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Teleport: Breaking Big Tech's Network Effect | Paul Bohm

By Lightspeed

Published on 2023-11-21

Discover how Teleport is leveraging Solana to create a decentralized ride-sharing protocol that could disrupt the industry and onboard millions to crypto.

The notes below are AI generated and may not be 100% accurate. Watch the video to be sure!

Introduction to Teleport and Paul Bohm

Paul Bohm, a visionary crypto OG and founder of Teleport, has set out to revolutionize the ride-sharing industry through decentralized marketplaces built on the Solana blockchain. In this insightful episode of Lightspeed, Paul discusses his core insights that led to the creation of Teleport, its innovative design, and the potential impact on both the ride-sharing industry and the Solana ecosystem.

Teleport represents a bold attempt to break the network effect of big tech companies like Uber and Lyft by leveraging crypto's coordination tools. The project aims to create a more equitable system for drivers and riders while potentially onboarding millions of users to the Solana ecosystem.

Paul Bohm's Background and Core Insight

Paul's journey in the crypto space began in 2011 when he was working as a protocol designer at Dropbox. His experience with peer-to-peer protocols and his early understanding of Bitcoin's revolutionary consensus mechanism led him to explore the potential of decentralized systems in various industries.

The core insight that led to Teleport came from a personal experience in Miami. Paul recounts:

"I took a ride in Miami from Miami, which to those who know it, it's a place on the water, but it's not by the beach. There's a place across the bridge, it's like an island basically or pin into a lot called Miami Beach and it's got a nice beach. So I want to take a car over there, I use a ride-share app, I call the car and halfway in the drive routes, it's me, hey, how much are you paying? It was something on the order of like $59, $64 and I show it to the driver, drivers like that's crazy, you know, it happens all the time though, I get paid $16."

This stark disparity between what riders pay and what drivers earn sparked Paul's interest in creating a more equitable system. He realized that the current ride-sharing model, despite its claims of connecting independent contractors, was essentially a monopoly that could set prices at will.

The Problem with Current Ride-Sharing Platforms

Paul argues that the current ride-sharing platforms have an inherent conflict of interest. They have an incentive to charge riders as much as possible while paying drivers as little as they can get away with. This leads to practices like price discrimination, where riders might be charged more based on factors like their pick-up and drop-off locations, without the extra revenue being passed on to drivers.

Moreover, these platforms often engage in aggressive driver acquisition strategies, spending large amounts on signing up new drivers rather than focusing on retaining and fairly compensating existing ones. Paul explains:

"If you spend $1,600 on acquiring a driver and then pay that driver less and bleed drivers at 10 to 12 percent a month which is absolutely insane but that's what it is that is a higher revenue for Uber as a marketplace to just pay drivers less and spend money on acquiring new ones and ridiculous numbers then simply pay them."

How Teleport Works

Teleport is designed as an open protocol that allows for real market price competition. The system is composed of several key components:

  1. The Teleport app: This is the user-facing interface, similar to a web browser for the ride-sharing network. It's non-custodial and includes a full Solana wallet.

  2. Ride-share operators: These are local entities that connect drivers and riders. They compete with each other on pricing and service quality.

  3. Verifiers: These entities perform background checks on drivers, ensuring safety standards are met across the network.

  4. The Solana blockchain: All transactions and key data are recorded on-chain, providing transparency and enabling the reward system.

When a user opens the Teleport app, it connects to local ride-share operators based on their location. These operators compete to offer the best rates to both drivers and riders. Payments are made in USDC on the Solana blockchain, with funds held in escrow until the ride is completed.

The Role of Blockchain and Crypto

The use of blockchain technology, specifically Solana, is crucial to Teleport's model. Paul explains:

"Actually having these transactions accessible by smart contracts, by programs on Solana allows a bunch of stuff to happen. For one, you know the revenue actually occurred proof of revenue exists. So now if you're giving out rewards for people for real rides, it's proven there are a lot of entities that these rides actually happened."

This on-chain data allows for transparent reward distribution, quality control, and governance. It also enables the creation of a truly open and competitive marketplace, where multiple operators can compete fairly.

