First of all, I want to cheer up my friends in Shanghai. We are just as depressed as everyone else these days, the only difference is that we are not starving. Although when this episode was released, I hope that the situation has improved; but at the moment, I can only say: if you don’t know what to believe, believe in time - time will heal everything. Today, let's help you divert your attention and discuss a slightly lighter topic: "Sports + Making Money + Web3". The phenomenon represented by today's topic is a good example of "Wei-style Dissipation Theory: Meme + Structure". Xiaopao and Wang Wei (Will) will do a case analysis of the new thing StepN. (The content discussed in this episode has nothing to do with specific projects and does not represent any investment advice) This issue outline 1. My personal experience with StepN: The huge difference between the psychological drive of runners and traders 2. Use the “Wei-style dissipative theory” to analyze the “meme” and “structure” of StepN – is it a “sustainable Ponzi structure”? 3. What is a “double meme”? “Sports” and “making money”: Which one is the lasting “strong meme”? 4. What is the “positive and negative feedback balance structure”? 5. The necessity of “cost exposure” in the Web3.0 field 6. Is StepN a Web3 product or a Web2 product that incorporates a token economy model? · Further reading ·
· Transcript · Xiaopao (02:41): Today I want to help you divert your attention and discuss a lighter topic - sports and making money. The phenomenon represented by today's topic is actually the dissipative theory discussed in the previous episode, that is, using the dissipative theory - the method of "meme" plus "structure" to analyze the Ponzi structure - an extension and case analysis of this topic. First of all, I would like to ask Teacher Will, what are your exercise habits? Will (04:38): I do have exercise habits. I used to play various ball games, but now that I work longer hours, I basically only do standard exercise in the gym, such as treadmills and strength training. Other than that, I am a typical stay-at-home guy. Jogging (05:20): I run every day. I started before college. Basically, I run about 5-7 kilometers every day. But I don’t like to record, such as using apps to record steps and exercise data; I don’t like to show off my “achievements” in WeChat Moments. Except for “showing off my shoes”, because my shoes are very worn out when running, and they wear out at an average rate of about two pairs per year, so every time a pair of shoes wears out, I will commemorate it in WeChat Moments. I learned about StepN a while ago and was very curious, so I started using it with a research attitude. The more I used it, the more I felt that the phenomenon it represents could not be summarized by a sports app or a Web3.0 product; I soon felt that it was a good example of the dissipative theory and the "meme" plus "structure" analysis of the Ponzi structure that we discussed. Has Teacher Will used this APP? Will (07:03): I haven’t used it myself, but many young women and men in my colleagues have used it, and some of them may have started using it before the project became popular. I haven’t used it for a very simple reason - I work out in the gym now, and StepN can’t count steps indoors, so I have to work out outdoors, so I won’t consider it for the time being. In fact, many of our colleagues are like this. Although they also go to the gym to exercise, for StepN, they have to walk outside for a few minutes every day. Xiaopao (07:50): I've been using it for a few weeks. I was quite fascinated at first, and then I had more ideas. Let me first take a few minutes to introduce to you its rules of the game and some of my feelings about using it; then, please ask Professor Will to analyze whether it is a sustainable "Ponzi structure" from the perspective of "meme" plus "structure"? I guess many of you haven't heard of this product. It's actually an APP, similar to Keep, Strava, etc., which records your running routes and kilometers. But what's special about it is that the amount of running you do every day can be converted into tokens, which means you can make money. This model is a very popular concept in the Web3.0 and crypto fields, or a business model - "x to earn", which means "earn while doing X". For example, "play to earn" means earning while playing, and StepN is a kind of "earning while running". Now in the market, it is considered a breakthrough product because it attracts many people who are not originally in the crypto circle, such as running enthusiasts, to enter the world of Web3.0. First of all, I want to talk about how I noticed it - this is quite important, it means how you were "attracted". I heard this name a long time ago, but I really started to pay attention to it on Bloomberg's news side. One day at work, a pop-up window suddenly popped up saying that the price of a token called GMT had skyrocketed (GMT is the governance token of the StepN project), from more than one cent in US dollars to a maximum of more than two dollars. I remember a Bloomberg reporter asked on Twitter why this was happening. Someone responded: Because people on Earth suddenly want a pair of "metaverse running shoes." I found this very interesting, and immediately read the white paper of this project. I decided to experience it myself and see what this phenomenon is all about. In fact, the factors that attracted my attention to it are actually