Imagine: You’re scrolling on Instagram and see a post from your favorite influencer wearing a hoodie from an up-and-coming brand. You love the design and tap the photo to see the price. Another click and you’re reading the product description page. A few seconds later, you decide to buy the hoodie, so you approve the transaction with FaceID…
You’ve just made a socially driven purchase in under a minute, all without leaving Instagram.
Welcome to the era of “publisher-exchanges,” where consumers exchange value directly via content platforms. The emerging trend removes all friction from the buying process, creating a more immersive UX, tightly coupling money and attention. This is the future of ecommerce.
What’s a “publisher-exchange” you ask?
Publisher = Platform that thrives by commanding user attention
Examples of prominent publishers include the likes of Instagram, X, Spotify, YouTube, Netflix, etc. All of whom ruthlessly compete to drive “unregretted user minutes.”
Exchange = Platform that commands the flow of money
Examples of prominent exchanges include the likes of PayPal, eBay, Venmo, Robinhood, Coinbase, etc. Each of whom compete to control the monetary system.
Hence, the fusion of a publisher and an exchange is called a publisher-exchange, i.e, a platform that operates on the interconnected dynamics of attention and money. Let’s take a look at a few examples of major publishers moving towards a publisher-exchange model:
- Spotify Merch Bar: Allows artists to sell merchandise and tickets directly through their Spotify profiles, blending music streaming with ecommerce
- Instagram Live Shopping: Influencers can live stream on Instagram with the objective of selling products to fans in real-time. This builds on the ability of influencers to add shopping tags to their posts that consumers can use to natively purchase products
- TikTok Shop: The digital storefront enables creators to natively sell products alongside their videos, often times offering discounts, subscriptions, exclusives etc. In fact, Tik Tok lost $500M+ in US ecommerce last year alone by subsidizing products (often offering completely free) so users could familiarize themselves with the platform
- YouTube Shopping: In a deal between YouTube and Shopify, companies can sell products on YouTube through live streaming, videos, or via a digital storefront
- Snapchat AR filters: Or “catalog-powered shopping lenses,” enables users to virtually try on eyewear, beauty products, clothes etc. and subsequently purchase in app
Basically, every publisher is becoming a publisher-exchange by allowing value to be exchanged directly via the frontend. And the stats don’t lie:
Yes you read that right, leading publisher-exchanges Douyin (Chinese Tik Tok) and WeChat combined for over $350B in annual revenue!
Moreover every exchange is also becoming a publisher-exchange:
- Amazon Live: Combines ecommerce with live streaming, allowing influencers to showcase products that viewers can buy in real-time
- Alibaba: Alibaba has expanded into media through Alibaba Pictures, Youku Tudou (a video streaming service), and AliMusic, blending ecommerce with content streaming
- Every Fintech Company Ever: It’s table stakes for every fintech to move into content creation and curation, and offer financial education and business insights. (Robinhood, Square, Stripe, Bloomberg, Coinbase, etc.)
To Summarize: Every publisher and every exchange is moving towards a hybrid publisher-exchange model as it maximizes user engagement, retention, spending and growth.
Okay but what do publisher-exchanges have to do with crypto?
- The convergence of Web3 publishers and exchanges into unified publisher-exchanges will accelerate the creation and adoption of new applications
- Web2 publisher-exchanges will adopt crypto payments, “onboarding the next billion”
Web3 Publisher-Exchanges
We have many publishers in Web3 including block explorers, data providers, analytics tools, etc.
We have many exchanges in Web3 including wallets, DEXes, NFT marketplaces, etc.
Contrary to the technical debt of Web2, we have the opportunity to inextricably unify publishers and exchanges, creating experiences previously not possible in Web2.
In Web2, popular consumer applications such as Instagram, TikTok, and Netflix are expertly engineered (down to the very last detail) to deliver frequent, small doses of dopamine, effectively keeping users engaged. We’ve already seen through the likes of WeChat and Douyin that when you layer financial products on top of sticky consumer apps, they perform extremely well.
We live in a world where we are exposed to content/information at an exponential rate. Imagine if money could be exchanged as fast or as seamlessly as information- this is the primary unlock of crypto.
Crypto consumer apps can enable any publisher or exchange (crypto-native or not) to offer new forms of user engagement through native trading, speculation, issued-credit, etc. If properly curated, these new applications can foster far deeper user commitment than singular publishers ever could. The ability for consumer applications to seamlessly integrate financial products into their frontends offers a significant opportunity for newer publisher-exchanges to compete with established incumbents in the market.
