How to become a major chain beyond the Ethereum

[inutanuking]

Hi everyone,
I’m Inuta.

Do you know how Flow blockchain can surpass the Ethereum ecosystem? I have some specific ideas about it.

I believe that Flow is the blockchain that the next billion people should use. Its architecture and design philosophy are excellent. Cadence is optimized for mainstream customers to own NFTs.

While there are still some technical improvements to be made, why is the Flow blockchain, which is so outstanding, not being widely adopted? To address this fundamental issue, I have launched a project called Tobiratory and am currently developing an app.

Let’s have a discussion about this. I will write out specific strategies for Flow to achieve great success in the future. Please share your thoughts as well.

To fully explain, it would require a vast amount of text, so I’d like to break it down into smaller parts. This time, I want to delve into the investigation of the root causes of why Flow blockchain is not being used and propose solutions.

In conclusion, the main reason is that the network effect of the Ethereum ecosystem is too strong. The network effect means that more people use it because everyone else is using it.

In a purely technical selection process, Flow could be a viable choice.

However, the reason this doesn’t happen is that the decision-makers in the business sector only want to choose chains compatible with Ethereum due to the network effect. There is no incentive for them to choose the Flow blockchain, which lacks customers and an ecosystem.

I believe the Flow development team understands this up to this point. That’s why they announced EVM on Flow. While it is better to have it than not, it doesn’t provide a fundamental solution.

To give an analogy, it’s like opening trade between Japan and Canada, but if there is no incentive for people to live in Japan in the first place, the number of people living in Japan won’t increase.

Do you know about a blockchain called Aster? It’s a parachain of Polkadot.

I’m Japanese, and I’ve considered using Aster because its founder is also Japanese. However, I ultimately decided not to use Aster. When I asked the developers on the team, they mentioned that the Wasm layer and EVM layer were being confused, leading to a poor development experience, so I stopped considering it.

Development experience is crucial. We are concerned that by implementing EVM on Flow, we may end up with the same issues as Aster.

By the way, here are some things we would like Flow to address before EVM on Flow:

• To create a full-on chain product, the storage limitations need to be resolved.
  • Using external storage like IPFS would worsen the developer experience, similar to sharding.
• Improve the archiving of past transactions through Sporks, as it negatively impacts the developer experience.

There is a concern that when Data Availability Layers like Celestia become practical and connect with the EVM, Flow may be at a disadvantage in terms of overall capability. To strive for a perfect blockchain, priority should be given to this development.

So, how can the fundamental problem be solved?

The answer is simple: the next billion people should create NFTs on Flow.

The Ethereum ecosystem’s network effect has a significant vulnerability, which is that it only captures crypto-natives.

If Flow could onboard the next billion people, the network effect would reverse. Businesses would flock to Flow with its larger customer base. As businesses gather, developers focusing on B2B solutions for these businesses would increase, and the ecosystem would thrive.

To summarize, Flow developers should concentrate on making Flow the best blockchain without worrying about EVM. Developers building Dapps on Flow should focus on attracting the next billion people to Flow.

Now, the question is, is it possible to bring the next billion people to Flow, and who will do it?

That’s where we, Tobiratory, come in. I have specific strategies in mind. However, to make it a reality, cooperation from the Flow ecosystem is necessary, which is why I’m writing this message.

For now, I’ll stop here. Please share your thoughts and opinions.

[inutanuking]

This time, I will discuss specifically how to get the next billion people to create NFTs on Flow.

First and foremost, it’s important to understand that innovation always starts from small beginnings. Looking at the history of technology, innovation has never started from large entities. It always begins in small places.

Next, in order to get a billion people to create NFTs on Flow, we need to establish the concept of digital ownership among humanity. This is innovation. Selling NFTs and establishing digital ownership are different things. Establishing digital ownership is comparable to innovation.

In summary, to get the next billion people to create NFTs on Flow, we must start from small places.

NBA Top Shot is a very good example. NBA Top Shot has introduced NFTs to new people. People who like the NBA bought them. This is fantastic. However, these people bought NBA Top Shot because they like the NBA, not because they realized the value of digital ownership. And this is not only true for the buyers but also for the NBA itself. If they had realized the value of digital ownership, not just the NBA but various sports industries would autonomously create and sell their NFTs on Flow. This would be true not only for the sports industry but for other entertainment industries as well.

However, this is not the case. The reason is that the NBA doesn’t find digital ownership essential. Without a need, there won’t be spontaneous action.

So why doesn’t the NBA find digital ownership essential? Because the NBA is large. As I said, innovation starts from small places.

