Moonshot Era

Posted on:Mar 25, 2024

TikTok, a social media application for sharing short form content, has taken the world by storm. The application has grown past a billion users, with more than 100 million of them in the United States. Statistics show that the average American watches TikTok for 80 minutes a day — more than the time spent on Facebook and Instagram, combined.

At Advisors Anonymous, we believe TikTok’s success can be distilled into three areas:

  1. Viralized content easily shared through messaging applications and social media
  2. Dopaminergic reaction triggered during videos, causing addiction
  3. Solo activity that was picked up due to boredom and work-from-home mandates

We argue TikTok’s ascension is just the start of society’s slow devolvement into desperation, loneliness, and boredom. TikTok isn’t the only trend we can point to; In a 2009 study, Daniel Kahneman, a Nobel Prize Winner, found no further progress between emotional well-being and annual income after approximately $75,000. Source.

For reference, in 2009’s wager statistics (source), an income of $75,000 was in the top 12% of U.S. earners. Compare that with 2022 metrics (source), where a salary of $115,000 was required to hit the same ‘standard’ of living. To put it bluntly, wages have not kept up with standard of living, especially in urban areas.

The new workforce has been groomed for high octane information through video games, TikTok, and other media, but are stuck working mundane, low-paying 9-5 jobs without any end in sight. Many are living paycheck-to-paycheck, depositing 5% of their income into a company-matched 401ks, and unable to purchase homes due to rates or prices.

Being terminally online and loud spoken as a generation, several have taken to social media to voice their displeasure, some of which have hit national attention. Here’s a short from @brielleybelly discussing her current lifestyle. Making matters worse, the upper echelon of society refuses to acknowledge the changing of times.

A tertiary effect of this frustration has manifested itself in the rise of gambling revenues. The American Gaming Association (“AGA”), a United States gambling industry education and lobby firm, saw each of the primary verticals within the industry– set revenue records in 2023. Particularly, sports betting which continued to see significant growth, increasing 44.5 percent from 2022 and reaching $10.92 billion in revenue (Source).

Retail is more comfortable throwing $200 in a 5-leg parlay or buying SPACs and “Meme Stocks” than prior generations. It’s gotten so heinous that Investopedia, a glossary and blog for starter financial education, published a blog titled “What Are Meme Stocks, and Are They Real Investments?”

To summarize, society is:

Advisors Anonymous believes these are all characteristics that will make moonshots or, as they are colloquially referred to, “memecoins” the killer application in crypto. 

The Killer Application in Crypto

On one hand, the market is observing traditional companies entering the space. Inevitably resulting in the “blue chips” becoming hyper competitive, muting the returns seen in prior cycles. Prices will go up, but not as fast as they did in 2021. We expect that as we move forward, users that amassed wealth from leverage will be washed out by these more sophisticated firms. These “blue chips” also often have the supply overhang from investors, teams, and estates, further preventing outsized returns from retail seen in prior cycles.

On the other hand, retail is unlikely to delineate the technology behind web3 products, but are instead attracted to the fastest movers, with the simplest narratives and viral content. While those embedded within the industry may be able to pick winners across the L1, L2, and DeFi sectors, newer folks do not have the edge nor will they be interested.

We’ve seen a surge in moonshot market dominance from fair launch tokens like PEPE and WIF. Similar trends were present with NFTs during the 2021 - 2022 run, the rise and fall of NBA Top Shot was a prime example of this. At one point, Top Shot did over $224 million in sales volume with over 80,000 unique buyers, generating over $45 million in a single day.  @Randy Ginsburg wrote a great piece on the history of the product and its ultimate downfall due to demand, and in our opinion, waning user attention. We attribute Top Shot’s success to:

  1. Easy user onboarding and abstraction from the blockchain.
  2. Engaging content shareable through social media.
  3. Gamification and dopamine induced through randomized packs and price fluctuations.

Following the Top Shot rollercoaster, Opensea and Moonpay capitalized on the mania by releasing easy tools to purchase NFTs. The sheer speculation on JPEGs showed us that newer users were interested in betting on communities they found engaging and funny. NFT launches also mimic moonshots:

Recent product launches from Cubist, Privy, Coinbase’s smart wallet, and telegram bots compound on this trend, obscuring transacting on-chain for less crypto-native users.

Keep in mind, hallowed tales of old DogeCoin and Shiba millionaires are deeply entrenched within participants in crypto, and the recent run up from PEPE and Dogwifhat have acted to compound this fomo. Like it or not, moonshots are here to stay and will be the gateway drug for new users, just as NFTs were for some, DeFi to others, and ICOs before them.

If you’re still not sold on the vision, ponder these questions:

  1. Why would retail spend time learning about Move vs. Rust vs. Solidity blockchains?
  2. Why would retail concern themselves with the differences between fully homomorphic encryption vs. zero-knowledge proofs?
  3. Majors like Ethereum, Solana, and Avalanche, are expensive to hold. Why would retail hold these tokens over Bitcoin Puppets, Pepe, DogwifHat, or CoqInu, all of which do not have the overhang from more sophisticated investors?
  4. If Solana goes up 200%, while BODEN goes up 1,000%, which will receive more publicity? Which price action induces greater dopamine?
  5. Does it feel better to hit a 5-leg sports parlay or watch $200 turn into $2,000 with a community bull posting about “Transcendence to Valhalla”?

Don’t get our analysis confused, Moonshots are a battlefield where participants are dodging honeypots, rugs, developer’s selling, and swift changes in market attention. Yet, moonshots are a rising asset class where both left and right curves can participate, gambling their way to financial freedom through betting on social trends. From our time spent in the trenches, Advisors Anonymous categorizes Moonshots into three verticals:

  1. Iconic Memes (DOGE, PEPE, Dogwifhat)
    • Moonshots originating from history or artwork that are used to mascot a token.
  2. Pop Culture Memes (BODEN, MAGA, WYNN)
    • Moonshots created for satire, often mascotted or influenced by public figures.
  3. Culture Memes (MOG, ZYN, STAN)
    • Moonshots used to bring together a community.

For what it’s worth, we believe the market is in the 4th inning of the trend as we’ve yet to see moonshots used in a proper go to market strategy. The market has seen a semblance of this thought at the Avalanche Foundation, who are purchasing moonshots to inflate value, incentivizing users to test out the chain. Pepecoin, the original token launched in 2016, is attempting a similar GTM community bootstrapping campaign for their upcoming AI protocol, BasedAI. The OG Pepecoin team has revived the token through a clever utility maneuver, creating demand for the token in their BasedAI launch and hinting at massive deflationary pressure upon launch. We believe this technique of community bootstrapping through memecoins is only going to become more popular over time.

During the final stages, we expect to see public figures endorse tokens, similar to Elon’s infatuation with Doge.

At Advisors Anonymous, we’re excited about this new trend. We believe this  is the start of hyper-financialization, the ability to bet on trends, culture, people, and even ideas. Welcome to the new asset class. Welcome to the moonshot era.