Network Effects and Coordination

One of the key challenges in creating a decentralized ride-sharing platform is overcoming the network effects of established players. Teleport addresses this through a clever reward system inspired by Bitcoin's mining rewards.

Paul explains:

"Bitcoin found a solution to this kind of network effect problem. It essentially said, hey, Bitcoin is not only decentralizing issuance of Bitcoin, whether you consider the money, gold, whatever, it's not just decentralizing the issuance of that based on an agreed upon program that is very hard to change, the rules of 21 million Bitcoin, never more. But it also coordinated the switch by rewarding the early adopters doing work on the network."

Teleport implements a similar system, where early adopters who bring revenue to the network receive rewards in the form of tokenized assets. This incentivizes users to switch to the platform and helps build the critical mass needed for the service to function effectively.

Solving the Chicken-and-Egg Problem

One of the biggest challenges for any new ride-sharing platform is solving the chicken-and-egg problem of needing both drivers and riders to make the service viable. Teleport approaches this problem through what Paul calls "permissionless marketing."

Instead of spending large sums on traditional marketing, Teleport relies on a network of incentivized users to spread the word. Paul explains:

"We're really doing permissionless marketing here where instead of spending corporate budget on acquiring drivers and writers we give other people the tools to recruit each other."

This approach not only reduces marketing costs but also aligns the interests of users with the growth of the network.

The Importance of Local Markets

Paul emphasizes that ride-sharing is fundamentally a local business. Success in one city doesn't necessarily translate to success in another. To address this, Teleport has developed a strategy based on "atomic networks" in specific metropolitan areas.

Using census data and agent-based modeling, Teleport can determine the number of drivers needed to provide good service in a given area. Once this threshold is reached, the service can be activated in that location. This approach allows for gradual, organic growth while ensuring a good user experience from the start.

Governance and Decentralization

Governance is a crucial aspect of Teleport's design. While the initial implementation will use a separate governance token, Paul envisions a future where the network rewards (issued as CNFTs) could be made convertible to governance tokens, allowing users to participate in decision-making.

The system also incorporates multiple levels of governance. For example, drivers can unilaterally blacklist specific operators they don't want to work with, providing a form of direct control over their working conditions.

Paul explains:

"I think there's always a question of governance, how excited are people actually about participating in the governance? I think that's an evolving field in terms of you know, you choose to do some kind of like liquid voting, do you allow people to delegate to people that represent their interests?"

Quality Control and Consistency

One potential concern with a decentralized system is maintaining consistent quality across different operators. Paul argues that this is less of an issue than it might seem, as the same pool of drivers is being drawn from, with the same background check requirements.

Moreover, the on-chain data allows for transparent quality metrics. Paul explains:

"You can make sure that the ETA, this estimated time of arrival that one of these operators stated was actually, you know, what the customer experienced by reporting back. So you can keep these operators honest and compete with each other not only on price, but also on quality of service."

The Potential Impact on Solana

If successful, Teleport could have a significant impact on the Solana ecosystem. Paul envisions onboarding millions of users to Solana through the app:

"We could bring hundreds of millions of users into the network, onboarded in a full Solana wallet with USDC. So someone's got to bring these people an easy onboarding way. And I think you've got to target people where they are."

This could lead to a substantial increase in Solana wallet holders and USDC users, potentially driving adoption of other Solana-based services and applications.

Regulatory Compliance and Safety

Paul emphasizes that Teleport is designed to be fully compliant with existing regulations. In fact, he argues that regulators may prefer a system with multiple smaller operators rather than a few large companies:

"The regulators love it because regulating in giant consumers like uber they just keeps hurting the regulations if you deal with many smaller operators you actually have some leverage of saying you shut one of them down if they keep breaking so it's actually it should be far safer because the regulators have so much more influence."

This approach could lead to better overall compliance and safety standards in the industry.

The Future of Decentralized Marketplaces

While Teleport is focused on ride-sharing, Paul sees potential for similar decentralized approaches in other industries. However, he cautions that not all markets are equally suitable for this model.

