cofounder @swayxyz / prev @dragonfly @arbitrum @ucsf
nyc
Joined March 2021
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please give my cofounder and cto @thezisko a warm welcome to crypto twitter
jacob is a generational product architect with a decade of experience at apple and google
we're cooking out of our office in union sq and it's been an absolute blast
other updates:
- we are naming our product Sway. you can now reach me at [email protected] and follow along at @swayxyz
- we are hiring founding engineers. cash + equity + benefits + the opportunity to build a new crypto use case that has positive implications for the world
hey friends, it's been a while. a personal update:
i've stepped away from dragonfly to start a new company, Manifest
we're building a new primitive at the app layer that i've been quietly obsessed with for many months. if you're an engineer and interested in zero to one journeys, let's chat
deeply grateful for my time at dragonfly. a group of incredible people that collectively accelerates how you think about the world. if you're lucky like myself and get the opportunity to work with @tomhschmidt, take it
this is the very beginning, follow along at @manifestios
phantom understands that wallets as we know them are dying
the monopoly on user access is over and only those able to leverage their fleeting importance into becoming actual destinations will survive
new users won’t download phantom to connect to external apps, they will download phantom to natively swap tokens and trade perps
coinbase wallet is the only other one actively responding to the threat of embedded wallets. everyone else is getting abstracted away by them
apps embedded into wallets, wallets embedded into apps, and a graveyard of wallets for connecting to apps
robinhood is joining arbitrum as base is abandoning the superchain
as a former arbitrum employee who has been critical in the past, let me just say: the pendulum is swinging back
a trip down memory lane
arbitrum was dominating optimism in 2021. OP whitelisted developers while arbitrum was open to everyone, and arb quickly became the home of defi with gmx, dopex, and others
then in 2023, coinbase chose the superchain
base became so successful that they monopolized developer attention, including from optimism. OP mainnet became a complete ghostchain, forcing them to pivot into only prioritizing the superchain, while their canonical L2 became neutral blockspace for governance
this strategy was working for a while, with other huge names choosing the superchain (worldcoin, uniswap, kraken)
but now that base has most of the assets and apps, they have zero incentive to opt into native superchain interop. so obviously, they won't. they've already announced their own security council, which directly conflicts with being in the superchain
and now arbitrum, which spent two years being looked down on, has (1) a canonical chain that still has a lot of defi apps + activity and (2) has landed robinhood, who rivals coinbase in retail presence, to build their appchain using arbitrum orbit
ggwp
thanks for playing
teapawt.net/realitywarp/status/189…
man the coinbase vs hyperliquid debate shows how pathologically zero sum people on here are
this isn't a fight for market share
in the same time that HL climbed from 0 to 12% of binance's perp volume, binance still grew over 2x
when robinhood entered the options market, they dominated the retail segment and STILL dramatically grew the pie for everyone
HL dominance vs coinbase dominance is a broke mindset. the category is expanding, not dividing. the endgame is perp dominance vs all trad derivatives
only losers are defined by their competition
this image is another blatant preview of financialized social media
why rely on professional pollsters when income is a plaid / zktls connection away
opinions will soon be backed by verifiable metadata (wealth, location, job, political status, etc)
today's twitter polls are like prehistoric cave paintings, and are still (!) very valuable
prediction markets pair opinions with stake. next up is pairing opinions with identity
financialized social media will make opinions weightable, sortable, and actionable
opinion markets are fertile fucking ground
the previews will continue
teapawt.net/realitywarp/status/193…
polymarket comment threads are a tiny preview of financialized social media
most social apps promote echo chambers based on shared views. meanwhile polymarket literally takes two directly opposed financially motivated groups of people and puts them in a cage
meaningful dialogue pretty much exclusively emerges from disagreement. comments are a primitive form factor, but capital exposure is just as strong a signal as clout
eventually, it won't just be prediction markets with comments attached. the prediction markets will run in the background, enabling public opinion markets, where people's position entry and stake are proportional to the weight of what they're saying
creating a new identity layer where credibility is more than just followers or engagement
x sees this, polymarket knows this
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uniswap set a toxic precedent with how they split value between token and equity
their setup has the same flaw as a project launching multiple tokens: competing incentives
like, at least if pump split fees between equity and token, everyone rows in the same direction. but uniswap's equity and token are directly competitive. raising frontend fees can lower volume for the protocol, and vice versa. it's a bizarre structure
internal competition isn't uncommon at big companies. ipads compete with macs. but that's precisely why the profits are housed under one roof
the reason for splitting is pretty simple (and not regulatory): retain employees after TGE by promising their equity has value too. but the amount of energy spent on balancing token and equity value is wasteful at best and toxic at worst (see: friendtech)
there's nothing wrong with funding operations for development. it's the structure that's broken. diluting value between two assets is bad enough. but creating competing revenue streams is just value destructive
impressive levels of having your cake and eating it too teapawt.net/kapursanat/status/1937…
kalshi must be sweating real bad watching polymarket constantly referenced as a source of truth for a massive geopolitical event
meanwhile they're completely absent with zero markets on the middle east conflict
it's more than missing a single news cycle. they're losing long-term path dependence
brand recognition + trust is everything when you're effectively a modern news outlet
and the effects compound
the media loop: coverage -> trust -> coverage
the market loop: traders -> liquidity -> traders
when polymarket is the sole reference without alternative, they become increasingly canonical, even for later events that both platforms support
kalshi's "safe" highly-regulated approach is actually riskier. win by being useful, not approved
what's happening to circle shows that assets are simply vessels for belief
they're not for pricing today's fundamentals. definitely not for claiming cash flows.