The reason innovation starts from small places is that small places are driven by necessity. Thus, to draw the next billion people to Flow, we need to find those small places that truly need digital ownership.

This is my opinion, but it’s likely not the gaming industry. Many Web3 businesses believe that NFTs will become widespread in games. However, the gaming industry doesn’t really need digital ownership.

I’m familiar with the gaming industry because I was a Minecraft YouTuber in Japan, and I can tell you that gamers tend to dislike NFTs. More accurately, they dislike people who try to bring money-making schemes into gaming. Considering this, I think the likelihood of innovation starting from games is low.

So, if it’s neither sports nor games, what could it be?

The genre I feel has the most potential is streamers. I believe streamers and their fans are the ones who could truly need digital ownership.

[SeanRobb]

@inutanuking Thank you for the thoughts in the post!

I completely agree that Flow is a fundamentally stronger technology and will be used to shape the future.

I am excited with the potential of EVM support on Flow is mostly due to lowering the bar for building and removing the perception of platform risk when building on Flow.

With EVM on Flow, developers should be able to use the FVM/Cadence to interact with contracts running with EVM on Flow. This will allow for the compounding networks effects of composability on Flow to be kickstarted with the robust examples and contracts “ready to use” with Solidity and EVM on Flow.

The segmenting of state is absolutely a challenge that is discussed frequently and are considering ways to limit or remove this risk.

What would a streamer product look like in your view? I see great potential there as well!

[inutanuking]

Thank you for writing the message.
Your opinion is very interesting!

Indeed, from the perspective of reducing platform dependency risks, EVM on Flow does lower the psychological barriers to entry.

As for the necessary products for streamers, I plan to write more about it today.

[inutanuking]

In this post, I will discuss what kind of products should be offered to streamers.

But before that, I’m happy to see that there are people who have commented and tried to contact me. There are two reasons why I am making this post.

One is to aim for a more active discussion on the business aspects within the Flow ecosystem.
The goal of Web3 business is not to create one big company.
It’s to spread Flow throughout the ecosystem and to increase the value of FLOW coin together.
This is often spoken of in analogy to colonizing Mars.

The Casino on Mars

We are comrades in colonizing the planet Flow.
To colonize this planet, we must unite. I hope this will lead to more discussions.

The second reason is to seek collaborators to grow our project ‘Tobiratory’ by communicating its importance.
I have the disadvantage of not being able to speak or understand English.
I’m glad I was born in an era with ChatGPT.
I practice English every day, but I’m a little anxious because if I wait to master it, I might not be ready by the next Bitcoin halving.
After the halving, there could be another Web3 boom.
By then, Flow must be able to approach mainstream customers effectively.
For this, I especially need the influence of Roham.
If he feels that my strategy is worth trying, it can be accelerated.
If you find me interesting and are close to Roham, please tell him about me.

Let’s get to the main topic. In my previous post, I mentioned that streamers should be our first customers, but there is another fundamental thing that is necessary before that.

It’s about the essential conditions to make something popular.

Have you ever researched how to make something popular?
As a former YouTuber, I have thought about trends from various angles every day.
And I realized that there is one condition necessary to popularize new technology.

That is to become a King Maker. Let’s think about this using YouTube as an example.
Are you familiar with the YouTuber Mr. Beast?

MrBeast

He is a top YouTuber with over 200 million subscribers.
He makes high-quality videos with an overwhelming budget and increases his subscriber count.
It’s said that he spends over $7M a month just for making videos. It’s incredible.

However, do you know what his first popular video was?
According to Wikipedia, it was a video where he just counted to 100,000. It’s crazy, isn’t it? I definitely wouldn’t want to do it.

But if you can become rich and popular just by counting to 100,000, it’s very dreamy. That’s right. The necessary condition to popularize new technology is a Dream.
Why do people upload videos on YouTube? Because there is the YouTube Dream.
Maybe they could become like Mr. Beast. After all, Mr. Beast was just a young man counting to 100,000 at the beginning. He wasn’t a celebrity from the start.

This links to something I wrote before, “Innovation starts from small things.”
If YouTube had been a video site used only by celebrities, it wouldn’t have grown this big. People would just watch content by celebrities.
There is no dream in that. In fact, celebrities wouldn’t even have posted videos on YouTube. Because they were already sufficient with TV and movies.

It’s important to make those aiming for a big breakthrough into KINGS. Just like the venture capitalists who made Mark Zuckerberg a KING.

Yuga Labs was the first to succeed with NFTs in this way.
They clearly increased the number of NFT creators. However, the important point is who Yuga Labs made into a KING.
They targeted people with an investor mindset. Those who bought BAYC in the early stages were able to make a lot of money.
People who bought it at that stage likely had an investor mindset.
That’s why NFTs became popular among people with a strong investment mindset.