For example, he discusses why a decentralized Airbnb might be more challenging due to the higher stakes involved in property rentals and the difficulty of quality control. This highlights the importance of choosing the right markets for decentralization efforts.

Lessons for Crypto Founders

Drawing from his experience with Teleport and his long history in the crypto space, Paul offers some key insights for crypto founders:

  1. Focus on real user needs rather than chasing trends.
  2. Prioritize distribution and built-in growth mechanisms.
  3. Don't overengineer - validate ideas quickly with real users.
  4. Look for opportunities where centralization is causing clear inefficiencies.

The Importance of Simplicity and User Experience

Throughout the discussion, Paul emphasizes the importance of creating a seamless user experience. For Teleport to succeed, it needs to be as easy to use as existing ride-sharing apps, with the added benefits of lower prices for riders and higher earnings for drivers.

He argues that many crypto projects fail because they focus too much on complex technology without considering how to make it accessible and useful for average users.

The Role of Solana in Teleport's Success

Paul's decision to build Teleport on Solana was driven by the network's speed, low transaction costs, and developer-friendly environment. He explains:

"When I started designing this I was thinking of doing like a layer two roll up and then I discovered Solana and I realized no I can actually build all of this on chain I can directly make it happen."

Solana's capabilities allow Teleport to handle the high volume of transactions and data required for a global ride-sharing network without sacrificing user experience or incurring prohibitive costs.

The Potential for Disruption

If successful, Teleport could significantly disrupt the ride-sharing industry. By reducing the take rate from the current 40% or more to potentially as low as 10%, it could create a more equitable system for both drivers and riders.

Moreover, the open nature of the protocol could lead to innovation in adjacent areas. Paul mentions examples like airports or event venues creating their own ride-sharing operators, turning what is currently a cost center into a potential profit center.

Challenges and Future Developments

While Teleport shows great promise, Paul acknowledges that there are challenges ahead. Building the necessary critical mass of users in each local market will be crucial. Additionally, educating users about the benefits of a decentralized system and the potential value of the network rewards will be an ongoing process.

Looking to the future, Paul hints at even more ambitious plans beyond ride-sharing, suggesting that the lessons learned from Teleport could be applied to other areas where centralization is causing inefficiencies.

Conclusion

Teleport represents an ambitious attempt to leverage blockchain technology and crypto-economic incentives to create a more equitable and efficient ride-sharing system. By building on Solana, it aims to overcome the technical challenges that have hindered previous attempts at decentralized ride-sharing.

If successful, Teleport could not only disrupt the ride-sharing industry but also serve as a model for decentralizing other marketplaces. Moreover, it has the potential to onboard millions of users to the Solana ecosystem, driving adoption and innovation across the platform.

As the project develops, it will be fascinating to see how it navigates the challenges of building a decentralized network in a highly competitive and regulated industry. Regardless of the outcome, Teleport's innovative approach offers valuable lessons for the broader crypto and blockchain community.

Facts + Figures

  • Paul Bohm has been in crypto since at least 2011 and was employee 11 at Dropbox.
  • Teleport aims to create a decentralized ride-sharing protocol built on Solana.
  • Current ride-sharing platforms can take up to 40% or more of the fare, while drivers receive as little as 25%.
  • Teleport's model could potentially reduce the take rate to as low as 10%.
  • The ride-sharing industry is projected to be a $300-800 billion business by 2030, growing at 16.7% annually.
  • Uber is currently valued at around $100 billion, while Lyft is valued at about $4 billion.
  • Teleport uses Compressed NFTs (CNFTs) on Solana to issue network rewards, allowing for millions of issuances at low cost.
  • The Teleport app includes a full Solana wallet and allows payments in USDC.
  • Teleport's model requires about one driver per square mile to provide good service in a given area.
  • Driver churn rates in current ride-sharing platforms can be as high as 10-12% per month.
  • Acquiring a new driver can cost platforms up to $1,600.
  • Teleport plans to use agent-based modeling and census data to determine when a local market is ready to launch.
  • The cost to become a ride-share operator varies by location, ranging from $500 to $15,000 per year in the US.
  • Teleport's open-source model allows for multiple client apps and operator servers to be developed.
  • The project aims to onboard potentially hundreds of millions of users to Solana wallets with USDC.