quite consistent with the rules of "attracting new users" or gaining attention in the crypto world so far - most people notice it from the "price surge". Or "price surge" is always the best publicity. So I started researching it. In order to compare different groups of people and get an objective view, I asked a friend to experience it with me. This friend and I are completely different people. I am a long-term running enthusiast. Running is a part of my life. There may be some "social factors", such as wanting to stay in shape, but it is more of a habit. My friend is a senior trader and a moderate gamer. There are two types of traders in the world, one is the "betting direction type" and the other is the "arbitrager" (arbitrager), such as market makers. He is an arbitrage trader who likes to compare prices in different markets, commonly known as "looking for free lunch" (taking advantage), and his arbitrage intuition is outrageous. We both started the experience at the same time, but later on our motivations and methods of use became very different. To start the game, you first need to buy a pair of virtual running shoes. At the time, the cheapest price was about 8-9 Sols (Solana tokens), which means the entrance fee was about 8,000 Hong Kong dollars. Running shoes only have a certain amount of energy per day. If you have a pair of shoes, the energy per day is only enough to run for about 10 minutes, which means you can only make money in these ten minutes. Of course, you can buy more shoes. If you run for more than an hour, you may need to own at least 30 pairs of shoes. After the energy is used up, if you still want to continue running, you will only wear out your shoes and not make any money; shoes need daily maintenance, which costs money, otherwise the greater the degree of wear and tear, the less money you will make from running. For example, I have a pair of shoes, I run for 10 minutes every day, then stop and close the APP and continue running; I earn about 6 GST (tokens used in the StepN APP) every day, and I have to spend about half of it to repair the shoes. There are many other game rules. For example, your shoes can produce "small shoes", can be upgraded, can open blind boxes, etc.; but there are costs - for example, you need to pay for the upgrade and wait for time. About two weeks later, interesting differences began to emerge between me and my friend: For me, I run every day anyway. If running suddenly has "value" one day and becomes something that can make money, then running seven kilometers every day is a waste. I also thought about it. If I lose my job today and have no source of income, I can go to the cryptocurrency ATM in Causeway Bay to exchange the more than 160 Hong Kong dollars GST I earn from running for USDC, which may be enough for daily meals. So my motivation is: if you don’t use it, it’s a waste, no pressure, no loss. My friend is completely different. StepN makes his arbitrageur nature come to the fore. He spends a lot of time every day studying the various arbitrage spaces in the StepN rules - such as the daily price changes of three currencies: GST (token used in the APP), GMT (governance token) and SOL (Solana token) to determine the strategy that can earn the most value. For example, if the price of SOL is lower now, he will keep running, try to earn more GST and then exchange it for USDC, and then use USDC to buy SOL - which is equivalent to synthesizing a cross arbitrage. But if the price of GMT is higher, he will upgrade faster, because the higher the level, the more GMT he can earn. He also made his own pricing model to find the endogenous price for GMT and GST. So his motivation is: whether it is running or dancing, any sport that can make money and arbitrage is a good sport. But our conclusion is the same: if there is no money to be made one day, we may not run anymore. It seems that we all run for the purpose of making money. Will (17:44): The two users’ personal stories also introduce a typical role in this ecosystem: the arbitrageur, who studies how to obtain the maximum value, and even has the meaning of challenging or even “attacking” the economy. It’s very interesting. I would like to analyze it from my perspective. When we talked about dissipative structure before, the concept of meme and structure, we were analyzing why DeFi projects can grow so fast or have such huge returns? I think the StepN project is indeed very typical. Whether it is called Web3.0 or a crypto project, it actually has relatively good designs at the two levels of "meme" and "structure". Let's talk about "meme" first. I think projects like StepN belong to a relatively good meme model. I simply summarized a concept called "double meme mechanism" . Last time when I discussed memes, I didn't actually talk about what "memes" are. When talking about the example of Turkey, I discussed that it was meaningless for Erdogan to stabilize the value of the lira by "multiplying deposits by 2" and other "pure structural" adjustments; at that time, I joked that there must be a call for "the great rejuvenation of the Turkish nation" - only then would it be a reasonable meme to attract everyone to continue to stay in Turkey's ecological environment. In fact, "memes" are indeed a kind of "idea" that people can recognize. In reality, there are many memes. For example, the citizens of a country and "national rejuvenation" are memes; "Chinese stomach" is also a meme, which determines