Kudos to Degens: the pioneers who drove early adoption in the crypto industry

Words: Qiao Wang

Compilation: Deep Tide TechFlow

A few months ago, I realized: “speculation” is the most frequently rejected idea in the crypto venture capital world, but it is the most common consensus among crypto users.

I’m certainly not talking about all crypto venture capitalists, but many of them are disappointed with the current state of cryptocurrency, which is undoubtedly very speculative. Some even see it as an ethical issue and openly ridicule the idea of speculation and the investors involved in it.

I’m not sure where this high-mindedness comes from. I have some assumptions. Perhaps they come from upper-middle-class or upper-class families and have never been financially stressed during their childhood, running around to earn money. Perhaps they see their peers investing in artificial intelligence, nuclear fusion, and space, unable to prove their existence to themselves or their limited partners (LPs). Perhaps they feel guilty for using Degens as their own exit liquidity and are trying to rationalize their moral stance.

Whatever the reason, this is either intellectual dishonesty or unfounded. Here’s why: “Degens” is synonymous with “early adopters.”

Cryptocurrency Degens is essentially no different from the early internet adopters, who had already used the first email clients and bulletin boards before the development of technologies like SSL. It’s just that the Internet is an information superhighway, and cryptocurrencies are a financial superhighway. Therefore, it is almost certain to say that the early adopters of cryptocurrencies should be those financial risk-takers who dare to try unverified products.

Venture capitalists want to see DeFi disrupt Wall Street. But who would be the first 100 users to risk their hard-earned money into an unverified financial protocol?

Venture capitalists want to see tokens drive the progress of humanity around the world. But who will be the first 100 people to spend $1,000 on a Helium hotspot to earn volatile and illiquid tokens?

Venture capitalists want to see NFTs create new intellectual property that competes with Hollywood and Nintendo. But who will be the first 100 buyers to buy “no real utility” penguin NFTs, and Pudgy World is not ready for production?

Will the average venture capitalist try these new things? No. They are too risk-averse, and the opportunity cost is too high.

So when you start laughing at Degens, you’re actually laughing at the first 100 users of that system that you’re philosophizing about from your ivory tower.

One of the most underrated outcomes of Degens activity in the early days of cryptocurrency was that it helped test our blockchains, rollups, wallets, oracles, bridges, RPC nodes, and much more. Without Degens, we simply wouldn’t know how secure and scalable our infrastructure really is. The fact that Degens was hacked and paid high gas bills is what has prompted our entire industry to focus on creating safer and cheaper systems.

Now someone might say, "I see, Degens has done a lot for our industry, but now the whole industry has turned into a pure speculative casino. I fully sympathize with that view. A world where the only use of a cryptocurrency is speculation is not the world I want to build. But the idea that speculation is the only use of cryptocurrencies is completely wrong.

The reason for this common perception is that speculation is the thing that attracts all attention. When a Nigerian teenager studying in Turkey uses USDT to send cross-border payments from home to a dormitory, no one cares. But stories like this happen every day across the globe and grow at an incredible rate. I know this because I’ve talked to about 50 revenue-generating and growing crypto neobanks and remittance startups in Latin America, Africa, and Southeast Asia. According to the latest report from Chainanalysis, India, Nigeria, and Vietnam are the top three countries with the highest cryptocurrency adoption. According to BH Digital’s latest report, $14 trillion worth of stablecoins were settled on-chain in 2022, surpassing Paypal. It’s been a long time since I’ve seen such a strong product-market fit in the crypto space.

But guess what? Even stablecoins are powered by Degens. One of the first use cases for USDT is cross-exchange arbitrage, as stablecoin transfers can be settled orders of magnitude faster than fiat currency tracks, and fast settlement improves the capital efficiency of arbitrageurs. One of the first use cases for DAI is leveraged trading, where ETH is deposited into Maker to create DAI and then used to buy more ETH. Without Degens, stablecoin holders may not have reached critical mass yet, and we may still be looking for the first non-speculative mainstream use case for cryptocurrencies today.

I love Degens on the chain. Part of the reason is that it helps with my instinctive brain dopamine needs. Equally important, it helps me visually understand the top 100 users. But I also want to build an open, borderless, permissionless, transparent, composable, user-owned financial system and network. That’s why I joined cryptocurrency. These two visions are not contradictory. Decentralized utopia requires open-minded, risk-seeking, thrill-seeking pioneers.