Alliance DAO: A Guide to Cryptocurrency Startup Ideas in 2024
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Alliance DAO: A Guide to Cryptocurrency Startup Ideas in 2024
One of the endgames of cryptocurrency is opposition to the nation-state as the fundamental unit of human organization.
Navigating Web3 tides with focused insightsAuthor: Qiao Wang, Core Writer at Alliance DAO
Translation: Shan Oba, Jinse Finance
Below are some crypto startup ideas and themes that excite us at Alliance. We will update this list regularly to reflect our latest thinking.
"Real-World" Financial Applications
Crypto Payments
Stablecoins are the first and by far the largest non-speculative use case for cryptocurrency.
According to a report from Brevan Howard Digital, “In 2022, stablecoins settled over $11T on-chain, dwarfing PayPal’s transaction volume ($1.4T), exceeding Visa’s payment volume, and reaching 14% of ACH settlement volume.” It always puzzles us when people claim crypto hasn’t found a killer use case beyond trading.
We believe crypto payment startups should not compete with companies like Venmo or Revolut. Instead, they should identify and focus on underserved user groups—such as industries traditionally underserved by banks (often taboo industries) or cross-border payments.
For example, we are particularly interested in stablecoin payment applications in Latin America, Africa, the Middle East, South Asia, and Southeast Asia, where fiat devaluation and censorship are more common. From conversations with startups, we’ve gathered anecdotal data suggesting stablecoin adoption in these regions is experiencing a hockey-stick growth curve.
"Binance P2P" or "Local Bitcoins" for Emerging Markets
However, for crypto payments to be useful to consumers in these regions, they must solve the last-mile problem—the on-ramp and off-ramp between local fiat currencies. Otherwise, recipients won’t be able to use the payments in “real life,” and senders will be limited to crypto natives.
One solution resembles Binance P2P or Local Bitcoins, where a network of agents facilitates on- and off-ramps in a peer-to-peer manner.
Crypto Neobanks for Developing Countries
These neobanks were all the rage 2–3 years ago but paid little attention to developing economies, which have exceptionally strong demand for stablecoins and yield.
We’re excited about the idea of offering developing-world consumers yield beyond just stablecoins. While parts of Latin America are fairly crowded, we still believe opportunities exist globally.
Another catalyst is the surge in on-chain RWAs such as U.S. Treasuries, which offer uncorrelated yields often higher than native crypto yields on Aave and Compound. These risk-weighted assets enable citizens in developing countries to easily access high-quality assets from developed nations.
Real World Assets (RWA)
On-chain wealth now totals $1.5T. This wealth seeks diversification.
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Since the 2023 banking crisis, diversifying on-chain funds has become a pressing issue for many crypto-native organizations. MakerDAO, for instance, has been leading in this area.
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Crypto-native speculators are now wealthy enough that they too want to diversify beyond highly correlated crypto assets.
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Consumers in emerging markets want access to high-quality assets. Today, they have dollar-pegged stablecoins—better than their local currencies—but these still suffer from endless devaluation.
Types of RWAs we’re interested in include but are not limited to:
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Financial assets such as treasuries, equities, corporate debt
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Hard assets such as real estate and commodities
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Collectibles such as watches and Pokémon cards.
RWA Collateralized Lending
A different take on RWA: allowing off-chain assets (e.g., real estate, treasury bills, or other RWAs) to serve as collateral.
The obvious approach is to tokenize the asset and treat it as on-chain collateral. An example is fractionalizing a watch into 4K tokens and using a watch NFT on Arcade to obtain a USDC loan. By storing all asset classes on a single ledger, we can dramatically improve the lending experience. Any asset could be used as collateral to borrow any other asset—a possibility inconceivable before crypto.
But tokenization may not even be necessary. Perhaps only an oracle is needed—or even less. MakerDAO is an example: they created DAI backed partly by RWA (custodied financial instruments), yet those RWA positions are not tokenized.
Another potential example is achieving capital efficiency for fund-based RWA in crypto without fully tokenizing them.
Crypto-Native Financial Applications
Perpetual Prediction Markets
Most people want continuous, infinite upside. They don’t want to be constrained by discrete, binary outcomes—that’s what traditional prediction markets offer. We believe true crypto-native prediction markets are actually meme coins in the form of ordinary fungible tokens, such as $BIDEN and $TRUMP.
Undercollateralized Lending
As on-chain reputation becomes increasingly important, undercollateralized lending becomes feasible. In fact, most corporate loans in TradFi are undercollateralized.
