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1/ Hopium phase and Cat out of bag moment:
Hopium phase is kinda magical - if you are in right market and well connected, you can raise millions (sometimes even tens or hundreds of!) just on pure TAM estimate, reflexivity and mimesis, capitalizing on FOMO.
Hopium phase is kinda magical - if you are in right market and well connected, you can raise millions (sometimes even tens or hundreds of!) just on pure TAM estimate, reflexivity and mimesis, capitalizing on FOMO.
2/ But there comes a moment when all the hopium is shed, all the promises, grand visions and hockey stick charts in deck give way to reality.
The moment when your investors can start looking at actual numbers.
The cat is out of bag.
The moment when your investors can start looking at actual numbers.
The cat is out of bag.
3/ In crypto - more often than not - this moment is very sobering. Your claims of "the new internet but with a token" are not interesting to anyone when the data says "0 users".
4/ Thus, some crypto projects became the masters in the art of delaying the cat out of bag moment. Endless roadmap updates, complicated tech jargon, conferences and podcasts.
What is dead may never die and hopium is cheaper price fuel than traction data.
What is dead may never die and hopium is cheaper price fuel than traction data.
5/ The more vague your vision is "being the new internet of everything, or new better money..." the better you are at obfuscating the lack of traction.
6/ That is one of the reasons why even high quality DeFi projects, with actual users and sometimes cashflows have such hard time getting higher in the marketcap vs all the dead ETH killers and BTC 2.0s.
We can measure DeFi projects like companies, no need to resort to hopium.
We can measure DeFi projects like companies, no need to resort to hopium.
7/ Does that mean DeFi tokens can't get massively overvalued? Ofc not, many were and many still are! But reality checks are much more concrete, thus providing better and quicker feedback loop.
Narratives like "being silver to btc gold" are infinitely harder to kill with data.
Narratives like "being silver to btc gold" are infinitely harder to kill with data.
8/ For this reason I think that valuations of DeFi projects have a fundamental ceiling tethered to actual KPIs.
Also KPI based projects tend to be populated by smarter investors who are not afraid to call BS and sell if price is out of whack with data.
And that is a good thing
Also KPI based projects tend to be populated by smarter investors who are not afraid to call BS and sell if price is out of whack with data.
And that is a good thing
9/ To be fair there is also a DeFi variation of this, where governance tokens can live off hopium for future cashflows, while tokens that already accrue value have their cat already out of bag and need to deal with reality. https://twitter.com/Fiskantes/status/1324694582001545216?s=20
10/ Finishing with (newly formulated) Fiskantes Law:
The more arcane and vague the token use case is, the harder it is to measure its value accrual, the easier it is for its price to be fuelled by hopium.
The more arcane and vague the token use case is, the harder it is to measure its value accrual, the easier it is for its price to be fuelled by hopium.
