TLDR
- Allo Protocol could become the Capital Allocation layer of the post-tokenization internet.
- We can use category creation strategy to systematically pursue this north star.
- Category creation is the process of developing a new market segment for a previously non-existent product or service.
- Gitcoin helped created the regen web3 category: Gitcoin helped create the “regen web3” category by funding public goods and supporting open-source projects, emphasizing regenerative economics and positive social impact.
- Shift to Capital Allocation focus: Gitcoin is transitioning to the capital allocation category with Allo Protocol, aiming to lead in web3-era capital allocation strategies.
- Strategic Positioning: Gitcoin is leveraging category creation strategy to position Allo Protocol as core infrastructure in the post-tokenization capital allocation ecosystem.
- Number go up if we do it right.
What is Category Creation?
Category creation in marketing refers to the process of developing a new market segment or category for a product or service that previously did not exist.
This strategy involves introducing innovative solutions that address unmet needs or create new demand, thereby establishing a distinct market niche.
Key aspects of category creation include:
- Innovation: Introducing a product or service that offers a unique solution, technology, or experience that is not available in existing categories.
- Market Education: Educating potential customers about the new category, its benefits, and why it is different from or superior to existing options.
- Positioning: Clearly defining the new category and positioning the product as the leader or pioneer within this space.
- Branding: Creating strong brand associations and identity that align with the new category and resonate with the target audience.
- Customer Adoption: Encouraging early adopters to try the product and become advocates, helping to build credibility and drive broader market acceptance.
Examples of category creation include:
- Apple’s iPhone: When first introduced, the iPhone created the smartphone category by combining a phone, internet communicator, and iPod in one device.
- Tesla’s Electric Cars: Tesla didn’t just create electric vehicles; they created a new category of high-performance, desirable electric cars that appealed to a wide audience.
- Airbnb: Airbnb created the category of home-sharing platforms, offering a unique alternative to traditional hotels and vacation rentals.
- Kleenex is a category king because it has become synonymous with facial tissues, dominating the market and brand recognition within its category
Category creation can be a powerful strategy for market differentiation and long-term success, but it often requires significant investment in innovation, marketing, and customer education?
Has Gitcoin ever created a category before?
Regen Category (2022)
Gitcoin has significantly contributed to creating the “regen web3” category, which centers on using blockchain technology for regenerative economics and positive social impact. By funding public goods and supporting open-source projects, Gitcoin aligns with regenerative principles aimed at sustainability and societal benefit. Their community of developers and innovators prioritizes long-term positive outcomes, helping to define and promote the regen web3 category.
Initiatives like Gitcoin Grants and the Quadratic Funding model have showcased the potential of decentralized finance to support public good projects. These efforts have attracted diverse participants and demonstrated successful examples of decentralized funding driving positive change. Gitcoin’s leadership and ongoing commitment to regenerative goals continue to shape and expand the regen web3 category.
Kevin Owocki’s 2022 book “Greenpilled: How Crypto Can Regenerate the World” and subsequent launch of greenpill.network contributed to the regen web3 category by articulating a colorful vision of how blockchain technology and decentralized finance can drive regenerative economic and social change. The book/network provided a foundational network and inspired the community, reinforcing Gitcoin’s mission and solidifying the principles of regen web3 within the broader crypto ecosystem.
The limits of the regen category
The regen category is powerful, a lot of our builders are regens. And Gitcoin can recruit (and retain) top talent because of this value set!
But the regen category is also quite small as measured by TVL and capital throughput. And also some people find it moralizing and woke (or woke-adjacent).
Paul Dennis recently stated “Kevin Owocki is the last regen standing” in a recent podcast appearance. In this podcast he also described the regen category as fading from relevance during the 2023 bear market. “Regens are seen as naively optimistic”.
What category are we in now?
Grants Category [2024]
Gitcoin is undoubtedly in the Grants market. Grants = Growth. Over the last 4 years, Gitcoin has been a cornerstone of Ethereum ecosystem’s public goods funding. In the past 2 years, Gitcoin has evolved into funding infrastructure for any DAO.
