Unit 4 · Level 5 · Protocol due diligence: capstone
Narrative cycles
Crypto attention moves in waves: ICOs (2017), DeFi summer (2020), NFTs (2021), L2s (2022-23), AI coins (2024)... Each wave mints early winners, peaks on maximum euphoria, then bleeds 80-90% in most of its tokens while a few survivors keep building. The pattern is old; railway manias and the dot-com bubble rhymed the same way. Knowing WHERE you are in the wave matters more than knowing the wave's theme.
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What you get asked
Put the typical life of a crypto narrative in order
The tragedy: most people discover a narrative at step 4, when it feels safest and is most dangerous. DeFi summer, NFTs, and AI coins all traced this exact arc.
What does being someone's 'exit liquidity' mean?
Early buyers need late buyers to sell to. When a narrative reaches your feed, your taxi driver, and your aunt, ask who's on the other side of your buy. Often it's someone who bought two years earlier.
Which signal most suggests a narrative is closer to euphoria than to early?
When adding a buzzword to a name moves millions (companies adding 'blockchain' in 2017, or 'AI' in 2024), attention has fully outrun substance. Skeptical coverage and quiet building are early-wave signals.
After each wave breaks, most tokens in the meta fall 80-90%, but a few ___ keep building and define the next cycle.
Amazon fell ~95% in the dot-com crash and still won the decade; Ethereum fell ~94% in 2018 before DeFi summer. Waves overprice the sector and underprice the discipline to find survivors.
How does a graduate actually USE narrative awareness?
Narratives are real forces, and pretending otherwise is as naive as chasing them. The graduate asks: what's shipped, who's already in, and who still needs to buy? Then sizes accordingly. That's next lesson. 🐜
The rest of this unit
The full framework: vet anything, size it for the frontier, and graduate scam-proof.