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Sections Below
Crypto GDP - diving deeper into a point Brian Armstrong made on a MOZ podcast episode
Uniswap crosses $50m in revenue in 9 months
4 interesting casts you may have missed in the last few days
Let's dive in 🚀
Crypto GDP
Context
I was listening to the Moment of Zen episode with Brian Armstrong this week and found one section that surprised me a bit.
Dan asked Brian what north star he thinks accurately measures economic freedom (Coinbase's mission). In my head I just defaulted to # of crypto DAUs. Instead, Brian went full Collison brothers mode and said:
% of global GDP that runs on crypto rails
He then mentioned something that caught me off guard...today only 20% of GDP is done over the internet! And even that number only recently grew a ton because of covid; before 2020, it was closer to the 10-15% range.
Thoughts
If someone asked me to guess that number, I'd probably say 60-75%. And I think most people in my circle (tech & non-tech) would roughly say the same. Of course, this is because most of us live in a bubble and have the privilege to order from Amazon, book transport online, Instacart groceries during a busy week, etc. And even the more subtle things like paying utilities, using Ticketmaster or ClassPass for experiences, and buying books on our Kindles are all done online.
This was a good reality check for me, putting in perspective how integrated e-commerce is in my life vs the norm.
Why is it taking so long for the internet to consume global GDP...what needs to change? For context, 63% of the total population is on the internet today. What's the path to get from 20% to 50% of global GDP on the internet? Is there an upper limit?
Perhaps...
Though some industries have embraced digital commerce (finance, media) others are still significantly behind (healthcare, agricultural) probably because those folks rely heavily on traditional methods. Reminder to self: internet has only been around for 30 years while most of these old money companies such as big pharma and manufacturing have been around for hundreds.
There's still tons of regulation overhead in terms of data, privacy, e-commerce taxation, etc. around the world. To avoid the pain, it's much easier for vendors to stick to what works. Maybe there's decent e-commerce clarity in the US/EU but that's not reflective globally.
Connectivity and systems reliability is still an issue in many countries (new solutions like Starlink are helping out here).
There's still a huge UX issue for seemingly simple tasks like checking out...it's not realistic to think that everyone can make new accounts on every platform, use 1password to manage logins, and type in their credit card info (if they have one at all).
When you start breaking down all the details that go into making our daily lives truly digital first, it's actually wayyy more complicated than we realize - you and me just have the luxury (time & money) to figure it out.
Of course, it's worth mentioning that maybe much of it is simply bureaucracy and inefficiency? The fact that there was a huge spike covid onwards showed us that when it mattered, it was in fact possible to move online quicker than we thought.
How is crypto doing relatively? What lessons can we learn from the internet and do differently for crypto mass adoption?
It's too early to make any GDP comparisons...even the internet was at less than 1% back in 2000. But in the mean time, let's start by simply comparing global # of uses.
I did some research, here's a bit of context to put things in perspective
Sources: Crypto asset users, Internet users
It's worth noting that it only took 4 years for the internet to go from 500m to 1b users. My guess is that something similar will happen for crypto (courtesy of S-curve growth). It seems most likely that stablecoin payments will be the answer here to quickly onboard the next 500 million users. Many countries such as Turkey, Argentina, etc. with currency instability are already on track here. It's only a matter of time as UX improves (i.e. Daimo) that we see people start using stablecoins simply for reasons such as simplicity and efficiency.
I recently worked with a developer in India for the last 2 months as I was building out the TOC client and I paid him directly in USDC. He was able to verify the payment on our call a few seconds later - no struggles of intermediaries, latency, etc.
It's only as I'm writing this post right now am I realizing how crazy it is that I was able to do that rather than go through several layers of US banking --> India banking.
Uniswap Revenue crosses $50m
Context
Last October, Uniswap Labs announced they were adding a 0.15% fee to their frontend (uniswap.app) in order to start earning revenue and help the Uniswap Labs team continue to develop, hire, try new product lines, etc.
I’m proud of the ways @Uniswap Labs has contributed to that effort and want to make sure we’re creating sustainable…
2,432
Then, this past April, they increased the fee from 0.15% to 0.25%. It's worth noting that this fee increase was when Uniswap got hit with the Wells notice from the SEC so the rationale was to probably increase revenue projections as extra cushion for upcoming legal battles.
I’m not surprised. Just annoyed, disappointed, and ready to fight.
I am confident that the products we offer are legal and that our work is on the right side of history. But it’s been clear for a while that rather than…
And just last week, I saw this chart from the Block showing that Uniswap had crossed $50m in revenue from its frontend!
Thoughts
I remember when I first heard about the fees, my immediate reaction was that everyone would just shift over to other UIs to avoid the fees. What idiot would pay more money when you can use the underlying protocol on any other interface with lower (or no) fees?
Well...turns out me 😂 In the past year, I continued to use Uniswap without thinking twice and I learned that habits do matter, good UX does feel safer, and platform trust takes years to form.
In his tweet, Hayden mentions the following:
"I built the protocol to be a permissionless and decentralized public good. Users have countless choices of ways to use it, through aggregators, other UIs, or by interacting directly with the smart contracts. Imo our interface remains the best – a huge amount of love (and money) goes into making that the case :)"
He nailed it. Yes - any of us can use aggregators and other UIs, but it turns out that most of us stuck to our habits. Look at this graph below showing DEX activity by frontends.
October 2023 (first fee announced): 30.84%
April 2024 (second fee announced): 29.44%
June 2024: 28.27%
July 2024: 25.73%
What's interesting here is that the largest decrease in Uniswap frontend wasn't even the months following the fee announcement but rather last month. July saw a 4% drop from June, but aside from that, the number stayed in the 28-31% range. It seems like 1inch and Cowswap both saw increased activity recently indicating folks are moving over to aggregators 🤔
I need to spend some time looking into aggregators - US folks aren't able to use 1inch and personally speaking I don't know anyone in my circles who use CowSwap. Recently, I've been seeing Matcha make a push on Farcaster; they even reached out to me for a TOC partnership! Clearly the numbers show that people are using tools other than Uniswap - I'm curious to see who and for what use cases. Will follow up here in a later post.
With that being said, going back to Uniswap's decision on implementing fees...it seems like so far that it was a fantastic decision. $50m of revenue in 9 months is no joke 🔥 Now, the challenge will be to find creative ways to trap folks into their ecosystem to maintain their frontend dominance. If they can manage to keep above 20% by the end of the year, their monthly revenue will be enough to continue justifying the fees.
One idea here is to perhaps find more ways to get people to use Uniswap wallet? In a recent shopping partnership with KidSuper, I saw this button that was pretty creative and surprised me.
I'm not saying that the wallet itself will be "successful" but more so making the point that the team will continue to try creative ways to keep folks within their ecosystem and direct them to Uniswap frontend. Another example here is how the Uniswap team bought Crypto the Game - they'll probably make it a game requirement to use Uniswap wallet & interface to play.
Casts you may have missed
That's all for today's post! Let me know if you have any feedback on this format 🤝
See you all on Friday, hope everyone has a great rest of the week :)
- YB
