Behave like a Layer 1
A Layer 1 Network in crypto refers to the underlying blockchain protocol with a full-fledged digital-first and permissionless crypto-economy powered by its own native currency. These properties, along with a few others, allow blockchains to serve their true purpose of powering the future of decentralized money and the Internet. These are permissionless, transparent, and globally accessible networks that can be the settlement layer for the global financial system and unlock hyper-specialized use cases and opportunities, or provide developers, builders, and participants with root access to deploy a wide range of social and financial applications on top of them.
Layer 1’s are inherently tribalistic and almost behave like countries with citizens that are deeply patriotic and will defend it against all real and presumed threats. This could largely be a function of a few things such as conviction in the underlying technology or some skin in the game in the form of ecosystem participation/contribution (builders) or due to ownership of the underlying native currency/asset of the network. Any attack on the ecosystem is perceived as personal.
Network users/participants that purchase/own/spend the native currency provide the necessary ammunition (Liquidity and value) for these chains to be able to sustain, build & grow their ecosystem in order to attract more and more developer & builder mindshare.
The idea is that if you are a country that has the best infrastructure, ecosystem access & opportunities, resources/capital, and more to offer to builders and talent across the globe, you become a lucrative destination for builders to build businesses & products that can generate tremendous value for the country, immediate community, citizens and themselves.
One can see this with most chains constantly trying to build better and better programs, host events, deploy grants, empower communities, build solutions, and more that can attract quality talent across the globe.
What is it that makes ‘Behaving like an L1’ a lucrative opportunity?
Value does not accrue to a central entity but instead to an ecosystem/network and every stakeholder is now incentivised to generate value for themselves and other ecosystem participants as a by-product
Unlocks open source contributions and interest that is vastly more cost-effective, provides access to global talent & some of the smartest minds and helps generate tremendous upside opportunities
Increases the odds of finding products and solutions that can scale or have PMF
Reduced centralised dependencies and ensures that the ecosystem and network lives on even if core team efforts are no longer available
You are an L1 by design, specialised or otherwise..
All protocols, infrastructure solutions, Layer 1’s, Funds, and Communities in their most ideal state mimic an L1. That is, these are ecosystems that incentivise and attract top-notch participants and builders with access to opportunities, access to information, access to resources, access to networks, and access to capital/shared upside.
Communities
A while back I wrote about building communities and the core of the essay was “building home bases”. As the term suggests this is intended to be a digital “home” equivalent for any participant online/on-chain. The Home could be many things, it could mean an app, an algorithm you are most familiar with, an online community, an institution, etc.
The idea is that you associate yourself with this community, treat it as your home base to launch all initiatives, and do some of your best work. For example, you could bootstrap your products, ideas & projects
Your home base can be the source of multiple such unlocks for you. These include
Access to Capital
Access to partners/network
Talent (Early Team)
Distribution
Early evangelists/Users/Feedback
And more
Without any formal transactional relationship, you voluntarily generate value for your fellow community members as well by unlocking or providing opportunities. To find your community/home base online is the ultimate unfair advantage one could gain.
The goal of the early founding members of these communities is to ensure that there’s enough economic or reputational opportunity for a new member to aspire to be a part of this community, stick around, and create value. The sense of belonging will follow and in due time you’ll have a fully functional self-sustaining economy.
Coming back to our L1 analogy, you could be a general-purpose L1 that houses all sorts of applications, products & services or you could specialise based on your core members skill, expertise & the vision/interest.
This means that depending on who you are, your approach to this may vary but the end goal is largely similar.
Infrastructure Solutions / Protocols / Standards - A Layer 1 in its own right
Building an Infrastructure solution, a protocol, or establishing a standard that is widely adopted, is preferred and provides an economic edge to those that choose to build on it is a massive challenge in itself.
These generally unlock network effects for producers as well consumers whether that’s access to network participants, products/solutions, users, liquidity, etc. In crypto especially many start out with infrastructure/protocol solutions that hope to improve the developer experience or the ability to ship something for an end user. This is futile without the core team having shipped multiple iterations of a product or various product types that either fail or succeed, instilling confidence in those who might want to explore your solution.
The model is similar to how a Layer 1 would operate and think about its network’s economic value and growth.
Structure & Systems
The founding team and volunteers will be responsible for ensuring the community/ecosystem has everything they need to sustain and succeed. This includes systems and processes that track and manage individual and collective progress. Engage and incentivise participants to be producers and evangelists of the network plus fellow contributors.
How do you create the right economic incentives to drive this? This is probably one of the harder parts to execute and entirely depends on the goals of the network. I do strongly believe with the rise of crypto one of its most obvious and underrated use cases is to be a tool for global coordination and its ability to be used to conjure permissionless networks. You could use Soulbound Tokens that track & record progress/contribution, be a proof of membership and more. The same can also be said for fungible tokens (coins) that can be used to raise capital, coordinate and deploy funds.
I have grown extremely passionate about taking an L1-like approach to everything I do and you’ll see this in the type of work I opt for as well. Everything from being an active community builder, a contributor, working on potential industry standards (tech & otherwise), and more.
Building a “home base” or an “L1” for your stakeholders will give you the best fighting chance and help you find those that are truly vision-aligned.
References
Here’s one half of a video of me breaking down how you can build a community from last year.