Also in the last two years, the market has become very crowded. Projects like CLRFund, Giveth, Artizen, Protocol Guild, Optimism, Vrbs, Prop House, etc have arrived - each offering funding infrastructure for the ecosystem.
Gitcoin’s USP in 2019 was “the most democratic way to fund the Ethereum ecosystem”. In 2024, this USP has been diluted as other innovative decentralized funding mechanisms have entered the space.
2023 was the year that Gitcoin fell to 3rd place in the ETH grants space. Measured by volume, Gitcoin’s distribution ($7m) was surpassed by Protocol Guild ($10m) and Optimism ($100m).
Since the market has gotten crowded, and we are now in 3rd place as measured by yearly GMV, I think we can find a more strategic USP. I think that is creating a category around capital allocation, and positioning ourselves as category king.
Capital Allocation Category [2025]
TLDR - Allo could become the Capital Allocation layer of the post-tokenization internet.
The opportunity ahead of us is capital allocation, starting with grants. As the EVM eats the world, $trillions will become tokenized. This will create enormous opportunities for Gitcoin to deploy flavors of Quadratic Funding, Retroactive Funding, Grant Ships, Conviction Voting, and other groundbreaking capital allocation strategies to the world’s companies, DAOs, NGOs, cities, states, and communities.
A core human need in the 21st century is Funding What Matters. The TAM for this is all of internet-connected humanity!
The key enabling resource/infrastructure Gitcoin is building is Allo Protocol. Gitcoin is building an engine for web3 era capital allocation called Allo Protocol.
There is a flywheel here. Allo Protocol becomes more valuable the more people use it for capital allocation. Capital Allocation as a market has trillion $$ TVL potential, so there is 10^7x upside here!.
Allo is the core asset to invest in here. The more Allo is used, the more useful it becomes, the more it is used, and so on. Linear investments in Allos utility create compounding exponential upside in network utility.
Allo being used by developers is a key leading indicator here. If we can get Allo fun/easy/quick to use for a medium-skill-level hackathon developer to get up and running, the world is our oyster. Having devs build on Allo will enable a Cambrian explosion of innovation in & around Gitcoin.
Allo deployments will accrue value the more they are is used. But we will freely allow people to fork Allo into their own apps and ecosystems. By allowing devs to build on Allo, we will build Allo’s network effects. Just as the EVM is freely forked to BNB, AVA, etc and ETH still accrues value… so too will Allo be freely forked but Gitcoin will accrue value.
The moment is now. As more & more communities go onchain in the coming decade, we can upgrade the way these communities coordinate. We can empower them to allocate capital in a more scalable, precise, decentralized, and effective manner than was possible before. By doing so, we create a category king that accomplishes our mission of Funding What Matters at scale.
How do we execute a category creation play here?
We need to nail each of the key aspects of category creation.
| Key aspect | Gitcoin’s position |
|---|---|
| Innovation: Introducing a product or service that offers a unique solution, technology, or experience that is not available in existing categories. | At devcon 2024, Gitcoin is releasing Allo Kit - a suite of tools that enable any developer to build innovative funding infrastructure. |
| Market Education: Educating potential customers about the new category, its benefits, and why it is different from or superior to existing options. | Gitcoin founder Kevin Owocki has released OnChain Capital Allocation handbook - a journey of the present and future potential opportunities in the space of capital allocation. |
| Positioning: Clearly defining the new category and positioning the product as the leader or pioneer within this space. | Gitcoin has announced a $6m fund to fund innovations in the capital allocation space. |
| Branding: Creating strong brand associations and identity that align with the new category and resonate with the target audience. | Allo Protocol is the Capital Allocation layer of the post-tokenization internet Gitcoin = Grants = Growth; Gitcoin is a significant pillar of the web3 grants ecosystem. |
| Customer Adoption: Encouraging early adopters to try the product and become advocates, helping to build credibility and drive broader market acceptance. | Allo Protocol is bootstrapped by leading funding infrastructure in the web3 space like Gitcoin Grants, Optimism Retro Funding & more. |
In conclusion
Allo Protocol could become the Capital Allocation layer of the post-tokenization internet. We can use category creation strategy to systematically pursue this north star.