This will be a long thread, but I hope it will be an interesting read for those who study crypto Ponzi economics, human greed, and market bubble laws. So let’s get started.
This article will be divided into 4 parts:
What is Celestia?
What is the narrative surrounding TIA?
What do TIA and (3,3) have in common?
What am I preparing for?
Before you get mad at me, let me clarify that I’m not saying Celestia is a Ponzi scheme. In fact, I believe it is one of the most important technological advancements we have seen in a long time.
TLDR: Celestia makes it easier, or cheaper, for new projects to deploy new rollups and blockchains.
For example, @MantaNetwork saved over 99% of costs by using Celestia for data availability (DA) instead of Ethereum. These significant cost savings have practical benefits for users.
This is another piece of information that can help you better understand it. Since I don’t want this article to be too long, I will continue discussing the narrative behind the TIA token and the reasons for its skyrocketing price since the November TGE.
I believe TIA is the purest way to understand the 2024-25 airdrop story. We have already seen two airdrops for TIA stakers (@Sagaxyz__ and @dymension), and more airdrops have been confirmed, such as @MantaNetwork.
Celestia makes it easier for new rollups to launch. Some rollups airdrop tokens to TIA stakers, and L1/L2 tokens have a premium in the market.
Therefore, we see the formation of the narrative: “The price of TIA doesn’t matter because the airdrops are enough to compensate for it.”
For example, my DYM airdrop has already covered the cost basis of my TIA investment at $4 by @aevoxyz. So, if I choose to liquidate my airdrop, the position has already made back its cost. But I don’t intend to do that, though it’s a topic for another discussion.
You can see that this could be a reflexive cycle. As more airdrops happen, we should see more buying and staking of TIA for future airdrop demand. We have already seen an increase in the number of stakeholders, which is closely related to TIA’s price.
Staking TIA tokens also aligns with my view of the highly anticipated alt-L1 trade. Instead of trying to pick L1/L2 tokens in the upcoming cycle, why not stake TIA and passively receive airdrops?
For most people, this is a psychologically more comfortable narrative.
I also see some similarities in the Solana/Cosmos perspective. Many teams have been developing during the bear market and raised significant funds from venture capital firms. Some of these teams will airdrop tokens to ATOM, OSMO, and TIA stakers, further strengthening this narrative.
But what makes it a (3,3) cycle? Here’s the progress:
– Market sees a significant number of airdrops (e.g., DYM)
– Market expects more airdrops
– People dream of the scale of these airdrops
– Buyers become increasingly insensitive to prices due to airdrop expectations
We can simplify the market pricing of TIA to this general function: TIA valuation = future value of DA layer + meme + narrative + future expectations of airdrops to TIA stakers. But honestly, nobody knows how to evaluate this.
So naturally, our brains simplify it to the narrative of airdrops. Who cares about the valuation of TIA if we can stake $1,000 and receive over $1,000 in airdrops, right?
Sound familiar?
“The price of OHM can increase by 99%, but you’ll be fine because the APY will compensate for it.”
“The price of TIA doesn’t matter because the airdrops can compensate for it.”
These are two completely different projects, but the narratives are similar. They have the characteristics of future bubbles.
Moreover, why wouldn’t other industries love airdrops?
After all, the promise of turning $100 into $100,000 sounds amazing. Look at these thumbnails and view counts! People need these videos, which in turn motivates YouTubers or TikTokers to provide these videos.
“But Taiki, you’re also making these videos!”
Yes, but Celestia just launched two months ago, and we have only had two airdrop snapshots. I expect there to be more in 2024-25. There will come a day when staking TIA becomes meaningless, but I don’t think we’re there yet.
A profit-oriented person realizes this and chooses to participate as long as we are “early enough.” This is not unreasonable. I believe TIA is one of the most significant innovations of this cycle, but that doesn’t mean it’s easy to avoid a bubble.
I’m writing this article to remind myself to profit humbly in the future, even when the narrative feels invincible. Here’s my view on the price trend of TIA in the next cycle (I drew this in 30 seconds):
I believe TIA will be an astonishing asset during the bull market, but it will also be an extremely painful asset during the bear market. Once people realize that valuation is meaningless and airdrops are diluted, they will start liquidating. The 21-day unlocking period will make this reality even more severe.
So, what’s the plan?
I stake TIA, I hold some airdrops, and I sell some airdrops. When do I sell TIA? Honestly, I don’t know. My current plan is to start liquidating my TIA position once Coinbase ranks first on the Apple App Store, or when major companies reach ATH.
This article was written on January 13, 2024, and if you’re reading this in the future, my views may have changed. I could also be wildly wrong, but that’s the risk of putting my thoughts on the internet.
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