Welcome to Issue 112:

▹ Week's Top Signal
▹ Elon Twitter Takeover <> Web3
▹ The Crypto Story by Matt Levine
▹ Vitalik Buterin on Public Goods <> Revenue
▹ Web3 Governance Design via a16z
▹ Crypto Regulation "Debate" via Bankless
▹ Liquid Splits by 0xSplitts
▹ ... much more

— Let’s get into it!

Reddit Web3 Playbook for Adoption

Folks have always said that for web3 to get real adoption, it needs to be embedded into the spaces that folks already interact and (in some cases) fade into the background. Reddit executed this playbook perfectly, and now people are wondering who’s next.

Friend of Forefront Nir Kabessa did a fantastic job breaking down what made the Reddit NFT play so successful. Arguably most importantly, there is little to no mention of crypto lingo in the Reddit UX. NFTs are called collectibles. Wallets are called vaults.

Additionally, Reddit NFTs were broadly distributed. Unlike the 10k pfp collections of 2021 that thrived on exclusivity, there are currently 3 million Reddit avatars with even more to come. The avatars have now generated over $2.5M in sales.

Most impressively, the insanely easy UX that Reddit created led to over 3 million new wallets being created on Polygon.

The decision to use Polygon meant instant EVM composability: NFTs could immediately be bought and sold on OpenSea, they can be displayed in various NFT apps, and they weren’t locked into a foreign ecosystem with little usage. Thousands of Redditors have now made their way into the Ethereum ecosystem through Reddit NFTs. That is what adoption looks like.

TAKE NOTE
Web3 adoption is around the corner, and the user experience might not look like anything we’ve seen before. For web3 to hit the mainstream, strategies like Reddit's that deeply integrates within their existing product and culture ecosystem are definitely worth a follow. 

The Crypto Story. Matt Levine is arguably the greatest finance writer of our generation, so it’s not a surprise that Bloomberg asked him to write a cover-to-cover issue of Bloomberg Businessweek on a whirlwind tour of crypto. This piece is genuinely a great introduction to the industry for folks who are trying to understand what the hype is all about, what criticisms are valid, and where we might go from here. It covers everything from the fundamentals of blockchains all the way to DeFi, DAOs, and the philosophical underpinnings of web3 today. It’s obviously a commitment – my scroll bar has never looked so small. But after spending a few days with it on and off, it was definitely worth the read. Levine manages to write about a highly polarizing industry in a knowledgeable and neutral way that keeps the reader hooked throughout. Great work and highly recommended.

Musk Begins his Twitter Reigning. This week, Elon Musk officially took ownership of Twitter, and he was quick to the punch. Musk began his tenure by firing top executives, including CEO Parag Agrawal. However, there is still very little clarity on how Musk will achieve his ambitious goals to dramatically improve the social network. One rumor is that Twitter is working on a “wallet prototype” that supports “crypto deposit and withdrawal,” which would be a massive move to increase crypto adoption, greater than the likes of Reddit’s NFT collection. Musk has also mentioned creating a “content moderation committee” with members of a variety of different viewpoints and walks of life, which has sparked support and criticism across the app. One thing is for sure – Musk’s Twitter will certainly be in the headlines much more in the coming months. A Web3 protocol next?

A Different Way to Think About Prioritizing Public Goods Funding. Vitalik is on his economist wave again. This time, he explores a more nuanced understanding of public goods through what he calls the “Revenue-Evil Curve.” He attempts to explain that sometimes, increasing revenue is also increasing the negative impact the good has, but this can happen to varying degrees. This evil takes the form of traditional economic deadweight loss, race conditions, sacrificing principles, and more. Vitalik argues that we should direct public goods funds toward those projects where the slope of the revenue-evil curve is the steepest. That is, we should focus on projects where each $1 of subsidies, by reducing the pressure to monetize, most greatly reduces the evil that is unfortunately required to make the project possible. This is a very interesting framework for thinking through funding priority. Vitalik argues, for example, that Wikipedia would be a lower priority public goods funding candidate because, despite its massive impact, the obvious revenue model (advertising) isn’t that bad. Thought-provoking piece as usual.

How to Design web3 Platform Governance. Today, the large web2 platforms that dominate our economic and social experiences lack fair structures and decentralization of power. But web3 governance — if built thoughtfully in a way that reflects lessons from the history of governance — will offer an embedded foundation of credible trust to build the next generation of platforms. This essay highlights various best practices and opportunities for protocol governance to break away from the mistakes we made in the past. For example, the authors Porter and Andrew argue that encoding rules at the protocol level is the first, fundamental step you can take toward decentralized governance. They also argue that more granular governance should happen at the application level, not the protocol per se. Finally, creating opportunities for the rules to be changed by users when they are no longer being served by the status quo is critical, as many web2 companies pay lip service to “listening to customers” but fail to create avenues to make that a reality.

What The Heck Is Urbit? We’ve highlighted Urbit a few times in this newsletter, but haven’t really gotten into the details of what Urbit really is. This piece from Lane Rettig attempts to do just that. Lane breaks it down into three lenses: infrastructure, agent, and aesthetic. The infrastructure layer is made up of a core function, a programming language, a kernel, public key infra, and more. The agent layer views Urbit as essentially a personal virtual server. And the aesthetic layer cuts deep into Urbit’s values and the personality of the community. Honestly, that’s still pretty confusing, but the author does a great job of linking out to resources and highlighting the various lenses through which we can view what makes Urbit interesting. Its popularity is definitely picking up, so more people will have these answers soon enough.

Crypto Privacy Is Humanitarian. Neeraj Agrawal of Coin Center writes for the Bankless Newsletter: Financial intermediaries can become tools of oppression. Cryptocurrency privacy is the only way out. Neeraj explains how various activist groups have handled centralized financial intermediaries banning certain services or transactions, and how crypto use could solve those problems now and in the future. He also highlights a downside of crypto adoption: while publicly readable blockchains are an excellent tool for law enforcement to track genuinely harmful activities, they are just as useful to an authoritarian regime trying to track the flow of donations to activists. Ultimately, Neeraj is a supporter of tools like Tornado Cash that preserve privacy on the blockchain while inheriting all of the other benefits. This is an excellent look at the activist case for crypto.

The NFT Profile Problem. Finn Lobsien sees a problem: most NFT interfaces are designed for trading, not showing who you are. Whether you own a token for speculation, utility, community membership or just for the art, it all shows up without differentiation. Finn explores the difference between content and context: Instagram is a social network with a content feature, are.na is a content network with a social feature. You know more about someone (and they know more about you) when you know that person has chosen a token as one of a few displayed tokens. The future of web3 social will be focused on individual curation of our identities, which will require profiles that we customize, not that display everything that we’ve ever collected without our desire to do so. As we move in this direction, more thought will need to be given to how profiles act as a reflection of ourselves online.

Market data on the last 7 days. Last updated Oct 24, 2022

▹ FF Library - Chaos is a Public Good
▹ Read  - Quantifying Reputation in DAOs
▹ Fresh Take - Worldbuilding, Pt. 1
▹ Deep Dives - Token Unlock Frameworks
▹ Music NFTs - Showtime Music Drops
▹ Watch - Crypto Regulation Debate
▹ Interesting - Web5 is Happening
▹ Cool - Liquid Splits
▹ Tooling  - Lens <> Guild
▹ DeFi - Creating A Standard For Whitehats

◎ Check out FF Signal  for daily top web3 social headlines