The one thing that I enjoy most about crypto is that the industry moves fast. There are new protocols, crypto companies, and white-papers popping up everyday - whether it's in De-Fi, Blockchain, NFT's, or whatever that's hyped up right now.
Throughout my time learning about crypto, I've noticed that a lot of the newer organizations position themselves to solve the challenges that more mature protocols face - which I think is good for two reasons:
Note: Crypto is not like big tech - where a company like Facebook would acquire Instagram/Whatsapp, which can inhibit innovation.
There's Sushiswap, that's built farming $SUSHI tokens (which Uniswap doesn't have), and even Pancakeswap, that position themselves as a Uniswap/Sushiswap clone but with lower transaction fees (because it runs on the centralized Binance Smart Chain, instead of Ethereum).
Note: From a simplified view, the key difference between Sushiswap and Uniswap is that people who lend crypto on Sushiswap get rewarded Sushi tokens and get a reward with a proportion of transaction fees, while people who lend crypto on Uniswap get a reward with a proportion of transaction fees, but no token.
One lesson that I've learned early in my crypto journey is to do your research. There's going to be scams out there that publish bullshit white-papers and promise to be the next big blockchain or protocol. That's why it's on you to understand the tradeoffs, pros, and cons of each protocol.
But, it's also hard to commit to researching sometimes because the market moves so quickly. At one point you can be an early adopter (and reap the benefits of the token value increasing), and at the end of the day you could be a laggard.
The bulk of this piece, and my second thought, is in regard to assessing the "first mover" advantage in crypto.
For a quick definition of the first mover advantage, it's exactly in the definition: it's a company that moves into an industry/market before their competitors and reaps the rewards of doing so.
For example, in the ride-sharing/food delivery app space, the first mover advantage is crucial. Skip the Dishes won Canada because they were able to penetrate local markets first.
Here's the question I want to answer: Does the first mover advantage apply to the crypto industry, or do the initial companies that define the new markets eventually fizzle out to newer, dominant players?
To answer this question, we'll look into a couple spaces in the blockchain/crypto space in which there have been attacks, clones, etc.
I'm sharing early thoughts. I encourage readers to share their own experiences to help refine my thinking. Everything that follows is based on my understanding of these protocols/companies. I’ve done my best to find sources to support my interpretation and verify my claims, but I am still quite junior in this space, and so should not be seen as an authority on the limits or capacities of the organizations I talk about.
I believe that Ethereum will serve for the majority of use cases for decentralized computing, and here are 4 reasons why I believe this:
Now with that being said, there's going to be several other Dapp platforms that will serve unique niches that I'm also really excited for. To name a few:
Disclaimer: I have looked into Cardano, but I personally have been unable to interpret and understand the value that this protocol brings. If you're interested on educating me on the values behind Cardano, I welcome you to DM me on Twitter or shoot me a message on Discord here.
Now, for the first mover advantage analysis.
Ethereum was one of the first blockchains for decentralized computing. However, if Ethereum was released today - would it still be considered the market leader in Dapp development?
I think so. Ethereum is an ecosystem that provides the most value to developers and wins in several categories below:
I've realized that De-Fi is a whole different universe as it's mostly consumer/retail-facing.
There isn't a high switching cost from depositing your crypto from Uniswap to Sushiswap to Pancake Swap, and the list goes on.
In that sense - the first mover advantage doesn't apply to the world of decentralized exchanges. What will make De-Fi protocols defensible will include the following:
We've seen protocols like Pancake Swap surpass Uniswap in terms of total volume exchanged in 24hrs (not total). There's been several members of the crypto community outspoken on these two exchanges.
Note: For more people to get into De-Fi, I think these terms of "Pooling," "Harvesting," "Farming," and the like are still pretty confusing for newbies. The documentation that actually clarified these terms for me wasn't even a blog post, but rather a help doc from the team over at Zapper: https://docs.zapper.fi/.
Developer and enterprise tools in crypto/blockchain are relatively dependent on the first mover playbook, while consumer/retail will focus on defensibility via UX + transaction costs.