The popularity of "tap-to-earn" games may be a response to the proliferation of complex games and AI.
Edited & Compiled by: Deep Tide TechFlow
Guests in the conversation:
Haseeb Qureshi, Dragonfly Managing Partner
Tom Schmidt, Dragonfly General Partner
Robert Leshner, CEO and Co-founder of Superstate
Tarun Chitra, Managing Partner of Robot Ventures
Podcast Source: Unchained
Original Title: $Mother, Hamster Kombat, & zkSync - The Chopping Block
Broadcast Date: June 15, 2024
Highlights of this podcast
Crypto Market Sentiment: Discussing the latest market trends and how inflation data is affecting the community.
Memecoins and Celebrities: Analysis of Iggy Azalea's $Mother and the phenomenon of celebrities launching memecoins.
Emerging Memecoins: Insights into new memecoins, including issues of fraud and accounts being hacked.
Tap-to-Earn Games: Overview of the rapid growth of simple tap-to-earn games like Hamster Kombat.
Airdrop Controversies: Exploring recent controversies, particularly involving ZK SYNC and Layer0, as well as the challenges of Sybil attacks.
Future Airdrop Strategies: Discussing the evolution and demand for clear, ungameable metrics.
Current Market Sentiment
Robert mentioned that recent market sentiment can be inferred from price changes. He pointed out that today (Wednesday) saw encouraging inflation data being released, leading to a very optimistic market sentiment, with the belief that the Fed might lower interest rates this year, thus bringing the market back on track.
However, this optimistic sentiment only lasted for a few hours, as the market saw significant selling, causing prices to fall. Ultimately, the market sentiment returned to a relatively calm and wait-and-see state.
Celebrities' Memecoins and Market Impact
$Mother
Tarun pointed out that the biggest news on crypto Twitter today was Iggy Azalea promoting her memecoin.
Haseeb quoted Iggy Azalea in an interview, questioning Vitalik's views on charities and hospitals, and implying that Vitalik profits from gas fees.
Haseeb introduced the background of Iggy Azalea and her memecoin "Mother," noting that she is now more of an internet celebrity and has conflicts with some well-known figures in the crypto community.
A meme image of Iggy Azalea and Vitalik was shown, depicting Vitalik as a baby being breastfed by Iggy Azalea, implying that she is his "mother."
Market Impact
Tarun mentioned that the memecoin market this week is not calm, with many celebrities getting involved in memecoins.
Haseeb explained that Hulk Hogan's memecoin was a result of a hacker attack and pointed out that hackers are now profiting by launching fake memecoins.
He mentioned Andrew Tate launching a memecoin called "Daddy," competing with Iggy Azalea's memecoin "Mother."
Haseeb emphasized that celebrity involvement in the current memecoin market has reached a peak, but believes there may be even higher peaks in the future.
Haseeb discussed the future monetization of celebrities through memecoins and other means, pointing out that celebrity tokens may be a positive-sum game in certain cases.
He mentioned the difference between celebrity tokens and traditional product endorsements, believing that celebrity tokens may create value in the early stages, but this value will erode as the market saturates.
Robert believes that monetizing celebrities through new businesses (such as wine brands, vitamin water, headphones, etc.) is the most valuable way, as these businesses are legitimate and can create value.
He thinks that memecoins may create positive wealth in breakthrough success, but are generally zero-sum games.
Robert mentioned Doge's unique value proposition, as Doge is the first satirical crypto asset, attempting to mimic blockchain imitators like Bitcoin or Litecoin and other Bitcoin forks, giving it greater longevity in crypto history, unlike other celebrity tokens.
Robert discussed the saturation issue in the memecoin market, believing that market demand is limited and will eventually reach a peak.
Tom believes that every market trend will eventually saturate, and the current memecoin market is no exception.
He mentioned the difference between celebrity tokens and traditional product endorsements, believing that memecoins may create value in the early stages, but this value will be eroded as the market saturates.
Tarun believes the core truth of memecoins is that they attempt to simplify revenue sharing agreements, but in reality, they do not solve this problem.
