wen token is the right question

liquidity in crypto has dried up, skepticism is at an all time high - here's why ive been building for the last 8 years, and why i'll continue building for the next 10 years.

crypto's ultimate invention

crypto's ultimate invention is cheap property rights. if you own something, it's secured by cryptography and cannot be taken away without your cooperation.

this was never possible before crypto. twitter could deplatform you, take away your followers, a game could take away your skins. not in crypto.

equity at scale

a company gives its stakeholders equity - founders, employees, investors. equity once given, in most parts, cannot be taken away. that is because equity is protected by the legal frameworks of a country. that is also what makes granting equity costly - legal fees and operational overhead. that in turn makes granting equity to a large number of users prohibitively expensive. so, no company really gives equity to its users. even though, early adopters help any app/project/company take off - there is no way to incentivize them. facebook's early users who took a bet, in some capacity, on facebook are never rewarded financially.

what a blockchain lets us do is equity granting at scale.

a new upcoming app could attract users by incentivizing them to come to the app. by giving a small fraction of its equity to early users and power users, it can bootstrap an ecosystem of users who have skin in the game to grow the app.

equity has 2 forms of exit - an ipo and an mna.

ipo is when the retail public is given an opportunity to own part of the business by buying equity from others.

mna is where a company B either gives liquid cash to all equity holders of company A or where company B gives all company A equity holders equity B.

we know these exits happen all the time in crypto. its called airdrops. and giving equity to users for doing actions is represented as coins on chain.

why on chain

its too expensive to give users equity in the traditional sense. but the traditional equity protects the users' right to the equity by means of the jury.

however blockchain lets companies give users equity in the form of coins and the right to those coins, that property, is protected by cryptography. the cost of giving equity to one more user is marginal.

no matter what the company does, it cannot take an equity back once granted. so why would a company want to give away this power?

for that lets look at what other options a fledgling startup has, that wants to incentivize its users. it could maintain a database of a user id to "equity" mapping. each time a user takes an action, update the database. you could trust a company of the size of facebook to do this honestly. in that case the "equity" is protected by social outrage. however, would you trust a new startup with unknown founders to maintain this database and honor it 10 years later when they ipo? my guess is - probably not.

so, a viable and cheap option the startup has is to issue the "equity" on chain. that way the users trust that the company will keep its word, and the company is able to bootstrap their early customer base.

if we figure out how to do this right, the next wave of internet companies will have a completely different ownership charts.

however, there are a few things that need to change.

a benevolent dictator

on day zero - no need for transparency, no need for decentralization, heck no need for even fairness. if you disagree with the benevolent dictator in the early days - you can exit. none of this shit needs to be on chain. all that needs to be on chain is the rewarding of the equity itself, aka the coins.

untransferable

these coins need to be non transferable. the current norm is to keep them non transferable for a particular amount of time. that just skews the incentives - airdrop farmers are here to farm and dump the day the token is unlocked. these coins should, rather, be non transferable until the benevolent dictator so chooses. when the coin becomes transferable it immediately becomes liquid and can be exchanged against other coins. just like an ipo. hold your earned "equity" all the way to an exit. no short term games.

degens and OGs

a lot of products are driven by what degens and OGs want. they are the people who have the money and they are the people who have the clout. but they arent necessarily the best product designers for a global audience. we pay way too much attention to building crypto products that will receive blessings of degens and OGs. that needs to stop. we need to think about products from first principles and from what the end user cares about. the end user doesn't care about the tech that powers their apps. we dont need the extreme idealism of the OGs anymore to solve the problems for the end user. the extreme idealism already gave us the blockchains and amms. thats all we need for now. we also dont need to have an exit mechanism in place on day zero to appeal to degens, they're only a miniscule fraction of the universal set.

regulations

this is a close cousin of the above section. because of the roots of the movement that gave rise to the invention of bitcoin and blockchain; we have come to consensus regulation is bad. many regulations are there in the right spirit - and theres nothing wrong in adhering to them. why such taboo against regulation? if owning equity gives you access to dividends/revenue share and thus classifies it as a security - why not abide by the rules that apply to a security? understandably, no one wants additional overhead of compliance. but a company shouldnt make their coins liquid and buyable by the public - until it is big enough to handle the overheads of being a security.

malicious bots protection

projects need explicit protection from bots. otherwise, the project is devoid of a crucial exit strategy - mna. not all companies ipo. some companies get their returns by selling to other companies. one of the important reasons ,and often the price determining factor, in an mna is the number of dedicated users. if there isn't a way to determine if the users of an app aren't sybil bots - the audience base is not very valuable.

it is going to be ok and even normal to allow ai bots to use an app. all that matters for a profit seeking business is does the user - a human or a bot - have purchasing power and does their behaviour not impede other users' spending on the app.

it is fairly trivial to determine the purchasing power of a user - have the user reveal their wealth and previous spendings. however, without malicious bot protection, it is hard to safeguard against a selfish bot optimizing for its own "equity" and, in the process, rendering the app spammy for other users to use and spend on.

the scarce resource

until recently the scarce resource was intelligence. only a human with intelligence could identify all the firehydrants and buses in a 3x3 grid. and that is what we used to protect against bots signing up and causing havoc in apps.

however, now intelligence is widely available via ai. the scarce resource in the world is now intelligent organic matter. it is produced by a verifiable delay function of 18 years. the question becomes - can we use this scarce resource to protect against spam bots? i think yes, and below is a construct.

one user, one human

a user could sign up to use any app. but instead of solving a captcha, they submit their signed proof that they are a certain human. this could be a worldcoin id like proof or cryptographic proof of their national id or an aggregated proof derived from various apps they use. some form of unique human identity.

an app publishes all the bad actors on its platform identified by the unique human identity. each app has its own malicious user registry. any new app can use these registries from various apps to decide whether or not to let the user in at the onboarding stage. now, users wouldnt want to be on the malicious users registry of any app, because it hampers their activity on other apps too.

apps could even share their registries or build aggregated registries for use by other apps, similar to how ip blocklists are maintained and shared.

there is no easy way to spin up a new identity, because you the user and all the bots that you spin up are associated with a unique human identity. you either need a new iris, new national id, or new activity on various popular apps. if you get blocklisted on an app, you are going to get blocklisted on all the apps that use the same registry.

crypto gives users property rights. it also protects apps from spam.

that is the future i am building towards. that is why i am excited about building reclaim protocol. for the next 10 years.