Attention Markets

As crypto traders, sometimes we delude ourselves into thinking projects are undervalued or overvalued, that earnings or “real yield” matters, or that your particular project is going to be a 100x for X, Y or Z reason. The only thing that matters in crypto for 99% of coins is attention. Personally, coming from a TardFi background, it was a somewhat difficult thing to “untrain” my brain from earnings and fundamentals matter to “99% of tokens have no intrinsic value, but can be valued at anything”. Let’s look at a super fun example, INJ.

Looking at the quite impressive ecosystem on the left hand side, one would assume this “ecosystem” is thriving, and the 32x increase in INJ token YTD would help solidify that thought in your mind. But TVL is essentially flat this year and “core developers” has also been falling. So why did this token increase 32x? Did the INJ team cure cancer? Nope. The price was going up, and more attention was drawn to it, and as more attention ($) found its way to INJ, the token just keeps going fucking up.

You can even look back and see smart people like Viktor arrive at the same thesis (and the token increased 3x from this post: the fundamentals aren’t there but strong coin gud.

Another good example is TIA / Celestia. The project executed a great airdrop, grabbed the collective attention of Crypto Twitter, and the rest was history. Transaction counts and active accounts on TIA have been mostly down since the airdrop

Same with dev activity.

But again, it doesn’t matter. Strong price = gud project.

The old crypto adage is that there is no better form of marketing than your token going up, and these are just 2 examples of this in full effect. The only thing these 2 projects have going for them is that they own the attention of crypto traders. These aren’t the type of coin I like to personally trade, but I’ve seen them all over my Twitter/X timeline for 2-3 straight months (and you can see why).

For those of us in DEX only land, we know what projects are getting the most attention from something like Dexscreener’s trending tokens (and associated filters). And taking it one step further, you should be qualitatively and quantitatively building your own mental framework around “how do I trade the amount of attention on X coin”.

If something is top 5 on Dexscreener trending for 3-4 days, and then it seems to “vanish” what do you think happens to the token price? Down or down more. For example on GFY (which was a top trendoor for at least 3 days), as soon as attention (and by association volume) started to slip, the token swiftly found its way down 85%. Obviously on memecoins its even more important as they quite literally only have attention as the reason they are worth anything.

Now let’s compare it to MUBI, which lost attention/volume/trending for a 3-4 day period last week when “BRC20s were dead”. But notice how the token held up, bounced on support, and then as attention/volume comes back its nearly a triple.

Now, maybe you have already internalized this framework, but for me personally it has been something that I’ve had to keep getting better at, both around buying new positions, quickly exiting losers, or doubling down.

You can frame the Attention Markets model in other ways as well. The couple of questions I ask myself whether I’m aping a brand new token with almost zero information (except AI in the name lol) or if its something that is much more established are:

1. Has attention peaked for this token? If so, I probably shouldn’t touch it

2. Will this token or narrative continue to see attention go up?

3. On a qualitative basis, where do I think token X is in its “attention cycle”

   1. For example, DOGE attention peaked on SNL day and then fell 90% over the course of 2 years. But is starting a new, smaller attention cycle for an event in ~30 days

Once you start framing things this way, when AI vaporware (or near vaporware) projects pump to $2-100mm over days/weeks/months when your DeFi project can’t catch a bid, its because of attention. I kind of wrote about this in The Chameleon Investor, but after going through the process of building chainEDGE and seeing what kinds of tokens highest PnL trades and traders are born from, its much easier to internalize that attention trumps everything. Going back to AI, one of the reasons I personally have been bullish on it, is that there isn’t a ton of public stocks where you can speculate on AI. Crypto, on the other hand, is perfect for this. Throw in some big brain tech and voila, multiple projects that have run to tens if not hundreds of millions of market cap in days/weeks/a few months.

Ok Wiz, but how do I put this in practice? Well first off, if you are not watching the Dexscreener hot tokens, start there. You don’t have to buy them, but you need to be watching where the hot ball of onchain gambler money is moving. In just the past few weeks it has tossed around between AI things, BRC 20s, AVAX, memecoins on each chain, and now back to BRC20s in the past 48hr. But also for any position you currently hold, you should have some sort of clear thesis of (1) has attention peaked for my token, (2) my token is in a narrative that has attention, but my token doesn’t, but I think it will for X, Y, Z, or (3) my token has no attention whatsoever, but I think its going to increase for some reason. If prices of tokens are just the financial representation of human psychology and greed, you should follow the old GCR wisdom:

Want to do well trading over the next decade? Tap into the heart and soul of the increasingly desperate, degenerate, jobless, lonely, addicted- generation moonshot

Front run the lottery tickets, if you have the savvy to get inside of the lost souls trapped inside the metaverse - GCR

Said another way, you are trying to front run attention, whether thats attention going from 0→5, or from 6→10.

For those of you not using chainEDGE, this is what its built for. A common misconception of this tool that I’ve spent 18 months building is that you have to be a 24/7 onchain degen or have to use bots to make use of it. But you can also use our holding data and filters to find projects that are “undervalued vs. their potential attention”. For example, I have been using our holdings data to look at which coins have $10k+ smart money holders. And then I look for tokens where this number is increasing, or where I haven’t seen them before, while also looking at smart $ holding as a percentage of market cap. Using these simple filters is very nice for both crypto degens that are online 24/7 or those that have busy lives, kids, etc. Taking it a step further, you can test yourself and find tokens early that you think will make their way into this “popular” smart money category, whereby you are not only front running people looking for a “lottery ticket”, but also front running later stage smart money folks. You can also filter this table by token age to try and find early stage gems (which is part of what I use to write the New Tokens to Watch series where we found projects like JOE, WEBAI, MBX, AEGIS, PALM, HYPR and BSSB early.

chainEDGE prices are going up again at the end of this month as we roll out a much more actionable chainEDGE 3.0, so if you’ve been curious about the platform and want to get a monthly sub at a 25% discount, sign up today. PS while we do not do trials, if you book a month and don’t feel like the platform is for you, just shoot us an email and we will refund you in full.

In closing, while maybe none of this is new to you, I felt like writing about it and if you made it this far, I appreciate you reading my ramblings. Attention trumps all, and orienting your trading around this will likely make you a better trader over time. Instead of focusing on diving super deep into a project, its roadmap, etc. You also need to have the higher level meta view of “why would anyone give af about this project”. And one more example for the road to hammer another very key point: there is no overvalued or undervalued, this is crypto. The most successful LSDfi project, LBR which has created over $165mm in circulating supply of its own stablecoin has a $26mm market cap.

Meanwhile, some examples of market caps where there is actual attention from speculatooors:

• AI

  • OLAS $3.6bn

  • AGRS $248mm

  • PAAL $169mm

  • ATOR $80mm

  • GROK $80mm

  • AIX $26mm

  • ENQAI $27mm

  • MND $26mm

• BRC20

  • MUBI $157mm

  • BSSB $40mm

  • TURT $20mm

Ok, thats enough rambling for now. Feel free to comment some projects/topics you’d like me to cover. Next week I’ll be dropping a new post on my favorite coins heading into next year, along with the Smart Money Weekly and the New Tokens series.