He discussed the uniqueness of Pump.fun as the first successful token launchpad project. Pump.fun is easy to use and fun. Tom believes it is closer to a truly viral consumer application than many blockchain gaming projects.
Robert mentioned that Pump.fun is the first project similar to Launchpad and is doing well.
Tap-to-Earn Games: Hamster Kombat vs Notcoin
Haseeb mentioned two blockchain gaming projects worth discussing: Notcoin and Hamster Combat.
Haseeb introduced Hamster Combat as a tap-to-earn game based on Telegram, where players earn rewards and points by tapping on images of hamsters on the screen.
Hamster Combat has over 100 million users, with daily active users surpassing Ethereum.
Haseeb believes the success of blockchain games may be seen as a societal issue, as these games can be addictive and time-wasting. He discussed the simplicity and virality of these games, suggesting that they fulfill people's desire for "digital growth."
Robert believes the success of tap-to-earn games lies in their simplicity and ease of use, catering to those looking to earn rewards through light work.
Robert mentioned the short-term appeal of these games, believing that players may lose interest after a period of time.
Robert continued to discuss the economic cycle of these games, suggesting that once the airdrop ends, players may lose motivation to continue playing. He also pointed out that the design of these games is very simple and requires almost no technical innovation.
Tarun mentioned that the popularity of tap-to-earn games may be a reaction to the proliferation of complex games and AI. He believes the success of these simple games is related to their low computational requirements and ease of use.
Tom believes the popularity of tap-to-earn games may be a reaction to high-end games, as people prefer simple games that require less investment.
Tom mentioned the cyclical nature of culture, suggesting that the current trend is a return to simplicity. He believes the popularity of these games reflects people's desire for "digital growth" and may be an expression of some societal dissatisfaction.
Airdrop Controversies
Airdrop Meta (zkSync & LayerZero)
Haseeb discussed the recent trend of airdrops, noting that many large airdrops have been accompanied by controversy and dramatic events. He mentioned the airdrops of ZKSync and LayerZero.
ZKSync is a zero-knowledge rollup that announced a 17.5% airdrop of the total supply to users. Despite the large scale of the airdrop, only about 11% of users were eligible, leading to a lot of anger, especially from farming-type users.
LayerZero's airdrop strategy allows users to self-report, with the incentive of receiving 15% of the original airdrop if they report themselves as bots. If successful in reporting others, the reporter can receive 10% of the reported user's airdrop. This approach also sparked different reactions.
Haseeb mentioned that recent airdrops have received almost no consistent positive feedback, considering it a widespread issue.
Tarun believes that the expected value of airdrops increases over time, making it increasingly difficult to satisfy everyone. He thinks the expected value of airdrops is set by the first project to adopt a novel mechanism, and subsequent projects need to pay more "premium" to meet these expectations.
Tom agrees with the view that the expected value of airdrops continues to increase, considering it a widespread issue.
Challenges of Fair Airdrops
Haseeb mentioned that there has been almost no major airdrop in the last six months that has satisfied everyone.
Tom believes that fairness and transparency of airdrops are important issues when facing a large number of users and potential bots. He mentioned that GMV's airdrop is one of the few recent examples that did not trigger a lot of negative reactions.
Tarun mentioned Celestia's airdrop as an exception, as they distributed the airdrop to developers and researchers, a method that other projects have emulated.
Tarun mentioned a phenomenon in behavioral economics, where once the expected value is set, subsequent expectations will continue to rise.
- He explained the specific manifestations of this phenomenon, such as some people expecting to receive large rewards in other projects after receiving them in Celestia's airdrop.
Tarun believes that the continuous increase in expected value is similar to the rise in salary expectations, making it difficult to lower once the expectations are set.
Industrialization of Airdrops
Haseeb mentioned the issue of the industrialization of airdrops, believing it may be one of the reasons for the increasing controversies surrounding airdrops.
