crab notes 🦀 lobsterdao dan repost
🧠 [Long Research] Topic: Stablecoin TAM, RWA poison and The Ever-Dying Ethos 3 parts 😅
Continuing the post above… The assumptions-ideas below are debatable for sure, it's made as food for thought! The decisions teams make depend on where they expect the market and the money to be. The security of the stablecoins due to their backing depends on that directly.
TAM drives stablecoins 💳
Total Addressable Market. The bigger it is, the better it is. Well, usually. Unless you read Zero to One by Thiel who argues that uncrowded small markets are a better starting point. Back to the point. Imagine you want to sell bikinis: you have billions of people being able to buy, but also big competition. However, you can buy ads & traffic to your store -> some % of that lands on it -> some % of that buys = conversion. As such, if your starting market is big, you can get to at least some size. And then it’s competition from thereon, but that’s a topic for another day.
On the other hand, if your market is just 1,000 people… You can maybe only find 100 to speak to, 10 will find the time to actually speak, and only 1 will buy. Sucks, right? Well, that’s crypto products for you. A tiny idustry unless we are talking of General Partner & lawyer bonuses where 1 whale is enough. It isn’t the bull case for stablecoins though, stablecoins want to have network effects (see here).
How is that relevant, ser? Is it even true?
Assumption-statement that stablecoins go by 📐
Stablecoins have strong network effects. The more people use the same stable, the better: it helps exchange value by sending to one another w/o swapping this stable has the highest liquidity & depth this stable is accepted as a means of payment and salaries in many places this stable is listed on many exchanges. These are kinda circular meaning "the rich get richer”.
— Case 1: imagine you are making a stablecoin.
Starting with centralized collaterals is only possible if someone huge stands behind you: you need a ton of trust+money and more than that, a lot of people willing to KYC and issue supply, a bunch of centralized exchanges... you need a ton of resources to just start off basically. It's like starting a bank. To start one, you need to basically be rich already or you can't lift it off.
So, likely not your situation. You need to derive trust from either interesting mechanics, decentralized collaterals, angels, open transparent books, and so on. You need to "become big enough" before users and whales are ok with you fucking around more. As such, anything that's not rich & huge from the start - has to begin as a more decentralized version, naturally speaking.
💡In a bull market, many stables lift off high enough into 9figs ($100M)+ with this approach. Usually, nobody hates projects and stablecoins at this stage of the game. The problems start after.
A perfect example of that is MakerDAO’s DAI in its SAI v1 version which grew "good enough” and then…
Continuing the post above… The assumptions-ideas below are debatable for sure, it's made as food for thought! The decisions teams make depend on where they expect the market and the money to be. The security of the stablecoins due to their backing depends on that directly.
TAM drives stablecoins 💳
Total Addressable Market. The bigger it is, the better it is. Well, usually. Unless you read Zero to One by Thiel who argues that uncrowded small markets are a better starting point. Back to the point. Imagine you want to sell bikinis: you have billions of people being able to buy, but also big competition. However, you can buy ads & traffic to your store -> some % of that lands on it -> some % of that buys = conversion. As such, if your starting market is big, you can get to at least some size. And then it’s competition from thereon, but that’s a topic for another day.
On the other hand, if your market is just 1,000 people… You can maybe only find 100 to speak to, 10 will find the time to actually speak, and only 1 will buy. Sucks, right? Well, that’s crypto products for you. A tiny idustry unless we are talking of General Partner & lawyer bonuses where 1 whale is enough. It isn’t the bull case for stablecoins though, stablecoins want to have network effects (see here).
How is that relevant, ser? Is it even true?
Assumption-statement that stablecoins go by 📐
Stablecoins have strong network effects. The more people use the same stable, the better: it helps exchange value by sending to one another w/o swapping this stable has the highest liquidity & depth this stable is accepted as a means of payment and salaries in many places this stable is listed on many exchanges. These are kinda circular meaning "the rich get richer”.
— Case 1: imagine you are making a stablecoin.
Starting with centralized collaterals is only possible if someone huge stands behind you: you need a ton of trust+money and more than that, a lot of people willing to KYC and issue supply, a bunch of centralized exchanges... you need a ton of resources to just start off basically. It's like starting a bank. To start one, you need to basically be rich already or you can't lift it off.
So, likely not your situation. You need to derive trust from either interesting mechanics, decentralized collaterals, angels, open transparent books, and so on. You need to "become big enough" before users and whales are ok with you fucking around more. As such, anything that's not rich & huge from the start - has to begin as a more decentralized version, naturally speaking.
💡In a bull market, many stables lift off high enough into 9figs ($100M)+ with this approach. Usually, nobody hates projects and stablecoins at this stage of the game. The problems start after.
A perfect example of that is MakerDAO’s DAI in its SAI v1 version which grew "good enough” and then…