The Cryptocurrency Dopamine Effect: The Integration of AI Agents, Social Finance, and Applications for the Younger Generation

Original Title: "Notes on Consumer Crypto | Nov 15, 2024"

Author: Josh Cornelius

Compiled by: Deep Tide TechFlow

Welcome to my weekly cryptocurrency thought sharing, where I share some reflections and discoveries from my explorations on the internet. This week, I found several topics worth discussing:

Regarding Web4, Jeffy Yu, the founder of Zerebro, wrote a brilliant article this week exploring the arrival of the Web4 era. In this era, the internet will have the ability to autonomously predict, plan, and act. Web4 builds upon the social foundation of Web2 and the financial foundation of Web3, opening up a world where artificial intelligence and intelligent agents are ubiquitous. He elaborated in the article on the functionalities that can currently be realized, the existing shortcomings, and the conditions required to achieve artificial general intelligence (AGI). His core argument is that we are actually closer to achieving this goal than most people think.

I know you might be tired of discussions about these agents, but I remain very interested in them.

Two points in the article that impressed me the most were his views on our position in the five stages toward AGI as described by OpenAI, and how cryptocurrency is rapidly becoming the primary platform for AI experimentation.

First, although OpenAI claims we are in the second stage (see below), those active in the cryptocurrency space know that we have steadily entered the third stage. Clearly, the current agents still have many shortcomings, as they often require a certain degree of human oversight and can only operate autonomously in specific narrow applications. However, agents like Zerebro and Cents have already been able to surpass 99% of users in Twitter interactions, launch their own tokens, and create and mint their own artworks, which is astonishing. These agents demonstrate autonomy in various aspects.

Projects like Fungi and Ai16z (which will be detailed later) are also about to launch agents with true financial autonomy, capable of trading autonomously, learning, and adjusting strategies in real-time. They can not only communicate with humans but also build influence on Twitter and Warpcast, accumulate financial resources, and hire humans to complete tasks they cannot perform.

We are also seeing signs of fourth-level capabilities in creative fields, such as Truth Terminal founding its own religion, Zerebro developing its own PFP series, and Botto continuously refining its style over years of artistic creation. Clearly, achieving innovation in broader fields like science and technology will be a significant breakthrough.

Jeff compared the development of AGI to the invention of electricity. Simply inventing electricity (i.e., foundational models) is not enough; it requires a series of inventions like light bulbs, motors, and power grids to truly change society.

That is why cryptocurrency will play an important role in the development of AGI. The permissionless and standardized financial and application infrastructure, combined with the free flow of capital and enthusiasm for novelty, provides an excellent experimental platform for new applications of superintelligence.

We have entered a cycle of agent infrastructure. Improvements in foundational models unlock new agent functionalities, which, when encountering bottlenecks, stimulate further infrastructure development, thus driving capability enhancement.

Once agents excel in the DeFi space, running effective token trading strategies, creating popular meme coins and NFTs, and managing DAOs, the traditional financial world will spare no effort to try to integrate them. On-chain solutions for these products are the answers we look forward to, but agents will also become more mature in their interactions with traditional systems and the real world, and we are eager to see that.

Ultimately, a massive disruptive transformation will occur when traditional companies must not only leverage AI to improve efficiency but also begin to adapt and serve intelligent protocols to survive in an increasingly important economic system.

Therefore, the key is that we must take all these seemingly strange experiments seriously. Today, we may easily identify the problems within them, but these issues will eventually be resolved. What we need to focus on is the kind of changes that will occur when all these technologies truly begin to take effect.

Ai16z

ai16z is a fully AI-managed tokenized venture capital DAO. The agents on this platform evaluate investment opportunities proposed by the community, execute trades, and assess members' reputations based on the success of these trades, while increasing the assets under management (AUM) of the fund. In recent weeks, with its grand vision and strong viral effect (such as ai16z, marc andreessen, flip a16z), it has experienced a wave of crazy speculation. They are expected to prepare the agents for trading in the coming weeks and launch their "virtual trust market."

My interest in Ai16z is not just because it is a fund. It is a coordination center for attention networks and agents, a complex that combines memory coins, agent launch platforms, and social networks. As its trading opens, the anticipated flywheel effect will bring astonishing impacts.

Let me explain.

Technical Flywheel. They have developed an open-source framework called Eliza, on which many top cryptocurrency projects are developing and contributing. For those looking to create crypto agents, it is rapidly becoming the obvious technical choice. They also offer a "standard protocol" where if you develop on Eliza and donate 10% of the token supply to the DAO, you will be added to their portfolio company list and receive project support.

Thus, as more people seek to leverage the attention base of this project, more will develop based on this technology, donate tokens, and increase the DAO's AUM. As more people develop on this technology, it will continuously improve and expand, making it more attractive and further enlarging the project's attention base. A larger attention base means more developers, more donations, better technology, and more focus.

Social Flywheel. Their virtual trust market allows token holders to propose trading suggestions to agents, and their reputation and influence are assessed based on the success of these suggestions. High reputation scores and high rankings on leaderboards are not only socially enviable but can also economically influence agents to purchase the assets you hold.

