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The Token Is the Product
Crypto founders often overvalue their product’s go-to-market and undervalue the go-to-market of their tokens. To build a valuable company in crypto, the primary goal should be to attract permanent attention and liquidity to your token. This means selling your token to anyone who will hold it for a long time.
First-Time Founders Focus on Product, Second-Time Founders Focus on Distribution
In the venture world, a common saying highlights the difference between first-time and second-time founders. First-time founders focus on building a great product, while second-time founders understand the importance of distribution and attracting repeat users. However, in the crypto space, there’s another crucial element: tokens.
The Primary Use Case for Blockchains: Token
Blockchains have primarily been used for the purchase, transfer, and sale of tokens. While some applications add extra steps or metadata, the ultimate goal is to create value for token holders. Successful crypto projects with >100k MAU often have a token or plan to launch one.
Crypto Markets and Sustainable Competitive Advantage
Crypto markets offer increased efficiency and fairness, making it difficult to build a sustainable competitive advantage. Uniswap, for example, maintained its position for years but eventually added a token to compete with Sushi. This shows that any successful crypto product without a token will eventually have its margins competed away.
Building Successful Crypto Projects
To build a successful crypto project, focus on:
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Attracting attention and capital to your token in a persistent manner
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Converting that attention into valuable products for your users.
Justin Sun and the TRON network are a prime example of this approach. Despite criticism, TRON has created real utility and value for millions of people.
Tokens as Self-Fulfilling Prophecies
Tokens can act as self-fulfilling prophecies, where price gains occur in advance of value creation. This is the opposite of traditional company building and valuations. Crypto assets are particularly good at converting attention into inherent value, as they welcome skilled contributors regardless of background.
The Importance of Liquidity
Liquidity is crucial for crypto projects. It provides a stop-gap during early fluctuations and allows for the attraction and maintenance of sufficient attention. The token’s price acts as a measure of attention flowing in/out of the ecosystem.
Attracting liquidity is a continuous process, not a one-time event. It requires a deep understanding of attention flows and the ability to ride waves of attention. Founders must consistently deliver on promises, innovate, and create self-reinforcing positive feedback loops.
The Art of Attracting Liquidity
Attracting liquidity involves various forms, including:
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Raising seed capital
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Institutional investments
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Pre-launch token deals
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Launch and bounty campaigns
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Exchange and market maker collaborations
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Marketing techniques to raise profile
The best tokenized communities are skilled at playing an infinite game within an adversarial game. They coordinate in times of token distress and compete to exit at a higher price later on. Founders must be technical, creative, and brave enough to take on incumbent organizations.
The Future of Tokenized Networks
In the next decade, we’ll see an explosion of tokenized networks challenging institutions and saving companies in commodified markets. This presents a massive opportunity for founders who are skilled in both technical and creative pursuits.
Conclusion
Tokens are a powerful coordination tool, and understanding their importance is crucial for success in crypto. By focusing on attracting attention and liquidity to your token, you can build a valuable company and create a sustainable competitive advantage.
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Note: Learn2.trade is not a financial advisor. Do your research before investing your funds in any financial asset, product, or event. We are not responsible for your investment results.
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