Below are a few examples of consumer crypto:
Frames
Frames extends Facebook’s OpenGraph standard and can turn static embeds into interactive experiences. It’s a new crypto primitive that provides developers a standard to run app Y while still within app X, without any coordination between app X and Y. Here are a few instances of Frames:
Someone even built a playable version of Doom within a frame:
If you can build an entire video game within a frame, really anything is possible.
Now imagine frames within wallets, block explorers and other Web3 publishers. When coupled with intelligent publisher infra, frames present a robust way for any publisher to become a next-gen ad network. For instance, a block explorer selling ad space to a derivates platform- who can enable live-trading within the ad frame via issued credits. This is a prime example of a Web3 publisher becoming a publisher-exchange because of the native value issuance. Emerging infra providers like Relayer provide publishers with tools for discovery, curation and rewards onchain.
Furthermore, frames provide advertisers an entirely new domain of marketing, of which has proven to yield far higher results than vanilla acquiring FB or X ad inventory.
The development of the frames stack is full steam ahead with teams building out everything from attribution tooling to intelligent publisher infra to non-custodial social accounts and so forth. For a deeper dive into Frames, check out the awesome-frames repo.
Can’t we already do this in Web2?
The technical debt imposed by legacy infrastructure combined by the incredibly difficult multi-team coordination to implement a frames-like primitive is next to impossible. Hence, many (including Facebook) have tried, but none have come anywhere near close.
As such, the power of interactive ads via frames- that don’t even require wallets- will be a defining trend in the coming years.
The Wallet Curation Era
The interface of a wallet can govern how we interact with Web3. Akin to how yahoo curates news or google curates websites, wallets have the opportunity to do both. Although wallets started as pure exchanges, I expect them to move heavily into the publisher game. Namely, wallets can:
- Allow Uniwswap, dydx, Aave style dApps to be accessed in-wallet. Further, wallets can curate leading protocols in each sector (money markets, perps, etc)
- Curate an FYP (for-you-page) of new protocols by leveraging user’s Web3 profiles
- Create an “offers” page which allows users to discover brands to earn rewards, and enables wallets to earn ad revenue. Kinda like composable credit card rewards we know and love.
This is a primary example of “meeting users where they live” as opposed to having users click through other web pages to deliver the same outcome. And we are merely scratching the surface of what wallets can be- aggregators of data from prediction markets and becoming a news provider, curators of crypto events from X and Farcaster, etc.
Apps
As we’re still early in the crypto consumer lifecycle, we’ve seen the emergence of “v1 Web3 publisher-exchanges.” They come in many forms, but all serve the same end of coupling information and money in ways beyond the confines of Web2.
Social
Farcaster- Protocol for building new types of social networks created by the community
Unlonely- Live-streaming platform where you can mint tokens + play prediction games concurrently with livestreams
JokeRace- Contest protocol for supercharging and programmatically monetizing engagement
Prediction Markets
Polymarket- Decentralized prediction market that allows users speculate on anything
Swaye- A prediction market and battle royale game available on Farcaster where players can create markets, bet against friends and earn rewards
Parcl- A prediction market for real estate, allowing liquid exposure to the asset class
Gaming
Parallel- Sci-fi trading card game that uses NFTs to enable users to own parts of the world they create
Karate Combat- A full contact striking league that combines live-action, full-contact Karate with immersive CGI environments where you can earn tokens when your fighter wins
Anichess- Chess game that introduces new mechanics where you can leverage NFTs + tokens
And of course we’ve seen early instantiations of this thesis through Telegram Bots such as Banana Gun, Maestro and BonkBot which have cumulatively processed nearly $15B in volume to date.
Tik Tok is to Media as Crypto is to Money
Just as Tik Tok reduced the unit of consumption for content and has become the most dominant form of media, crypto reduces the unit of consumption for money and will become the most dominant form of value.
People, especially the younger generations, are moving away from TV, Netflix etc. and increasingly prefer short-form content. I believe crypto is only a natural extension to the “Tik Tok Thesis,” in that we’ve already reduced the unit of consumption for media, why haven’t we done the same with money?
The above applications are the first real attempts at doing so. As infrastructure matures and applications become more advanced, I have no question Web3 publisher-exchanges will be the frontrunner to captivate attention from the next generation of internet users.
Okay, but do Web3 publisher-exchanges offer anything Web2 doesn’t?
There are two defining characteristics that could make Web3 markedly better than Web2:
1. Protocol Issued Credit
Crypto reduces the friction of money, to a point where money can flow as fast and freely as data. As alluded to above, crypto enables publishers to seamlessly add financial rails to their application. There are number of use cases, the most significant being protocol issued credit (PIC).
