tl;dr: It may not seem like SushiSwap has lessons for the larger world of marketing, but it just might.
Back in late 2018, I had a short post called Will Crypto Protocols Go to War with each other?
Ian Lee’s blog post, Fork Defense Strategies in DeFi starts out:
Dear Bankless Nation,
The protocol wars are here.
Uniswap vs. Sushiswap, YFI vs. YFII, Swerve vs. Curve—getting impossible to keep up.
Forks take the code of a parent protocol and redeploy it, sometimes with tweaks. A fork might add a token, target a new market, or change investor allocations. And sometimes a fork is just an attempt to cash out on someone else’s work…
So I guess the answer is yes.
But the point of this post isn’t to remind myself of my powers of prediction (ok, maybe a little), it’s to use this moment as a lesson of the “near future” and what it could mean for the future of marketing.
We’re all Protocols, it’s just that some of us know it.
Software is a protocol. It’s a set of rules for how things work in a given situation.
Some protocols, like iOS are “closed.” Others, like Bitcoin are “open.”
In the future, the open protocols are going to win because they will innovate faster, providing users with more specific niches and use cases than closed protocols.
It won’t happen overnight, but the pace of innovation in Decentralized Finance (DeFi) is a sneak preview of what ultimately will happen.
This is a great thing for users, but it’s not necessarily a great thing for the creators of the protocols themselves, since they are vulnerable to attack, which Uniswap discovered from the SushiSwap vampire attack a few weeks ago (and which I touched on in The Good Governance Premium.
So, defending against these “forks” is the focus of Ian’s blog post and he does a really great job outlining some of the strategic options available depending on the “Fork Archetype.”
Examples abound, I believe, of teams that are employing each of the strategies.
Loyalty-The Missing Link
All of Ian’s suggestions make sense and it’s clear that he’s put a lot of thought and effort into the post, but I think theres something missing.
Actually, two things.
The first is, as stated above, the Governance Premium.
The other might be called the “Loyalty Premium” that comes through Community (and some economic incentives).
While the DeFi world seems to be populated by people who only care about yield maximization (which is fine), I think there’s a market of people who will take slightly lower yield if they know they are a part of a community of like-minded individuals.
These are people they share values with and in whom they have confidence that the right governance decisions will be made.
Yes, there will be an economic component to this (think loyalty points from a hotel or airline-back in the days when people used to do that type of thing) and you’ll see where it is going.
One of the earliest prototypes (and I haven’t played with it myself yet) is the $GHST token, which is part of the Aave protocol. As I understand it, it’s a game that rewards people who have committed to the Aave protocol and gamifies it.
It’s kind of like Crypto Kitties meets liquidity provider. Or, a real world example, might be Beanie Babies/baseball cards for people with deposits at Citi/Chase.
Anyway, the idea here is that we’re going to-out of necessity-see an explosion in loyalty programs as part of the Fork Defense toolkit and it’s going to be fun to watch this.
Maybe $GHST is that. Maybe not. Regardless, loyalty game changers are on the horizon.