Multicoin: News is Price, The Value Attention Theory of the Crypto Market

Written by: Multicoin Capital

Compiled by: Deep Tide TechFlow

"Price is news" is a saying often used in the crypto space, where engagement and awareness in the network increase after rapid price fluctuations. For me, the opposite of this phrase may be more accurate: "News is price."

In my article titled "What Multicoin is Excited About For 2024", I described the apparent changes in how the market prices assets, which I call the "Value Attention Theory." In cryptocurrency, the primary input for asset pricing is not a multi-factor model centered around risk premiums or cash flows, but rather the perceived amount of time, energy, and money that the community invests in the asset. Please note that this is not a normative statement, but an observation of the historical capital flows of tokens as an asset class (see the recent memecoin liquidity, which is an early example in this regard).

The internet has made arbitrary, bidirectional information transfer possible. Cryptocurrency has achieved arbitrary, bidirectional value transfer on these tracks. Today's consumer internet (streaming platforms, online media, mobile applications, social media, etc.) can be summarized as an attention market, and thus, money and attention are increasingly exhibiting similar characteristics.

In the 1930s, Benjamin Graham had to wait for quarterly reports and financial statements and purchase paper stock certificates through human brokers to express his value investing theory. By the 2020s, a series of posts on Reddit regarding hedge funds shorting Gamestop attracted tens of thousands of retail traders to submit buy orders on Robinhood, causing the price to rise 15 times within 30 days. The consumer internet and crypto tracks have significantly narrowed the gap between information and value while increasing the quantity and frequency of data consumption and value transactions. As this occurs, the Value Attention Theory becomes more important: information is money, and money is information.

While the markets for attention and value exist in the wild, we have yet to truly see their real collision. When we consider consumer applications in crypto, this is what we are looking for. Crypto enables the rapid creation of new assets around attention and makes it possible to trade where attention is gathered: consumer-facing applications.

In the coming years, we expect consumer developers to consciously incorporate crypto into the structure and user experience of their applications, thereby massively changing the content that can be traded and the places where trading occurs. Internally, we refer to such applications as "Publisher-Exchanges."

Publisher-Exchanges

Exchanges have product-market fit in the crypto space because one of the core uses of crypto is to transfer value. Coinbase (fiat on/off ramps and centralized exchanges), Tensor (digital collectibles exchanges), Jito (transaction intent and block space exchanges), and Phantom (active order flow exchanges) are all different forms of exchanges.

The role of exchanges in crypto is similar to that of major publishers in the consumer internet (e.g., X, Instagram, and The New York Times): publishers control the flow of attention in the consumer internet, while exchanges control the flow of capital in the crypto space.

When we think about the next generation of consumer applications, we expect to blur the lines between exchanges and publishers, creating new experiences that combine money and attention.

Kyle discussed UI layer composability in his 2024 Thought Contribution. The simplified argument means that the next important online exchange will not have a traditional order book, depth charts, etc., like Coinbase, but will resemble a short video app where viewers can bet on the viral spread of upcoming creator content, or like a group chat where friends can immediately launch NFT collections based on inside jokes or memes, or like a curated platform similar to are.na, where designers can gain status and monetary rewards based on their taste. In other words, consumer applications brought by cryptocurrency are both publishers and exchanges: Publisher-Exchanges.

Publisher-Exchanges increase the surface area for new asset issuance by embedding issuance and native trading into the application front end, allowing for novel interactions and coordination of these assets. Introducing trading into familiar venues may seem narrow or imitative, but we believe that narrow markets are wedges for discovering emerging behaviors that will lead to the creation of large-scale new platforms.

This will be a golden age of experimentation—developers can experiment by combining native issuance and trading with new application experiences. "Crypto-native consumer applications" will treat these design principles as first-order principles.

Emerging Category of Publisher-Exchanges

The goal of Publisher-Exchanges is to facilitate applicable trading versions and content that captures user attention at any given moment. Next-generation crypto consumer applications will allow users to directly issue and trade assets, thereby monetizing the user attention they capture directly.

For founders looking to build Publisher-Exchanges, we believe that some design principles from the history of publishers and exchanges will be relevant.

In the history of the consumer internet, publishers are essentially content markets, driven by two core attributes: discovery and management (presenting content that users want to view and interact with), and trust and reputation (providing assurances to users). Successful publishers can generate strong "liquidity" by measuring the attention time users spend on them. This is why Upworthy measures success in "attention minutes," and why Elon Musk is fascinated by "regretful user minutes" and "user seconds."

For Publisher-Exchanges, the key point here is that they first need to establish an engaging core experience that captures users' time and commitment, and then embed asset issuance and transfer to align with their unique engagement style.

We do not view exchanges simply as trading venues, but rather as an Athenian agora (an open gathering place in ancient Greek cities for citizens to engage in various activities), where people interact in a strictly defined specific environment, exchanging experiences, value, and information. With this in mind, we envision several broad categories of applications that we believe are suitable for the emergence of Publisher-Exchanges.

Chat Applications

Chat applications are prime candidates to become Publisher-Exchanges.

Early examples of this argument can be seen in WhatsApp and WeChat. Both platforms have rich developer ecosystems in India and China and are built on strong, nationally regulated digital payment tracks. This allows teams like Sama and Meesho to directly embed AI-tagged labor markets and local merchant e-commerce into the user social graphs on these platforms.

In crypto, Telegram is the de facto messenger, and their bot API has created a vast design space for embedding issuance and value exchange experiences. Products like Dialect Operator and Maestro exemplify this situation. They demonstrate that users want to be able to trade directly within their chats. These Telegram trading bots fit the definition of Publisher-Exchanges because they bundle discovery and intent with execution, strengthening the tight connection between attention and value transfer. Telegram has its own hidden app store (search for 'tapps' after entering) that contains hundreds of bots allowing users to send payments, play games, discover content, and more.

