Narrative Overload — crypto only has one advertisement slot
... and it costs a lot to get featured on it.
I’ve been thinking quite a lot about the meta of how crypto as a game works, and in particular the role that “narratives” play. Why is it that our industry relies so heavily on what everyone chants but so little on actual underlying value?
Well, the answer always lies somewhere in the actions and turns of the past. If we look back to the inception of Bitcoin, there was only experimental technology that couldn’t have its use case proven out until it got enough traction. As long as everyone believed that it was “censorship-free” and the technology could deliver on that promise — it would gain in strength. That’s exactly what actually did happen though. Bitcoin was a great use case for dark market transactions due to the anonymity and censorship properties it contained. What’s critical to note is that there was the technology first, then the narrative to market the technology.
Fast forward to today and you have narratives that become hyper dominant before the technology is even remotely close to being shipped. Some of my favourite examples:
Gaming is going to eat blockchain before we have games that are actually fun
Alt L1s are going to beat Ethereum as the global settlement layer before they even have 1/10 the amount of decentralisation or organic traction
<my favourite stablecoin> is going to become the defacto standard for payment before it even has a single vendor that accepts it as payments
Now I’m not going to sound like an old man bashing narratives because innovation inherently requires a certain amount of speculation to boostrap the capital and attention needed to get it off the ground. Narratives that dominate get it all: the chatter on Twitter, liquidity into the asset, community trying to get involved, influencers shilling, early millionaires and all the other crazy parts of crypto.
Given the incentive for a narrative to be heard, it’s important that it can accumulate as much energy to reach the top of the collective consciousness of the industry.
But why?
Well, let’s think of it another way. Crypto Twitter is where the majority of the action takes place. Think of it as the battleground of narratives is constantly being fought for whatever the incentive the player is trying to bat for. There was another really similar time in history where we had something similar... the early days of the internet.
The early days of websites such as Yahoo and other “search portals” has similar experiences where you’d have millions of visitors go to the same place but then there was only one, at max 3, ad slots that advertisers could pay for. Given no one knew how much each user was worth, the strategy was simple:
Pay as much as you can to dominate the top ad slot and use it to drive business.
Sounds a little familiar? The top ad slot in crypto is simply the most dominant narrative at the time. However, given we’re dealing with hyper globalised, 24x7 financial markets — the top ad slots gets you much more than just “clicks” to buy a $24.99 product.
To compound this, given these are financial markets, the pockets of the people purchasing these ad slots are much deeper than anyone else — especially new entrants. As a result, you have a misallocation of attention because the deep pockets keep dominating the narratives while genuine value creation can’t pay for the top ad slot. To get a top ad slot in crypto you need:
A multi-billion dollar financial game that promises future riches
Future technology that is far from delivering but could also promise future riches if you get in
Drama that involves very high profile figures
Exploits/hacks/regulatory scares that invoke strong emotions of fear
As you can see, the common theme of these narratives is that they have to drive extreme fear or greed responses of the market participants that they come before. Failing to do so results in deaf ears.
Is there an escape from this cycle?
I believe so yes. Going back to our previous analogy of internet advertising slots, the reason why we have these single slots is because you have to take a shotgun approach to everything you do in crypto. Nothing is measured or targeted. Most of dominating the top ad slot requires giving free money to everyone or no one. There’s very little in between. It’s not anyone’s fault, it’s just the state of the tooling we have keeps us in this vicious cycle.
I’m still formulating my thesis on how we might solve this but the answer starts off with not treating every market participant the same...
I hope you enjoyed this piece given it is a bit more “meta” — let me hear your thoughts!