(Amazon) Prime time in web3

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.

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.

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 build and only possible if they can capture significant value on the application layer.Enter membership moats.

“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.”

I believe some of the leading consumer product business models in web3 will feel like Amazon Prime — membership bundles mediated via tokens.

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.

There are a few elements of Prime that are very important and I believe transferable to web3 consumer applications:

Tokenized versions of Prime will enable a number of different ownership models that further incentivize early adopters. Rather than offering their products for free until protocols emerge, smart consumer applications can leverage these models to create sticky behavior and strong loyalty. 

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

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.