🌱 is avoiding investors knee-capping Flow?

I’ve written previously about the dangers of having a token that is broadly available to the public. I’ve also discussed how Flow’s strategy avoids those dangers. But lately, I’ve been wondering if that strategy’s downsides are worth the benefits.

For those who don’t know: 🌳 Flow is a16z-funded Dapper Lab’s new blockchain protocol. It’s a NFT-first blockchain, with NBA TopShot as their showcase of what other developers can achieve on their platform. The unique thing about Flow is…the FLOW token is unavailable to US investors.

Presumably, this is because of the SEC. Dapper Labs suspects that Flow will be seen as a security and wants to head that off by not selling FLOW to US customers. But I think it can be a huge advantage for other reasons. As I write about in “🌱 the ability to go public on day 1 is a trap”, when users own your tokens, they basically own your stock. And when customers own your stock, they can care more about money than they do about your product. Which is not what you want in the early days of product development.

That said, this approach also creates a severe disadvantage for Flow in the crypto world. A big partnership like the NBA can be profitable building on Flow. Customers are willing to part with USD to purchase a TopShot. They’re are willing to resell to other users only on the TopShot platform and eschew all other aspects of crypto. But what about everyone else?

Let’s say you’re a small team who wants to create a custom line of NFTs in the vein of Bored Apes, etc. You want enough custom functionality that Rarible or OpenSea isn’t enough for you: you’ll need a smart contract custom to your needs. Your options are the following:

Ethereum

Pros	Cons
Everyone has heard of it, many use it. At least 3% of your IRL fans probably already have ETH, if not more. Crypto folk who haven't heard of you already might become fans.	It's expensive to mint and expensive for your customers to buy due to gas prices. If your usual art price is less than $1000, it probably not worth it.

Solana

Pros	Cons
Cheap compared to Ethereum. Up and coming enough that there is a crypto community that might find your work.	Unlikely many of your customers currently hold any Solana. How much support does Solana have across the ecosystem? Does OpenSea support reselling? Will your customers feel like second-class citizens in the crypto space?

Flow

Pros	Cons
Cheap compared to other options. An NFT-first designed platform should make design and building easier.	Very few crypto nerds use Flow, limiting new fans you can reach. Customers will need to create a Blocto app account and then use a credit card to purchase FUSD to buy your products. Basically, you'll have to convince your IRL fans and new crypto fans to try out the platform in order to give you a chance.

Why, in this case, would you choose Flow? I honestly can’t think of a good enough reason. The ability to go viral among the crypto community in the vein of Bored Apes or Zed is pretty much shot due to the fact that no one uses the Flow ecosystem. You’ll do a bunch of development work, and eventually have to convince both non-crypto and crypto people that your product is worth paying and receiving FUSD for.

Part of what makes Ethereum valuable is the hype cycle that you, as a small developer, can build on. The value of Ethereum or Solana itself can drive the crypto-public to your product. Flow is like running your average USD business when others are running a business on Apple stock. There are pros and cons, but for the small developer, the difficulty of convincing people to use FUSD to buy products they can’t view anywhere other than their Blockto wallet just may not be enough.

This means that for the smallest creators, Flow doesn’t make enough sense. And it’s possible it’ll never make sense. Flow might be the right place for the NBA or MLB or Dr. Seuss to make a cash-flow positive fiat business. But it may not provide the big break small creators need to be worth the time and effort.

What do you think? Does this make sense? Is there something I’m missing?

Every post on this blog is a work in progress. Phrasing may be less than ideal, ideas may not yet be fully thought through. Thank you for watching me grow.