Discussion about the shift in the crypto evolution from DeFi to meme coins and the embrace of financial degeneracy.

Embracing Our Shadow in Crypto Evolution

Introduction to the Polygon Community Grants Program and its support for Polygon builders.

Polygon Community Grants Program

Introduction to the ZRX research episode and discussion about market and crypto trends.

ZRX Research Episode Introduction

Introduction to Z Prime Capital and their investment approach in the crypto space.

Z Prime Capital Introduction

Discussion about the significance of narratives, innovation trigger, and the need for real innovation in the crypto space.

Narrative Waves and Innovation Trigger

Emphasis on the importance of execution and building useful products in the crypto industry.

Execution and Useful Products

Discussion about the importance of originality and risk appetite in the crypto space, and the need for new talent pool.

Founder Mindset and Unique Playbook

Shift in focus from infrastructure to applications in the crypto industry, and the challenges and opportunities for founders in different ecosystems.

Shift from Infrastructure to Applications

Exploration of cultural path dependencies in different blockchain ecosystems and the considerations for new entrants in the space.

Cultural Path Dependencies and New Ecosystems

Discussion about the evolution of social-fi, its experimentation, and the potential for breakthroughs in the space.

Social-Fi and Evolution

Discussion on the financialization of social networks and market sizing perspective.

Financialization and Market Sizing

Exploring the potential impact of crypto on consumer behavior and market adoption.

Consumer Adoption of Crypto

Debate on the implicit financialization of social media and its potential impact on consumers.

Implicit Financialization of Social Media

Discussion on tokens as consumer products and their potential role in the crypto market.

Tokens as Consumer Products

Promotion of the Permissionless event for CryptoNatives and its key themes.

Permissionless CryptoNatives Event

Introduction of Polygon Labs' open source ZK tech and Community Grants Program.

Polygon Labs and Community Grants Program

Introduction of Avalanche's Teleporter and WordPress Chain for cross-chain communication.

Avalanche's Teleporter and WordPress Chain

Discussion on tokens generating culture, NFTs, and the identity crisis in crypto.

Tokens Generating Culture and Identity

Reflection on the evolution of crypto, embracing the shadow, and the potential outcomes for the industry.

Crypto Evolution and Reformation

Discussion on the potential for growth and reforming in the market.

Reforming and Growth

Optimism about price action in the short to midterm and the future of technological innovation in commerce.

Technological Innovation and Crypto

Exploring the approach to investing in diverse crypto verticals and ecosystems.

Investment Strategy and Portfolio Diversity

Adapting investment theses over time and the benefits of maintaining a generalist approach in crypto investing.

Thesis Evolution and Generalist Approach

Discussion on the frontier nature of crypto and the absence of traditional credentials for success.

Frontier of Crypto and Decentralization

Expectations for app evolution and the rapid experimentation and feedback cycle in crypto products.

App Landscape and Future Expectations

Acknowledgment of the conversation, recommendations for further reading, and gratitude.

Closing Remarks and Resources

- The crypto market is currently embracing the concept of "shadow" and focusing on meme coins and tokens
- The Polygon Community Grants Program and Avalanche platform are highlighted as opportunities for developers
- Z Prime Capital is looking for innovative and surprising projects, focusing on execution rather than token dynamics
- The market has seen shifts towards funding applications over infrastructure, with a focus on capturing surplus value through investing in startups.

- The market incentivizes building large ideas for quick liquidity
- The crypto industry may need to shift towards app development from infrastructure
- App founders may require different skill sets and risk appetite compared to infrastructure founders
- The focus should be on building for users and creating new user roles
- The ecosystem in which an app is built may not matter as long as it is a great product
- There is a cultural and status game within the crypto industry that may hinder app development
- New talent pool and mindset may be needed to shift the focus towards app development
- The focus should be on building great products rather than being dependent on a specific chain or ecosystem.

- The speaker criticizes the lack of culture and community in the crypto space, with many applications being seen as opportunistic and overhyped
- They express skepticism towards new chains and platforms, questioning the need to wait for their launch before launching a product
- The discussion also touches on the evolution of social-fi apps, with optimism for potential breakthroughs in the future
- The focus is on finding cool and useful features that can be applied across different platforms, rather than being ecosystem-specific

- The discussion revolves around the financialization of social networks and the market sizing perspective.
- There is optimism about the potential market size for crypto products, but uncertainty about how to measure it.
- Tokens are seen as consumer products and there is a belief that crypto will have a significant impact on consumer behavior.
- The event "Permissionless" for CryptoNatives is being promoted, along with a free hackathon in collaboration with Bittlebox.
- Various blockchain projects and grants are also mentioned, highlighting the development and interoperability of different blockchain networks.
- The conversation also touches on the role of tokens in generating cultures, memes, and narratives, and their potential impact on consumer products and markets.

