On Mindspace And It's Impact In Web3
"Narrative", aka. mindspace is the most important indicator that you have to master
Good morning guys! Before I start, I want to just address a few things. My substack has just been a place for me to regurgitate my thoughts for the day, but lately I’ve been realising that my drafts are filled with pretty long articles. But the longer the article, the harder it is to write it. So I wanna try something new - shorts, where it’s literally just a short article. This will probably be better for someone like me with a short attention span anyways.
Anyways, thanks for tuning in. Let’s go!
Mindspace In Crypto
I’ve been thinking - what exactly determines whether a coin will go up? This was sparked when I was scrolling through Twitter and saw that Animoca raised $358 million in their VC round. A quick scan Google search told me that it was a VC company, but when I clicked in to see their investments in blockchain gaming, I was greeted by this:
Now, you gotta be kidding me if you can seriously tell me that you know every single one of these games. I was like “Dude, if a VC is investing in all of these games, then they must be pretty good” - but this was quickly followed up with “Wait, but why don’t I know of any of them?”
But that’s the clincher isn’t it? Web3 is growing so big that it’s virtually impossible to keep up with all the protocols, projects, and games coming out at once. I consider myself to be pretty well-versed in the “gaming/NFT” universe, but honestly there’s just too many that’s popping up everyday to even consider.
And that’s what mindspace is about: The ability of certain projects to take root in your mind and occupy it. Cobie has written an immensely great article on it that you should read.
Mindspace as an indicator
SOLUNAVAX, FOAN, Blockchain gaming - these are all “narratives” that were spun into existence due to current market trends, or were they just “memed” into existence?
Narratives are a form of mindspace. Whether a coin pumps because it’s part of the narrative, or a narrative is formed BECAUSE a coin pumps doesn’t matter; in both cases, clearly the coin in question has taken a large % of a person’s attention.
We often see this in NFTs as well - the success of BAYC led to many derivatives, and people chase these derivatives to get a piece of the pie.
But who wins? Trading is a zero-sum game - the winner is the person who correctly identifies the meta, and rotates into it the earliest.
But there’s a deeper, underlying problem that I would like to address. As more and more people come onboard, we’re seeing more and more projects. Take the above-mentioned blockchain gaming example. It is of no surprise to anyone that the current meta is blockchain gaming.
What I want to know is - how, amidst this mass of games, will someone correctly identify the correct game to invest in?
Take my trades for example. I’ve been sitting on a Frontier Data Key for around 4 months now. In that time, the price has only doubled (a 100% increase). In contrast, JEWEL has been up more than 400% in the same span of time.
I would like to point out that although both projects are great, clearly one of them is better than the other at “pumping”. Also, what if Frontier hadn’t pumped? What if I had invested in another gaming coin that just didn’t move at all?
You see my point. With so many games to invest in, not everything will pump. In the earlier days, sector-specific pumps happened because everyone was rotating into the same coins and the same protocols. Now, we have so many different chains, with each chain building their own games and protocols.
And so, mindspace has never been a more reliable indicator. Tradfi will laugh at me - with their PE ratios, DCF, and other fundamental metrics. But this is crypto. In Crypto, Mindspace is everything. Not only in narratives, but in the specific coins of that narrative.
BUT how do we measure it?
I don’t think there are visualizable data points (yet). But back to my JEWEL example, I think a great indicator of mindshare was how much CT (Crypto Twitter was tweeting about it). I follow certain people who I believe are indicators of the overall macro market. And when all these people started talking about the same green coin, I knew I had to get in on it.
In contrast, I hardly see anyone talking about Frontier. BUT - I’m immensely bullish on it because of the Ubisoft partnership. Literally, who doesn’t know Ubisoft? The chain of events is clear as day to see.
And so that’s another indicator you can use - relation towards a huge brand. Nike & Clonex, Champion and Non-Fungible Friends, etc.
But I think there’s a more meta-indicator here, and that’s identifying good projects versus projects that are purely pumping just because of “VCs”.
In this very well written thread, Cobie talks about how the current state of things look a lot like the 2017/18 market; VCs frothing to get in, bidding on anything because they think everything is “up-only”.
While VCs are a good way to earn mindshare from their prestige, thinking deeper you realise that they’re not here for the long-term. They’re here to dump on you - the retailer. And this typically means that once their token unlocks, you can expect huge price crashes.
This is, of course, subject to the type of token unlock. But in general, you’ll have to be very careful in examining the way these unlocks work. In contrast, the two top performing coins (JEWEL and MAGIC) didn’t have any sort of VC unlock; so there’s that.
Wrapping it up
All in all, I believe mindspace to be an extremely important indicator. And the best way for anyone to determine what causes certain swings in mindshare is by asking yourself - what current projects occupy the most of your mindspace? And WHY do they occupy such a large portion of your mindspace?
Because breaking that down could be the key to finding those great trades that will help you make it.