Recent developments have made undercollateralized lending increasingly viable:
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Off-chain attestations, such as Coinbase or Clique
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Growing adoption of ENS and other domain names
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An increasing number of individuals receiving regular on-chain cash flows
A concrete example of undercollateralized lending is enabling on-chain individuals or organizations to borrow against future cash flows.
Privacy DeFi
Privacy has found PMF in unexpected places. For example, whales use centralized exchanges to anonymize their trades. We also suspect Thorchain, known for cross-chain swaps, is a de facto privacy solution. It may already see the usage once seen on Tornado, since tracking cross-chain transactions is much harder than tracking on-chain ones.
In any case, we’re interested in new solutions to this old problem. For example, zero-knowledge proofs (ZKP) can be used for compliance (proving a user isn’t a citizen of a sanctioned country or is accredited) without breaking pseudonymity. We’re also fascinated by other technologies like multi-party computation (MPC), fully homomorphic encryption (FHE), and trusted execution environments (TEE).
Rari Relaunch
We’ve learned that many vertical-specific projects around the world have launched their own lending platforms by forking and modifying Aave or Compound. This incurs significant costs in development, auditing, and maintenance. Rari Capital’s original thesis was massive cost reduction—essentially “Aave/Compound fork-as-a-service.” Now that Rari is offline due to a hack, there’s an opportunity to fill this gap again.
M&A Investment Banking for DAOs
In 2021, Fei Protocol merged with Rari Capital. This won’t be the last DAO merger we’ll see. More DAOs will face distress, and more will want to acquire others horizontally or vertically. There’s an opportunity to build reusable tools (smart contracts and legal structures) to facilitate and sophisticate this process.
NFT Derivatives
NFT options, perpetuals, and futures can help NFT holders hedge positions or simply speculate on NFT prices.
Due to illiquidity in underlying assets, index pricing is difficult to calculate and prone to manipulation. Therefore, physically settled derivatives might be the right design.
Prime Brokerage
Capital efficiency is limited by the fact that no protocol can talk to each other about risk. Perp protocol A doesn’t care that you’re hedging on lending protocol B.
One approximation is consolidating assets into one giant account across each protocol. Creating an accounting layer to manage risk per customer account. But is there a better way?
Non-Financial or Semi-Financial Applications
Fully On-Chain Games
On-chain games are those that write the entire game state and logic (not just in-game assets like currency and NFTs) onto the blockchain.
Consider tic-tac-toe. The concept of turns, the 3x3 board, players, and sequences of three must be immutably recorded as rules. The history of player moves must also be recorded. On the other hand, the color of the board and pieces, the shape of the pieces (X and O could become Y and Z for all we care), animations, sounds, etc., can remain on the client side.
Putting all state and logic on-chain unlocks novel behaviors:
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Smart-contract-based players (instead of human players) that play the game. One of the earliest instances was actually MEV in DeFi. Trading is the game, MEV bots are smart-contract-based players. Note that in this case, contract-based players compete not only with each other but also with human players.
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Game mods built by third-party developers without fear of platformization. Mods are the lifeblood of Web2 gaming, and many iconic games started as mods (e.g., Dota 2, Counter-Strike, PUBG). However, due to the permissioned nature of Web2 games, mod developers are at the mercy of the original game studios. Many have either been taken down or never started for fear of takedown.
Ultimately, game studios can become game publishers. If Web2 history is any indication, the first successful on-chain game engine will likely come from a successful on-chain game studio—think Unreal (engine) and Epic Games (studio). Likewise, the first successful crypto game publisher may emerge from a successful crypto game studio—think Steam (publisher) and Valve (studio).
On-Chain Social Networks
The winning Web3 Twitter will ultimately deliver the features we’ve long craved: user-owned data, diverse clients enabled by permissionlessness, and/or resistance to censorship.
There’s just one problem. If history is any guide, the first successful Web3 Twitter probably won’t start out wanting to be the next Twitter or look anything like Twitter. Maybe Web3 Twitter will initially be a game, a DeFi super app, or something novel and seemingly trivial enough to be mocked—or so radical it makes many uncomfortable. The weirder or more controversial your app, the more excited we are to try it!
Anonymous Social Networks
A specific example of an on-chain social network is an anonymous one where individuals use ZKPs to prove certain identities—for example, that they’re employees at company X, or have net worth above Y dollars. Anonymous gossip always has high demand. Recall the early days of the internet with RateMyTeachers.
Personal Tokens
Despite failed experiments like BitClout and the drama surrounding Fientech, the idea of personal tokens is fundamentally novel because it enables speculation on a new, potentially massive asset class. We expect future iterations of this idea to find product-market fit.