- The speaker discusses how money enables the aspiration culture and how meme coins are a result of this
- They suggest finding more productive endeavors for meme coins with utility
- They mention the idea of culture bootstrapping pools and the role of tokens in consumer culture
- They discuss NFTs and tokens as a representation of culture and identity
- The conversation also touches on the increased attention in crypto from large traditional finance institutions
- They debate whether crypto native individuals will maintain an edge over new participants from traditional finance
- The discussion also includes the incentive misalignment in projects and the importance of innovation triggers in bear markets
- Finally, they mention a portfolio company, FrodoBots, as an example of a project that identified a problem and worked towards solving it.

- The speaker discusses the potential of a gaming company, Herodao, to solve real-world problems such as folding
- They express concern about the current state of the crypto industry, feeling that it has become more focused on gambling and quick profits rather than solving real issues
- The speaker sees the current stage of crypto as a period of "embracing our shadow" and believes that the industry is in a stage of reformation rather than revolution
- They express optimism about the potential for growth in the crypto industry, despite the current challenges and lack of product development

- The speaker is optimistic about the growth of crypto in the short to midterm
- They invest in a wide array of crypto themes and prioritize original and out-of-the-box ideas
- They believe in maintaining a generalist approach to remain fresh and learn from different crypto verticals
- Credentials are not necessary in the crypto frontier, and anyone can come in and build as long as they follow the theme of decentralization
- The speaker is asked about their 2022 fat app thesis and how they see apps evolving in the next year

- Crypto market embracing meme coins and tokens
- Opportunities for developers on Polygon and Avalanche platforms
- Focus on funding applications over infrastructure
- Incentives for building large ideas for quick liquidity
- Shift towards app development from infrastructure
- Need for new talent pool and mindset for app development
- Criticism of lack of culture and community in the crypto space
- Optimism for potential breakthroughs in social-fi apps
- Importance of finding cool and useful features for different platforms
- Optimism about potential market size for crypto products
- Impact of tokens on consumer behavior and culture
- Promotion of "Permissionless" event and free hackathon for CryptoNatives
- Discussion on the role of tokens in generating cultures and narratives
- Increased attention in crypto from traditional finance institutions
- Concern about industry focus on gambling and quick profits
- Optimism about growth of crypto industry in short to midterm
- Investment in original and out-of-the-box ideas in crypto
- Belief in maintaining a generalist approach in crypto frontier
- Anyone can come in and build in crypto as long as they follow decentralization theme
- Discussion on the evolution of apps in the next year.

- The discussion focused on the evolving app landscape and the validation of Fed applications
- There is an expectation of more experimentation and failure in the next year
- The speakers have a blog and newsletter for further reading
- The Polygon Community Grants Program is offering 35 million in MATIC for builders on Polygon

- Discussion on evolving app landscape and validation of Fed applications
- Expectation of more experimentation and failure in the next year
- Speakers have a blog and newsletter for further reading
- Polygon Community Grants Program offering 35 million in MATIC for builders on Polygon

In this episode, we’re joined by Matti and Rapolas from Zee Prime Capital to discuss the evolution of SocialFi, the current state of the crypto markets, and some of the innovative projects they are backing. They dive into the importance of adaptability in venture markets, how culture arises onchain, and explore crypto’s identity crisis. Finally, they look back on the Fat Application Thesis, and how things have played out thus far.

Thanks for tuning in!

As always, remember this podcast is for informational purposes only, and any views expressed by anyone on the show are solely their opinions, not financial advice.
--
Polygon Labs is developing the next generation of open source zero-knowledge tech to aggregate crypto liquidity and user bases with the AggLayer. To support the aggregated future, the Polygon Community Grants Program was launched with 1 billion tokens — all for Polygon builders.

Season One of the community grants program is live now, and features 35 million in MATIC to support the next generation of Polygon projects!

Join the aggregated future today by applying at https://polygon.technology/grants
--
Avalanche is a smart contracts platform that scales infinitely and regularly finalizes transactions in less than one second. Its novel consensus protocol, Subnet infrastructure, and HyperSDK toolkit enable Web3 developers to easily launch powerful, custom blockchain solutions.

Build anything you want, any way you want, on the eco-friendly blockchain designed for Web3 devs.