that you actually want to live in China and don't want to go abroad. This kind of cognition is actually a meme. It is normal to have at least one meme for a project. If you don’t have any memes, others won’t be able to “recognize” your project. But a single meme may not be enough. Previous DeFi projects, such as the Olympus DAO discussed last time, have a typical feature, that is, the meme is relatively "simple". All we can see is "making money", and Olympus DAO has introduced Nash equilibrium for this purpose, telling you that you can make more money if you "don't sell", and everyone will be ruined if you sell. But it always revolves around "making money" or "losing money" - of course, making money and losing money is obviously a powerful meme, which is an indisputable fact. Therefore, most DeFi projects and crypto projects are probably centered around the meme of making money. But this is a bit too simplistic, and it is easy to fall into the situation of "rapid growth and rapid collapse". Growth is fast because there is a money-making effect, but once the money-making effect is gone, collapse is also fast - because there is no other meme to support it. The ideal situation is of course that there are a lot of memes. If you have 168 memes, even Sun Wukong can't escape from your palm. But a person can only recognize three things at the same time - if there are more than this number, it will be difficult to understand. So I think a good project, maybe needs 2 or 3 memes, that's probably the best state. One is too few, four is too many. A project like StepN, at least two memes: the first and most important is still making money. I think it's important at least in the initial stage of any project. We talked about this last time. If you start a jogging platform, you will get subsidies, be cheap, or make money at the beginning. But you will soon find that it is difficult to sustain for a long time, and you must come up with "another thing". What is "another thing"? I think it should be another typical human psychology, that is, "a continuation of something that already exists." You just mentioned this mentality: I have to run every day anyway, and I don’t pay anything more for it. I can also make some money with it. People will have this way of thinking - I have to do something anyway, and if I don’t pay anything more for it, I will feel relieved and willing to participate, and I will have less resistance to participating in this thing. This falls into another concept we talked about - I call it "safety". "Safety" is actually a very powerful meme that makes you feel that you will not be harmed or hurt by going into something. I think most of StepN users think like this - I have to run anyway, and I don't spend extra time on this. If you spend extra time or waste energy on it, you will feel insecure, because everyone knows that time and energy are precious. StepN does it better. It grasps an important point of the meme, which allows you not to "spend extra money". Is there more to this meme? In fact, in the “ICO era” of 2018, a large number of projects also took this path. The stories they told were often about introducing blockchain into a certain industry, whether it was the catering industry or the clothing industry. Almost all industries could be called “blockchain+” or “+ blockchain”. In fact, the meme of "using blockchain to improve a certain industry" is actually relatively weak. But if you convert it into: in this industry or daily field, without any extra effort, I can give you a possibility to make money, these two memes can be effectively connected. This kind of meme design is actually inherent in most of the current Web3.0 or crypto projects, but people may not actively design it from the perspective of "meme superposition", so the effect is not very good. StepN is obviously a project that can superimpose these two concepts better after several iterations. Of course, this is also because it sees the direction of "sports" - because "sports" naturally conforms to the cognition of "no extra effort". Therefore, achieving "meme superposition" or "double meme" - I think it is very important for a project. Xiaopao (26:24): After listening to Mr. Will's explanation, my impression of science students has changed a bit. I used to think that "creating new concepts" was the strength of liberal arts students, but now I think that science students are not only very capable in creating new concepts, but also very logical. Will's concepts of "double memes" and "meme superposition" just explain some of my feelings: I always feel that everyone calls everything "memes", but are they the same concept? Sometimes it represents something very lasting, such as culture and habits; but there are also some fleeting things, such as cat and dog pictures and meme pictures circulating on social networks, which are also called memes. I feel that they are definitely not the same thing. Because the latter disappears quickly, while the former can last for thousands of years. In fact, the performance of the entire crypto industry from its birth to the present is also in line with the logic of "meme superposition". After so many cycles, the halving cycle, the craze represented by ICO, DeFi Summer, etc., each wave seems to be regarded as a "meme". But these memes are still relatively shallow. If you stretch the entire development curve of the crypto industry, it is still an upward line. What supports this line? I