The objective of this post is to lay out how I see the market opportunity for SuperModular.xyz in 2023.
I’ve also recorded this post as a youtube video, which you can watch here.
Objective of this exercise
In this post I will outline an approach to how we might explore the regen web3 design space in 2023.
We are looking to create the greatest possible upside we could achieve in the next cycle of web3, where upside = venture scale returns, public goods
As such, we will be prioritizing our evaluation of the regen web3 design space to explore areas where we think we might discover projects with the greatest possible upside (again, defined as venture scale returns, public goods).
How do we find/create the greatest possible upside?
1. Study what new infrastructure is available.
To do so, we must reason about what infrastructure has been built this cycle, and how that will enable the next trend of apps.
(graphic circa 2019)
My shortlist of infrastructure that matters next cycle:
- Many more money legos, especially after the ICO/DeFi/NFT phases
- Account abstraction
- Gnosis safe
- Grants Stacks & Gitcoin Passport
- ZK Tech
2. Long Term Time Horizon
We must also have a long term horizon, so that we can survive until the next cycle.
3. Know our niche.
We must figure out what is in the center of the venn diagram of:
- What are our skills?
- What does the world need?
- How do we meet our purpose (our purpose is “cultivate a more regenerative digital frontier”) ?
4. Know where we are + where we want to be
We are in a search space in which we are trying to find the maximum of f(x) = public good + venture return.
We have found a local maxima (Gitcoin), and are now searching for a global maxima (a valuable portfolio of supermodular regen web3 ventures).
How will we know if our market exploration is successful?
You know it when you see it. What will it look like?
- We find new venture scale opportunities.
- We find new public goods that attract user interest.
Signs of a successful supermodule:
- Investment interest
- User interest
- Glowing testimonials & Increased Social Capital
- Strategic complements with other supermodules
- Cultivates a more regenerative digital frontier
5. Bottoms-up exploration of the design space
Our bottoms-up exploration of the design space involves looking at the modules that are available to us, and reasoning about what kinds of novel good does it enable?
- Passport enables sybil resistence
- Grants Protocol & Round Manager (QF) enable democratic capital allocation
- Grants Protocol & Round Manager (RPGF) enable expert based capital allocation
- Hypercerts enable the tracking (and possible monetization) of impact
What kind of new things could we build on top of this tech?
Vitalik has called Gitcoin a “significant pillar of the Ethereum ecosystem”, and Ethereum is the most successful web3 ecosystem in the world.
Gitcoin is taking what works in the Ethereum community + running it’s Grants Programs (which will enable anyone who runs an EVM based community to have quadratic funding).
Our job is to be a live player (A live player is a person or well-coordinated group of people that is able to do things they have not done before. A dead player is a person or group of people that is working off a script, incapable of doing new things.) and figure out what new innovative things can be done with these modules outside of what Gitcoin is doing.
Some examples of that might be
- building hypercerts
- build QF social networks
- build an open source non-EVM grants platform
- …many other things
6. Top-down exploration of the design space
We have a handful of initiatives that we are working on that will help us explore, catalog, and communicate value in the digital frontier. Together, they form our top down exploration of the design space.
- engagements with subject matter experts
- a priori analysis
- multi cycle entrepeneurship (both in web2/web3) and the muscle memory that comes with that.
- understanding market trends and market data
- teaching/educating at the frontier of web3.
If you want to see some early top down thinking, checkout the last 10 minutes of this video. Here is a handy timestampped link for you.
We want to build a well-oiled market opportunity evaluation & capital allocation machine that lucidly upregulates high ROI market opportunities & downregulates low ROI market opportunities… Over time, the market exploration will produce a supermodular ecosystem of massively valuable ventures (both to investors + to humanity).
This design space is such a blue ocean, that I think there is a lot of great opportunity in it that we see before anyone else.
But we can’t do everything at once.
So I think it would be prudent to set a cap of the number of market opportunities we evaluate at once with our limited resources (say, 5-6 at once?), and go all in on them.
Each supermodule that we work on will have its own
- Market hypothesis
- Human Resources
The market hypothesis of each supermodule will be evaluated against the project progress from running an iterative succession of monthly OODA (Observe Orient Decide Action) loops. If a project is NGMI, we will need to be relentless about spinning it down to make room for something else.
Human economic systems are complex systems + Complex systems are chaotic and hard to understand without engaging with them. As a result of this, we are not likely to solve this problem our first go-around. We should be intensely iterative. That means
- an inner OODA loop that keeps supermodules on track
- an outer OODA loop that evolves how we prioritize, resource, and manage supermodules.
We are exploring the design space of what is possible for SuperModular.xyz to build in 2023. This post is a summary of that thinking.