Postmortem: Co-founding a Web3 startup as a crypto skeptic young dev
anicetnougaret.fr
anicetnougaret.fr
I, for one, am shocked.
Think about it: you have no-coiners running around like “why does that need a token!? there is no use case for anything, I looked at the top 100 things on Coinmarketcap…”
Not noticing that they only found things with tokens because it advertised to them effectively, completely missing the products that do not have a token attached
Splitting the protocol fees with a subset of token holders who choose to stake is an ok human coordination mechanism, even gets no-coiners to look and swayed too late by a grifting youtuber at the top of the next bull market
The problem is that this is the very definition of a security, and you will run afoul of powerful regulators in some important countries if you’re offering unregistered securities over the internet to all comers.
nobody cares if some random unpausable smart contract that happens to use the token is creating securities transactions
the only people getting targeted by those powerful regulators are the centralized custodians that resell access to those smart contracts. so the Coinbases and Binances and Geminis, not the AAVE’s and ETH2 contract deployers for example
Its not even supposed to be a workaround, its just the consequences are completely fine. “hey your token is fine and can be traded everywhere, but the primary staking smart contract that happens to be linked to platform fees for the project of the same name is an unregistered securities vending machine! we’re sanctioning it and it will keep operating autonomously regardless! no, it has nothing to do with the token of the same name, why do you keep asking that”
prior token project evolutions would extend dividends to all token holders, which would introduce liability to the status of the token certainly. exchanges wouldnt even list those tokens because there would be nothing to argue to securities regulators. now its rapidly iterated to something more inconsequential and ambiguous, or just inconsequential
This is the problem with a true blockchain-based distributed exchange. It makes money only from fees. All the exchange does is match orders locked in for a time by smart contracts and tell both sides "go". The exchange operator doesn't get their hands on customer funds, so they don't get to become a big company like FBX.
As the old saying goes:
It is difficult to get a man to understand something, when his salary depends on his not understanding it.> By the way, we didn't plan doing that at the end, after thinking about it a lot, but it meant we would need to gain many users by having a killer product and work for free for very long, like a regular startup I'd say.
Real web3 startups are just like normal startups if you take out the token economics. There do exist use-cases and users, but I'm glad the author had a strong enough sense to do what he felt was right. It's definitely easier now that the bandwagon has mostly stopped, but I think his reaction is a good one to maintain throughout our careers.
Many many years ago Ethereum /smart contract hackathons way were more innocent, at least most participants acknowledged they were working on something useless but fun.
A Ponzi scheme still a Ponzi scheme even if it's using Rust.
That’s not a Ponzi scheme.
The main difference is the lifecycle: the dump is fairly quick and sudden, as the name implies, while the Ponzi can keep digging a hole for decades if it can reach a sufficiently large or wealthy base of fresh investors.
Here's what the actual sceptic would immediately see and say "nah":
Goal: "hackathon during which we had to develop an innovative app or web app using NEAR's blockchain"
Result: "During the hackathon we made a decentralized exchange (DeX or "swap" in web3 jargon) named "Far Far Away Swap". This app's goal was to let our users exchange coins hosted on the NEAR blockchain using an automated market maker (AMM) algorithm"
Yup. Yet another currency speculation exchange. As a more jaded person, I would stop there. However, I see it as a good learning experience for the author, and I wish them the best of luck on their path.
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This also made me chuckle: "I met many skeptics there. Often they were on the older side of the attendees (most of them were looking like 40 years old)".
Yup :)
one of the problems with crypto as currency is that currency is not supposed to deliver value beyond medium of exchange and store of value at least long enough to do that.
I can't imagine how would it look for a founder. It's like trying to swim while being skeptical about touching water.
There have been very few companies I worked for where I "believed in" what they did in the sense of thinking they were doing something amazing and world-changing. But I "believed in" them enough to know they were doing things I found interesting and could afford to pay me.
> I can't be productive and efficient working on stuff I despise.
There's a huge amount of space between believing in something and despising that thing.
> It's like trying to swim while being skeptical about touching water.
I think being nervous about touching water when trying to swim for the first time is healthy and rational, and may even make your ultimate success more likely. I'd be much more comfortable working with a founder that had a healthy amount of skepticism than a founder who was a "true believer".
I suspect I'm purely getting trip up on language here, though, and I probably agree with your underlying sentiment.
For example I work in healthcare and I think that the software that I write positively affects both doctors and patients, even though it is not about a world-changing novel idea. If I were to work for Meta though (just to make an example), I wouldn't be thrilled at the idea that I am optimizing for addiction, and even if I weren't working on the core business of the company, but instead on the latest and greatest web framework, I would be still working for a company that (in my opinion) totals a negative contribution to our society. The motivation is not the same for me.
Now, in the case of Web3 and crypto, people are usually either on the "the best thing since the discover of fire" camp, or in the "a wasteland of frauds and Ponzi schemes", so in fact the dichotomy between "believing in it" and "despising it" is not really wrong...
I agree, that's why I was asking. What the commenter meant makes a pretty large difference.
I think "I found interesting" might be not be quite right for most people either. If it's serving a need for the people that pay for it, or you think it can be serving a need if it continues in the direction it's going, I think that's the important part in "believing in it".
I've done work for companies where I was able to convince myself of this for short periods, but eventually had to accept the harm was greater than the good (payday loan companies. Used appropriately they aren't horrible, but they do everything in their power to make sure they aren't used appropriately), and that's when even though the work was interesting it became hard to stomach, for me at least.
Ultimately, if the service or product you're working to support is one people appreciate and come away appreciating afterwards, I think most people won't have a problem "believing in it". It might not be interesting though, so it's entirely possible believing in it isn't sufficient to keep people working there in itself.
If I'm trying to think on a a user's behalf, and the question "what the user might want from the service to further their best interest?" for me has answers like "discontinue immediately and uninstall the app", I can't work on making new features and improving user retention. I'm not psychopathic enough.
> space between believing in something and despising that thing.
Correct. It's the spectrum between wasting time because the business will never work, and actively and consciously helping people do things that I would rather help them stop doing. None of this spectrum is interesting to me to work on, except maybe if that were the only way to secure my family's physical survival. I try to strategically stay far from circumstances like those.
It's not the technology, of course. I have interviewed with a company that used a blockchain to track something like carbon credits and trees planted. Most web3 companies try to peddle tokens though.
> nervous about touching water when trying to swim for the first time is healthy and rational
I agree about the first time, and maybe the N-th time, until you're comfortable in it. But your goal has to be to get comfortable in water, and to master the almost-submerged motion that is swimming. If you plan to swim in the long term while avoiding contact with water and staying on the shore, it's likely unrealistic.
Money is only a means to an end.
That said the amount of dishonest scammy behavior around the crypto world is terrible. You don't want to be part of that. You still have to make an honest living to make the world a better place.
Have you tried converting money into power and influence lately? The exchange rate is terrible.
The bay area has hundreds of thousands of STEM millionaires. Does the politics look like they're having a lot of impact?
Admittedly, engineers might not have any particular advantage when dealing with issues like drug addiction - but you'd expect things like water infrastructure, new homes and construction of high speed rail would be well in hand.
No, I suspect most of these millionaires are not doing much to help their communities. This is my point, there are few people with power and influence that are working for good. It would be great if more people established themselves and then started working to better the world.
Unfortunately it's like politics. The people you want in power don't want the power. The people you want to have money and influence tend to avoid it.
People who use this notation (and its derivatives) are committing crimes against humanity.