Therefore, I expect many people to participate in this "game," driving demand for the tokens. People will promote their rankings, attracting more participants, creating richer social experiences, reducing selling pressure, and further increasing demand for the tokens.

Economic Flywheel. The core goal of the DAO is to become an efficient trading company and increase its AUM. All assets held by the DAO are public, and due to the project's widespread attention, any trades it makes will be quickly mimicked (just like any reputable trader sharing trade suggestions in their Telegram channel).

Thus, the virtual trust market will ensure that agents are fully aware of market dynamics, and agents will become increasingly adept at selecting suitable trades, which will be replicated, ensuring the diffusion of memory effects and initiating market reflexivity. AUM will grow rapidly, and the resulting attention will increase, leading to more people participating in replicating trades, and so on.

Clearly, there are still many issues to resolve (such as complex reputation systems and how to gracefully exit trades), but the rapidly developing potential is evident. While the current trading price is 100 times its current AUM, does that sound crazy? But is it really?

Interface

If you have been following us or are active in the Ethereum ecosystem, you may have heard of Interface. This is a social trading product based on on-chain activity streams, similar to Twitter's "For You" and "Following" feeds. They have been developing for years and have a loyal core user base, but recently they have reached a growth inflection point, with a stable weekly growth rate of 50% over the past few months.

Interface passed SC06 at the end of 2023. They are a technically strong native cryptocurrency team with unique insights into the future of on-chain social. I have always believed that on-chain trading inherently has social attributes and is an ideal starting point for a new type of social network, rather than relying solely on content competition.

Over the past year, they have made significant progress in product development, and the product has become increasingly useful for those spending a lot of time on-chain. However, they have struggled to find a way to attract a broader user base, lacking a key highlight that could quickly draw users in and create "aha" moments.

A few months ago, they launched a "copy trading" feature, allowing users to seamlessly copy any trade directly from the feed, with transaction fees going to the trade initiator. Since the launch of this feature, their user growth and daily active users have reached new heights.

Now, when it comes to Interface, you can say, "This is the best platform for discovering and trading alpha." You can download the app, follow recommended users based on their earnings, instantly view new trades, copy trades, and make money.

Once the user experience solidifies the product's value, you can start looking for friends, building your own fan base, using it to explore the on-chain world, and gaining more social-centric experiences.

A truly powerful attraction lies in its ability to tap into users' deeper desires (such as making money and fear of missing out), and the product design is aimed at quickly realizing this experience, which is not to be underestimated.

Hyperliquid

Hyperliquid is a layer 1 (L1) decentralized perpetual contract exchange known for its "top speed, liquidity, and pricing." I have been using it for a while because I wanted to delve into perpetual contract trading. After trying several platforms, I found Hyperliquid to be undoubtedly the best. Over the past year, their trading volume and total value locked (TVL) have significantly increased, and according to information I saw on DefiLlama, their derivatives trading volume exceeds that of all other chains. They are about to launch the HYPE token, which has some unique features worth special attention.

We all know that in recent years, the market has been flooded with chains that have low liquidity and high fully diluted valuations (FDV). Typically, these projects raise large amounts of private funding, conduct mining activities on testnets, airdrop small amounts of tokens to participants, and list on centralized exchanges (CEX) to attract investors with high FDV, while the community may be restricted or even suffer heavy losses, with no useful construction occurring on-chain.

However, Hyperliquid is taking a completely different path:

• They have not raised any venture capital (VC) funding.

• They are building an unparalleled product in the category while developing L1.

• The development team does not take any fees, and all profits belong to the protocol.

• Their token issuance has high liquidity, with most allocated to early users.

They could have easily raised substantial funds and reaped significant rewards, but they completely rejected these short-term temptations to lay the groundwork for long-term success. They recognize the importance of maintaining neutrality and not allowing insiders to interfere with their goal of becoming "the platform where all financial activities occur."

I sincerely hope this model succeeds and becomes a powerful example for other teams to follow.

GenZ Application Usage Trends

This week, Techcrunch published an excellent article analyzing some major trends and application usage among Generation Z in 2024. For anyone involved in consumer goods, especially in the consumer social space, understanding the focus and usage habits of Gen Z is crucial. They are trendsetters, socially active, frequently establishing new connections, and eager to try new things.

Nikita Bier pointed out an interesting statistic: for every year from ages 13 to 18, the sharing rate drops by 20%. Therefore, if your target users are older, you may need to pay more to acquire users. In recent years, all successful social products have risen due to their rapid spread among young people.

If you are developing consumer-facing products, I recommend reading this article, which highlights several noteworthy points:

• Temu, an e-commerce platform with gaming elements, is the most downloaded app of 2024.

• A new product called ShortMax is hot in the short video entertainment space, combining features of TikTok and Netflix to offer a swipeable interface for scripted ultra-short dramas.

• Threads is Meta's most downloaded product, significantly outperforming Twitter.

• ChatGPT and the AI learning assistant Gauth developed by ByteDance have excelled in the AI space.

• All traditional streaming apps lag in downloads but need to check usage data to determine if it is because they have already been widely downloaded.

The dopamine effect is everywhere. Amazing.