Author: Qiao Wang, core writer of Alliance DAO Translation: Shan Ouba, Golden Finance< /p>
Here are some of the cryptocurrency startup ideas and topics we are excited about here at Alliance, and we will update them regularly to reflect our latest thinking.
Stablecoins are the first and by far the largest non-speculative use case for cryptocurrencies.
According to a report by Brevan Howard Digital, "In 2022, the on-chain settlement volume of stablecoins will exceed $11T, making the transaction volume processed by PayPal ($1.4T) It dwarfs Visa's payment volume and accounts for 14% of ACH settlement volume." People think that cryptocurrencies have not found a killer use case outside of transactions, which always baffles us.
We don’t think crypto payment startups should compete with the likes of Venmo or Revolut. Instead, they should identify and focus on underserved user groups, such as traditionally underbanked industries (often taboo industries) or cross-border payments.
For example, we are particularly interested in stablecoin payment applications in Latin America, Africa, the Middle East, South Asia, and Southeast Asia, where fiat devaluation and censorship are more common . From talking to startups, we have a lot of anecdotal data that suggests stablecoin adoption is a hockey game in these parts of the world.
However, In order for crypto payments to be useful to consumers in these parts of the world, it needs to solve the last-mile problem of entry and exit from local fiat currency to entry in local fiat currency. Otherwise, the recipient will not be able to use the payment in "real life" and the sender will be limited to cryptocurrency natives.
One solution is similar to Binance P2P or native Bitcoin, where a network of agents helps facilitate entry and exit in a peer-to-peer manner.
These neobanks will develop in 2-3 years was all the rage, but little attention was given to developing economies, where demand for stablecoins and yields is exceptionally strong.
We are excited about the idea of providing benefits beyond stablecoins to consumers in developing countries. While some parts of Latin America are quite crowded, we continue to believe that opportunities exist around the world.
Another driver is the proliferation of on-chain RWA, such as U.S. Treasuries, whose yields are uncorrelated and tend to be higher than the native yields of cryptocurrencies such as Aave and Compound higher. These risk-weighted assets allow developing countries to easily access high-quality assets from developed countries.
On-chain wealth is now worth $1.5T. This on-chain wealth seeks diversification.
Since the 2023 banking crisis, on-chain funding has diversified into many crypto-native organizations A difficult problem faced. MakerDAO, for example, is leading the way.
Cryptocurrency native speculators are now wealthy enough that they also want to diversify their holdings beyond highly correlated crypto assets.
Consumers in emerging markets want to own high-quality assets. Today, they have a USD stablecoin that is better than their national currency but still suffers endless devaluation.
The types of RWA we are interested in include but are not limited to:
Financial assets, such as treasury bonds, stocks, corporate debt
Hard assets such as real estate and commodities
Collectibles such as watches and Pokemon cards.
Different interpretations of RWA . Allow off-chain assets such as real estate, treasury bills or other RWAs as collateral.
The obvious approach is to tokenize the asset and treat it as on-chain collateral. One example would be to 4K tokenize watches and use the watch NFT on Arcade to obtain USDC loans. By storing all of the world’s asset classes on one ledger, we can dramatically improve the lending experience. Any asset can be pledged to borrow against any other asset. This is something that could not have happened before the advent of cryptocurrencies.
But it is also possible to abandon tokenization. Perhaps only one oracle remains, or even less. One example is Makers. They effectively created a collateralized debt position, DAI, partially backed by RWA (financial custodian), but their RWA position was not tokenized.
Another potential example is capital efficiency by using a fund's RWA in cryptocurrency without fully tokenizing it.
Most people hope for continued, unlimited upside. They don’t want to be limited by discrete, binary outcomes, which is what happens with traditional prediction markets. We believe that the true crypto-native prediction markets are actually memecoins in the form of ordinary fungible tokens, such as $BIDEN and $TRUMP.
As on-chain reputation becomes more and more important, collateralization Under-borrowing becomes possible. In fact, most business loans in TradFi are undercollateralized.
A number of recent developments are making undercollateralized loans increasingly feasible:
Off-chain certificates such as Coinbase or Clique
ENS and others Domain name adoption continues to increase
More and more people are receiving on-chain cash flow on a regular basis
A specific example of under-collateralized lending is enabling on-chain individuals or organizations to borrow against future cash flows.