Questions Answered

What is Teleport?

Teleport is a decentralized ride-sharing protocol built on the Solana blockchain. It aims to create a more equitable system for drivers and riders by reducing intermediary fees and leveraging crypto-economic incentives. The protocol allows for multiple competing operators in each market, with all transactions and key data recorded on-chain for transparency and efficiency.

How does Teleport differ from traditional ride-sharing apps like Uber or Lyft?

Teleport differs from traditional ride-sharing apps in several key ways. Firstly, it's built on a decentralized protocol, allowing for multiple competing operators rather than a single centralized company. Secondly, it uses blockchain technology to ensure transparency in pricing and payouts. Thirdly, it implements a reward system to incentivize early adopters and network growth. Finally, it aims to significantly reduce the take rate, potentially from the current 40% or more to as low as 10%, benefiting both drivers and riders.

Why did Paul Bohm choose to build Teleport on Solana?

Paul Bohm chose to build Teleport on Solana due to its speed, low transaction costs, and developer-friendly environment. Solana's capabilities allow Teleport to handle the high volume of transactions and data required for a global ride-sharing network without sacrificing user experience or incurring prohibitive costs. The ability to use Compressed NFTs (CNFTs) for reward issuance was also a key factor, as it allows for millions of issuances at very low cost.

How does Teleport plan to overcome the network effects of established ride-sharing companies?

Teleport plans to overcome network effects through a combination of strategies. It uses a reward system inspired by Bitcoin's mining rewards, where early adopters who bring revenue to the network receive tokenized assets. This incentivizes users to switch to the platform. Additionally, Teleport employs "permissionless marketing," relying on incentivized users to spread the word rather than spending large sums on traditional marketing. The project also focuses on building "atomic networks" in specific metropolitan areas, ensuring a good user experience from the start in each new market.

What role does governance play in the Teleport ecosystem?

Governance plays a crucial role in the Teleport ecosystem. While initially using a separate governance token, the project envisions a future where network rewards (issued as CNFTs) could be convertible to governance tokens, allowing users to participate in decision-making. The system incorporates multiple levels of governance, including the ability for drivers to blacklist specific operators. This approach aims to create a more democratic and responsive system compared to traditional centralized platforms.

How does Teleport ensure quality and consistency of service across different operators?

Teleport ensures quality and consistency through several mechanisms. All drivers go through the same background check process, regardless of the operator. On-chain data allows for transparent quality metrics, such as comparing estimated arrival times with actual performance. Users can rate their experiences, and this data is used to hold operators accountable. The competitive nature of the system, where multiple operators compete in each market, also incentivizes maintaining high standards of service.

What potential impact could Teleport have on the Solana ecosystem?

If successful, Teleport could have a significant impact on the Solana ecosystem. It has the potential to onboard millions of users to Solana wallets with USDC, dramatically increasing the user base for Solana-based applications and services. This influx of users could drive adoption and innovation across the Solana platform, potentially establishing Solana as a go-to blockchain for real-world applications beyond just finance.

How does Teleport address regulatory compliance and safety concerns?

Teleport is designed to be fully compliant with existing regulations for ride-sharing services. The decentralized nature of the system, with multiple smaller operators rather than a few large companies, may actually be preferred by regulators as it allows for more granular control and enforcement. All drivers still go through standard background checks, and the transparent nature of the blockchain allows for better tracking and accountability.

What lessons does Paul Bohm offer for other crypto founders based on his experience with Teleport?

Paul Bohm offers several key lessons for crypto founders based on his experience with Teleport. He emphasizes the importance of focusing on real user needs rather than chasing trends. He advises prioritizing distribution and built-in growth mechanisms from the start. Bohm also stresses the importance of not overengineering and instead validating ideas quickly with real users. Finally, he suggests looking for opportunities where centralization is causing clear inefficiencies, as these areas may be ripe for blockchain-based solutions.

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