Start building today at https://www.avax.network/
--
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--
Timestamps:
0:00 Introduction
3:18 What's Interesting in Crypto Today?
8:42 The Prevalence of Infrastructure 
24:12 SocialFi's Evolution
34:39 Permissionless Ad
35:53 Polygon Ad
36:43 Avalanche Ad
37:25 Do Tokens Generate Culture? 
46:31 Approaching Problems in the Market
52:28 Crypto's Identity Crisis
1:00:56 Tackling Different Market Sectors as an Investor
1:09:11 The Fat Application Thesis
--
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Disclaimer: Nothing said on 0xResearch is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Boccaccio, Dan, and our guests may hold positions in the companies, funds, or projects discussed.

I think that currently we're in the, I call it embracing our shadow part of the crypto evolution.

You know, we're kind of admitting we're jokers, nothing works, and let's just find a new marginal buyer for this token or meme coin.

Whereas, you know, last cycle, we really believed or, you know, maybe partly fool ourselves that we are rebuilding finance with DeFi.

The Dejuns were more like a fringe part of it, but today they are us.

I think that it's a quote from Ying that only the man who goes through this darkness can hope to make any further progress.

And I think like this is us on the rebound, right?

Like we were hurt by this beautiful idea of Deep5 and we're jumping on this meme coin skank.

And you know, the financial degeneracy is unraveling and the shadow, our shadow is playing out in the open.

The Polygon Community Grants Program was launched with 1000000000 tokens all for Polygon Builders.

Season 1 is live right now and features 35 million in Matic to support the next generation of Polygon products.

Builders on Polygon, these grants are for you.

Join the aggregated future today by applying at polygon.technology.

Avalanche is a smart contract platform that has a novel consensus protocol, subnet infrastructure, and the Hyper SDK toolkit, which allows web-free developers to easily launch custom, powerful blockchain solutions.

You can start building today by checking out the link below.

Nothing said on 0xResearch is a recommendation to buy or sell securities or tokens.

Its podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice.

Pocaccio, Ryan, and our guests may hold positions in the company's funds or projects discussed.

Welcome back to another episode of ZRX research.

Today I'm joined by Ryan from BlockWorks research and Matty and Rapolas from Z Prime Capital to talk about how they're thinking about the markets and crypto in general.

Before we get started, Matty, Rap, Thank you so much for joining.

Do you want to give a short introduction of yourselves and a bit about Z Prime?

We, Z Prime, I think that the story goes that we just emerged from the depths of the subconsciousness of this ecosystem, meaning we're likely demons.

But yeah, we started as a prop shop, VC prop shop grew substantially into free funds over the years.

Majority of the capital we manage is internal.

And we're investors with a long-term investment horizon.

Our funds are close on the 10-year vehicle.

So, But we're looking for zany, wacky solutions with technological substance.

I guess that's how I would describe it in short.

Yeah, that makes I've looked through a lot of your research and a lot of your website.

And that's definitely the vibe that I got is that you guys invest in more Zany is the right word.

I think like more interesting stuff than I think most other funds do Which I really appreciate it Do you want to talk a bit about what narratives you guys are looking at right now or what sectors you're interested in?

I think I'm mostly interested in being surprised.

You know, anything that I know that can become a narrative has much less power than something we have not conceived of yet.

I know that in crypto we think of narratives and narrative waves and narrative rotation, but to me at this point I'm much less interested in the narratives, because everyone knows these are just narratives.

And therefore, like them, it has much less power.

So to some extent, some of these narratives can materialize down the line, but it always takes time to so personally, and maybe some other Z Prime team members, I'm not speaking for all, but we try to pay attention to the slow more than to the fast.

So I read somewhere that fast has all the attention, but slow has all the power.

But I do think many of our narratives like, you know, d-sci, culture-fi or social fi, d-pin, and d-fi will likely in the long run produce great products.

I might see some good attempts right now, but at this point I'm just hoping for some real innovation trigger that's part of the new wave of adoption regardless of a narrative.

I would also add maybe that I guess which narrative comes back is not as important as seeing just good execution on, you know, either 1 of them.

I think people over index on, let's say, over engineering the tokenomics and trying to think what else could be detailed of the token or how it fits into the product.

But I think there's not enough, we haven't seen enough good attempts at actually building out useful products that wouldn't just cater to the existing demands of the people who are in crypto today.

So I think maybe we should just try to think how to execute better rather than come up with new narratives that back quickly and then we expect them to come back, but ultimately that's not the whole point.

Regarding execution over, I guess, token dynamics and how projects are building, is there a specific thing that you look for in a project when they come to you or like when you're doing your own research process is there how do you tell that like You think these people will be able to execute or they have a unique way of executing.