Gone are the days marketers measure campaigns in cost per click (CPC) or cost per thousand impressions (CPM). The future of marketing will consist of interactive ads that enable PIC. For instance, a new perp DEX could issue 10 USDC via an ad frame to trade within their platform or a game could offer 15 OP to finish a tutorial which are then usable later on. This is a structural shift in how market dollars are spent and directly compensates users for their time- and could actually increase user engagement as seen by early frames statistics- It can be a win-win.
But don’t I need to be crypto native to participate?
No, actually. There are a number of crypto apps today that abstract the complexities of getting started. No initial crypto and therefore no onramp needed to get begin.
Here a few examples of crypto apps that don’t require crypto wallets:
- Pudgy Penguins- The founder posted an awesome demo showing how users can onboard by redeeming a QR code by purchasing a Penguin from Target, opening a digital mystery box and saving the progress via email login
- Blackbird- Users can earn status, points, and perks from Blackbird eligible restaurants without needing to onramp crypto or pay gas fees
- Lolli- Browser extension that allows users to earn Bitcoin on purchases via affiliate marketing tactics, all without a wallet or onramp
By leveraging decentralized auth platforms such as Privy, developers can seamlessly integrate sign-on functionality without requiring users to have a crypto wallet.
2. Phasing out Cookies
Despite the values they promote, the likes Facebook, Snapchat and Google are fundamentally designed to harvest your attention. You may believe these platforms are free to use, but as the saying goes “if it’s free, you are the product.” And indeed that couldn’t be more true.
Yes I’m alluding to the usage of cookies- which have revolutionized the modern digital advertising era and user experience by enabling personalized content and targeted ads based on individual browsing behavior across websites. But…There is a paradigm shift en route.
The traditional use of third-party cookies in web browsers is finally on the decline. Major browsers like Safari and Firefox have already blocked third-party cookies by default, and Google Chrome is also planning to phase them out by early 2025.
The gradual phasing out of third-party cookies, particularly led by privacy concerns and regulatory changes, have several implications:
- Privacy Enhancement: Removing third-party cookies enhances user privacy by reducing tracking across websites. Users will have more control over their personal data (As is already the ethos of Web3)
- Impact on Advertising: Advertisers will need to find new ways to deliver personalized ads without relying on extensive tracking
- Changes in Web Analytics: Without third-party cookies, businesses will need to adapt their approaches to web analytics and first-party data or aggregated reporting
- Development of New Technologies: Technologies like the Privacy Sandbox by Google are examples of efforts to create a more private web while still enabling personalization, but will not produce results close to 3rd party cookies
And this presents a golden opportunity for Web3.
Enter onchain data and digital identity
Content curation and targeted ads are a trillion dollar industry, predominately built upon the premise of using cookies to build hyper optimized curations algos and serve targeted ads. The end of cookies presents an opportunity for the “flippening” of Web2 to Web3- where Web3 can offer far more robust solutions than the Web2 replacements to cookies.
A core belief of Web3 has been to incentivize data in a meritocratic manner. There are a plethora of platforms where users can earn tokens for providing a multitude of offchain data: Whether that be your eye scan via Worldcoin or connecting your Web2 social profiles via Oamo or providing demographic data secured by ZKPs on other venues. Further, platforms like JokeRace allow you to share your projects, memes, tweets, songs, etc, and people vote on them to create a graph of value. While the Web3 identity stack is quite fragmented today, I expect a consolidation of standards to further increase the adoption and utility of these primitives.
The key part here is onchain data paired with incentivized offchain data means Web3 can build far more complete user profiles which leads to superior curation and better conversion on ads for apps.
And in response, I definitely expect Web2 companies to begin sourcing data via Web3 native venues to gain an edge.
To summarize: The combination of protocol-issued credit and “flippening” of Web3 data could provide a tenable path for long-term, broader crypto adoption.
So far we’ve covered the transformative shift to publisher-exchanges and how Web3 is the ultimate testing grounds to build the next generation of publisher-exchanges. Next, we’ll dive into why Web2 publisher-exchanges are more likely to adopt crypto payment rails than you may think.
Onboarding the Next Billion
There have been a plethora of reasons why crypto payments haven’t seen institutional adoption to date. To name a few: high txn fees, slow settlement, lack of privacy/compliance, poor UX and DevEx, brand risk, etc.
Beautifully, the primary infra problems have mostly been solved. Naively, one could create an appchain and modify everything from gas fees, block times, enable FaceID and virtually anything else you can think of.