Privacy finds PMF in unexpected places. For example, whales also use centralized exchanges to anonymize their transactions. We also suspect that Thorchain, billed as a cross-chain exchange, is the de facto privacy solution. It may see use for the now-defunct Tornado, as tracking cross-chain transactions is much more difficult than tracking transactions on the same chain.
Anyway, we are interested in new solutions to this old problem. For example, zero-knowledge proofs (ZKPs) can be used for compliance (proving that a user is not a citizen of a sanctioned country or accredited) without breaking pseudonyms. We are also fascinated by other technologies such as Multi-Party Computation (MPC), Fully Homomorphic Encryption (FHE), and Trusted Execution Environments (TEE).
We understand that many vertical industry projects around the world have passed Fork and modify Aave or Compound to launch your own lending platform. This incurs significant costs in terms of development, auditing and maintenance. Massive cost reduction is the original thesis behind Rari Capital, which can be thought of as “Aave/Compound forks as a service.” But now that Rari is out of business due to a hack, there's an opportunity to fill that void again.
In 2021, Fei Protocol merged with Rari Capital. This won’t be the last DAO merger we’ll see. More DAOs will struggle, and more DAOs will want to acquire horizontally or vertically. There is an opportunity for someone to build reusable tools (smart contracts and legal structures) to facilitate this process and make it more complex.
NFT options, perpetual contracts and futures can help NFT holdings or simply speculate on the price of NFTs.
Due to the illiquidity of the underlying assets, index prices are difficult to calculate and easy to manipulate. So maybe physically settled derivatives are the right design.
Capital efficiency is limited by the fact that no single protocol can Risk dialogue. Perp Protocol A doesn’t care that you hedge against Lending Protocol B.
One approximation is to pool assets into one giant account on each protocol. Create an accounting layer to handle risk for each customer account. Is there a better way?
On-chain games refer to games that write the entire game state and game logic (not just currency and in-game assets such as NFT) into the blockchain.
Consider a game of tic-tac-toe. The concepts of turns, 3x3 board, players and three-player sequences must be immutably documented as rules. The history of player movements must also be recorded. On the other hand, the color of the chessboard and chess pieces, the shape of the chess pieces (for what we care about, X and O can become Y and Z), animation, sound, etc. can all be left on the client.
Putting all state and logic on-chain unlocks all kinds of novel behaviors:
Smart contract-based players (rather than human players) who play the game. One of the earliest examples was actually MEV in DeFi. Trading is a game, and MEV robots are players based on smart contracts. Note that in this case smart contract-based players compete not only with each other, but also with human players.
Game mods built by third-party developers do not need to worry about being platformed. Mods are the lifeblood of Web2 games, and many generations of games started with mods (e.g. Dota 2, Counter-Strike, and PUPG). However, due to the licensed nature of Web2 games, modders are at the mercy of the original game studio. In fact, many have either been removed from the market or will never start modding for fear of being removed.
Eventually, game studios can become game publishers. If the history of Web2 is any indication, the first successful on-chain game engine will likely come from a successful on-chain game studio. Think Unreal (the engine) and Epic Games (the studio). By the same token, the first successful crypto game publisher will likely come from a successful crypto game studio. Think Steam (publisher) and Valve (studio).
The winning Web3 Twitter will finally deliver what we have been dying to see Features: User-owned data, customer diversity due to no permissions, and/or resistance to censorship of speech.
Only one question. If history is any indication, it's unlikely that the first successful Web3 Twitter started out wanting to be the next Twitter or look like Twitter. Maybe Web3 Twitter will start out as a game, a DeFi super app, or something new and seemingly trivial enough to be laughed at, or so outrageous that it upsets a lot of people. The weirder or controversial your app is, the more excited we are to try it!
A specific example of an on-chain social network is an anonymous social network. Where individuals use ZKP to prove certain identities, for example, they are an employee of Company X, or have a net worth of more than Y dollars. Anonymous gossip is always in high demand. Take a look back at the early days of the internet with Ratemyteachers.
Despite failed experiments like BitClout and the drama surrounding Fientech Also failed. The idea of personal tokens is fundamentally novel because it enables people to speculate in a new, potentially huge, asset class. We expect future iterations of this idea to find product-market fit.
The most interesting thing about Friendtech is not alpha sharing, private groups, or social networks, but that they fundamentally solve social consensus. Let's say 5 people create 5 different plain ERC20s called $VITALIK, which one is the "real" Vitalik coin? Friendtech solves this problem by requiring creators to log in using their official Twitter account. Boom, social consensus is settled.
