The Dev2Dev Thesis: A Shift in Crypto Focus

The cryptocurrency space has long been dominated by a focus on infrastructure and middleware solutions. However, recent developments suggest a shift in this paradigm. Matti from Zee Prime Capital introduces the concept of the "dev to dev market," highlighting a critical issue in the current crypto landscape. This thesis posits that the industry has become overly focused on selling "picks and shovels" to other developers, rather than building solutions for end-users.

Matti explains, "Everyone is kind of defaulting to selling picks and shovels and hiding behind sort of like a micro techno bubble, hiding behind buzzwords, not building towards the users." This observation underscores a growing concern that the crypto industry may be stuck in a cycle of creating tools for itself, rather than addressing real-world problems and attracting a broader user base.

The dev to dev market has led to a situation where many projects are essentially selling to each other, creating what Matti describes as a "dev to dev circle jerk." This inward focus raises important questions about the direction of the industry and its ability to achieve mainstream adoption.

The Need for User-Centric Applications

While infrastructure remains crucial for the development of the crypto ecosystem, there is an increasing recognition that the industry needs to shift its focus towards creating applications that people actually want to use. Matti emphasizes this point, stating, "We need use cases much more. So it's not about how but it's about what?"

This shift in perspective aligns with the growing sentiment in the crypto community that the next phase of growth will come from practical applications that solve real-world problems. The challenge now is to move beyond the technical jargon and create products that resonate with a broader audience.

The Evolution of the Middleware Thesis

Interestingly, Zee Prime Capital's stance on middleware has evolved since 2021. While they previously saw a strong need for infrastructure solutions, the current landscape appears to be saturated with such projects. Matti reflects on this change, saying, "Now we are sort of like overcompensating, I would say there's like too much infra and very little, very little use cases."

This shift in perspective highlights the dynamic nature of the crypto industry and the need for investors and developers to adapt their strategies as the market evolves. It also underscores the importance of continually reassessing the balance between infrastructure development and user-facing applications.

The Challenge of Building for Users vs. Developers

One of the key issues identified in the discussion is the tendency for projects to default to building infrastructure rather than user-facing applications. Fiskantes from Zee Prime Capital provides insight into why this might be the case, drawing a parallel with macro and micro economics:

"It's much easier to macro bullshit than to micro bullshit," Fiskantes explains, attributing this concept to Nassim Taleb. He continues, "So it's much easier to bullshit people about big macro trends and whatnot than to go to a particular, let's say business or company and bullshit there because then the numbers need to be very precise and it's very easy to see if there is a product, if there is a business there."

This observation highlights the challenge faced by crypto projects when it comes to demonstrating real-world value and adoption. Building infrastructure allows for more abstract discussions and longer development timelines, whereas consumer-facing applications require more immediate proof of traction and user engagement.

The Rise of the Superapp in Crypto

The concept of a "superapp" in the crypto space has gained significant attention. Fiskantes discusses the potential for such applications to emerge, drawing parallels with successful Web2 companies. He notes, "When you look at like how web two companies are structured when it comes to their value capture or how big they are, like most of the biggest companies are kind of touching the end user."

This observation suggests that the most successful crypto projects in the future may be those that can directly engage with and provide value to end-users, rather than focusing solely on infrastructure or middleware solutions. However, Fiskantes also cautions against prematurely claiming superapp status, stating, "The first rule of super app is you never call yourself a super app."

The Importance of Product Wedges

Instead of aiming to build a superapp from the outset, Fiskantes emphasizes the importance of starting with a strong product wedge. He explains, "You're building a product wedge from which you can expand into what might become a super app." This approach allows projects to establish a foothold with users through a specific, valuable offering before expanding their services.

The product wedge strategy aligns with successful patterns seen in Web2, where companies like Amazon started with a focused offering (online bookstore) before expanding into a wide range of services. This approach allows for organic growth and the development of a loyal user base.

Establishing Moats in Crypto Applications

One of the challenges in creating successful crypto applications is establishing moats - competitive advantages that protect a project from being easily replicated or outcompeted. Fiskantes discusses several potential moats for crypto projects:

1. Becoming a block builder: This could provide an advantage in transaction ordering and execution.
2. Creating unique identifiers: By adding new identifiers not present on the blockchain itself, projects can create proprietary data layers.
3. Building a strong brand: Similar to Bitcoin and Ethereum, a powerful brand can become a moat in itself.
4. Increasing switching costs: Making it difficult for users to move to competing platforms can help retain users.