However, our customers are mainstream customers.
This means we must make someone who is attracting the attention of mainstream customers the KING.

That’s why I’m most focused on streamers.

So, let’s think about how we can make streamers the KING from here.
Then, the kind of application we should create will become apparent.

What kind of person do you think of when you hear the word streamer?

I first think of game streamers active on Twitch and YouTube.
Indeed, game streamers are also among our target customers.

However, there are more people who fit the criteria. They are Vtubers (Virtual YouTubers).
This is a culture that originated in Japan and is well-known mainly in Asia, but the market is definitely expanding in English-speaking countries as well.

I’ll explain more about Vtubers another time.
Here, I’ll write about what such people are looking for.
To do that, we first need to consider the business model of streamers.

Even among those active on YouTube, the business model of a video creator like Mr.Beast and that of streamers are significantly different.
Video creators earn through advertising revenue.
Thus, maintaining high video views translates to substantial earnings.

On the other hand, streamers don’t earn much from advertising revenue.
This is because the number of viewers they acquire during live broadcasts isn’t that high.
From this, we can say that video creators aim to reach a wide but shallow audience, whereas streamers target a narrow but deep reach.

Next, I’ll explain why the number of streamers has increased.
Logically, since it’s more profitable, becoming a video creator seems like the better choice.
However, becoming a video creator has become extremely difficult in recent years.
This is due to market saturation and the increasingly high quality demanded of videos.

If Mr.Beast is spending $7M a month, there’s no chance for new entrants.
Therefore, instead of competing through videos, people have started to compete through live broadcasting.
The advantage of live broadcasting is that it’s easier to build a core fanbase.

The distance between viewers and broadcasters is closer in live streams, making fans grow fonder of the broadcasters.
However, the downside is that it doesn’t reach the masses, so ad revenue isn’t as high, and generally, streamers earn less than video creators.
This is why we should make streamers the KING.

Streamers have a core fanbase but are looking for new monetization points.
This is where NFTs come in as a perfect match.
However, they have not entered the NFT market.

Why is that?

To understand this, we need to consider in more detail the business model of streamers.
Simply put, they are in the popularity business, making it difficult to enter the NFT market.
I used to be a YouTuber myself, so I understand that if they lose their fans’ support, their income significantly decreases.
That’s why they can’t take on new challenges.

I spoke to a famous male idol active on YouTube, who is not a streamer but a friend of mine, about NFTs.
He said that their fans probably couldn’t handle it.

What can we conclude from this?

The answer is that DeFi won’t be used.
At least in the initial stages, DeFi is too complicated.
Let’s stop creating things that are difficult to understand.

So, what should we create?
The answer is an application where anyone can easily create, display, and sell NFTs.

In Japan, the sale of items related to characters or idols is called ‘Goods.’
In English, it might be closer to ‘Merch.’
In reality, the ‘Goods’ in Japan and Korea and the ‘Merch’ in America have a slightly different taste.
But here, we refer to the items sold by YouTubers and streamers as Merch.
Yes, if it’s ‘Digital Merch’ that replaces this Merch, it seems possible to make it popular among streamers.

And there’s another important thing.
That is to provide a place to display them.
Our app, Tobiratory, aims to be the No.1 place for displaying NFTs.

Now, why are these things important, and what is the current state of the Vtuber market?
I plan to write about these in the next issue.

If you want to hear more sooner, please DM x or contact me on Discord.
X: https://twitter.com/inutanukEng
Discord: inutanuking

[inutanuking]

In this installment, I will write about what kind of application Tobiratory is actually trying to create and why.

From the previous discussions, it seems clear that for streamers to adopt new technology, they must give ample consideration to their fans.
The real first step should not be about making streamers kings, but rather ensuring their fans can safely enjoy digital ownership.
In other words, we shouldn’t just focus on selling NFTs, but on making the ownership of NFTs enjoyable.
This is the first and foremost thing to do.

So, how can we make NFT ownership enjoyable for people who know nothing about NFTs?
Since these are people unfamiliar with NFTs, appealing to them with the prospect of earning money won’t work.
Many Web3 businesses use the potential to earn money as their appeal, but this is counterproductive for mainstream customers.
The reason is that they are looking for trust and a sense of security.

This is evident from the ‘Chasm’ theory.

Crossing The Chasm - Technology Adoption Lifecycle

Promoting the potential to earn money implicitly imposes the associated risks on the customers.

Let’s make digital ownership more enjoyable in a simpler way.

