Success From The Bottom: Building In A Bear

by Nik Hawks & Max Gold

In a DePIN bear market, the only thing that matters is whether or not you’re improving the key aspects of your project. Let’s go through what you need to be doing to maximize your project’s chance of success.

Deploy miners where it counts.

Every network has an optimum topology. If you don’t know yours, figure it out, then begin building it. The community will finish it for you in the bull market, but you’ve got to start it now. A high quality topology is typically the single highest point of value in a project.

Whether it’s the type of car or location for DIMO, where a Helium Mobile small cell is, or where you put a WeatherXM station, topology is where the value is.

I get it; you started this DePIN thing so the community would build it for you. If you leave it totally up to them, you’ll end up with a low quality topology. Take the initiative and lead from the front. Show them what a good deployment looks like; where it should go in relation to others, how it contributes value, why it matters.

You’ve got to show them the way. Light the beacons now that they’ll follow later.

Stress test your processes.

Yes yes yes, I get it, no one is using your network right now. Low usage now is not a problem, it’s a golden opportunity for you. Stress test small parts of it. See what breaks. Fix it. Trust me, you won’t have the time or resources to fix it when the cycle spins back up. Along those lines…

Know your limitations

A bear market can last longer than your capacity to withstand it. While we all want you to make it, the failure rate for businesses in general is about 90%, crypto probably amplifies the risk, and the space is young enough that there’s no DePIN project where we can say, “Yeah, they really made it.”

Think through what your “no-go” criteria are. If planning for contingencies and being ready with an audible was good enough for Alexander the Great, it’s good enough for you.

Build an incredible new onboard experience.

Remember, you’ll be onboarding an order of magnitude (or more) users than you are now. They are very likely to know NOTHING about your project. The pressure they’ll feel to deploy is so great they basically won’t think it through. Without guidance, they’ll connect nodes willy-nilly and YOLO.

You’ve got to make it the default for them to get in the best position to contribute when the time is right. It can’t just be easy to do, it’s got to be the thing they do naturally. That, by the way, will require tremendous effort on your part to set up and is almost entirely driven by your Story, which we talk about here.

Refine how quickly a new user can learn about the project.

You should be able to explain the 30,000′ view in less than 30 seconds. Here’s an example:

IoTeX helps other DePIN projects by providing a blockchain purpose-built for IoT.

That takes me about 4 seconds to say. Another example might be:

Helium allows you to create coverage for anything from a cell phone to an IoT radio and get paid in tokens when your coverage is used.

That’s how quickly you should be able to describe what your project does.

From there, you need to build the “elaboration”. How does your system work? What’s the best case for deployments? When should someone NOT use this? How can someone earn the most by contributing the most value?

Make it easy to understand.

The elaboration should take you less than 5 minutes. I know, I know, you can go way deeper and take much longer. First you need to build trust with short chunks of information that show time spent exploring your project is worth it.

When they want to know about gateways and LoRaWAN and where an LNS fits in (or whatever your technology is), they’re ready to trust you with their time. That’s when you can give a long form answer.

Once you’ve built trust, move to the next step.

Make it easy for your community to teach others about your project.

DePIN has an unfair advantage in that you can use tokens to drive actions. That doesn’t mean you should sit back and rest on token incentives alone. Building a group of true believers is what propagates your token incentives, and propagation in a bull market is an awesome power.

Still, let’s not ignore the unfair advantage tokens offer. Now is the time to structure (or re-structure) your project to use well formed token incentives to the absolute maximum.

The other critical aspect of enabling your community to build with you is to create a transparent structure of trust around those incentives. How are the tokens broken down? Who gets what? How much will a miner earn, and importantly, how and when can that be reduced?

Deep visibility into the project to include making the small details visible is extraordinarily important, and supports the vital trust building you need to do now.

Make mistakes NOW!

If you make a mistake during the bear, that’s OK! Now is the best time to make mistakes. The consequences are low, so the risks are (generally) worth it.

Let’s say you want to get into whitewater kayaking. Would you rather learn how to roll your kayak in a calm pool with an instructor right next to you to help get you back upright, or will you wait until you’re in the maelstrom and just “figure it out.”

The “figure it out underwater” method puts your project at high risk for failure.

Just ask any engineer. As much they love the FAAFO* method, no competent professional uses it for scaling growth. There’s no time to “fuck around” in the maelstrom.

Speaking of timing, for now, don’t worry about growing your audience. Trust me, a time is coming when you won’t be able to keep up with the growth. The numbers you’re struggling to hit now are ones you’ll blow past when the cycle turns.