if someone wanted pure exposure to stablecoin growth, they could just long a perp with an oracle pegged to overall stablecoin / usdc supply
but no one wants an instrument that just reflects reality. markets want to speculate on future growth *today*
a usdc supply perp doesn't instantly reflect the GENIUS act passing the senate, but an asset speculating on future growth does
no one wants to track growth, everyone wants to front-run it
shared belief is more valuable than fundamentals
boop (dot fun) is proof that tokenomics do not matter
last week, boop did $150k of total volume. pump did $900m (6,000x)
and they pulled every trick in the book. targeted airdrop. direct incentives for KOLs. instant value accrual for the boop token. staking lockups. withdrawal fees. supply control. everything.
complex tokenomics do not make a product successful. success cannot be engineered with incentive design. pump didn't optimize mechanics, they created a new game
this applies to all projects. yes, berachain, i'm looking at you too. although thankfully your identity isn't just PoL (..right?)
the best incentives are simple. not because complex incentives are bad, but because they're irrelevant
polymarket comment threads are a tiny preview of financialized social media
most social apps promote echo chambers based on shared views. meanwhile polymarket literally takes two directly opposed financially motivated groups of people and puts them in a cage
meaningful dialogue pretty much exclusively emerges from disagreement. comments are a primitive form factor, but capital exposure is just as strong a signal as clout
eventually, it won't just be prediction markets with comments attached. the prediction markets will run in the background, enabling public opinion markets, where people's position entry and stake are proportional to the weight of what they're saying
creating a new identity layer where credibility is more than just followers or engagement
x sees this, polymarket knows this
celestia's chart is down bad because they've been selling a future that hasn't arrived yet
when a project launches a token, the market prices the story it's telling against the traction it's showing
the bigger the story, the quicker it must make "progress" (explains a lot of logo x logo bd fuckery). a wider gap makes narrative decay faster
celestia's story runs ahead of its traction despite having real customers and usage, and so the market punishes it for not making quicker progress
hyperliquid (using for contrast), also has a big vision, but has previously underpromised and overdelivered, which keeps its narrative healthy even without major short-term progress
every project lives somewhere on this graph, but the moment a project has thousands of token holders, the expected pace of progress becomes priced
selling a big story without the traction to support it is not a bad thing. it's how every startup begins. many projects have launched a token with little traction, and then either closed the gap quickly enough or recovered after the narrative bled out
but launching a token with a big gap is essentially taking out a loan against future execution. the interest owed compounds, and if it's not paid, the chart ends up telling the story instead
stripe just assembled the first stack that circumvents CEXes entirely
before embedded wallets, apps were at the mercy of external wallets
privy flipped the model. they empowered apps to own the relationship with users
but CEXes still provided the best onramp, and so the bottleneck just moved upstream
the past (metamask era): fiat -> cex → external wallet → app
the current (privy era): fiat -> cex -> app
the fiat onramp is the missing piece. moonpay is awful. no one wants to pay 7% fees. no one wants to kyc everytime they try a new app
coinbase knows this. that's why they began offering subsidized onramping into usdc. but users are still going through their gates
the future?
stripe gives privy a first-party onramp
privy gives stripe shared identity across embedded wallets for reusable kyc
the bridge acquisition completes it. bridge + privy lets stripe monetize deposits (stablecoin yield, cross-chain swaps, etc) to subsidize onramping fees
the future is fiat -> app
that's it. open app. never leave.
