The emergence of NFT has refocused the public's attention on scarcity, but in fact "Attention" is the only scarce resource in the cryptocurrency field.
First, venture capital is clearly not a scarce resource. Since last year, Internet companies have used huge sums of money to explore the Metaverse and decentralized applications, so in the encryption industry, even $1 billion is not a huge amount of money.
And encrypted assets are not really scarce. The reason why BTCandETHare scarce is mainly affected by the setting of hard cap supply and the token design of deflation mode. Although many people think that the supply of NFT is limited and fixed, and it is extremely scarce, we might as well think about it from another angle and dimension. The total amount of things we can speculate in cryptocurrency is constantly increasing, theoretically infinite of. For example, in a bull market, the funds invested in the encryption industry are also diluted by a large number of projects.
For example: Although there are only 10,000 cypherpunks , there are still 10,000 BAYCs, MAYCs, etc. in the market. Although the EIP1559 mechanism launched by Ethereum will burn and destroy ETH, the scarcity will gradually increase. But if people feel that they have missed the best time to get ETH, it doesn’t matter, because there are AVAX,SOL, etc. to choose from.
![The encrypted world under the attention economy: from SOS to BAYC, Dogecoin 注意力经济下的加密世界:从SOS到BAYC、狗狗币](https://img.jinse.com/6124496_image3.png)
After a period of cleaning in the market, most of the projects or tokens with no practical application or value will disappear completely, and the truly valuable encrypted assets will also be proved, and the capital will return to value. For the investors who are participating in it, The "value pool" may face sudden shrinkage. But the attention we spend during this period is irreversible.
Therefore, in the encryption industry, attention is the only scarce resource.
attention economy
In web2, many Internet companies have realized that users pay for services with attention, and use big data analysis to market products to users in a targeted manner, acting as "middlemen" between users and merchants.
In the era of token economy, the monetary attribute of attention will be more straightforward. There are more than 50 initial Defi issuances every day, and they compete to obtain funds and continuously attract users to join their respective communities. Over the past period of time, companies have used the airdrop incentive model to give back to users who use and support their products.
During the evolution from web2 to web3, the competition for attention has intensified, and airdrops of up to five figures are commonplace. On Youtube, KOLs in the encrypted field even spend five to six figures in advertising fees per video. It can be seen that attention resources are quite scarce and in great demand.
Attention-Based Asset Valuation
In the encryption market, most players are unable to fully evaluate the technical and fundamental aspects of the project. In other words, retail investors are highly dependent on market signals and social proof when making decisions. The price of cryptocurrencies is driven precisely by demand among sellers and buyers, and this is where the effects of scarcity of attention come into play.
If the quantity demanded increases or the number of sellers decreases, the price is bound to increase, during which attention is the only factor affecting the supply and demand variable. Because it is completely controlled independently by both parties.
SOS, and BAYC
There are many examples of attention resources flooding the market in a short period of time. For example, in the previous SOS token airdrop event, the third party conducted SOS airdrops based on the previous NFT purchase history of Opensea users. This action of providing free tokens to crypto players who have contributed can quickly increase everyone’s attention in a short period of time.
But this kind of pure token airdrop is more speculative. When players turn their attention to SOS tokens, they mainly face 3 choices:
Sell airdrop tokens forEtheror USD;
Keep the airdrop tokens and wait and see;
Turn to the airdrop seller to buy more SOS tokens.
When attention is gathered, all people think about is how to make money from it, which is also the fatal attraction of the encryption market. If more people choose to keep tokens or buy more SOS tokens, the purchase price will be far higher than the initial sale price, and the price of SOS tokens will show an upward trend.
Once this upward trend is formed, more people will talk about SOS tokens, thereby joining this market, and then make a choice between the following two:
Buy SOS tokens and participate in transactions;
Wait for your opportunity, or ignore this market entirely.
Some people will choose to buy tokens to further increase the price of tokens, making money in rounds of rises, and more people are willing to sell airdropped tokens, but when the influence of token ownership surpasses attention resources, due to the price curve The growth rate is slowing down, attention resources are ebbing, and the number of newcomers who decide to purchase SOS tokens will also decrease. If assets are not supported by products and users, it will be difficult to achieve sustained attention.
This also explains why BAYC can surpass other projects released at the same time. The reason behind it is that BAYC focuses on building a community driven by value. The participating community members will become permanent promoters and continue to maintain stable attention resources. Or attract more attention resources.
Dogecoin
Dogecoin is also an example of attention resources flooding the market in the last year.
During the period from the initial issuance of Dogecoin to the end of 2020, the fluctuation range of Dogecoin has basically remained within the same range, and it has basically maintained a consistent zigzag fluctuation within 7 years.
![The encrypted world under the attention economy: from SOS to BAYC, Dogecoin 注意力经济下的加密世界:从SOS到BAYC、狗狗币](https://sosolx-prod.oss-cn-shenzhen.aliyuncs.com/sosolx/hotNews/2022-05-25/bwf0uwlkk71653450171412.png)
This volatility was broken when Elon Musk turned into the number one fan of Dogecoin, leading to two things at the same time:
(1) Many crypto natives were persuaded to choose to buy Dogecoin;
(2) New market participants are also persuaded to choose to buy Dogecoin as an entry-level cryptocurrency.
Dogecoin holders may wish to ask themselves: If Musk continues to attract the public's attention to Dogecoin, how large an audience can he reach? To what extent will the ratio of the number of buyers and ignorers be affected?
![The encrypted world under the attention economy: from SOS to BAYC, Dogecoin 注意力经济下的加密世界:从SOS到BAYC、狗狗币](https://sosolx-prod.oss-cn-shenzhen.aliyuncs.com/sosolx/hotNews/2022-05-25/8cbst5r2bb1653450171744.png)
If he continues to raise the price, the attention resources he attracts will greatly change the relationship between supply and demand for a period of time, and Dogecoin holders will take advantage of the market—it is expected to have a 5- to 10-fold increase. If he doesn't raise the price, the holder could lose 33% of his investment. In this way, investment risk and return are unbalanced.
At present, the people who understand Dogecoin have been saturated, and those who can be persuaded to buy before have become holders, and the attention resources are mainly concentrated on the hesitant bystanders and holders. The decline in the exchange rate will lead to the weak purchase intention of new participants, and finally the holders will become the only source of attention.
When the influence of ownership and valuation starts to outpace attention resources, smart traders actually start to sell tokens.