Helius Labs Co-founder: The Innovation Dilemma of Cryptocurrency

Author: mert Source: X, @0xMert_ Translation: Shan Ouba, Golden Finance

Observations on the lack of exciting ideas in cryptocurrenciesCryptocurrencies are socially driven. Narratives, groupthink (social consensus), and imitative thinking are the basis. That's how most of these tokens get their value, social beliefs.

But this also determines cycles, for example:

• Is anyone starting a point system? Others are now adding points.

• Airdrops? Others are now adding airdrops.

• Are people buying NFT X or Token Y? Everyone is paying attention to it now and trying to buy it.

• Did anyone make it out of memecoins? Now let’s launch 100,000 more.

• Did Polymarket start a betting market? Everyone is watching it now.

Perhaps most importantly:

• Did project X get funded? Now project X can get funded on chain Y.

Market participants are completely social animals — VCs, traders, but most importantly: even founders.

This is actually a bigger problem than we think.

In regular tech, you’re encouraged to be different and come up with bold ideas — Peter Thiel captured this by pointing out that the most successful founders have some autism spectrum disorder — they don’t care about social norms at all.

Crypto is the exact opposite.

In crypto, you can actually get short-term rewards for going with the consensus, not against it — because of i) the liquidity of the market ii) socially determined values.

This is obviously not a blanket rule, you can certainly be different and get rewarded in crypto, just like you can go with the consensus and get rewarded in regular tech.

The key is that this is a numbers game.

The incentives in crypto are so heavily skewed towards short-term consensus that founders rarely build truly bold things because i) they’ll get mobbed on Twitter, ii) they can get 10x faster with regular technical methods (illiquid equity, long-term vesting, non-socially driven).

Without incentives for founders to build truly bold things that go against current social norms, you end up with a lack of interesting new applications.

I mean, this “cycle” we’ve had basically nothing new or interesting — but I don’t know if anyone noticed because the price kept going up until it didn’t.

Fortunately, the solution is simple, though not easy:

Update the culture to encourage bold ideas, not repel them.

A good, but controversial example of this might be something like the algo stablecoin.

They were hot before, and now if someone tries the idea again, everyone automatically thinks the founder is a fraud or an idiot.

However, the industry is only a few years old, and it is these types of problems, when solved, that ultimately change everything.

Bold ideas from founders who are not influenced by short-term monetary incentives and social rejection are key to the success of the industry.

About 80% of this app is people saying "stuff sucks and is stupid", then getting engagement, then repeating it every day as their entire personality - nihilism might make you feel more secure for a few minutes, but it won't build the future.

Independent thinkers will do that.