When is the right time to start a crypto project?

I believe block-chain is the next internet and here's a talk I gave earlier about why. 2021 in crypto is probably the equivalent of 1998 in the dot com boom. Lots of hype, large valuations and very little actual usage, but usage is growing fast. If you started AirBnb, in 1998, the timing would not have worked and the product would have flopped. The decentralized AirBnb would not work now either and would be too early.  In this post, I propose two frameworks for how to time these markets. 

 The first model, is the "serve the existing user" model; i.e., One needs to build a product for the existing crypto (internet) native audience and not count on everyone being crypto native. Crypto native here means, have your own metamask wallet and interacting with dApps. Another way of saying the same thing is, if there is a venn-diagram with the left circle being set of all potential users for your app and the right circle being the set of all crypto native users, the fuller the intersection, better the odds that the timing is correct. 

 The reason AirBnb did not work in 1998 (and in blockchain right now), is if only 0.1% of the users who can rent your house are on the internet, you might as well not list your house there. Once 90% of those users are already on the internet AirBnb starts working. 

Let's now test how well this model works on three category of predicted ideas from the last bull run (2017):

1. The ideas that everyone predicted would work in this cycle and they happened: L1 chains actually proving out and scaling blockchain TPS. And all these chains being connected to ETH via bridges. This has clearly happened and was one of the top themes of this bull run. We now have many many L1 chains worth billions -- Near protocol, Cosmos and Polkadot are my favorites. This is clearly an incremental improvement to reduce transaction fees for the existing users that the model correctly predicts.
2. The ideas that no one predicted would work in this cycle but it happened: DeFi and NFTs are clearly the leaders here. Both of them again appeal to the existing user base of crypto rich, fiat poor users who don't want to KYC into an exchange. And there are lots of them.
3. The ideas that everyone predicted would work but it did not happen: Betting markets are clearly in this bucket. The existing crypto rich users have very little interest in betting on who is going to be the next president. Crypto offers far more rewarding adrenaline filled gambles than just a 2x of the money making these predictions. Therefore, for the prediction markets to work, it depended on bringing in new users and teaching them how to bet with crypto, which was a much harder thing to do. ala, too early.

For these reasons, I believe, a decentralized AirBnb, Uber, PG&E etc are too early. Even crypto twitter and BitClout does not work for the same reason. They will only happen when crypto native penetration reaches close to 100% and this is why the real world impacting stuff usually comes the last. The early internet or crypto apps are completely virtual and serving it's existing users.

In the internet, you first had the AOL where a few internet native users just spoke to each other anonymously and randomly. Little to no real world equivalence or significance. Then there was Yahoo -- which is a website list. And as that list grew a lot, we got Google etc. All of these again have no real-world equivalents. The important thing to note though is each of these "killer apps" grew the internet penetration by 10x and onboarded the next wave of users because it simplified complex technologies. It helped the internet native users first but then also expanded the number of users on the internet. Same thing is playing out, with BTC, ETH, DeFi, NFT. I predict the next crypto bubble is going to be about some decentralized consumer apps/websites running entirely on-chain.

The second framework, which is albeit a much weaker model than the first one, is "technical unlock" -- i.e, what recent technical breakthrough has enabled this? Right now, for the first time, chains can do 2K TPS and each chain can be run separately. I am very bullish on Cosmos and the kinds of apps this might unlock. I'm building one myself and looking to invest in this space.

What do you think is going to be the theme of the next bull run?