1KX: Infrastructure dividend disappears, the next Ethereum-level opportunity is in new paradigm encryption applications

Written by: 1KX

Compiled by: Deep Wave TechFlow

“Infrastructure (ghost towns) is everywhere, and no one is doing real encryption applications.” Investors in the encryption industry once complained, but this still cannot stop the enthusiasm of capital to bet on various infrastructures. Recently, the well-known overseas encryption VC 1kx published an article stating that they are focusing on consumer applications. 1kx investor Peter said that the next biggest economic opportunity bigger than Ethereum itself is not to launch another L1/2, but to build the previous Consumer products and virtual worlds that never existed. **

In terms of encryption consumer applications, what directions has 1kx invested in, and what areas will it focus on next? The following is a summary of the core content.

Two years ago, 1kx began expanding its focus into the consumer track. While the infrastructure portfolio remains our core, it is clear that the infrastructure technology stack is maturing and the path to a mass-market viable product is becoming clearer.

Our current investments

Since then, we have made more than 30 investments across all consumer categories, 13 of which we led, including projects in games/virtual worlds, creator economy, community coordination, social, payments and intellectual property. The chart below is a brief overview of the portfolio:

Next step

While we approach consumer investing with a fairly open mind, we are actively seeking to invest and partner with founders operating in the following areas:

Social and Attention Economy

As the number of applications, content, and creators on the chain increases, we believe that the need for a shared social space has never been greater for end users. We are particularly interested in the following ideas:

1. Display activity sources of target content for end users based on their on-chain holdings or connected social graphs. We’re excited about on-chain activity feeds becoming the emerging discovery layer for content, creators, and social. The number of non-financially oriented collectible NFTs alone is growing, and we believe this is an exciting but under-prominent opportunity.
2. A new social game for crypto natives, existing on-chain content, mass market audiences, off-chain content creation, and a core game loop with collection and ownership. We believe that digital property rights enable new forms of social expression, regardless of the ultimate audience. Very excited about the team building out photo sharing, tokenization, and collection.

Creator Platform, Tools and Marketplace

We remain very excited about how NFTs and digital property rights enable creators to monetize and build stronger communities, specifically:

1. A vertical creator platform and market focused on **** discovering new creators and building communities on the **** chain. We've always admired how SuperRare/KnownOrigin (artwork), Artblocks/fxhash (generative art), Sound/Catalog (music), and theme platforms (Metalabel) are pioneering adoption in their respective categories.
2. Dynamic NFT infrastructure that enables holders to obtain a deeper and more meaningful experience, and transform on-chain assets into continuous channels of attention, rather than staying in the current on metadata.
3. General-purpose tools and infrastructure that help creators complete things better on the chain**. **For example, products that better help manage the issuance, community, royalties, etc. of assets on the chain. We're excited about NFT stores, minting engines, community coordination tools, capital formation, and any creator tools that allow for more multiplayer collaboration between creators.

INTELLECTUAL PROPERTY AND COMPOSIBILITY

We believe there are still many gaps in how to use on-chain technology and tools to create new IP and tell better stories. We put a lot of thought into the design space:

1. Community-owned intellectual property that engages community members closely around the earliest stages of the creative process. While the first generation of crypto-native intellectual property has mostly failed to live up to expectations, we believe the next wave of metaverses are being built right now.
2. Platforms and creator tools that make it easier to create composable content on top of existing intellectual property that exists as NFTs. We’re excited about IP that already has end-user and community resonance as a starting point for new content.

Virtual World and NPC

We are excited about space and 3D as new mediums for how end consumers will interact with ownership-based virtual experiences, specifically:

1. Highly interoperable spatial 3D worlds (infrastructure for GLB/GLTF, VRMs, wallet indexes) that content creators can create without barriers, without being limited by technical skills. To date, many projects in this space have been too focused on a scarce land model that limits creator participation - we'd like to see projects remove this barrier to entry while establishing new areas or gameplay loops that guide initial attention.
2. Use digital property rights to establish deeper relationships and interactive NPC and AI agents between the virtual world and end users.

Autonomous World and On-Chain Games

We’re incredibly excited about being able to create entirely new worlds and on-chain-driven experiences that would otherwise be impossible:

1. An on-chain game that financializes the player results of traditional non-financial casual game cycles.
2. Commit to building your own world from day one as a developer or creator platform, as a playground that allows anyone to expand.

Other areas of interest and research:

1. Mass consumer experience and products;
2. Luxury goods and consumer experience.

Through blockchain-backed digital property rights, we believe cryptocurrencies offer a new opportunity to rethink and reimagine the consumer internet experience, and we have never been more confident in the consumer racetrack.