I guess I can start by saying that you know, we're always put off by just simple copying of ideas from 1 ecosystem to the other and being X of Y is never a good idea.

So I guess what we try to spot is just people thinking for themselves and trying to establish a new playbook rather than following in someone else's footsteps.

Because I think if you just copy what other people did, the chances are that the outcome that you're going to have is not going to be as great as the first person for whom it worked.

How do you see products evolving over the past 6 months?

Because in the bear, I assume that the products that came up that you guys were interested in the protocols, the apps, they were quite a bit different to what is launching right now and what has been launching over the past few months.

And not just in terms of like valuation, but in terms of quality and their execution plans, Is there something that's noticeably different?

I think from the perspective of like a VC or you know the private markets it was pretty volatile.

I think earlier last year it was mostly dead.

It sometimes felt like people were alone.

And with the market pumping later last year, the private markets got crazy.

Big rounds, big info plays, AI nonsense, KOL rounds.

People started clustering around certain buzzwords and optimizing for the VC pitch again.

And I think that some investors that were scared to deploy earlier last year were overcompensating.

And I'd say, you know, sort of like, now with the market kind of going down and, and the low flow high FTV bubble burst thing, things started to slow down again.

And I think people are starting to reposition to fund applications.

So I'd say that this is 1 of the bigger shifts in the industry is people starting to call out infra and large and asking for more applications.

Yeah, even in as far as what I've seen being discussed about EFCC, there seems to be some form of infrastructure tiredness and people trying to get away from people constantly building infrastructure in favor for building more apps.

And 1 thing that we talk about quite often in BlockWorks is that the prevalence of infrastructure is kind of related to Ethereum having to scale through roll-ups and that's why it's like there's a lot of infrastructure constantly launching because there's always something that needs to be fixed.

Do you guys think this is a good take or do you have any other idea why we might be getting a lot more infrastructure than perhaps is necessary?

Yeah, I think, well, in 1 of the articles that we published recently is that, you know, because Ethereum has sort of not enshrined a lot of the protocol solutions, you know, at the protocol level that created the sort of VC surplus value to be captured by investing in startups that do all of these small pieces themselves individually.

All of these small pieces can then go to the market and command high valuation.

So the natural incentive is just to do that.

And I think there's another aspect of this market where, because you have quick time to liquidity compared to the traditional markets, then you're obviously incentivized to go for the largest outcome.

So build huge ideas, get liquidity quickly, and then hope that it survives over time somehow, as opposed to starting with let's say a smaller niche wacky idea and you know taking a long time to execute it.

So yeah I think liquidity and time to liquidity is also a big aspect contributing to this And I think also in the past, the biggest outcomes were always like infrastructure plays.

And so there's this just mimetic desire to follow what's worked in the past, basically.

I think it begs the question, like, okay, the crypto industry needs to shift towards apps from infrastructure.

To me, thinking about the people that I've met in this industry, what they're interested, what their skill sets are, like an infrastructure founder is very different than like an application layer founder.

I'm wondering if you agree, disagree, and what are you seeing in the market in terms of the founders that you're meeting with?

Does this necessitate a completely different mindset than the current mix of developer skill sets in crypto right now?

Are we going to have to pull from big tech, Or does that talent exist in crypto today?

I definitely think that we always need to tap into the new talent pool.

I think it does require a different sort of a founder in terms of that it requires some bit of idiosyncrasy.

So you probably can't be just a nerd, right?

I, and you know, there are people like that in crypto and hopefully there will be more of those.

But I think it's also a question of a risk where you need to have a, I think you need to have a higher sort of like a risk appetite to be building on the app layer because you will you will fail much faster than sort of like techno babbling yourself and the you know in the infra cluster because it's you maybe get you know, 2 or 3 pivots and and then you're in then you're gone because as an app you really need users.

It's not about partnerships and other devs using you.

It's about very clear goals and it's data-driven.

Do you have users and how much money you're making by having these users or how much money can you potentially make?

And I do feel like perhaps other ecosystems than Ethereum are doing better at this or better at this because Ethereum has this like a long standing death fetish.

And I think it's probably costing them in the race if it's truly a race against other chains.

But I, you know, I, you know, people are talking about even, you know, I've heard lately, amongst the daps is like, oh, you know, a good UX, but I don't think you know the UX is a problem.

It's if you're offering people great product or giving them a way to make money, it matters less how many times you click or something like that.

So I do feel like we need to tap into the new talent pool indeed.

But I do also feel like we need to stop playing these sort of like almost, almost, you know, I think many people, they would go for the Ethereum space mostly, they're over indexing or on impressing other people within their group.

And I think too many people in that circle optimize for smartness.