Fiskantes emphasizes the importance of brand, stating, "I do believe that, you know, like we're more in commerce than we realize. So I believe that tokens are potentially a commercial product that people are buying."

The Commoditization of Blockspace

An interesting point of discussion is whether blockspace - the computational resources on a blockchain - can be commoditized. Fiskantes suggests that the jury is still out on this question, given the early stage of the industry. He notes, "Crypto still has like thousands of users, maybe tens of thousands. I mean, of course, there are many people holding crypto somewhere on violence or Coinbase, but they're not really that many users actually doing stuff on chain, like individual people."

This observation highlights the need for caution when making predictions about the future structure of the blockchain ecosystem. As the industry matures and attracts more users, clearer patterns may emerge regarding the value and differentiation of blockspace across different networks.

The Future of Web3 Social

The discussion then turns to the future of social media in the Web3 era. Matti provides insights into how crypto could play a role in shaping the next generation of social platforms. He suggests that the future of social media might involve a greater degree of financialization and gamification:

"It's maybe a bit dystopian thesis, but I guess that the hypermonetization or hyperfine civilization could be doubling down of this like live streaming of mass delusion, where GDP and inflation and token going up or down is the main spectacle."

This perspective raises important questions about the potential impact of combining social interactions with financial incentives and speculative elements. While this could lead to increased engagement, it also poses risks in terms of user behavior and the quality of interactions.

Status vs. Utility in Social Tokens

An interesting phenomenon observed in recent social token experiments, such as Friend.tech, is the apparent preference for status over utility. Users seem willing to purchase tokens associated with influencers or popular figures, even when there's no guarantee of actual interaction or value beyond the status conferred by ownership.

Fiskantes challenges the dichotomy between status and utility, arguing, "Status is utility, right? Like status is access even in like a physical world." This perspective suggests that the perceived value of social tokens may lie more in the social capital they represent rather than any specific functionality they provide.

The Challenge of Testing New Crypto Products

Fiskantes raises an important point about the difficulty of accurately testing new crypto products due to the limited and potentially biased user base currently active in the space. He uses a colorful analogy to illustrate this point:

"When you have a scientific laboratory with a lot of rats, and you are using the same rats for every experiment, I would say these rats are no longer giving you the same results as you would get if you always use the new batch of rats that are fresh and that are not like ridden by all kinds of previous chemicals that you used on them."

This observation highlights the need for crypto projects to find ways to reach beyond the existing crypto-native user base to truly test the viability and appeal of their products to a broader audience.

Equal Opportunity vs. Equal Outcomes in Crypto

The podcast touches on a controversial but important topic: the relationship between equal opportunity and equal outcomes in the crypto space. Matti suggests that increased access to opportunities through crypto and internet technologies might actually lead to greater disparities in outcomes.

He explains, "Everything comes with like a bigger consequences online. So, um, so it, it, it gives everyone the same opportunity, but not everyone is, is making the same choice, right?"

This perspective challenges the notion that merely providing equal access to tools and platforms will automatically result in more equitable outcomes. Instead, it suggests that the amplifying effect of technology could exacerbate existing inequalities or create new ones based on how individuals choose to use these opportunities.

Crypto as an Equalizer

Fiskantes offers a counterpoint to the idea that crypto might increase inequality, arguing that in some ways, crypto has acted as a greater equalizer than previous technologies:

"Crypto kind of makes or at least in, in a recent past, it made it much easier. Capital formation was much easier holding value like in stable coins or whatever was much easier even for someone who never, uh, could have a bank account or bank account in a, in a Western world where the money are reasonably safe for, for this person to, to not be worried about it."

This perspective highlights the potential for crypto to provide financial services and opportunities to individuals who may have been excluded from traditional financial systems. However, it's important to note that these benefits are not evenly distributed and may be more accessible to those with existing technological literacy and access.

The Volatility of Crypto Wealth

An interesting aspect of wealth creation in the crypto space is its volatility. Fiskantes notes that many people who quickly accumulate wealth in crypto often lose it just as quickly, especially if they become high-profile figures in the community. This volatility presents both opportunities and risks:

"Many people who make money super fast in crypto actually also like, especially if they become the main character, they lose them as well. So there is much less of a chance to like sustainably capture the value there because the market moves so fast."