thought about it and felt that there is a strong "meme" or concept that has not changed from beginning to end - such as yearning for freedom, autonomy, grassroots geek spirit, etc. There may be new spokespersons in each round, and these new spokespersons have such commonalities in their personalities and images. Will (29:34): I agree with this. Systems like Bitcoin and Ethereum do reflect this “dual meme” model to some extent. On the one hand, the growth of the currency price brings wealth effect, and on the other hand, they have their own ideas. For example, Bitcoin's "asset inviolability, asset freedom, or freedom from the impact of excessive currency issuance"; Ethereum is "the computer of the virtual world and the infrastructure of computational finance" - their dual memes are a perfect combination. From this perspective, they are still far superior to projects like StepN. StepN's meme is a superposition of "wealth effect" and "sense of security", while the dual memes of Bitcoin and Ethereum have even merged into one - your "wealth freedom, avoiding the impact of excessive currency issuance" and "coin price growth" are integrated, in fact, two sides of the same coin. The characteristics of Ethereum - your "gas fee consumption" and "computational infrastructure usage cost" - are also integrated. A truly lasting, or even great, project will definitely have this feature. We cannot say whether it is designed or spontaneous. But it will definitely have the feature of a perfect superposition of “multiple memes”. Xiaopao (31:37): Professor Will called the basic layer of the "double meme" "safety". We also mentioned it in the episode "Metaverse Sexual Harassment". "Safety" is a good description, but are there other angles to this type of meme? For example, a "commonality" of human beings, an existing "habit", "culture" or "belief" - or the result of the solidification of meme culture accumulated by human beings over a long period of time. For example, the human nature of "advocating freedom" may have been just a short-term meme similar to a "stalk" at the beginning. But like the "selfish gene", it developed selfishly (this "selfishness" has no emotional color) without any design or manipulation, and finally became such a result - the concept of advocating freedom. Memes and genes are the same. A certain behavior or idea is gradually solidified over a long period of time, forming a "default" thing to do. In fact, running is the same, because "running can make you healthy" may have started as a "stalk", a solidified idea. If we have to argue about it, whether running can make you healthier may not be certain. But it has become a concept. Will (33:22): Right. Let me add one more point to the analogy with genes. Human genes are huge. Humans have hands, legs, eyes, and noses, which are actually determined by different gene fragments. The human body has such complex characteristics, which is a typical dissipative structure. From the perspective of a project, an economy, or a social activity, there are indeed many memes, but it is difficult to make it like genes, which are jointly determined by millions or even hundreds of millions of fragments - because human cognition is difficult to reach this volume. We can't design something to have 5 million memes and let everyone recognize them - from this point of view, memes are very different from genes. A good project, economy or society must have 1 to 3 powerful memes that can be recognized by everyone. The rest will probably have to be left to the "structure". Xiaopao (34:44): I suggest you read Dawkins' The Selfish Gene and Susan's The Meme Machine again. They are actually saying the same thing from beginning to end: both genes and memes are "selfish." But I think memes are even more "selfish" than genes. Selfishness is something that cannot be changed by anyone's will, cannot be designed, and is passed down in a natural way. If we think from the perspective of memes, in fact, human thoughts are not created by ourselves, nor are they used to serve ourselves; instead, we are the hosts of memes, which parasitize us and we are possessed by memes. Therefore, what kind of memes can be passed down cannot be designed by humans. The role of memes has come to an end. Teacher Will will analyze StepN from the perspective of "structure"? Will (35:55): We have discussed before that the complex structure of dissipative bodies is an essential feature of the positive feedback mechanism. Without a complex structure, it is difficult to establish a positive feedback mechanism. But in fact, this sentence only says half of the story. There should be another half. If you want to prevent a dissipative structure from collapsing quickly, you should have a "corresponding structure". It should actually be a "negative feedback mechanism" to some extent, which is the opposite of the "positive feedback mechanism". Or the concept of "friction". If the "positive feedback mechanism" is too strong, for example, the money invested in StepN can be earned back in three days, and I can run it 24 hours a day, then the positive feedback mechanism must be strong. I can even optimize it, such as giving more money in the first hour, and more money in the second and third hours - if it is designed in this way, the positive feedback mechanism is stronger. But in fact, if you design it this way, the collapse will definitely happen in an instant - because everyone will desperately try to