Six months ago, the scale of the industrialization of airdrops was far less than it is today. At that time, while there were airdrop hunters, the quantity and tools were far less than they are now.
He pointed out that many users in emerging markets can easily participate in airdrops through various guides and tools, making the industrialization of airdrops more common.
Haseeb believes that for some projects, such as decentralized exchanges (Dex) or projects requiring liquidity provision, measuring user behavior is relatively simple, thus leading to less controversy.
For some unclear projects, such as Layer 1 protocols or Celestia, users are unsure of what to do to receive the airdrop, increasing uncertainty and controversy.
Tarun agrees with Haseeb's point, mentioning that Celestia's airdrop was also exploited by industrialized farmers. He mentioned some memes reflecting users' dissatisfaction with airdrops.
Tom believes that some airdrops require users to have more "skin in the game," such as providing capital or paying transaction fees, resulting in less controversy.
He mentioned a meme in ZKSync's Discord, reflecting strong dissatisfaction from Indian users.
Tarun believes the entire ecosystem is somewhat out of control, with users manipulating metrics in various ways to receive airdrop rewards.
He believes the current airdrop system is too complex and easily manipulated, not an effective way of token distribution.
Tarun predicts that the future trend of airdrops may change completely, as the current system is not ideal.
Future Airdrop Strategies
Haseeb pointed out that the current airdrop mechanism lacks resistance to effectively distinguish between real users and fake accounts (Sibyl attacks). With the improvement of airdrop hunting technology, the effectiveness of anti-Sibyl technology decreases, increasing the probability of mistakenly targeting real users and the error rate.
He believes that to some extent, project parties tacitly allow the existence of airdrop hunters because it helps improve the project's metrics.
There exists a "Faustian bargain" between airdrop hunters and project parties, where project parties allow the existence of airdrop hunters to boost short-term metrics, but in the long run, this will lead to more user dissatisfaction.
Haseeb pointed out that future trends may change. He believes that project parties may make things clearer earlier. For example, project parties may inform users in advance of what they will reward and choose some difficult-to-manipulate metrics, such as liquidity. This can avoid dissatisfaction and manipulation issues caused by surprises. Another possibility is that the "cat and mouse game" between airdrop hunters and project parties will continue indefinitely, with both sides constantly trying to defeat each other's Sibyl attacks and anti-Sibyl measures.
Robert believes that the success of Proof of Work (PoW) in Bitcoin lies in its close connection to the core goals of the project. However, the current airdrop mechanism is similar to "fake work," providing no actual value to the project, more for optical effects. Future airdrop mechanisms need to better link work to token distribution to improve the project's success rate.
Tarun discussed the differences between Proof of Work (PoW) and Proof of Stake (PoS), believing that PoS is not as good as PoW in some aspects. Airdrop mechanisms need more randomness and continuity to reduce the problem of managing expectations. He also mentioned that fraud issues in other areas such as gaming and Spotify have not been completely resolved, and airdrops are no exception.
KYC's Role in Airdrops
Haseeb suggested that comprehensive KYC may be the future direction for obtaining airdrops, as some regions (such as Luhansk, Crimea, the United States, India, etc.) are already excluded. If these restrictions are already in place, then comprehensive KYC may be the next step.
Tarun opposed this view, believing that KYC cannot scale and will lead to asset distribution being more concentrated in the hands of those who can pass KYC, rather than being widely distributed. He also pointed out that many airdrop hunters may not be able to pass KYC.
Haseeb further explained that the current anti-Sibyl attack measures are actually a "lame version of KYC," attempting to verify whether users are real through various signals.
Tom believes that reverting to linear airdrops (i.e., distributing based on difficult-to-manipulate metrics) may be a more practical solution.
Haseeb mentioned that in the future, there may be some zero-knowledge proof (ZK) technology that can verify without revealing user KYC information.
Tarun believes that this technology may be realized in the future, but it is not mature enough at the moment. Even with this technology, many people may still be excluded.
Tarun is concerned that if KYC is adopted, governments may be more likely to consider it as securities, which will increase complexity and compliance costs.
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