In 2021 I noticed a huge gap in the NFT space.
Teams were raising millions on day 1, but buyers had to rely on "trust me bro" for everything after mint.
In short, incentives were not aligned.
My working thesis was, that if a project existed where team and holder incentives were aligned, all the smart money would flow to those assets and they would outperform everything else.
There was little motivation for projects to try this, because it was easier and more lucrative to let minters take all the risk. Teams were guaranteed to make millions no matter what they delivered.
Finally, the perfect opportunity to test my thesis arose with the rug and subsequent buyout of Geckos.
The premise was simple:
Holders eat first.
Team can only win WITH holders, not at the expense of holders.
All initiatives designed to drive value back to the OG asset, directly or indirectly.
I was confident in my thesis.
But I made a huge mistake.
I overestimated the sophistication and the patience of degens.
Rational, responsible, long term oriented collectors are a niche within a niche in web3.
As a result, it took many years to curate 3000 such collectors into a single community.
But the upshot has been an extraordinarily high quality group of people. A group with a ton of collective wisdom. A group that is happy to share what they know with others. Without grift, without expectation.
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When jpegs were on easy mode, no one cared about tokenomics, aligned incentives, and so on.
But now that NFTs are in the toughest environment ever, people are finally asking the fundamental questions.
And projects with aligned incentives are poised to outperform.
Strategies and buybacks in particular are being heavily debated.
The side people take tends to match their bags; if their projects are doing buybacks, buybacks are bullish; if their assets have no buybacks, buybacks are bearish.
As usual, the truth is somewhere in the middle, and nuanced. Unfortunately social media is the nemesis of nuance, amplifying hyperbolic and incorrect analysis.
Buybacks and strategies on their own are futile. If the project has heavy dilution or no demand, it will go to 0 regardless. Detractors of these instruments can point to many examples.
Implementation on a project with a limited supply, fully and fairly distributed over many years, is a different story. Even better if the supply is deflationary in other ways. Demand is requisite as well.
In sum, there is no panacea. Every case must be evaluated individually.
Geckos are a ideal candidate for multiple reasons.
1) Fixed, indivisible, undiluted supply
2) Deflationary mechanics of: a) time b) forever staking
3) Long term staking further reducing circulating supply by ~80%
4) 4 years of steady demand as a top 4 Solana pfp
Bear markets are also the ideal time to experiment, with minimal downside.
So for Phase 1 ... we're starting with buybacks.
Details on Monday.
More experiments soon.