If you haven’t been around too long, it’s hard to fully appreciate how quickly narratives can change in this industry, especially when it comes to catching up. Fashions get old, memes get tired. It’s fair to say that this year’s seasonal craze is currently feeling the pressure of Bitcoin’s slowing momentum.
While it may be easy to dismiss this as a temporary setback caused by the market’s usual bullish correction, there are strong undercurrents that run counter to popular scaling narratives. As the tide recedes, it’s becoming a little hard to ignore those swimming naked.
Is the airdrop meta over?
If it wasn’t already clear, the recent wave of projects proposing to “build on Bitcoin” has so far been more about opportunism than innovation. Yes, BitVM and Ordinals have generated genuine interest and creativity, but the follow-through has left a lot to be desired. This is due, in large part, to laziness on the part of the operators. Instead of doing any real engineering, every other third-rate entrepreneur in the space has simply taken the Ethereum playbook and used it on Bitcoin.
I makes a case In my last post I explained why this modular cottage industry has made Ethereum more fragile from a scaling perspective, but recent developments have highlighted just how misaligned the economic incentives are.
Of course, the obstacle to this infrastructure arms race has been the ability of its proponents to print tokens like it’s going out of fashion. Unfortunately for them, it seems that the trend is starting to reverse on these programs. You may remember how everyone ended up moving away from ICOs after Dentacoin raised billions of dollars. Something similar is playing out right now.
Just a few months ago, I have explained how the notion of points conquered the airdrop token meta. Alternative execution layers were popping up left and right, announcing the possibility of collecting possible rewards in exchange for liquidity on their networks. The principle was quite simple: users would be incentivized to use applications on a given accumulation or to contribute assets to its exchange pools. Once the chain is launched, tokens would be awarded to a semi-random set of qualified participants. The idea was that this would align them more with the protocol and its future.
It turns out that the exact opposite is happening. Over the past week, a few highly anticipated token airdrops have highlighted the absurdity of the method.
How to verify the identity of a user in a pseudonymous system? It’s impossible. The inability to do so creates an opportunity for any competent actor to impersonate any number of users. Unsurprisingly, well-capitalized players I quickly understood the trick and have been very busy exploiting it for their own benefit. Instead of users, airdrops have attracted mercenaries who loot every new layer they can get their wallets on.
You may be wondering why I’m writing about tokens in an article about Bitcoin. Just consider it a reminder that any Bitcoin scaling proposal or layer involving a token should be avoided at all costs. Setting aside the fraudulent nature of the assets, this playbook is a telltale sign of projects that are behind schedule, even by Ethereum standards. I don’t care what technology they claim to work on, or their runtime environment, or their zero-knowledge proof. The window is closing on them and we can expect them to shortchange their “users” at every turn to take advantage of the liquidity this racket has left behind. Stay away.
Ethereum’s Identity Crisis
THE Bitcoin Players The platform reported yesterday that more than half of current scaling proposals for Bitcoin plan to use Ethereum’s EVM as a technology platform. I don’t know what to think of this number. It’s probably generous to associate any of these with Bitcoin, but the market is clearly interested in exploring the idea.
This is especially telling given the unstable state of Ethereum at the moment. Don’t call it a civil war just yet, but some battle lines are being drawn and the outcome will be indicative of his cumulation-centric roadmap. I have already exposed the case of Ethereum network fragmentationSuffice it to say, things are accelerating quickly and the project is once again facing serious debate and soul-searching.
On the one hand, a cohort of developers are campaigning in favor of consecration of rollup operations in the protocol aimed at consolidating economic activity and improve user experience. Another group is raise questions about the initiative claiming it would further centralize MEV extraction and affect censorship resistance. It increasingly looks like Vitalik needs to pull another rabbit out of his hat.
Combined with the fatigue caused by the commoditization of EVM execution environments, the previously celebrated modular thesis is It’s starting to look pretty tenuous.. At the very least, the original playbook no longer seems to hold up and the narratives are changing again.
Now might be a better time for new Bitcoin players who are starting to look quite outdated by industry standards – and they haven’t launched yet!
Memetic exhaustion
You’ll never catch me being bearish on memes, but they move in cycles and the latest iteration has lost some of its luster. While I’m not ready to call the peak of this new meme paradigm, it’s another example of new Bitcoin layers late to the show. Without cat and dog tokens, what market is there for all the infrastructure being built?
The ground is shifting under the feet of a new generation of Bitcoin creators. I think those who decided to take the long way and work hard will have a better chance of reaching the other end of this bull market. To achieve this, we will need to learn valuable lessons from experiences on the other side of the Atlantic. It seems that patience is required given the rapid evolution of the situation.