We are at a point where the infra is good enough. Now the benefits of adopting crypto payments may outweigh its perceived risks.
Web2 publisher-exchanges in particular are presented with a unique opportunity to become the earliest institutional adopters of crypto.
Of course, I don’t think publisher-exchanges will integrate crypto payments just because it’s cool; Crypto needs to provide a 10x improvement over legacy infra to justify the switching costs and brand risk. Hence, publisher-exchanges won’t adopt crypto all at once, rather the early adopters will be those who fall into the below categories:
- Demographic
- Integrated Rewards System
- Credible Neutrality
Demographic
A very underrated aspect of crypto is the rapidly growing user base. By the end of 2023, the number of crypto users worldwide had surged to approximately 580 million, marking a 34% increase from the previous year. This growth trajectory is expected to continue, with projections suggesting that the number could reach between 850 and 950 million by the end of 2024. In addition, studies show 72% of crypto owners are under the age of 34. Basically, global crypto adoption is rapidly increasing and the younger generations have a strong preference towards it.
Similarly, existing publisher-exchange sales are predominantly driven by 10-34 year olds. As younger generations enter the market, two trends have been overwhelmingly true: 1) They prefer short-form content and more generally instant gratification and 2) Will make majority of their purchases via publisher-exchanges
Given the striking resemblance between the demographics of crypto and publisher-exchanges, and the ever-growing similarities of the user bases, it is very likely publisher-exchange users will expect and even demand crypto payments over time.
On another note, people who live in countries with unstable governments and currencies have clearly shown they want to move money into USDC. Many folks in underdeveloped countries are either 1) getting rekt by inflation 2) do not trust banks and/or 3) cannot even open a bank account. Luckily the bi-directional nature of crypto is the most obvious answer to that, hence Visa is exploring paying merchants in USDC. Another notable example is Stripe reintroducing crypto payments. This decision wasn't driven by improvements in infrastructure, but rather by the increasing demand in emerging markets.
Publisher-exchanges are on the bleeding edge of commerce, just as crypto is on the bleeding edge of finance. As such, the shared user base will grow in tandem until they become unified.
Integrated Rewards Systems
Legacy payment rails make it extremely easy to send value, but very difficult to receive value. The nature of sending/receiving value onchain and ease of spinning up an account makes it 10x easier via crypto rails. Hence, there are a number of unlocks in that 1) you can receive value seamlessly and 2) can exchange smaller units of value due to the speed and inexpensiveness of settlement.
There are a number of incredible use cases. To share a few:
- Interest payments: Gambling platforms or escrow services can incentivize users to hold funds in the platform by offering real-time interest payments
- Asset Issuance: Special interest communities can create and distribute virtual assets without needing to connect to a bank account or KYC. Early signs of PMF can be seen by Reddit awards or Discord Nitro
- Protocol-Issued-Credit: As discussed earlier, PIC can structurally change user acquisition as we know it today. Crypto payment rails can enable Web2 companies to also offer PIC
Credible Neutrality/Privacy
The beauty of smart contracts is they represent the pinnacle of credible neutrality. As such, any publisher-exchanges that face scrutiny from traditional payment processors or experience high chargeback rates (of which there are many), may opt to move payments onchain. Industries like CBD, gambling, pharmaceuticals, adult entertainment, etc.
Just check out Stripe’s list of prohibited and restricted businesses and you’ll realize quite fast there exists material demand for alternate payment rails.
Generally this segment of publisher-exchanges will have users who will also have a higher demand for privacy. We have plenty of technologies and infra providers like Fhenix, Aztec, Penumbra and so forth building tools for private payments. A recent example is the Shiba Inu team adopting an FHE powered privacy layer to extend their entertainment ecosystem.
Looking forward
Publisher-exchanges represent the future of ecommerce. Web3 publisher-exchanges in particular are presented with an incredible opportunity inextricably unify publishers and exchanges, creating a tighter relationship with money and attention not possible in Web2.
Web2 publisher-exchanges are some of the most likely institutions to adopt crypto payments given the striking similarities of the demographics + the net new functionalities and sovereignty granted by moving payments onchain. Moving forward I expect to see a resurgence in verticalized crypto payment startups, performant privacy technology, chain/balance abstraction, seamless non-custodial experiences etc.
As information has become democratized and accessible, money will be democratized and accessible. Long live crypto.
Special thanks Anil, Dougie, David & Sean, Thomas, and Justin for their contributions + review!
References
[2] https://blog.spindl.xyz/p/why-farcaster-frames-are-important