Paying Tribute to the Degens Pioneering the Early Adoption of the Cryptocurrency Industry

Honoring the Trailblazing DeFi Players who Embraced Cryptocurrency in its Infancy

Author: Qiao Wang

Translation: Deep Tide TechFlow

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

Of course, I’m not saying all crypto venture capitalists, but many of them are disappointed with the current state of cryptocurrencies, which is undoubtedly highly speculative. Some even see it as a moral issue and openly mock the idea of speculation and the investors involved in speculative activities.

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I’m not sure where this elitist attitude comes from. I have some assumptions. Perhaps they come from upper-middle or upper-class families who have never experienced financial pressure in their childhood and never had to hustle to make money. Perhaps they see their peers investing in artificial intelligence, nuclear fusion, and space, unable to justify their existence to themselves or their limited partners (LPs). Perhaps they feel guilty about utilizing Degens as their exit liquidity and try to rationalize their moral stance.

Whatever the reasons, it is either intellectually dishonest or baseless. Here’s why: “Degens” is synonymous with “early adopters.”

Crypto Degens are fundamentally no different from early internet adopters who were using the first wave of email clients and bulletin boards before technologies like SSL were developed. The internet is an information superhighway, while cryptocurrencies are a financial superhighway. So, it can be almost certain that early crypto adopters should be the financial risk-takers who dared to try unvalidated products.

Venture capitalists want to see DeFi disrupt Wall Street. But who are the first 100 users who risk their hard-earned money in unvalidated financial protocols? Degens.

Venture capitalists want to see tokens drive global human progress. But who are the first 100 people to spend $1,000 on Helium hotspots, earning volatile and illiquid tokens? Again, Degens.

Venture capitalists want to see NFTs create new intellectual property and compete with Hollywood and Nintendo. But who are the first 100 buyers of “useless” penguin NFTs while Pudgy World is not yet ready for production? Yes, it’s still Degens.

Will ordinary venture capitalists try these new things? No, they won’t. They are too risk-averse, and the opportunity cost is too high.

So, when you start mocking Degens, you are actually mocking the first 100 users of the system that you philosophize about from your ivory tower.

In the early days of cryptocurrencies, one of the most underrated results of Degens’ activities was that it helped test our blockchain, aggregators, wallets, oracles, bridges, RPC nodes, and more. Without Degens, we wouldn’t have known how secure and scalable our infrastructure really is. It is the hacks and high gas fees that Degens suffered that led our entire industry to focus on creating safer and cheaper systems.

Now, someone might say, “I get it, Degens has done a lot for our industry, but now the whole industry has turned into a pure gambling casino.” I completely sympathize with this view. A cryptocurrency world solely focused on speculation is not the world I want to build. But the idea that speculation is the only use case for cryptocurrencies is completely wrong.

The reason there is this widespread belief is because speculation is what grabs all the attention. When a Nigerian teenager studying in Turkey uses USDT to send cross-border payments from home to the dormitory, nobody cares. But stories like this happen every day around the world and are growing at an incredible pace. I know this because I have spoken to about 50 revenue-generating and rapidly growing crypto neobanks and remittance startups in Latin America, Africa, and Southeast Asia. According to Chainalysis’ latest report, India, Nigeria, and Vietnam are the top three countries with the highest cryptocurrency adoption rates. And according to the latest report by BH Digital, stablecoins worth $14 trillion will settle on-chain in 2022, surpassing traditional banking. It’s been a while since I’ve seen such a strong product-market fit in the cryptocurrency space.

But guess what? Even stablecoins are driven by Degens. One of the initial use cases for USDT was cross-exchange arbitrage, as the settlement speed of stablecoin transfers is orders of magnitude faster than fiat currency rails, increasing capital efficiency for arbitrageurs. And one of the initial use cases for DAI was leveraged trading, by depositing ETH into Maker to create DAI and then using it to buy more ETH. Without Degens, stablecoin holders may not have reached critical mass, and we might still be searching for the first non-speculative mainstream use case of cryptocurrencies today.

I love the Degens on-chain. Partly because it caters to my instinctual dopamine cravings. But equally important, it helps me intuitively understand the top 100 users. However, I also want to build an open, borderless, permissionless, transparent, composable, user-owned financial system and network. That’s why I got into cryptocurrencies. These two visions are not contradictory. Decentralized utopias need open-minded, risk-seeking, and thrill-seeking pioneers.

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