While these Publisher-Exchange bots are designed to shorten the execution time for retail traders seeking alpha in closed chat groups, there are further opportunities to significantly expand the set of assets that can be issued and traded. We expect chat groups to become the foundational layer for new forms of work (getting paid to complete tasks directly in chat), special projects (crowdfunding new projects in large conversations), and games (issuing meme coins as simply as sending a gif)—all of which are experiences of Publisher-Exchanges.

Content Networks

The largest social media applications (Instagram, TikTok, X, YouTube) are content markets where creators of music, posts, videos, or other user-generated content compete for users' attention. Creators can then leverage the attention they accumulate to sell content or branded products.

The highest guiding principle pursued by crypto content networks is that audiences support individual creators or content pieces, and creators earn the majority of the revenue from the content they create. This is the initial argument for creator tokens, but we understand that creator tokens are unlikely to succeed on their own if they are not connected to the platforms where their audiences are located.

We are seeing early experiments with new types of content networks today, each experimenting with in-app issuance and trading of new types of assets. We envision a new type of content market where users come for entertainment but stay for the market.

Unlonely is a streaming platform that directly embeds token issuance and prediction games into streaming and chat. Farcaster Frames enable direct interaction with on-chain status within the feed, another example that allows for the issuance and trading of assets in familiar venues.

Currently, most content networks monetize through advertising. Advertising-based customer acquisition models often lead to leaks in the conversion funnel, and since they frequently disrupt the user experience, users become aware that they are being sold to, making it an obviously inadequate solution for attracting attention.

Display advertising is a relic from the pre-crypto era. A more fundamental way for merchants to acquire users is through Direct Value Issuance (DVI), which means directly paying users with tokens.

Advertisers should be able to allocate value directly to users rather than serving targeted ads based on user behavior/group structure. Content networks do not need to serve ads for sports betting platforms between posts as users scroll through live NBA games—instead, they can allow sports betting platforms to directly airdrop $50 in platform credits to users.

Advertisers no longer transact with platforms as rent-seeking intermediaries but deliver their CAC budgets directly to end users. In turn, content markets can also provide users with better products: they transform from places where users are actively attracted to attention without seeing any benefits from the financialization of that attention (through display ads) to places where users can directly engage with that financialization by earning and spending assets (through DVI) based on their attention patterns.

The backdoor opened by embedded advertising networks may be more attractive. By providing each user with an address, applications can embed universal financial services at zero cost and layer them on top of the deep contextual states users already have.

Information Markets

Search engines in the 90s attempted to organize information on the internet, initially focusing on static web pages and then expanding to new forms of media and content. The cost of accessing this information was subsidized through advertising.

Today, information on the internet is far more extensive than web pages; it is distributed across thousands of forum posts, group chats, podcasts, and private databases. Information markets (e.g., prediction markets, sports betting platforms, alternative data providers) are a way for users to directly extract signals and noise from all these sources and distill results from a vast amount of qualitative information.

While the most successful examples of information markets do not currently rely on crypto tracks, we believe they can strengthen themselves through crypto. The design space here is either to financialize the information itself based on quality or to embed these markets directly into first-party information-sharing venues.

Prediction markets like Polymarket are essentially binary call options with expiration dates centered around future outcomes like elections or sports events. Historically, they have failed to accumulate enough liquidity or attention to serve as reliable sources of information. In contrast, cultural assets (meme coins or NFTs) have proven to attract more attention and engagement than isolated prediction markets because they do not have fixed expiration dates and can have their own life. For example, trading volumes for Trump-related NFTs and tokens consistently exceed those of the Polymarket prediction market.

Thus, directly tracking attention with new spot assets may represent a more interesting proxy for attention or information flow. Embedding these types of assets into news release platforms or editorial publishers may be more attractive than the past binary fixed-expiration structures. Numerai draws on the principles of token registration, conducting machine learning competitions on obfuscated financial data; similarly, we believe that a universal information market can be established for a new category of information based on the same principles.

Consider a StackExchange-like forum where voting and reputation have financial value, or a Pinterest-style board where users can stake their reputation on emerging trends and behaviors. There is a wealth of high-quality information on the internet today, most of it user-generated, and what is currently lacking is a formal mechanism to appropriately aggregate and monetize it, which is precisely where cryptocurrency can be most useful.

Special Interest Communities

Tokens enable communities to draw attention to new issues and manage resources. ConstitutionDAO demonstrated that meme coins can gather enough funds to bid on rare artifacts, and the network began to operate autonomously after the auction.

In this case, we conclude that when tokens are attached to missions, they are more likely to coordinate real-world actions. This precise collaborative funding model can support traditional funding and research for traditionally neglected new ventures: capital-intensive projects like VR, the fringes of open-source software, the arts, or drug development for rare diseases.

Tokens uniquely support capital formation from distributed sources and empower capital providers with strong ownership of that capital product. This means that groups around the world can coordinate capital for large-scale experiments, produce the results of those experiments, and return the profits to the tokens.

HairDAO and VitaDAO are real-world examples today. We have seen new collaborative research platforms funded and sustained by people's attention to various neglected issues.

In Conclusion

Consumer crypto applications will be a generative transformation rather than an imitative one. The fundamental elements described in this article showcase the tight loop between attention, capital formation, and coordination, as the primary feature of cryptocurrency is that transactions can occur anywhere. Cryptocurrency is not just about moving the existing economy onto the chain; it unlocks new forms of economic expression to capture people's attention, where like-minded crowds can exchange time for money and vice versa.