In my previous newsletter, I mentioned that POAP’s cessation of operations is a major loss for the industry and society at large. However, in the poll at the end of that article, 30% of readers felt that POAP “failed to find a business model, was poorly managed, and its closure was normal.” Although I am a fan of POAP, this time I will try to play the devil’s advocate and offer a hard-hearted critique of POAP’s business model and product design to discuss how this beloved service ended up on the road to closure.
Opposed to token issuance, yet took $10 million in VC funding?
You don’t need an MBA to know that a business model boils down to two things: who is paying, and how they are paying.
In the context of POAP, finding a business model meant deciding whether to charge the general user, the event organizers, or advertisers—and whether to use an à la carte or subscription model.
POAP founder Patricio Worthalter viewed the service as a public good, a gift to the Web3 community; the door to charging general users had long been closed. Of the remaining options—event organizers and advertisers—POAP chose to tailor check-in solutions for the former. Under the execution of Isabel Gonzalez, they secured a batch of clients and achieved some success, but ultimately failed to achieve scale or stable revenue, leading to the final closure.
It is worth mentioning that issuing a token for a project—though Web3 history has shown us that prices are usually unsustainable—can be considered a business model; at least, it is an unproven, meta-business model. Patricio’s stance was clear: he staunchly opposed issuing tokens to prevent speculation, a point I sincerely admire.
However, rejecting an ICO while accepting $10 million in venture capital is hard for me to understand. After all, VCs have a similar mindset to most ICO participants—both hope to “buy low, sell high”—with the former pursuing even higher returns of 10x or more. Conversely, at least a portion of ICO participants share the same “geek spirit” as Patricio, seeking only to participate and support meaningful projects, regardless of investment returns. Even I, not daring to call myself a true geek, have participated in token launches with this mindset; even when I lost most of my investment, I still felt it was worthwhile.
Therefore, in my view, if one must choose between the two, an ICO actually conflicts less with the “geek spirit.”
Hairdryers, Oracles, and lies etched into history
Intertwined with the business model, but even more critical, is POAP’s product design.
POAP is positioned as “Web3 check-in,” with the app slogan “Bookmarks for your life.” It writes the proof of an individual’s participation in online and offline events onto the blockchain as an NFT—immutable and publicly readable. It is an application with a clear audience, specific needs, and it sounds perfectly reasonable—until we consider the “Oracle.”
The blockchain is a digital world; it is a parallel universe to the physical world we inhabit. Whenever a blockchain transaction needs to reference data from the physical world, it requires a data source—this is what we call an “Oracle.”
For example, Alice and Bob bet that tomorrow’s temperature will exceed 40 degrees. Both stake 100 USDC into a smart contract. If the temperature exceeds 40 degrees, the smart contract transfers 200 USDC to Alice’s wallet; otherwise, it goes to Bob. However, how do the blockchain and the smart contract know the temperature of the physical world? Therefore, for any transaction that is not 100% blockchain-native, it must rely on an “Oracle” to provide the data. For “creatures” on the blockchain, information from the other universe is like an oracle—hence the name.
The concept is simple, but the execution is full of nuances. Following the example above: Does “tomorrow” refer to which time zone? Is it the daily high or the daily average? If it’s the average, over what time interval? At which latitude and longitude? What about Celsius or Fahrenheit? A statement that seems objective and clear on the surface can yield opposite results if interpreted slightly differently. Furthermore, since everything relies on the Oracle’s answer, there is potential for loopholes, cheating, bribery, and other issues. How to guard against these is an eternal battle.
Take a live example: this April, someone on Polymarket bet $119 that the temperature in Paris would exceed 22 degrees Celsius—a highly unlikely scenario historically. However, these “hacker” users ran to one of the thermometers acting as an Oracle and heated it with a hairdryer, easily winning $21,398.
Garbage in, garbage out. When the Oracle serving as the data source is inaccurate, what gets written to the blockchain is merely false information. Immutability becomes meaningless, and it actually etches the lie into history.
Back to POAP: the Web3 check-in concept is good, but the associated Oracle space has immense room for cheating. The POAP team made many efforts to address this, including adding manual review teams, dynamic Kiosk QR codes, and CAPTCHA verification. But these efforts not only incurred high costs and complicated the experience, they ultimately failed to combat bots and airdrop hunting operations.
To explain it without the jargon, the core problem is simple. There is no reliable information source for who attended which gathering around the world—including online events. This is the structural flaw in POAP’s product design.
Lessons from the Web3 “model student”
I have written about POAP for three consecutive newsletters, not only because I like the project, but also because, over the eight years of iterating on LikeCoin, I have always kept an eye on this “Web3 model student.”
Few people know that the closest we came was during the LikeCoin v2 era. I even thought about defining LikeCoin’s positioning as “POAP for Books.” However, considering that few people outside the circle knew what POAP was, I gave up and used “Web3 Bookplate” to explain the concept instead. But I dare not say whether there are fewer people who understand bookplates than those who understand POAP.
As opposed to writing proof of event attendance on the blockchain, POAP for Books would write the proof of book ownership on the blockchain as an NFT. In geek-speak, LIKE could also be named PORP: Proof of Readership Protocol, or at least POPP: Proof of Purchase Protocol—buying a book is one thing, and reading it is another; every book lover knows the feeling of having shelves full of books that haven’t been finished or even started.
As mentioned earlier, POAP’s fundamental problem lies in the fact that Oracles are easy to cheat and hard to implement. For LikeCoin, proving that a user owns a digitally native ebook is much easier, or to put it another way, the room for cheating is much smaller. However, clearing the Oracle hurdle does not mean the road ahead is smooth. The reality is that building LikeCoin into a sustainable Web3 project is also fraught with thorns.
To go on would be too much information. I will leave it for another day. As long as someone is reading, I will not go back on my word. No, even if no one is reading, I will write for myself and keep the records for LikeCoin.
POLL: Writing about POAP for three weeks in a row…
- Too much, and POAP was just a niche thing anyway (5%)
- A serial format, layer by layer—it’s great to discuss it so deeply (70%)
- Not enough, will there be a part 4 or 5? (15%)
- I already abandoned the ship (but I still fast-forwarded to vote at the end) (10%)
- None of the above, I’ll tell you in the comments (0%)
20 VOTES · 6 DAYS REMAINING · SHOW OPTIONS
p.s. It’s incredibly hot in Hong Kong. I took four or five showers during the ten-plus hours of writing this article. I am grateful for indoor work, electric fans, and running water, and I extend my thanks to the workers who are slogging it out outdoors under the “Yellow Work Heat Stress Warning.”
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