In other words, Friendtech fundamentally combines two orthogonal ideas into one: alpha sharing and token speculation. What if we decoupled the two and focused solely on individual token speculation? Alpha sharing already exists in Web2 at scale in the form of Substack, SeekingAlpha, and Telegram premium groups.
For these user groups, blockchain has never Basically it can be two things. First, they can become factories for digitally native goods. Image-based NFTs (such as PFPs and generative art), language-based NFTs (such as novels), or audio-based NFTs (such as music) are all examples of digitally native goods. They offer creators and brands a new way to monetize their brand and artistic prowess. For buyers, these NFTs are speculative collectibles and an underappreciated carrot for early adopters. But creators/brands can also decide to offer benefits such as exclusive access and royalties.
Second, they can be a database of redeemable receipts for physical goods. For example, a pair of Nike sneakers could be equipped with an embedded physical chip that is digitally linked to the NFT. Some call it "phygital". Others call it a “digital twin.” You can even think of it as a "RWA" if that helps. On-chain representation of physical goods provides creators/brands with a new channel to engage customers, provides customers with a strong guarantee against counterfeiting, and provides the asset itself with the potential to leverage existing DeFi/NFTFi infrastructure.
We're excited about startups that start with a creator or brand in a very specific vertical and help them deliver new experiences to their customers. The narrower the vertical lines, the better.
Despite its simplicity, PFP will likely remain It is the dominant category of NFT. The key insight here is that there are already large distribution channels for these NFTs, including Twitter and other social networks, and NFT holders can use their Punk or Pudgys as their PFP.
Compare this to game NFTs, music NFTs, etc. Gaming NFTs require new games that can natively support them and achieve mass adoption, or existing popular games to adopt them. Music NFTs are not supported by Spotify, Youtube Music or Apple Music. You can display generative art NFTs on Twitter, but it takes a tweet to do so, and those tweets disappear after 24 hours. But your PFP is an ongoing elasticity that shows up every time you tweet and every time someone lands on your profile.
PFP is simultaneously the most boring and exciting category of NFTs.
StepN has proven that token incentives can effectively encourage People develop healthy habits. This might include activities like running, sleeping, meditating, eating, or learning new things. Some studies show that it can take anywhere from 18 to 254 days for a person to form a new habit, with the average taking about 66 days. Overcoming the initial hurdles may be difficult for many, but using financial incentives through tokens may provide the motivation people need to stick with new habits and make them a permanent part of their lives.
One of the end games of cryptocurrencies is against nation-states as the basic organizational unit of humanity.
Cryptocurrencies allow us to implement property rights through cryptography, constitutions and laws through smart contracts, taxation through token issuance, and cryptocurrencies. National currency, transparent policy making through decentralized governance, and international trade through decentralized finance.
The idea is to start as an online community with a common interest or belief, a well-designed governance structure, and a path to economic growth. Most DAOs don’t realize this yet, but they are effectively becoming digital nations.
One of the biggest problems plaguing the scientific community is the lack of funds. The lack of funding stems from the risky and speculative nature of scientific discovery. Crypto capital, on the other hand, is risk-seeking, open to new speculative ideas, and well-funded. The idea is to match two groups.
Despite the bad reputation "ICOs" get, they are fundamentally one of the biggest unlocks for cryptocurrencies.
Another major challenge, especially in the health sciences, is the lack of sufficient data sets to test their hypotheses. One possible solution to this problem is to use tokens to incentivize individuals to contribute health data to scientific research and drug development.
For example, individuals can share their genotype and phenotype data, creating a decentralized version of 23andMe, with participants being rewarded for their contributions. Another example is sharing physical activity data, heart rate, sleep data, and other types of data collected by wearable devices. Universities, hospitals and pharmaceutical companies can access this data through the Research and Commercial Applications Marketplace.
Another futuristic idea from DeSci is Disrupting scientific journals with cryptographic primitives. These journals have traditionally served as curators and disseminators of scientific research. But as curators they are beset by perverse incentives, and as publishers they are often beset by paywalls. Perhaps encryption can help create open, market-driven scientific journals. For example, each paper automatically comes with a prediction market about the completeness of the research or the probability that the theoretical recommendations will translate into real results.
Consultations like GLG (annual revenue $650 million) Networking is a popular way for people to seek out very specific experts who cannot serve as full-time professional advisors, but who still have very valuable insights to share. These networks are heavily monitored and tightly regulated, limiting their value and creating a general chilling effect on products. Cryptosocial networks like Friendtech have emerged, which at least suggest the possibility of niche thinkers sharing expertise. We believe that cryptocurrencies, with their ability to protect privacy, resist censorship and transfer value, are ideally suited to reinventing expert advisory services.
