Crypto is at the Mercy of the Attention Economy

Warning: You may be a bagholder in projects that will realistically never go anywhere and you will seethe as fortunes are made by those who know how to adapt with the times and understand the psychology of the human mind. 

Gm, anon, 

Today we’re tackling a topic that might ruffle some feathers but is crucial for anyone in the crypto space to understand: the dominance of the attention economy over fundamentals in our highly speculative market. While many still cling to the hope that strong fundamentals will anchor crypto valuations, the reality is far more nuanced and rooted in historical precedent.

2024 has been the year of memecoins, with Solana-based tokens reaching multibillion-dollar valuations while projects focused on ‘utility’ have languished. This isn’t surprising when we consider the historical trend of speculative manias driven by attention. The South Sea Bubble of 1720, for instance, was propelled not by trade profits but by a narrative of untold riches, captivating the public imagination and driving share prices to unsustainable heights. Similarly, in the 1840s, railway mania saw investors pouring money into companies with no viable plans, driven by the allure of revolutionizing transportation.

The dot-com bubble of the late 1990s offers a contemporary parallel. Companies with little more than a “.com” suffix saw their stock prices skyrocket on the promise of internet-driven transformation, often without any revenue models. The eventual collapse was a stark reminder of how speculation and attention can inflate valuations without substantive backing.

Today’s crypto market mirrors these past speculative frenzies. With a proliferation of tokens and protocols, many lacking clear utility or substantial user bases, the metrics indicating growth—like total volume locked, active addresses, transaction volumes, user counts—are frequently manipulated. The rise of Sybil attacks further complicates the landscape, creating an illusion of engagement and success while masking a lack of organic growth. 

Airdrops, once a novel strategy to distribute tokens and build community, have become overplayed and largely ineffective. Saturation means these giveaways fail to capture sustained interest. Retail investors, burned by the 2021 bull market collapse, remain cautious, and fleeting attention often dissipates quickly, leaving a trail of forgotten tokens.

Consider this: at this point, how many L1s, L2s, wallets, DEXs, perpetual and futures trading protocols, bridges, lending and borrowing protocols, etc currently exist in the market? Far too many and there are more entering the market constantly. Who is exactly expected to buy all these tokens? There is too much fragmentation of liquidity and mindshare and not enough buyers. 

The issue with the attention economy extends far past crypto, it’s a symptom of the modern digital age. Attention spans have gotten shorter with the deluge of content available online which has fried people’s dopamine receptors. People are continuously looking for quick hits of dopamine and entertainment and struggle to sustain their attention for long. One of the few things that has been able to capture that attention has been memes. Simple, funny, entertaining and most importantly offering the potential for massive outsized rewards. This has snowballed into hype and mania which is unfortunately what dominates in highly speculative markets.

Understanding this dynamic is crucial. The speculative nature of the market means that valuations are driven more by collective belief and narrative than by tangible progress or intrinsic value. Recognizing the historical patterns of mania and correction can provide invaluable insights. In crypto, as in past bubbles, the true survivors will be those who transcend speculative fervor and build lasting value, capturing not just fleeting interest but enduring engagement and utility.

For a real world example, consider this: what is the likelihood that forgotten dinosaur tokens from the 2017-2021 era will meaningfully gain mindshare again when shiny new protocols ripe with attention and fresh hype, such as in AI and real world assets, are entering the market ready for speculative run-ups?  

The crypto market of 2024, with its myriad of tokens and fragmented protocols, vividly manifests the attention economy. By appreciating these historical and current trends, we can navigate the speculative whirlwind and identify projects that might ultimately stand the test of time.

So now the final question for you is:

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