Crypto’s AirTag Moment: Unlocking Mass Adoption with Web Proofs

Crypto has long been exciting to a handful of core users, but has yet to cross the chasm to mainstream adoption.

Outside of investment and speculation, payments lead the pack of use cases, with trillions of USD stablecoins flowing around the world each year on crypto rails, instantly teleporting value across the Internet with minimal fees. DeFi has a slew of robust financial primitives, spanning from permissionless lending markets, decentralized exchanges, and an ever expanding menu of yield opportunities.

Other consumer applications show early glimmers of potential, but their userbases are primarily cryptonatives. Crypto has not yet broken out of our largely self-referential ecosystem, a point recently highlighted by Vitalik. In fact, the total value locked (TVL) of DeFi is less than a single day's fluctuation in Apple stock, and the entire crypto industry’s market cap is less than Apple’s.

We can debate all day why TradFi firms haven’t engaged meaningfully beyond ETFs, why internet giants don’t integrate beyond hosting nodes on cloud services, and why retail services only haltingly experiment with accepting crypto payments or issuing NFTs. The fact of the matter is, crypto adoption is still nascent.

That’s about to change.

Crypto’s Superpower

Looking back at our speedrun build of a new financial system, what has our industry uniquely gotten really good at? Incentives. Going back to the DeFi Summer 2020–which was kicked off by Compound’s yield farming, evolved with Yearn’s fair launch, injected with steroids by the ill-fated YAM, and reached its zenith with Uniswap’s airdrop–crypto is indisputably the king of capital-lite customer acquisition.

‍Instead of paying for advertising and hoping users show up, crypto has industrialized shaping behavior and rewarding engagement.

Airdrops may be the most powerful engagement tactic we have ever seen. Often augmented with point campaigns to even further shape behavior, airdrops serve a number of purposes:

• Advertising - “Hey, you’re getting something of value for free! Come check out our product!”
• Jumpstarting the flywheel - “This works much better with more liquidity or network effects, so we’re going to subsidize early use”
• Distributing ownership and responsibility - “We need to bootstrap governance or other activities for our protocol, but it needs to be done by people with skin in the game and you’ve done things that make it seem like you might be so inclined…so here you go!”

Impressively, these campaigns don’t require millions of dollars of cash upfront. By distributing ownership of the underlying protocol in the form of tokens, new entrants can meaningfully attract and reward early users without needing a large war chest.

While teams have gotten increasingly creative in defining criteria for airdrop eligibility, the primary limiting factor is their reach: with few exceptions, they can only target people who have some form of onchain history, i.e., are already part of the crypto ecosystem. Users who are onchain today represent only a small fraction of the addressable audience these applications would ideally like to reach.

Crypto has hit its carrying capacity, and to change that, we must widen the aperture. 

This Has Happened Before 

Interestingly enough, the arc of crypto’s progress is strangely similar to that of Tile, the Bluetooth item-finding gadget.

Tile was groundbreaking for finding lost things, but only so long as you and your phone remained within Bluetooth range, making it mostly useful for finding items within your own home. If your keys fell out of your pocket somewhere during your day out and about, you were out of luck.

Eight years after the introduction of the Tile, Apple entered the scene with their AirTag, which piggybacked on Apple’s omnipresent Find My network. Without needing any of their existing iPhone users to take any action, Apple enlisted all of them to enable a magical experience for AirTag users. Instead of a tiny install base that effectively resulted in Tiles being a single-player product, AirTags leveraged the billion+ active iPhones to allow objects to be found on a massive, global Bluetooth network.

Tile was indeed on the right track, but it took the ability for a product in this category to integrate with a ubiquitous existing network to reach its full potential.   

Enter: Web Proofs

Crypto is on the cusp of its own AirTag moment, thanks to an emerging technology called zkTLS or Web Proofs. 

Web Proofs use TLS Notary and privacy-preserving ZKPs to demonstrate authenticity of data from any server. To be clear, there are no guarantees being made here about truth, only about the data and its source. Web Proofs can provide strong guarantees that ESPN.com has reported that the Warriors defeated the Lakers last night, that a certain user has purchased an Eras Tour ticket, or that an Uber driver has completed 1,000 trips with a 5.00 rating, but they don’t provide any independent verification that ESPN didn’t misreport the score, the fan didn’t give the ticket to a friend, or the Uber driver’s brother wasn’t the person behind the wheel.

How is this different from just pulling data from an API and putting it onchain? Well, access to APIs can easily be shut off. If a tech company doesn't like an application using their data to distribute tokens or enable financial activity outside of their platforms, they can easily shut down those APIs. With Web Proofs, as long as a user can access their data on a website with an HTTPS connection, they cannot be shut down. While a company could try to block access to the data, they would have to directly impact user experience to do so. Restricting access to customer’s own metrics, either by moving the data to a new website, pushing it via an alternate channel like email, or layering in time delays, would only cause temporary setbacks and come at significant annoyance to the typical user.    

This means that virtually any web2 data can be put onchain in a verifiable manner, without the source of that data needing to take any action–or being able to prevent it.

To our knowledge, this concept was first proposed by a team of Cornell researchers in 2016 in the Town Crier whitepaper. Recently, various flavors of this approach have been brought into production by pioneering companies including Pluto, Clique, Opacity Network, OpenLayer, Reclaim Protocol, and others. 

