how does a normal application that has zero marginal costs improve when you add a marginal cost to every action

if you can’t answer this your crypto product is bullshit

— Marko (@mark0tonic) February 5, 2024

While crypto valuations are often top-down ¹ and vibes based ², it still behooves application developers to think critically about their application cost structure. Minting new and selling/synthetically selling tokens is not a business model. The importance of scaling in reducing cost is that it reduces the marginal cost associated with each action. The lower the marginal cost gets, the broader the set of applications that are feasible gets (artificial costs can always be imposed atop). It’s important to note stuff like AA does not ultimately impact the cost structure as the cost is still born by someone, just the someone is shifted around.

Footnotes

1. [big project] is valued at A, and [smaller project] does xyz at the same level if not better than A and has m% chance of being or eclipsing [big project] size so it’s fair should be B. I won’t make any specific comparisons, but this happens in private markets and with liquid tokens. ↩

2. nebulous, but broadly true for categories that don’t have comparables. premium for team. premium for community. premium for likelihood of longevity. premium for broader market sentiment. ↩