You’ve already heard of Product-Market-Fit (PMF). But today, you’ll learn about Product Zeitgeist Fit (PZF). Get your coffee and enjoy the ride.

h/t to @DCoolican for his amazing explanation around PZF. You can find that here. This article extends my understanding of PZF - with Web3-native examples.

So what is PZF?

In simple terms, it is the fitting of the product to people’s emotions and directly catering to what they care about. Remember those short bursts of moments (Clubhouse 😏) when people wanted to get in on a product in Web3? From monkey images redefining age-old asset managers’ portfolios to games with no real-world utility but having a short-lived ability to fund the homes of several people - people caved in to buy them not because they added value to their life but because they were in the moment. They desired them because of just what they were. Any strong desire that comes from I want that defeats the rational senses of the mind.

It’s not just the want for the desire that drives us humans. It’s also the running away from pain, discomfort, inconsistency, and confusion. A product will have achieved its PZF when it either:

• provides pleasure, or
• removes any of the negative feelings mentioned above.

The year 2021 was great for almost every project. Mint valueless free tokens. Give them out to users. They buy your token and inflate your Analytics sheet to show sTrOnG user growth. They dump their tokens after making a profit. The result?

The year 2022 was/is brutal for several protocols. Why? Because after dumping their tokens, why on earth would users want to stick to your protocol? Ah shit. You forgot that you needed to work on PMF, too.

March to PMF from PZF

The philosophy behind product-zeitgeist-fit (PZF) is amazing. People care about the product that’s in the moment. However, when you apply it to crypto, you end up with these bubbles where some products see insane growth over a short period - and then suddenly, when they get bored, they move to something else.

PZF is good for attracting people to your product. But it’s not enough to make them stick. Unlike what is often said, to build and sell a product to the masses successfully, you don’t need to do something you’ve never done but do exactly what every successful product does - solve a problem.

• Do we know what the major problems that plague this industry are?
• Are we actively hunting them down and solving them?

No. We’re all running towards that same goal: making quick flips. While for some its a valuable pursuit. As a DeFi protocol founder, I can’t help but notice the PZF happening right at this moment at an insane level in liquid staking.

PZF for staking?

Staking is not new. But the problems around staking, such as stake centralization are being discussed more often now than ever. This is because, at a time when other crypto protocols fail to provide consistent returns, staking still stands tall. But centralized entities such as exchanges and even some protocols that offer staking and/or liquid staking services end up becoming a liability on the network.

At this time, then, truly decentralized liquid staking protocols are most needed than ever.

And not just liquid staking, but an entire ecosystem of liquid staking protocols is needed, or the player who introduces that first on any chain is fated to get the most stake eventually (unless a competitor comes up).

I’ve spent considerable time investigating the various yield-generation methods prevalent in crypto. Most of them fall flat on the sustainability test as the free tokens they offer (usually the governance tokens) are valueless in the first place. They are good for pumping/dumping and making quick flips. And I’m sure that both users (at least some of them) and DeFi protocols now understand that the quick-flip-making schemes are unsustainable. And they don’t add any value to the ecosystem.

Thus, you add in:

• the frustration of users from unsustainable and inconsistent returns in DeFi, along with
• the age-old complexity of stake centralization

and you see a PZF happening right in liquid staking.

Ok, what’s next?

PZF is fine and all.

And PMF is needed.

So what’s next for liquid staking?

Has it already achieved PMF? I’d say both yes and no.

I believe we still need to mature as an industry. While the factors influencing the current crypto market may be different, the truth is that widespread adoption can only happen on things that can sustain the test of time. Liquid staking, while highly sustainable, has to stand the test of time.

Neither should it be boxed by ideas of delegating to professional validators alone, nor should the importance of establishing strong decentralization structures within the protocol be underestimated.

Liquid staking isn’t a one-time-thing. It’s a revolution. Imagine still being able to make staking rewards when everything else in DeFi and TradFi fails. Come on, even the bond market can’t compete with that.

However, to truly achieve the PMF, one of the core problems that needs to be solved is stake centralization. The tools for that are educating the users about different ways of staking, making them aware of the many benefits of liquid staking (composability), and creating resources for them to become independent stakers/delegators.

It’s a long path ahead. But a promising one. We have already achieved PZF to some extent. Now let’s work on PMF.

To liquid staking 🥂