Thus far, teams have largely stuck to relatively simple forms of Web Proofs, such as proving ownership of a unique Twitter or Facebook account to implement rudimentary forms of sybil resistance. This is only barely scratching the surface of the type of powerful interactions that are possible.  

Let’s get back to airdrops: while most have had to limit themselves to users who are already onchain and have previously made transactions, distribution criteria can now encompass any internet activity. 

So What?

This is the "AirTag moment."

Overnight, the addressable population of airdrop recipients has gone from a few million existing crypto users to the majority of the global population. The game can now shift from zero-sum competition for the attention and resources of current crypto users to attracting attention and incentivizing engagement from anyone on the Internet.

As a first pass, you can now make tokens claimable based on the:

• artists listened to on Spotify
• stocks held on Robinhood
• purchases made on Amazon
• rides taken on Uber
• deliveries made for DoorDash

In all these cases, it is highly unlikely that any of the users with meaningful history are fake. In most cases, there are real financial or time costs associated with the activity. This makes it ideal for getting tokens into the hands of real potential users rather than Sybil farmers. In this way, Web Proofs both provide greater assurances to support “proof-of-humanity” and also facilitate the creation of true digital communities based on verifiable shared interests and activities.

One team that has already started down this path is PleasrDAO, the onchain collective that purchased the Wu-Tang Clan’s legendary one-of-a-kind album and started selling tokens that will give access to the music as the unlock date draws nearer. PleasrDAO airdropped some to GME holders, explicitly seeking to appeal to a crypto-adjacent community.

But expanding initial airdrop audiences by letting people claim tokens based on their past activity on web2 platforms is only the beginning of what Web proofs enable.

Where it gets really interesting is when teams start using onchain incentives to meaningfully drive offchain behavior. Imagine:

• Music NFTs that in order to mint, the artist has to be in your 10 most listened to on Spotify over the past month
• A $KIRKLAND memecoin that has weekly inflation claimable based on how much you spent at Costco
• A pot of USDC that is used to automatically reward contributors who get PRs merged into an important open source project

Retroactive rewards are good, proactive incentives are better. While we are skeptical of the “X-to-Earn” (e.g., play-to-earn, run-to-earn, sleep-to-earn) category, the idea that some amount incentives can be offered to incentivize or coordinate offchain behavior is inherently compelling. Finding the right level of explicit rewards and tying them to the appropriate verifiable action is a powerful combination.

Let’s See How Deep the Rabbit Hole Goes

Web Proofs aren’t just about incentives though–there’s potentially an even bigger unlock to be had.

Web Proofs provide an avenue for breaking down the moats of existing web2 marketplaces, allowing both liquidity and reputation to be freely exportable. The biggest challenge for bootstrapping marketplaces is getting enough inventory and reputable participants to let a lower fee structure or better UX even have a chance to make a difference. By providing a method for tying together onchain and offchain actions, Web Proofs allow users to simultaneously access the greater current availability of web2 users while providing the cryptographic assurances of onchain transactions.

An early example of this is ZKP2P, a fiat on/off-ramp that enables peer-to-peer transactions where one party sends fiat using a service like Venmo or Revolute, and the other sends crypto which is automatically released based on Web Proofs once the payment has been made.

Such a system could also be applied to other marketplaces such as secondary event tickets. Imagine undercutting the massive fees of a platform like Stubhub by being able to have payment escrowed onchain and automatically released once the seller provides a Web Proof confirming the ticket has been delivered to the buyer. This can be done with almost any offchain digital asset, such as traditional ICANN domains, CSGO skins, or social media handles.

This approach could also be layered on top of existing existing marketplaces, where sellers dual-list across both the dominant web2 marketplace and the new Web Proof-based marketplace. Buyers could be enticed with potential savings if they purchase from a seller where the transaction can be facilitated fully on this platform, but they still see the full inventory from the incumbent market leader and are redirected there to finalize a transaction if needed. With the right UI, the value proposition here is very reminiscent of the original Morpho Optimizer lending protocol, which created a pareto-efficient improvement on top of existing lending markets, such that borrowers were never worse off with Morpho Optimizer than they would be with either Aave or Compound (and in most cases receive improved rates).

Such marketplaces can be further strengthened by the ability to export reputation from existing marketplaces, establishing a history of trustworthiness, paired with cryptographic proof of the success or failure of any transactions going forward. Too many user-owned identity projects focus on exporting data from existing platforms for hypothetical future use. By focusing on just-in-time identity proofs and verifying the authenticity of the original source, Web Proofs can be kept both lightweight and practical.

Web Proofs are the Future

As crypto reaches a pivotal moment in its growth, Web Proofs are a powerful tool for bridging the gap between early adopters and the mainstream. Just as Apple’s AirTag transformed the limited potential of Tile into a global phenomenon by leveraging a massive existing network, Web Proofs offer crypto bi-directional access to nearly all existing digital services.

By enabling verifiable onchain data from any web2 source, Web Proofs expand the reach of crypto incentives beyond the current user base, opening the door to a much larger, more diverse audience. This technology not only redefines airdrop potential but also sets the stage for unprecedented integration of onchain and offchain activities and provides the tools to credibly take on incumbent marketplaces.

Crypto’s AirTag moment is upon us; go forth and grow the pie.

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Thanks to Plotchy, Kyle, Leighton, Tracy & the Pluto team for feedback