What’s most interesting about Friendtech isn’t alpha sharing, private groups, or the social network—it’s how it fundamentally solved social consensus. Suppose 5 people create 5 different ERC20s called $VITALIK—how do we know which one is the “real” Vitalik coin? Friendtech solved this by requiring creators to log in via their official Twitter accounts. Boom—social consensus resolved.
In other words, Friendtech fundamentally combined two orthogonal ideas: alpha sharing and token speculation. What if we decouple the two and focus solely on personal token speculation? Alpha sharing already exists at scale in Web2 through Substack, SeekingAlpha, and Telegram paid groups.
Creators and Luxury Brands
For these user groups, blockchains can fundamentally be two things. First, they can be factories for digital-native goods. Image-based NFTs (e.g., PFPs and generative art), language-based NFTs (e.g., novels), or audio-based NFTs (e.g., music) are all examples of digital-native goods. They provide creators and brands with a new way to monetize their brand and artistic power. For buyers, these NFTs are speculative collectibles—a largely unrecognized carrot for early adopters. But creators/brands can also choose to offer benefits like exclusive access and royalties.
Second, they can be redeemable receipt databases for physical goods. For example, a pair of Nike sneakers could come with an embedded physical chip linked digitally to an NFT. Some call this “phygital.” Others call it a “digital twin.” If helpful, you can even think of it as “RWA.” On-chain representation of physical goods provides creators/brands with a new channel to engage customers, gives customers strong anti-counterfeiting guarantees, and offers the asset itself potential to leverage existing DeFi/NFTFi infrastructure.
We’re excited about startups that start with creators or brands in a very specific vertical and help them deliver new experiences to customers. The narrower the vertical, the better.
10k PFPs
Although simple, PFPs may remain the dominant NFT category for some time. The key insight here is that these NFTs already have large distribution channels—Twitter and other social networks—where NFT holders can set their Punk or Pudgy as their profile picture.
Contrast this with gaming NFTs, music NFTs, etc. Gaming NFTs require either new games built natively to support them and achieve mass adoption, or existing popular games to adopt them. Spotify, YouTube Music, or Apple Music don’t support music NFTs. You can display a generative art NFT on Twitter, but it requires a tweet—and tweets disappear after 24 hours. But your PFP is a persistent billboard, appearing every time you tweet and every time someone visits your profile.
PFPs are simultaneously the most boring and most exciting category in NFTs.
Habit-Forming Apps
StepN has proven that token incentives can effectively encourage healthy habits. This could include activities like running, sleeping, meditation, dieting, or learning new skills. Research suggests forming a new habit can take anywhere from 18 to 254 days, averaging around 66 days. For many, overcoming initial inertia is hard, but economic incentives via tokens may provide the motivation needed to stick with new habits and make them permanent.
DAOs as Digital Nations
One of crypto’s endgames is challenging the nation-state as humanity’s fundamental organizing unit.
Crypto enables property rights via cryptography, constitutions and laws via smart contracts, taxation via token issuance, national currency via cryptocurrencies, transparent policymaking via decentralized governance, and international trade via DeFi.
Our idea is to start with an online community sharing common interests or beliefs, thoughtful governance, and a path toward economic growth. Most DAOs haven’t realized it yet, but they’re actually becoming digital nations.
Decentralized Science Crowdfunding
One of the biggest problems plaguing science is lack of funding. This stems from the risky and speculative nature of scientific discovery. On the other hand, crypto capital embraces risk, welcomes new speculative ideas, and is abundant. The idea is to match these two groups.
Despite the bad reputation of “ICOs,” they were fundamentally one of crypto’s greatest unlocks.
Decentralized 23andMe
Another major challenge, especially in health sciences, is the lack of sufficient datasets to test hypotheses. One possible solution is using tokens to incentivize individuals to contribute health data for scientific research and drug development.
For example, individuals could share their genotype and phenotype data, creating a decentralized version of 23andMe where participants are rewarded for contributing. Another example is sharing data from wearable devices—physical activity, heart rate, sleep patterns, and other metrics. Universities, hospitals, and pharmaceutical companies could access this data via research and commercial application markets.
Open and Market-Based Scientific Publications
Another futuristic idea in DeSci is using crypto primitives to disrupt scientific journals. Traditionally, journals act as curators and distributors of scientific research. But as curators, they suffer from misaligned incentives; as publishers, they’re often behind paywalls. Perhaps crypto can help create open, market-driven scientific journals. For example, every paper could automatically come with a prediction market on research integrity or the probability of theoretical proposals translating into practical outcomes.