They sort of like indulge in this self image of, oh, I'm smart math genius or blob optimizer or ZK magician.

And, And the fact that they actually got rich in the past, real fast as well, just enables this obsession with status game rather than building outside of this circle towards users.

So I think that the incentives are also not helping.

So if you get more people interested in building apps, I guess the focus can shift towards them and it may also convince existing builders to build there.

Also, I think to add to this is that what we see, let's say, in the crypto consumer product space is that the founders who build that are not those who've been around in crypto for 10 years.

They're more like the people who entered crypto, let's say in 2021, 2022, be it through NFTs or some other popular means.

And if you're part of that cohort and you want to be a founder and build something, why would you build another L2?

Or why would you build a bridge between the L2s or the aggregator?

The chances are that you will want to build something that's unexplored, because the incentive should be the strongest for that.

So yeah, I think just to reiterate what Maddie said is that it matters what part of group you are and who are you trying to impress.

Those are 2 really interesting observations.

I guess what we're alluding to is like different cultures forming around different chains and like kind of a path dependency there, like with you being more infrastructure related or more infrastructure focused.

So that kind of makes me think about like brand new like blockchain ecosystems, right?

Like an app toaster suite, like certainly less burdened by like these cultural path dependencies that you guys are alluding to.

But at the same time, they like, it's hard to start a developer ecosystem, right?

So like, how do you guys think about new people coming into the space and what chain they're choosing?

I always say that, you know, we are product investors for an ecosystem second.

I truly don't think it matters where you're building, as long as you're building a great product that because if you depend on being on a on a certain chain, are you even a product?

Are you just like an X of Y, or like I'm a Uniswap of Blaz or of MegaEther or something?

And yeah, it's just, I don't think it really matters.

The ecosystem doesn't matter if we if we're talking about applications.

I don't really I mean, there's definitely some that have done better in certain ecosystems, but I wonder if that's just culture or because of the way that they I mean, I guess it's a bit of both.

It's like, for example, BASE has done comparatively really well with social fire, especially with FrontTech and Farcast, they're both being on there, but then you also see Valiant efforts.

Like I think Lens is on ZK now, but it originally launched on Polygon.

Apps, I guess, as long as you're building it for users, the end goal should always be to abstract away the backend anyway, to not let people focus on what's happening in the background.

Going back to the base example, I think it's good, right?

Because they started with the on-chain somewhere last year where they had this daily NFT mince and this and that, where just click with the expectation that this will land onto the airdrop in the future or something like that.

And that obviously didn't really lead to a lot of usage.

And then Frontech came along in August and that just blew it out of the water and wasn't the thing for quite a few months.

And I think that's a good example that it doesn't really matter ecosystem that you're building if you have actually a mobile product that creates new user roles like Front Deck was at the time.

And also lately we had an experience, we were on a call with a specific application and we kind of questioned whether they are, because they were building 1 of the, or they're building on 1 of the upcoming hyped ecosystems.

Or does it matter that you build on this?

And it took a very wrong turn, and people got offended, just because us questioning if this is like an ecosystem play or is this an actual application that cares about the product more.

And I think there's a lot of a lot of this where, you know, it's even funny to talk about culture of these things, because these things have haven't been around for, you know, maybe some for like a year.

Like, there's no culture, it's made up, there's no community, there's just people waiting for upside, which is which is fine, but there's no culture.

They're just, you know, opportunist, mostly manufactured applications that, you know, got entitled with like, bloated seed raises.

But they have nothing to show for, right?

It's just, you know, it's a decent salesmanship, but I guess the staff, and if we're asking where are these new users coming from, they really don't care if you're built on bear our chain or mega either monad or whatever thing that's not even launched yet.

It's just a very, very kind of niche inward looking game that I don't think it's productive when it comes to.

Yeah, I would say it's mostly 0 sum rather than positive sum for crypto.

I think like the most extreme example of that, do you even have an identity without this chain, is when throughout 2022, 2023, there were a lot of apps that were just over.

And Rapp, you kind of mentioned this, is we're X on Y.

Well, I guess it was already an avalanche, but you get the gist.

And I think we're gonna get a big wave of this with the new L1s or L2s that launch as well, especially the super hyped ones.

Mega EVE, Barrett Chain, Monad are the ones that you mentioned.

I think those are going to largely disappoint, is my controversial take.

Maybe not Mega EVE just because I haven't read up too much into it.

But I mean, I like Barrett Chain and Monad and the guys but I feel like they're gonna be a bit over hyped.

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Crypto’s Identity Crisis: Investing in a Better Tomorrow | Matti & Rapolas