This observation suggests that while crypto can create opportunities for rapid wealth accumulation, it may not necessarily lead to long-term, stable inequalities in the same way that traditional financial systems might.

The Importance of Bold Bets in Crypto Investing

The podcast concludes with a discussion on the importance of making bold bets in the crypto space. The hosts praise Zee Prime Capital for their willingness to take unconventional positions, even if some of these bets don't pay off. This approach is contrasted with a more conservative strategy that prioritizes being right most of the time but potentially misses out on significant opportunities.

Fiskantes emphasizes the importance of finding one's niche in the crypto space, rather than trying to pay attention to everything. He suggests that the most interesting opportunities often lie at the intersection of passionate communities and problems that can be solved through crypto-enabled financialization.

The Future of Crypto: Community-Driven Innovation

Looking towards the future, Fiskantes highlights the potential for crypto to enable passionate communities to solve problems that traditional systems have failed to address. He cites the example of the Hair DAO, a community focused on addressing male pattern baldness:

"Good example is the hard outing where you have these people that are balding, they really care about it and they don't see any solutions coming from mainstream pharma and medical research and they suddenly realize, oh, we can actually form around community around this token, around this like tokenized IP that we can gather and harness value from and we can actually be the ones like propelling it."

This example illustrates the potential for crypto to empower niche communities to pool resources and drive innovation in areas that may be overlooked by traditional institutions.

The Challenge of Finding Genuine Passion in Crypto Communities

While the potential for community-driven innovation is exciting, Fiskantes also notes the challenge of finding communities that are genuinely passionate about solving problems rather than simply chasing financial gains. He observes:

"Even most of the die heart crypto communities today that you can see and you would be like, oh, these people are really fanatical about this project. When you really dig deeper into it, you realize that these people are actually not as fanatical about this particular project as they are fanatical about like making it and like making a hundred eggs with their back."

This observation highlights the need for projects to cultivate communities that are driven by more than just the potential for financial gain. True innovation and long-term success may depend on aligning crypto projects with genuine passions and needs.

The Role of Solana in the Future of Crypto

While not explicitly discussed in the podcast, it's worth noting the potential role that Solana could play in enabling the types of applications and communities discussed. Solana's high-speed, low-cost infrastructure could provide an ideal platform for building user-centric applications and supporting community-driven initiatives.

Solana's focus on performance and scalability aligns well with the need for user-friendly applications that can handle high volumes of transactions. As the crypto industry shifts towards more user-centric approaches, Solana's capabilities could make it an attractive choice for developers looking to build the next generation of crypto applications.

Lessons for the Crypto Industry

The insights shared by Fiskantes and Matti offer several important lessons for the crypto industry:

1. Focus on real-world use cases and user needs, rather than just building infrastructure.
2. Recognize the importance of brand and community in creating sustainable crypto projects.
3. Be willing to make bold bets and explore unconventional ideas.
4. Look for opportunities to empower passionate communities through crypto-enabled solutions.
5. Be cautious of projects that claim to be "superapps" without first establishing a strong product wedge.
6. Consider the potential consequences of increased financialization in social interactions.
7. Recognize that equal access to opportunities does not necessarily lead to equal outcomes.

The Path Forward for Crypto Innovation

As the crypto industry continues to evolve, the insights shared in this podcast suggest a path forward that balances technological innovation with a focus on real-world impact. By shifting attention towards user needs, empowering communities, and addressing genuine problems, the crypto industry can move beyond its current limitations and realize its potential to transform various aspects of society and finance.

The future of crypto may lie not in creating more infrastructure or middleware solutions, but in finding novel ways to apply blockchain technology to solve pressing issues and create value for users. As projects like Solana continue to provide robust, scalable infrastructure, the onus is on developers and entrepreneurs to build applications that can truly capture the imagination and meet the needs of a broader user base.

In conclusion, the rise of crypto's superapp may not come from a single, all-encompassing platform, but from a diverse ecosystem of specialized, community-driven applications that leverage blockchain technology to address specific needs and passions. As the industry matures, those projects that can successfully bridge the gap between technological innovation and genuine user value are likely to emerge as the true leaders in the space.