Tokens have proven to be extraordinary mechanisms for coordinating large-scale human activities. We are interested in startups that use tokens to incentivize people to create
Telecom Networks
Clean energy infrastructure
Use Large data sets for AI training
Other aspects we have not thought of yet.
This is widely known as Physical Proof of Work (POWP) or Decentralized Physical Infrastructure Network (DePIN). Take renewable energy as an example. It can also be unpredictable due to the intermittency of energy sources such as wind and solar. Batteries can help solve this problem by storing excess energy for use when needed. The more batteries you can connect to the public energy grid, the more useful they will be. The PoPW/DePIN network uses token incentives to encourage households to deploy batteries and pool them for later use.
ChatGPT may take away the focus on generating images, audio and Generative AI models for video are in the spotlight. However, these models are currently capable of generating realistic deepfakes. The recent AI-generated Drake song is a great example of what these models can achieve. Since humans are wired to believe what they see and hear, these deepfakes pose a significant threat. There are many startups trying to solve this problem using Web2 technology. However, encryption technologies such as digital signatures can better solve this problem.
In cryptocurrencies, transactions are signed by the user's private key to prove their validity. Similarly, whether it is text, pictures, audio or video content, it can also be signed with the creator's private key to prove its authenticity. Anyone can verify the signature against the public address provided on the creator's website or social media account. Crypto Networks has built all the infrastructure needed for this use case. Many reputable VCs and hackers have linked their existing social media profiles to encrypted public addresses, which lends credibility to the use of digital signatures as a content authentication method.
The product we would like to see is a protocol that integrates with existing social networks and automatically verifies digital signatures when creators post and sign content.
Specialized hardware company targeting specific use cases and establishing early market leadership Eventually it became a very valuable company. When Nvidia became the most valuable semiconductor company in North America by focusing on AI hardware, the same was true for AI. The same is true in the field of Bitcoin mining, where Bitmain, Canaan, and Shenma Mining became unicorns by focusing on ASIC mining machines. Companies designing and building efficient ZKP hardware accelerators will follow the same trajectory.
Currently ZkRollups such as ZkSync and Starknet are common. However, it is possible to create dedicated ZkRollups that use faster and cheaper ZK circuits. For example, if an application is an order book-based DEX running on ZkRollup, then it only needs to perform the circuitry of order creation, cancellation, and matching. In this case, the ideal ZkRollup is one that is optimized for these operations and doesn't care about anything else.
Another example is an off-chain artificial intelligence computing network that is settled on the chain. Since AI inferences can be too expensive to run on-chain, they need to be run off-chain. But how do you prove that the model is working properly? By using specialized ZKPs optimized for operations such as matrix multiplication.
Although we don’t know if Bitcoin L2 can be used without The security assumptions of the underlying L1 are inherited in the case of a fork, but we are excited about the overall idea of adding more expressive capabilities to Bitcoin smart contract functionality. The paper is simple. There is $1T of wealth in Bitcoin, and there are at least some Bitcoin holders out there who want to do something crazier, fun, or more productive with Bitcoin than just holding it. To enable these use cases, Bitcoin needs more expressiveness.
Many existing and upcoming Bitcoin L2s are trying to be as consistent as possible with Bitcoin L1. One way to achieve this is to use Bitcoin L1 for DA and delegate L2 transaction ordering to Bitcoin miners. This means that extracting MEV will be in the hands of miners. Similar to Ethereum, there is an opportunity to build large-scale companies similar to Flashbots that work with miners to order transactions or execute Bitcoin transaction bundles in some way. If Bitcoin L2 becomes a reality, the company building the dominant L2 MEV extraction platform could easily become a unicorn.
We are optimistic about Solana as a modular and research-driven approach to Ethereum A single, engineering-driven alternative. However, Solana infrastructure is generally in its infancy. It’s possible to build 10x better development tools (e.g., Solana’s Foundry), smart contract wallets, block explorers, on-chain data indexers, and other areas we haven’t thought of. Solana infrastructure developers have the opportunity to build something specifically tailored for Solana while learning from the mistakes of their predecessors on other chains.
Scammers have developed a new tactic to defraud Solana users by burning their tokens seconds after purchase, using a Solana token extension to secretly erase crypto holdings. While the motives vary, the result is consistent: users lose their assets.
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