At that point it will be too late to make preparations. You’ll be in the maelstrom.

Want to know how big of an opportunity you can miss if you don’t prepare? Just ask every manufacturer for Helium hotspots. When demand for Hotspots peaked in late March of 2021**, any manufacturer with in-stock Hotspots would have been 6-8 MONTHS ahead of the rest of the market.

A 6-8 month head start in a market is what dreams are made of.

As Eminem says, “You only get one shot, do not miss your chance”. If you’re reading this, you probably missed the opportunity last time. Don’t miss it again.

The fundamentals of building a project ALWAYS matter. All markets cycle. There is no skipping the bear just because you’re special. Projects that get the fundamentals right will benefit throughout the entire cycle, building the fundament in the bear to get the momentum for escape velocity during the bull.

What does matter?

Now I know that some of you obsess over numbers. You want a number to keep a lookout for. I get it, and I’ll give it to you, but keep this in mind: It’s not that useful, and by the time you see this number in the market, you are out of time to prepare.

As a ROUGH rule of thumb, there’s only one number that matters, and it’s 30.

It’s not exact. It actually could be 45, or even 90. Still, we’ll use 30 for now with a 99% confidence rate just to give you something to keep an eye out for.

Somewhere around a 30 day payback period for a miner (“payback” is commonly and incorrectly labeled “ROI”), the market will lift off. Miner prices (and sales) are driven by returns, in fact, academic papers have been published showing the correlation.

We find the prices of the most efficient Graphical Processing Units (GPUs) for Ethereum mining are significantly positively correlated with the daily price returns to that cryptocurrency.

-Linus Wilson, GPU Prices and Cryptocurrency Returns, University of Louisiana at Lafayette – College of Business Administration

As the cycle cranks up and the payback period gets shorter and shorter, the market starts to go bananas.

How bananas? Between March and June of 2021, Helium miners were selling for $10,000 on eBay and paying off in 10 days on a network with no revenue. There were no miners for less and at that point, thousands of miners had been sold. It was batshit bonkers.

It won’t make sense, it won’t line up with what you want, it’s not granularly predictable, but IT. WILL. HAPPEN.

Tulips. Cabbage Patch Kids. Beanie Babies. iPhones. The human condition for susceptibility to mania hasn’t stopped, it’s just quiescent now.

The smartest people in the space, rather than despairing, are saying, “Thank sweet baby Jesus, we have time to breathe and build and prepare.” Most people are saying “Holy smokes, we’re not going to make it.”

The smartest people know that the opportunity in a bull market is two fold – massive profits during the run up, and coming out the far end with a functioning system. Nothing else matters.

All you have to do now is make sure your projects arrives at the bull prepared to maximize the opportunity. That’s it.

The companies who’ve raised the capital to be prepared for the bull, who can steer a steady course of improvement through the fog of the bear market will see extraordinary results.

The ones who don’t? You’ll never hear about them again.

Which kind of project do you want to build?

Disclaimer: Financial Interests and Consulting Services Disclosure

This blog post may contain references to various cryptocurrency projects, tokens, or assets. It is important to note that the authors of this blog post and Gold Hawks & Associates may have a financial interest in some of these projects or may provide consulting services to them, or in some cases, both.

The information and opinions expressed in this blog post are intended for informational purposes only and should not be construed as financial advice or a recommendation to invest in any specific cryptocurrency project. Readers are encouraged to conduct their own research and seek the advice of qualified financial professionals before making any investment decisions related to cryptocurrencies or any other financial assets.

The authors and Gold Hawks & Associates are committed to providing accurate and unbiased information, but it is essential to understand that our financial interests or consulting relationships with certain projects may influence the content presented. We aim to maintain transparency and integrity in our content, but readers should exercise due diligence and consider potential biases when interpreting the information provided.

Investing in cryptocurrencies involves inherent risks, and market conditions can change rapidly. It is crucial to make informed decisions and only invest funds that you can afford to lose. The authors and Gold Hawks & Associates assume no responsibility for any losses or damages resulting from actions taken based on the information presented in this blog post.

By reading and engaging with this content, you acknowledge and accept the potential conflicts of interest disclosed in this disclaimer.

*FAAFO stands for Fuck Around And Find Out, and is how most engineers learn how a thing works. It is NOT a method for scaling growth.

**Based on Nik’s Helium consulting workload during the entire cycle. There’s probably no way to accurately know the correct answer as you’d have to get access to every manufacturer’s sales numbers. April 2021 (or even “late spring 2021”) is a good first order approximation.