CEXes are becoming optional
distribution is not destiny
look at TON, who is squandering the biggest distribution advantage in crypto history
telegram is the only platform every crypto-native trader and builder lives on. not to mention a billion other retail users
and yet the chain is soulless. no presence. no story. no purpose.
the success stories of the ecosystem (notcoin, hamster kombat, catizen) are all the same click-to-earn slop. the chain isn't evm compatible, so they don't even get copy-paste evm slop. there isn't a single ton-native app worth getting excited about
they even fucked up the one thing that's working, tg gifts / stickers, to the extent that 80% of the volume is now happening on p2p offchain marketplaces
it's clear telegram's distribution is extremely valuable. tg trading bots printed nine figures last year, completely ignoring ton and offering assets on other chains
the walled garden around mini apps could still work - it's not like tg users are going anywhere
but distribution is leverage, not destiny
zero times a million is still zero
plasma could not have scripted a better setup to own the stablecoin chain narrative
1. first to publicly brand itself as a stablecoin-native chain (new category)
2. paolo endorses (instantly borrowing tether's credibility)
3. viewed as the canonical tether chain even though multiple exist (narrative lock-in)
4. angels consistently evangelizing (distributed marketing)
5. circle ipo melting faces (creates urgency)
6. new outlets wanted for expressing stablecoin bullishness (latent demand)
7. topped off with an ico engineered to be massively oversubscribed (artificial scarcity)
and now, for the next 40+ days while everyone is locked up, they have the chance to convert their momentum into traction, a self-fulfilling prophecy
the story is far from over - many cases of hype not translating into reality. but my god, a perfect storm of velocity, timing, and narrative execution
resentment toward kaito reflects a broader trend of social media increasingly dissolving the boundary between authentic expression and incentivized content
brands have fully shifted to "UGC" because it has the highest chance of tricking the brain into thinking paid endorsements are actually organic
kaito formalized this shift by introducing a way to democratize and filter what posts are monetizable. specific projects. sentiment screening. smart follower count. contrast this to X payouts, where content doesn't matter as long as it hits certain engagement thresholds
this sets up the core tension: a disconnect between individual judgment and collective output
individually, plenty of us can identify or at least suspect inorganic slop. but collectively, the CT hivemind can't make the distinction at scale. as a result, no matter how much algorithmic hygiene one has, the slop pollutes everyone's timeline. there's no escape
kaito didn't create this problem, they just built what the market wanted, making the reality impossible to ignore
most successful crypto products start off as kind of illegal
from coinbase to circle to polymarket to uniswap to hyperliquid
if nobody thinks the product is a little illegal, it's probably not that interesting
this is only natural - crypto exists to skirt around incumbent power structures. if the product can succeed within those structures, then it doesn't belong onchain anyway
obviously, building in good faith alongside counsel is necessary (fuck scammers), but respectfully, don't ask for permission to build something people want
second-order effects of polymarket + x are ridiculous. we haven't even begun to grasp what happens when capital and social media converge
- embedded prediction markets inside posts. 'bet' becomes a default reaction alongside 'like' and 'repost'. betting shifts from intentional action to emotional impulse
- the algo optimizes for betting volume, not just engagement. X further polarizes once it knows which side of a market users are on. capital is a stronger input than attention
- bets become a public stance. betting records become credibility. we're not just posting opinions anymore
- market-impacting news originates on X. embedded markets collapse the time gap between source of info and taking a position. "I saw it first" becomes "I bet it first" with public timestamps
- prediction markets don't just reflect reality, they shape our perception of it. betting activity by specific X accounts emerges as the ultimate signal
- creator-driven markets. when someone bets through an embedded market, the post author gets a share of the fees. controversy is no longer just engagement bait, it's direct monetization. controversy -> volume -> controversy flywheel
social media will never be the same.
to be clear, this is all conjecture. dragonfly is an investor in polymarket, but i have no details about the partnership
shocked that no perp exchanges or prediction markets offer a way to long or short circle equity
zero competition from tradfi right now. no spot shorting. no options. no futures. nothing
meanwhile, hyperliquid insta-lists literal garbage that is worth 1% of what circle is trading at (as they should) and polymarket had odds on whether elon will create a new political party minutes after his tweet. the infra exists
prediction markets are incredibly easy. "will circle be above or below X at the end of Y?" add oracle and done. market created
perps are harder. MMs want to hedge against spot, and there's not much spot to borrow for shorting
but there are solutions. let them warehouse risk and widen spreads. have clunky p2p natural flows sort themselves out. price may get temporarily dislocated. who cares
there's compliance, but if crypto does one thing well, it's reg arb. ostium already has perps for the mag 7. limitless (a tiny prediction market) has price markets for stocks. not suggesting HL or polymarket do this, but anybody
someone will eventually fill this gap, and i will be your first user
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it's actually fine that hyperEVM is still a ghost chain. people forget base started the same way until friendtech
hyperEVM and base both also share (1) infinite runway bc they are backed by profitable exchanges, and (2) seamless transfers between the exchange and the chain
the real question is whether jeff can attract builders who create new things other than copy paste evm slop. other cex chains failed at this despite massive distribution because they weren't crypto native enough. jesse had the right mix of both
hyperliquid can't match coinbase's retail reach (or fiat onramp), but they do offer the highest value crypto-native traders, increasingly similar levels of liquidity, and zero competition from other apps
if you believe HL the exchange will continue growing, the appeal of launching on hyperEVM only increases, even if it just sits there for a while
hyperEVM isn't destined for success, but they're definitely not in any rush either