accumulate it, and then sell it all at once. Because the more people who can obtain it, the greater the pressure of selling will be, and it will become less valuable, and the faster it will collapse. So we can see something very interesting: the design of many systems, such as Bitcoin's four-year halving cycle and the energy of each pair of StepN shoes is only enough to run for 10 minutes a day - you will find that the logic of these mechanisms is the opposite - the longer you spend and the more you pay, the less you get. This is obviously a "negative feedback mechanism." This is very strange. Is there something wrong with our dissipative structure theory? Should complex structures be positive feedback mechanisms or negative feedback mechanisms? I think it's normal. What is the premise of the inherent characteristics of dissipative structures? It is to exchange matter and energy with the outside. So, "positive feedback" is good when it comes in, but if it is still "positive feedback" when it goes out, wouldn't it be worse? In fact, every designer of a dissipative body (assuming that the structure can be designed) will definitely design such a structure - easy to come in but difficult to go out. Therefore, this complex structure must reflect these two characteristics at the same time: the positive feedback mechanism is "strengthened" when it comes in, and "weakened" when it goes out. In other words, it is an absolutely rigid rule that makes one direction faster and the other direction slower. It sounds easy to understand, but it is difficult to do in practice. Why? A purely linear thing has one speed in one direction and the same speed in the other direction. Complex structures have different dimensions, some of which are used to strengthen the speed of entry, while others are used to weaken the speed of exit. If I simply want it to be "fast in, slow out" - it can't be done with a rigid mathematical logic. The only thing I can do is to settle for the second best. Let the "in" speed not be so fast. Otherwise, if a person can enter freely as long as he wants to, he can control a lot of energy in your body through the accumulation of time. If you allow it to be swapped out in an instant, the system will collapse too quickly. In fact, the strategies that we see now that can really be implemented are all about trying to balance the two as much as possible. This is actually a very standard routine in the gaming industry, and we generally call it "balance." Just like the design of StepN, you can only run for ten minutes a day, and then the energy is gone. You need to use various tricks 24 hours a day to get a lot of GST - this design is a typical balanced design, which needs to be restricted. This is the first point of our structural analysis. But here comes the problem. If you don't let it in too quickly, then it's fine. I won't consume it after 10 minutes because I won't get any benefit and I don't want to incur any cost, right? But if you don't close it, your shoes will be worn out. This logic is obviously unreasonable for consumers - how can I consume if I can't get any benefit? This is also very simple. Because the operation of this system architecture has costs. When running, you need GPS signals to come in, and you need to record your running data, which consumes background computing power. If all computing power is recorded on the blockchain, such as Ethereum, then each transaction will consume gas fees, so recording also costs money. It is the same even if it is not recorded on the blockchain. In a data center, the machines have to run every day. For example, Tencent’s WeChat is free because it has other means of income, otherwise it cannot cover up the fact of “cost”. Therefore, design cannot be viewed simply from the outside, everything has a cost - I think this is a very important direction for future system development. The model of Web2.0 and the Internet model of "the wool comes from the pig" actually conceals the "cost" of system operation - they all believe that there are other sources of income to subsidize their own costs. Models like the Ethereum blockchain actually make the "cost" more reasonable - every operation I make has a cost, and you can see this cost, which is a more reasonable model. In fact, the development of Web3.0 should also go in this direction. Every operation has a cost, and you know how much the cost is, and you can decide whether to pay or not. Back to Step N, it doesn’t matter if you don’t want to pay the cost anymore, you can turn it off; but turning it off means that the software will no longer take on the record and other functions for you. This is very important in the application structure of Web3.0 and cannot be ignored. If you make it a standard Web2.0 form and hide the cost, the system will not be sustainable. To sum up, a good "structure" has these two characteristics: First, there are positive feedback mechanisms and negative feedback mechanisms. It cannot be too accelerated, because it may lead to accelerated collapse. Second, the friction or cost of the actual operation within the system must be explicit so that all participants can know it. Xiaopao (44:45): It was very exciting. I think there is no need to ask many of the following questions. We cannot control the development of "memes", but the "structure" can be designed in a more reasonable and sophisticated way. Positive feedback is actually an "acceleration". Positive feedback can be