January 14, 2025 | Read Online

_{Brought to you by:}

"A mere life of ease is not in the end a very satisfactory life."

— Teddy Roosevelt

Crypto, at its best, is DIY finance

In the 1950s, Sweden's National Association of Furniture Dealers tried to put the startup retailer IKEA out of business.

IKEA's low prices were undercutting competitors and threatening their profit margins. In response, the association resorted to harassing measures, including warning furniture makers that no retailer would carry their products if they also supplied them to IKEA.

Sweden's furniture makers complied, forcing IKEA to design its own products — which came in handy when a supplier suggested making a table with detachable legs so it could be packed flat for shipping.

Flat-packed, self-assembly furniture was cheaper to transport, cheaper to store and less likely to be damaged en route — it also allowed customers who came to IKEA's one store (built on the founder's family farm) to take their purchases home in their cars rather than wait weeks for them to be delivered.

Flat-packed, DIY furniture is what transformed IKEA from a scrappy local retailer to a global icon of style and affordability — but IKEA's founder, Ingvar Kamprad, didn't take much credit: "Reality forced the innovation upon us."

The biggest innovation, however, turned out to be the most unintended one.

IKEA's DIY approach not only reduced costs, it also gave customers who assembled their own furniture a sense of accomplishment, fostering a personal connection to the company's products.

This came to be known as "the IKEA effect" — a cognitive bias first described in a Harvard Business School study demonstrating that people were willing to pay significantly more for items they had assembled themselves than they were willing to pay for identical, pre-assembled items.

"Participants saw their amateurish creations — of both utilitarian and hedonic products — as similar in value to the creations of experts, and expected others to share their opinions."

If you're not a DIY enthusiast, that may sound delusional. But the IKEA effect is not just your mom telling you your macaroni art is museum-worthy — even adults take pride in things they've done for themselves.

This may be why people like crypto, too — because crypto is DIY finance.

The core idea of crypto finance is to cut out the middlemen and gatekeepers.

But, as with flat-packed furniture, an unintended side effect of DIY finance is that people build a personal attachment to the protocols they use, the tokens they buy and the ecosystems they contribute to.

I think this explains the intensity of the social media backlash that followed this weekend's AICC debacle.

When people saw prominent crypto influencers making a 100,000% return in an invite-only token sale, it felt like those influencers were unfairly extracting profit out of a system we all collectively built.

This is perhaps what it would feel like if IKEA redirected the profits from selling self-assembly furniture to the people who convinced us that assembling your own furniture is great fun.

In other words, it was crypto at its worst: an insider's game where who you are matters even more than it does on Wall Street.

By contrast, crypto is at its best when who you are matters least: Participatory capital formation that lets everyone participate on equal terms, fair launch tokens that give everyone an equal chance to get in early, and do-it-yourself finance that gives everyone a sense of ownership.

Fortunately, there are many such opportunities.

Participatory DePIN projects let you acquire tokens without buying them: You can rent out your IP address to earn GRASS tokens, for example, offer spare hard drive space in return for FIL tokens, or put a specialized antenna on your roof for GEOD tokens.

(In the latter case, I decided it was safer to buy the token than risk falling off my roof, but it's not nearly as satisfying — there's no IKEA effect in just buying a token.)

Similarly, airdrops are an oft-maligned form of capital formation, but you can't really argue with free: Participating on the Hyperliquid exchange, even with just a single trade, would have earned you a substantial number of HYPE tokens — and just the other day my Phantom wallet informed me I was eligible for the PENGU airdrop, because I have no idea what I did to qualify.

I haven't questioned it; I simply consider my $500 of free PENGU as a thank-you note for generally losing money in crypto over the years — a nice gesture that you wouldn't ever see in TradFi (maybe in Vegas, though).

More actively, you could buy a token like JLP that makes you a liquidity provider on the Jupiter perps exchange — a sort of DIY prime broker.

Also, the yield you earn on stablecoins by lending them in, say, Aave, is DIY banking — and even just sending crypto to someone is akin to doing the work of a bank.

Things can go horribly wrong if you try to get too fancy, however, as it did for one DIY banker when participating in a complex stablecoin arrangement that left them paying 93.8% interest on a $106.7 million loan they're currently unable to get out of.

And even if you keep things simple, you might still lose a seed phrase, get phished, get rugged or irrevocably send money to the wrong place.

But I'd argue that this is all part of the appeal: Contributing to the crypto mission and surviving all of these pitfalls will leave you with a sense of accomplishment that you wouldn't get from investing in stocks and bonds — even if the returns don't quite justify the risks.

Call it the crypto effect: the unexpected cognitive rewards of DIY finance.

— Byron Gilliam

Brought to you by:

GlobalStake's global, bare-metal network footprint unlocks superior performance, greater security, and maximum returns for institutional clients and protocol foundations.

Join our elite group of digital asset ecosystem partners by diversifying stake and breaking free from centralized hyperscalers via GlobalStake's entirely SOC-2-certified and carbon-negative node operations.

GlobalStake clients benefit from exclusive white-glove service, competitive pricing, slashing insurance backed by top-rated carriers, and the reliability of a next-generation platform engineered from the ground up for the world's most demanding institutions.

Learn more

The Bull Case for Solana in 2025

Ryan Watkins unpacks the ways his Solana thesis has developed over time. Get insights into the rise of AI agents, the state of applications in crypto and what to expect in 2025.

Listen to Lightspeed on Spotify, Apple Podcasts or YouTube.

This March, Michael Saylor, Mohamed El-Erian, and Mike Novogratz will share their insights on the shifting dynamics of global markets. From macroeconomic trends to the integration of digital assets, DAS NYC is the meeting point for allocators, fund managers, and institutional leaders.

📅 March 18-20, 2025
📍 NYC | Javits Center North

Be part of the conversations that matter.

Don't miss it

Eric Balchunas @EricBalchunas

SHOCKER: Mark Wiedman is leaving BlackRock. He was a potential successor to Larry Fink, been there 20 years. Doesn't say where he's going. Comes within a year of Salim Ramji leaving (who is now Vgrd CEO). Story via @sabrushbloomberg.com/news/articles/…

7:37 PM • Jan 14, 2025

32 Likes 2 Retweets

3 Replies