Facts + Figures

• The crypto industry is currently focused on "dev to dev" markets, with many projects building infrastructure rather than user-facing applications.
• Zee Prime Capital has shifted its focus from middleware to more user-centric applications since 2021.
• Most successful Web2 companies directly engage with end-users, suggesting a similar path for crypto projects.
• The concept of a "superapp" in crypto is gaining attention, but projects should focus on building a strong product wedge first.
• Potential moats for crypto projects include becoming a block builder, creating unique identifiers, building a strong brand, and increasing switching costs.
• The commoditization of blockspace remains an open question due to the early stage of the industry.
• Friend.tech and similar platforms have demonstrated a preference for status over utility in social tokens.
• Crypto has the potential to act as an equalizer by providing easier access to capital formation and value storage.
• The volatility of crypto wealth can lead to rapid gains and losses, potentially mitigating long-term inequality.
• Community-driven innovation, such as the Hair DAO example, represents a promising direction for crypto projects.
• The crypto industry currently has a limited user base, with estimates ranging from thousands to tens of thousands of active users.
• Solana's high-speed, low-cost infrastructure could provide an ideal platform for building user-centric applications.

Questions Answered

What is the "dev to dev" thesis in crypto?

The "dev to dev" thesis refers to the current trend in the crypto industry where many projects are focused on building infrastructure and tools for other developers, rather than creating applications for end-users. This has led to a situation where crypto projects are essentially selling to each other, creating a cycle that may hinder broader adoption and real-world impact.

Why is there a shift away from middleware in crypto investments?

Investors like Zee Prime Capital are shifting away from middleware investments because the market has become saturated with infrastructure projects. There is now a recognition that the industry needs more user-facing applications and real-world use cases to drive adoption and create value. This shift reflects the evolving needs of the crypto ecosystem as it matures.

What is a "superapp" in the context of crypto?

A "superapp" in crypto refers to a comprehensive platform that offers a wide range of services and functionalities to users, similar to how WeChat or Alipay operate in the traditional tech space. However, the podcast emphasizes that projects should focus on building a strong "product wedge" - a specific, valuable offering - before attempting to become a superapp. This approach allows for organic growth and user acquisition.

How can crypto projects establish moats or competitive advantages?

Crypto projects can establish moats through various means, including: becoming block builders to gain advantages in transaction ordering, creating unique identifiers to develop proprietary data layers, building strong brands that users trust and prefer, and increasing switching costs to retain users. Additionally, owning both the front-end user interface and the underlying blockchain infrastructure can provide a significant competitive advantage.

Does increased access to opportunities in crypto lead to more equal outcomes?

The podcast suggests that increased access to opportunities through crypto and internet technologies might actually lead to greater disparities in outcomes. This is because these technologies amplify the consequences of individual choices and actions. However, crypto is also seen as a potential equalizer in some ways, providing easier access to financial services and opportunities for those previously excluded from traditional systems.

What role do community-driven initiatives play in the future of crypto?

Community-driven initiatives are seen as a promising direction for crypto innovation. Examples like the Hair DAO demonstrate how passionate communities can leverage crypto technologies to address specific problems that traditional systems have failed to solve. These initiatives can harness the power of tokenization and decentralized organization to drive innovation in niche areas.

How does the volatility of crypto wealth impact inequality?

The high volatility of crypto wealth can lead to rapid gains and losses, potentially mitigating long-term inequality to some extent. Many individuals who quickly accumulate wealth in crypto often lose it just as quickly, especially if they become high-profile figures in the community. This volatility creates a more dynamic environment compared to traditional financial systems.

What are the challenges in testing new crypto products?

Testing new crypto products is challenging due to the limited and potentially biased user base currently active in the space. The podcast uses an analogy of lab rats being reused in multiple experiments, suggesting that the current crypto user base may not provide accurate feedback for products intended for broader adoption. This highlights the need for projects to find ways to reach beyond the existing crypto-native audience.

How important is it to make bold bets in crypto investing?

The podcast emphasizes the importance of making bold bets in crypto investing. While this approach may lead to some failed investments, it also increases the chances of identifying truly innovative and transformative projects. This strategy is contrasted with more conservative approaches that prioritize being right most of the time but may miss out on significant opportunities.

What is the potential role of Solana in the future of crypto applications?

While not explicitly discussed in the podcast, Solana's high-speed, low-cost infrastructure positions it well to support the development of user-centric applications and community-driven initiatives. Its focus on performance and scalability aligns with the industry's shift towards more practical, user-friendly applications that can handle high transaction volumes, making it an attractive platform for developers building the next generation of crypto applications.