Market-Protocol Fit

-Utility discovery - Early community members prototype new uses cases, some of which provide real utility, driving growth.

-Ossification - Network effects strengthen value and push the protocol to converge around specific functionality and narrative.

However, at early stages, the notional value of tokens is determined almost entirely by narrative rather than utility. The zeitgeist of an incipient token can be understood as a kind of decentralized branding, whereby permissionless narrative formation is driven by speculative desire. Whether financial, social, or owing to a genuine affiliation wit... See more

Reaching market-protocol fit is a journey of forking paths and complex, political upgrades. Bitcoin shed several narratives before arriving at the censorship-resistant store of value, "digital gold" narrative. This took place over years, alongside the development of supporting mining and financial infrastructure, and an ideological fork that pushed... See more

At inception, tokens are neither digital stores of value, nor equities—they are simply promises that attract an audience.

Marc Andreessen's original formulation of product-market fit describes how startups move from minimum viable product to serving customers. Cryptonetworks instead start with nothing, apart from token-based incentives and narratives, mobilizing developers and contributors to spontaneously coordinate in ways that end-users will ultimately find benefic... See more

Market-protocol fit can be divided into 3 conceptually distinct phases:

It's important to understand why even the most grandiose promises are "investable" at this stage (if inadvisable under US securities law). Tokens are issued on a blockchain, which creates, at minimum, the conditions for exchange, ownership and participation, as well as more advanced rules like scarcity of supply, consensus, reward mechanisms, and f... See more

In the world of retail products and services, most exchange traditionally begins with an ask, followed by an expectation that some utility will be provided. In crypto, however, we see the reverse: mass issuance of a fractional promise, the utility of which is not fully defined at the outset, but progressively realized.