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Our Investment in Based

Two sectors dominated crypto mindshare throughout 2024: meme coins and prediction markets. Prediction markets found their defining moment when Polymarket mentions in mainstream political coverage became commonplace, and the wisdom of the market ultimately called the US presidential election correctly — when most major outlets got it wrong (despite 80,000 simulations). $3.2 billion was wagered on the outcome. Meanwhile, we saw a Cambrian explosion of meme coins, and unprecedented retail activity on Solana mostly thanks to Pump.fun, which generated a massive ~$400m in fees in its first year.

Despite significant buzz, both of these sectors are still (need I remind you?) early. Post-election, Polymarket volumes and open interest declined as expected, and yet monthly active traders continue to grow, as attention has shifted to sports markets. Meanwhile, the meme coin sector was rattled when the US president-elect unexpectedly dropped an official meme coin days before the inauguration, becoming an instant top-5 meme coin with a multi-billion market cap. Wild, controversial, and completely unprecedented. Regardless of how you feel about either of the above, it seems clear that things are only going to accelerate, with shifting regulatory winds and increased retail interest paving the way for the next era of iteration and experimentation. We’ve been seeing new and interesting takes on both of these sectors weekly, but we think that one of the most interesting opportunities lies right at the intersection of the two.

Today I’m excited to share our pre-seed investment in Based. Based is an Opinion Market, a new SocialFi construct at the nexus of memes coins (opinions) and prediction markets. Simply stated, it transforms any temporally-relevant content (memes, brands, political or cultural events, narratives) into tradable markets.

We’re excited about Based for many reasons: the market opportunity overlap is big, the product is a fun and engaging experience with mainstream appeal, and the leadership team is exceptional. We’ve known the Based founders for several years, and we’re excited to be among their first champions and users. The team includes founders and builders from web3 projects that have shipped critical blockchain services, most notably Membrane Finance (recently acquired by Paxos) and API3, along with excellent web and mobile design and UX talent.

Betting on idea virality and trajectory — brands, identities, archetypes, concepts — isn’t a new phenomenon, but it’s one that is now tangible and relatively easy to do, assuming you’re already somewhat familiar with crypto. In fact, I think it’s safe to say that more of my normie friends own meme coins at this point than they do $ETH or $SOL. More of them have used Pump than Aave. At first blush this seems funny and a bit weird, but I think it’s actually quite indicative of what’s to come, and the size of the opportunity. The ability to express your bullishness on an opinion is important, and speculating on that can be fun. We’re already doing this today, with meme coins, but in a super low-res way.

Many tokens that we think of as “meme coins” are actually already more like brand, celebrity, or affinity tokens, c.f. $TRUMP and Iggy Azalea’s $MOTHER. They’re effectively a sort of idea currency, and if you’re a cultural speculator, you want to get in as the sentiment trends up, and sell if you think it’s on the way out (of course if you’re a die-hard fan, you hodl forever). Most meme coins are currently implemented as vanilla ERC-20 or SPL tokens, but long term, is this the right modality for supporting or speculating on trends? Today, if you want to make a bet on the rising relevance (and presumed value) of a meme or brand you basically go to a launchpad or exchange, buy a token named after something you think is based, and hope you get the right one. This works for those of us who are already living and breathing crypto, but it’s hard to feel like it isn’t a duct tape and glue prototype of an opinion market.

Launchpads like Pump, Moonshot, and Clanker were a massively important step for meme coins in 2024; they solved the first batch of logistical launch complications, simplifying the token generation process for non-technical creators and initial liquidity provisioning. This was a huge unlock, and it’s a major reason why we saw an explosion of new ideas and now see thousands of new meme coins launching every day. However, the end to end experience for users outside of the degen crypto faithful is still... clunky. Buying and selling can be confusing (“Which $NEIRO token do I buy?”), fraud is rampant, and rug pulls are commonplace.

Discovery is a related problem. Though launchpads also made this somewhat easier, it’s still esoteric and difficult for normal humans. Most tokens are, by design, disjoint from the mediums in which memes are created and consumed; social media feeds like Twitter or Farcaster, or OG image boards like 4chan. This also means meme creators often don’t get the credit or any upside from a meme they create that spawns a token created by someone else.

Based is unifying all this good stuff and gamifying it, packaging meme (and other content) ingestion and creation, token launch, and market participation together in a single social feed that’s both engaging and fun. You can see what’s new, what’s trending, and speculate on – and implicitly propagate – the things that you think are most based.

Under the hood, Based leverages a combination of automated market maker and perpetual futures design, and represents each meme (or any other content) as two sides of a market, allowing users to promote something and bet on its growth (based) or also fade something and speculate on its decay (cringe).

Much like prediction markets can be used for more accurate outcome forecasting (and decision making), we believe that opinion markets can and will be used to gauge sentiment directionality. This is a huge opportunity that certainly transcends the traditional definition of memes, but memes are absolutely the best place to start, because they’re fun, they’re omnipresent, and they’re ever-changing. Even the most ambitious high-IQ opinion market design doesn’t matter unless the content is fun, user incentives are dialed in, and the interface is easy to use. The early Based prototypes that we’ve seen check all of these boxes.

For the crypto ecosystem to grow, we need to do more than resolve the regulatory problem and improve blockchain TPS. We need new app and game experiences with mainstream appeal that leverage crypto primitives; apps that need crypto but don’t feel like crypto. Based is exactly the kind of app that we believe can do this, capitalizing on and unifying two of 2024’s most notable themes, built by an experienced team, with a relentless focus on UX. Based is a social feed. But it’s also a market. It’s also a magic crystal ball that can gauge Internet sentiment and predict emerging trends. It’s the first opinion market, built on crypto primitives, but designed as a web2 mobile app for both you and your normie friends.

Will Based be based, or will it be cringe? If it was already live you could make a meme and place a bet. Stay tuned. In the meantime, just to be clear, I’m betting on Based.

If you’re interested in getting Based before everyone else does, you can find the waitlist signup here, or you can find them on Twitter.