If you haven’t been around long, it’s hard to fully appreciate how quickly narratives can change in this industry, especially when it comes to catching up. Fads get old, memes get tired. It’s fair to say that this year’s seasonal fad is currently feeling the pressure of bitcoin’s fading momentum.
While it might be easy to dismiss it as a temporary setback caused by the usual bull market correction, there are strong underlying currents that are working against popular rally narratives. As this tide recedes, it has become a little difficult to ignore those who swim naked.
Is the airdrop meta over?
If it wasn't already clear, the recent crop of projects proposing to “build on bitcoin” has so far had more to do with opportunism than innovation. Yes, BitVM and ordinals sparked genuine interest and creativity, but the follow-up leaves a lot to be desired. This has been caused, in large part, by lazy traders. Instead of doing any real engineering work, all the other third-rate entrepreneurs in the industry simply took the ethereum playbook and applied it to bitcoin.
In my last article I laid out why this modular cottage industry has left ethereum worse off from a scaling standpoint, but recent developments have highlighted just how misaligned the economic incentives are.
Of course, the impediment to this infrastructure arms race has been the ability of its promoters to print tokens as if it were old-fashioned. Unfortunately for them, it seems that the trend is beginning to give way in those schemes. You may remember how everyone ended up abandoning ICOs after Dentacoin raised billions of dollars. Something similar is happening right now.
Just a couple of months ago, I explained how the notion of points had taken the token airdrop meta by storm. Alternative execution layers were popping up left and right, advertising the opportunity to collect eventual rewards in exchange for liquidity on their networks. The premise was simple enough: users would be incentivized to use applications on a given stack or contribute assets to their trading pools. Once the chain was launched, tokens would be allocated to a semi-random set of qualified participants. The idea was that this would further align them with the protocol and its future.
It turns out that exactly the opposite is happening. Over the past week, a pair of highly anticipated token releases have shed light on the absurdity of the method.
How do you verify a user's identity in a pseudonymous system? You can't. The inability to do so creates an opportunity for any capable actor to impersonate any number of users. It's no surprise that well-capitalized actors x.com/k1z4_/status/1804577918963876083″>quickly understood the trick and they have been busy exploiting it to their advantage. Instead of users, airdrops have attracted mercenaries who are plundering every new layer they can get their hands on.
You may be wondering why I write about tokens in an article about bitcoin. Consider it just a reminder that any bitcoin scaling proposal or layer involving a token should be avoided at all costs. The fraudulent nature of the assets aside, this manual is a telltale sign of projects that are behind the curve, even by ethereum standards. I don't care what technology they claim to work on nor should you care about their execution environment or their zero-knowledge proof. The window is closing for them and we can expect them to scam their “users” at every turn to profit from whatever liquidity they have left in this business. Stay away.
The ethereum identity crisis
He bitcoin Layers The platform reported yesterday that more than half of current scaling proposals for bitcoin planned to use ethereum’s EVM as the technology platform. I don’t know what to make of this number. It’s probably generous to associate any of them with bitcoin, but the market is clearly interested in exploring this idea.
This is especially telling considering the volatile state of ethereum right now. Let’s not call it a civil war just yet, but some battle lines are being drawn and the outcome will be telling for its rollup-focused roadmap. I previously made the case for ethereum’s network fragmentation. Suffice it to say, things are rapidly getting worse and the project is once again facing serious debate and soul-searching.
On the one hand, a group of developers advocate x.com/drakefjustin/status/1801321889152835758″>consecration of accumulated operations in the protocol to consolidate economic activity and x.com/barnabemonnot/status/1805859632583184728″>improve user experience. Another group is x.com/_charlienoyes/status/1805778876632862958″>raising questions about the initiative stating that x.com/0x94305/status/1806006308782612699″>further centralize MEV extraction and affect resistance to censorship. It's looking more and more like Vitalik might need to pull another rabbit out of his hat.
Combined with fatigue over the commoditization of EVM runtime environments, the previously held modular thesis is x.com/jon_charb/status/1803802522814947604″>starting to look pretty dimAt the very least, the original manual no longer seems to work and the narratives are changing again.
The timing for this might be better for emerging bitcoin layers that are starting to look pretty dated by industry standards, and they haven't even launched yet!
Memetic exhaustion
You would never catch me being bearish on memes, but they move in cycles and the latest version has lost some of its luster. While I’m not ready to name the top of this new meme paradigm, it is another example of how bitcoin’s new layers are late to the show. Without tokens for cats and dogs, what market exists for all the infrastructure being built?
The ground is shifting under the feet of a new generation of bitcoin builders. I suspect that those who decided to take the long route of actually working will have a better chance of making it to the other end of this bull market. To achieve this it will be necessary to learn valuable lessons from the experiments carried out on the other side of the pond. It would seem that patience is warranted given the rapidly evolving situation.