I believe there are three important aspects to enjoying digital ownership:

• The joy of creating something you like
• The joy of displaying your favorite things
• The joy of gifting to someone you care about

I am thinking of creating an app that fulfills these three aspects.

Let’s start with the joy of creating something you like.
I want to make it possible to create digital items from just one image.
It will be easy enough for anyone to become a digital item creator.

All technology has always democratized something.
Blogs democratized newspapers.
YouTube and TikTok democratized television.
Tobiratory will democratize manufacturing.

Next is the joy of displaying your favorite things.
Once you own something, you want to display it, right?
But is there a way to display NFTs?
There are some projects trying to display them in metaverse spaces on web applications.

However, that is still too ahead of its time.
Only a handful of people access metaverse spaces.

Why do we want to display things?
It’s because we want to show them to others, to boast about them.

So, let’s make the display place on smartphones.
And if you take a screenshot and post it on social media, you should be able to get likes.
Making it overly 3D can make displaying it too complicated.
It needs to be easy to display.

This is something I made for demonstration on the web.

Fans from my YouTube days are freely creating and enjoying displaying them.
It’s not an NFT yet, but the joy of displaying has already been proven.

Lastly, there is the joy of gifting to someone you care about.

Humans have been gifting things to each other since ancient times.

It wasn’t easy to gift physical items, but with NFTs, it can be done easily.

There are many other details to consider, but if we can enjoy digital ownership this way, a future where streamers sell digital items will come.

And it will spread from streamers to other internet influencers.

Why? Because the business of selling digital items has an extremely high-profit margin!

[inutanuking]

I will write about why it is important to aim to be the No.1 place to display NFTs.
This is not only important for us at Tobiratory but also for the entire Flow ecosystem.

To put it simply, it is to maintain the network effect.

Why does becoming the No.1 place to display NFTs maintain the network effect?
The answer is simple.

Because one place to display is enough.
And, what is displayed becomes a memory.

Let me explain in detail.
By their nature, NFTs can be bought and sold anywhere.
Therefore, a specific marketplace may not be able to maintain the network effect.

However, one app for display is sufficient.
Would you install multiple apps just to display your NFTs?
Once you start displaying in one place, you would want NFTs that can be displayed there next.

And what you display becomes a memory.
Discarding what you have displayed and moving to a different app or blockchain is like discarding memories.
Humans are creatures who want to accumulate memories.

In other words, we use memories to keep users on Flow.
To create a stronger network effect, many other innovations are necessary, but being the No.1 place for display is extremely important.

In this way, by successfully building the network, the network effect becomes strong, and all entertainment companies will start creating NFTs on Flow.

[inutanuking]

I will write about what we should ultimately aim for and how we should showcase the characteristics of NFTs.

In fact, the content I have written so far does not necessarily need to be about NFTs. It could be implemented centrally using a traditional database without any particular problem.

However, NFTs have an interesting property that allows them to transcend platform boundaries, and this can create a very strong network effect.

For example, some might use NFTs in collaborations between restaurants and IP. Imagine a restaurant where scanning a QR code changes the NFT you own. This mechanism serves as marketing for the restaurant and allows the IP side to sell digital items. Buyers can prove their participation in the event.

There might even be IPs that create games. Nowadays, games are made and promoted by paying influencers. But influencers don’t always want to do this because introducing an uninteresting game could decrease their fans’ goodwill.

Let’s think differently. Influencers could plan a game and outsource its development. They can sell NFTs for profit, which are then reflected in the game.

Are you familiar with Super Smash Bros.? It’s a fighting game by Japan’s Nintendo featuring their characters. They mainly use Nintendo characters, probably due to the difficulty of distributing profits for copyright reasons. However, if monetization points are set to NFT purchases, we might see a game like ‘Super Smash YouTubers’ where popular YouTubers battle it out. Each YouTuber profits from their character’s sales.

Cadence’s ability to create nested structures with NFTs is very useful for IP collaboration. If Mr. Beast were to sell NFTs on Flow, it would greatly increase awareness. Mr. Beast, who loves the Japanese manga NARUTO, could collaborate with NARUTO on Flow’s NFTs. He is currently developing a private chocolate brand. While YouTubers have been focusing on merchandise sales, digital items could be more profitable.

If the market is mature enough, big Japanese IPs like NARUTO might be interested. A challenge for Japanese entertainment is tapping into overseas markets, which is difficult due to the need to hold inventory globally. With NFT sales, this concern is eliminated.

If Mr. Beast collaborates, NARUTO might also join. At this scale, Flow could become a hub for all entertainment. Although there are many challenges to overcome, this is the future Flow should aim for.