divided into "positive positive feedback" and "negative positive feedback". Positive positive feedback means faster and faster, while negative positive feedback means slower and slower. However, negative feedback should be a negatively correlated concept, a concept of "pulling back". This reminds me that the logic of this structure is actually applicable to the financial industry. For example, the "negative positive feedback" when the financial market collapses; and the "balance" between the business department, risk control department, and operation department in the bank. The risk control department is a "negative feedback" role, and everything must be "pull back", especially when the market is good, more friction should be applied to highly developed businesses. (Of course, the current financial system has major flaws, and the negative feedback force has become very small. This may also be related to the human mentality-when the market is good, the party that should have played a negative feedback role will also be affected by the business side, and instead become a boost to positive feedback). The best structure for the financial industry is still a balance between efficiency, cost and risk - forming a stable triangle. By the same token, the current development difficulties of the Internet and web2.0 may be that the triangle is missing the "cost explicitness" corner, which leads to an unbalanced and unsustainable situation. Will (47:53): These two characteristics are actually "overall" characteristics. A project like StepN actually has a lot of ingenuity in its structural design. In fact, whether it is crypto, Web3.0, traditional financial markets or Web2.0 projects, they will gradually begin to merge with each other, because everyone has their own areas of weakness. For example, Web3.0 or the crypto industry over-emphasized positive feedback mechanisms in the early days, which gave rise to countless myths of "10,000 times a year" or even "100,000 times", as well as various crashes, which led to people in traditional industries always doubting whether you were a scam. Projects like StepN, which probably had good intentions and wanted to continue playing, would proactively design a very obvious negative feedback mechanism, which is similar to a risk control mechanism - this is actually learning from traditional industries. Traditional industries also take detours and crooked paths, and they overemphasize covering up costs. This is not only true in the Internet, but also in the financial industry. To give the simplest example, Chinese banks charge almost no fees for bank transfers, and only a portion of fees may be charged for extremely large transfers - this is actually a manifestation of not learning well. Operations require costs, and covering up the cost of handling fees is still using superficial means to cover up another purpose. I think this is not good, and we should return to the balance of cost, risk and benefit, which is the correct direction of development. The current financial industry should do the opposite and stop learning the Internet's "fleecing pigs" routine. The two worlds should converge for better development. Xiaopao (51:13): A few days ago, a classmate in the group asked: Is this "making money while doing X" model a Web3.0 product? Or is it still Web2.0, just using the concept of Web3.0? Or is it trying to use the tokenomics model of Web3.0 to change its financing method? Will (53:21): This is a topic that can be discussed continuously. The main problem at present is that the definitions of Web2.0 and Web3.0 are not so precise. It is really impossible to say whether a certain project belongs to Web2.0 or Web3.0. Projects like "X to earn" or StepN are not just Web2.0 with tokens. To be frank, this is what everyone is questioning: is it a new model, or is it just a project with tokens, financing, and trading? I think to some extent, StepN is slightly different from other Web3.0 projects, and its "token" factor is a little bigger. There were many projects like StepN in the past, but most of them failed or disappeared. Some even did better, with a real pair of shoes, with chips implanted in the shoes, and then connected to the phone via Bluetooth, etc. Of course, that may be a gimmick, or just a prototype product without real large-scale promotion. But from the perspective of "technological innovation", implanting chips in shoes sounds more like technological innovation than StepN's simple GPS pedometer function. I think that without a precise definition of Web3.0, it can be summarized as a question of "degree". What exactly is Web3.0? Is it more innovative in terms of technology, model, or underlying process? Is it more closely integrated with blockchain? Or is it more fully utilizing some features of smart contracts? It may be more objective to consider it from these perspectives. Running (56:42): I feel that it may be a "door", an entrance to Web3.0. I think so far, it is just a means, not an end; or it is a door, window, or bridge to a new world, allowing me to enter this world first. But what greater role will it play in the future, or whether its entire world is only running, I think it may not be certain in my understanding. This brings us to another huge "basket" we are going to discuss - the bridge of parallel worlds. I will stop here for today and talk about it next time when I have the chance. |
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