Crypto is full of potential & full of bullsh*t.

You’ll be a better investor if you see bear market as a stress test to help you separate the industry’s long term truth from short term delusions.

4 truth & 4 BS in web3 economy at current stage of adoption:

Long-term truth that’ll likely stand the test of time—

1. Tokenization adds powerful fuel to any economy

Super power of tokenization is obvious despite many problems of web3 to date. For start, it makes latent values in economy trackable & tradable.

Many things have values but don’t have a market b/c they’re hard to track or trade. E.g. At personal level: attention, habits, credit scores. At social level: air quality, crime rate, traffic congestion.

Tokenization w/ unified standards & interoperable databases as those on public blockchains gives latent values explicit expression.

It gives liquidity to hidden values & allow them to be exchanged w/ other things valuable. It allows creators of those latent values to be compensated & incentivized to create more.

Result is a more dynamic economy, new layers of GDP, new industries, professions, & more diversified sources of personal incomes.

2. Programmability makes “co-op” economic model scalable.

In traditional economic production cycle, producers of values & consumers of said values are usually different people.

Customers buy stuff—> proceeds are distributed to producers via firms as wages & profits—> customers buy more stuff.

This distribution cycle predicates on existence of employment & capital ownership. Many distortions & frictions happen in the process.

Web3 made alternative “co-op” economic model scalable through code: profits of productive projects can be programmed to deliver to all participants as token holders instantly, whether they’re customers or contributors or both.

It allows more immediate & efficient value creation-distribution loop.

3. Digital assets lowers entry barrier to earning capital income.

Tokenization creates new types of assets, new formats of capital ownership & makes ownership more accessible.

It makes it easier for the average person to become a capital owner in digital age & supports more equal distribution of wealth.

4. Incentive alignment supercharges product/community adoption.

Tokenization creates immediate ownership behind a common goal & rallies a community on back of shared self interest. In the right context it’s a powerful tool for driving users, investors & contributors.

In sum: Web3 model can improve the economy’s ability to express & distribute values & as a result unlocks new values.

But problem is no business model does any good if underlining activities are not valuable.

Here lies the main issue w/ web3 economy today— tokenization & associated financial reflexivity masks a lack of products that create actual value. ’Tis true across deFi, gaming, NFT, etc. That brings me to—

Short-term bullsh*t that’ll eventually go away:

1. The metaverse will pay for “work” that has no utility.

Bull mkt creates a frenzy of on-chain activities in yield farming, play to earn, etc.

Clicking buttons on a screen for its own sake can be a lot of work. But it’s not work useful to anybody except creating the mirage of “product adoption”.

In long run the market price for such work is zero.

2. Projects relying on ponzi-nomics for initial growth will be sustainable once they mature.

Tokenization is a great ally for web3 projects to implement growth-at-all-cost strategy used by so many web2 startups to gain “network effect”.

Problem is such network effect is not real without an underlining viable product that has utility.

Token-enabled ponzi-nomics hides weakness of the product, creates illusion of adoption & actually makes it harder for the product to improve b/c there’s no correct market feedback.

Sanity check: What’s left in this product/project if you take the token away?

For 95% of web3 products today the answer is nothing.

3. Decentralization is an important value prop by itself.

Crypto maxis don’t want to hear this, but you can count w/ one hand the number of products for which decentralization or censorship resistance is actually an important feature.

Time & energy many projects spend on crafting a narrative of decentralization is largely a fool’s errand. As investor if the project pitch you hear is “Like X, but decentralized”, run the other way.

4. You can build a sustainable product from copy-paste code.

The issue w/ investing in today’s deFi or NFT projects is most of them have less defendable competitive advantage than your neighborhood restaurant & yet are expected to give VC-type returns.

(BTW, like this so far? I help you get smarter about web3 & macro. Subscribe to my newsletter for updates.)

For example, most defi exchanges & lending protocols, no mater how innovative the idea is, are infinitely clone-able. Many should just be a feature that belong to a larger platform, e.g. a L1 blockchain, rather than products w/ own tokens & standalone balance sheet.


Odd reality of web3 today is on one hand we have a new economic model that has revolutionary potential. On other hand, few products that leverage web3 model provide any actual value. Most are reflexive hot air using tokenization to create facade of growth.

Where do we go from here?

Most projects from this cycle will die in winter. The new wave of projects— they’ll come—will need to integrate w/ the real economy: leverage web3 model to improve production & distribution of real products & services.

I expect to see biggest successes not from crypto-native new projects, but traditional companies & products (God forbid, centralized!) that take advantage of web3 biz model to maximize their potential.

As investor those are the type of projects I’ll look out for on the application layer, besides better, more performant infrastructure layer.

This past cycle has been wild fun. No matter how much you won or lost financially, I hope you can appreciate the audacity & ingenuity in so many web3 experiments. There’s much to learn. We’re still early.


  1. Anthony Rosas Reply

    Thank you Tascha! The expression of value through code is succinct and a helpful recap. I cashed out early this year after viewing your videos. Thank you for the the effort to put your original thoughts out there.

  2. Austin Murray Reply

    Love your clear and thoughtful no-bullshit analysis of a space ride with potential and also bullshit!

  3. spendapenny2022 Reply

    Great insight into how tokenization could help track & trade those aspects of society with latent value. Are there any companies or products you have your eye on working on these ideas?

  4. Dua Sasebo Reply

    So after the merge… one of the main narratives is that systemic demand for ETH will far surpass systemic supply (90% ETH issuance drop post-merge) causing a huge spike in token price. Wild guess but 90% of traffic on ethereum seems to be for hot air projects. Just wondering if you have a take on the systemic demand for ETH as it stands now.

  5. Another great newsletter Tascha. Thanks for taking the time to share your thoughts.

  6. Tascha is incredibly insightful. Thank you so much for your writings on this subject. Best wishes!