(Amazon) Prime time in web3

So the meta point here is that if web3 really is the future, I believe it will look remarkably less transactional than it is right now. We will need applications built on crypto rails to connect with friends, find restaurants, share photos, and so on. Those products will still feed the protocols underneath them, but they will also be expensive to b... See more

To rewind a bit, the reason the topic of how consumer applications build businesses is up for debate is because value in crypto has primarily been captured so far on the protocol layer, essentially in transactions that happen behind the scenes of the apps we use.

My other issue with being too protocol focused is that if we can’t capture much value on the application layer, it will simply lead to shitty apps. As anyone who has tried to figure out how to navigate the world of web3 knows, we need to strive for vastly better and easier to use consumer applications than we have right now.

Here are a few predictions you might make if you buy the viability of this model:

Those memberships will feel like Prime, where more and more of the products and services you need live under one umbrella. This will help make the UX of web3 feel less scattered.

Most of the widely adopted products right now are extremely transactional - apps that help you exchange tokens for example. As Jesse Walden correctly points out, these products should commoditize their applications in order to drive more demand for their truly differentiated product, the underlying exchange.

Prime membership simultaneously drives adoption and usage of transactional products (eg buying TVs on Amazon) as well as other subscription products (eg Prime Video) and infrastructure/protocols (eg Amazon warehousing)Because Prime’s main purpose is to drive behavior on other services rather than revenue on its own, Amazon can ensure the benefits d... See more

“The market cap of the protocol always grows faster than the combined value of the applications built on top, since the success of the application layer drives further speculation at the protocol layer. And again, increasing value at the protocol layer attracts and incentivises competition at the application layer.”

There are over 200 million prime members worldwide, generating north of $25 billion in revenue. The real story isn’t the revenue from Prime though; it’s what Prime does for the rest of Amazon’s product. Recent studies showed that Prime members spend roughly $2K on Amazon a year, 4X more than non-Prime members. There’s no way to prove causality give... See more