Decentralized GLG
Consulting networks like GLG (annual revenue $650M) are popular ways for people to access very specific experts who aren’t full-time professional consultants but still have valuable insights to share. These networks are heavily monitored and regulated, limiting their value and creating a chilling effect on product innovation. Crypto social networks like Friendtech have already emerged, suggesting at least the possibility of niche thinkers sharing expertise. We believe crypto—with its capabilities for privacy protection, censorship resistance, and value transfer—is well-suited to reinvent expert consulting services.
Infrastructure
DePIN
Tokens have proven to be extraordinary mechanisms for coordinating large-scale human activity. We’re interested in startups leveraging token incentives to encourage people to create:
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Telecom networks
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Clean energy infrastructure
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Large datasets for AI training
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Other areas we haven’t thought of yet.
This is broadly known as Proof of Worked Physical (POWP) or Decentralized Physical Infrastructure Networks (DePIN). Take renewable energy as an example. Because sources like wind and solar are intermittent, they can also be unpredictable. Batteries help by storing excess energy for later use. The more batteries connected to the public grid, the more useful they become. POWP / DePIN networks use token incentives to encourage households to deploy batteries and pool them collectively for shared use.
Combating AI Deepfakes
ChatGPT may have overshadowed generative AI models focused on generating images, audio, and video. Yet these models can currently produce realistic deepfakes. The recent AI-generated Drake song is a good example of what these models can achieve. Since humans are naturally inclined to believe what they see and hear, these deepfakes pose a serious threat. Many startups are trying to solve this using Web2 tech. However, cryptographic techniques like digital signatures could address this better.
In crypto, transactions are signed by a user’s private key to prove validity. Similarly, content—whether text, image, audio, or video—can be signed by the creator’s private key to prove authenticity. Anyone can verify the signature using the public address provided on the creator’s website or social media. Crypto networks have already built all the infrastructure needed for this use case. Many reputable VCs and hackers have already linked their social profiles to crypto public addresses, lending credibility to digital signatures as a method of content authentication.
The product we’d like to see is a protocol integrated with existing social networks that automatically verifies digital signatures whenever creators publish and sign content.
ZKP Hardware Accelerators
Specialized hardware companies targeting specific use cases and establishing early market leadership eventually become extremely valuable. This happened with AI, where Nvidia became North America’s most valuable semiconductor company by focusing on AI hardware. It happened in Bitcoin mining, where Bitmain, Canaan, and MicroBT became unicorns by focusing on ASIC miners. Companies designing and building efficient ZKP hardware accelerators will follow the same trajectory.
Specialized ZK Compute Networks
Currently, ZK rollups like zkSync and Starknet are general-purpose. However, specialized ZK rollups can be created using faster, cheaper ZK circuits. For example, if an app is an order-book-based DEX running on a ZK rollup, it only needs circuits for order creation, cancellation, and matching. In this case, the ideal ZK rollup would be optimized solely for these operations and ignore everything else.
Another example is off-chain AI compute networks settled on-chain. Since AI inference may be too expensive to run on-chain, it must happen off-chain. But how do we prove the model ran correctly? By using specialized ZKPs optimized for operations like matrix multiplication.
Bitcoin L2 and MEV
While we’re unsure whether Bitcoin L2s can inherit the security assumptions of the underlying L1 without forking, we’re excited about the general idea of adding more expressive power to Bitcoin’s smart contract capabilities. The thesis is simple: there’s $1T in wealth on Bitcoin, and at least some Bitcoin holders want to do crazier, more interesting, or productive things with their Bitcoin than just holding it. To enable these use cases, Bitcoin needs more expressiveness.
Many existing and upcoming Bitcoin L2s aim to stay maximally aligned with Bitcoin L1. One way to achieve this is using Bitcoin L1 for data availability (DA) and delegating L2 transaction ordering to Bitcoin miners. This means MEV extraction would fall into miners’ hands. Similar to Ethereum, there’s an opportunity to build large companies akin to Flashbots—working with miners to order transactions or execute Bitcoin transaction bundles. If Bitcoin L2s become real, the company building the dominant L2 MEV extraction platform could easily become a unicorn.
Solana Infrastructure
We’re bullish on Solana as a singular, engineering-driven alternative to Ethereum’s modular and research-driven approach. However, Solana’s infrastructure overall remains in its infancy. There’s room to build 10x better developer tools (e.g., Solana’s Foundry), smart contract wallets, block explorers, on-chain data indexers, and other areas we haven’t thought of. Solana infrastructure builders have the chance to create things tailored specifically for Solana while learning from the mistakes of predecessors on other chains.
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