Where to fly? Acquiring market targets

With any product or suite of products it’s critical to know who your customers are. Your customer set (or target market) informs what features get built and when. Since this is ultimately the responsibility of the community, I think we can’t begin this discussion soon enough. Keeping the customer set focused will make product discussions easier because we will agree on who it is we are trying to provide value to.

The 3 big factors I think of are market size, market attractiveness and product market fit. Here are some questions you can ask to think about these factors. This is not exhaustive, it’s just a starting point.

Market Size

  • How many potential customers are in this market?
  • What are those customers willing to pay?

Market Attractiveness

  • How competitive is the market?
  • Are customers expensive (in resources and time) to acquire or market to?
  • Does the market have potential partners that can make acquiring customers more efficient?

Product Market Fit

  • How well is the product suited for this market?
    • Does the product provide value to customers in this market?
    • Is the product hard for this market to use?
  • Is the organization suited to supporting this market?
    • Can we provide the kind and level support for these customers?
    • Can we access the partners or resources necessary to reach these customers?
  • Is this market unable to or restricted in the use of the product due to local regulations?
  • Does the community have connections or knowledge within this market that can be leveraged?

The UI we’ve seen so far, especially Copilot, I think will be very exciting for the existing Defi market. But it’s only the tip of the iceberg.

Ref: Copilot

I think it would be great if some community members took the above questions and applied it to some potential markets. If you do, feel free to add other questions and categories you think are important. And don’t feel the need to provide specific numbers about things like market size or number of competitors. At this stage it’s ok to use some relative language like ‘Very big,’ ‘Small’, or ‘a lot.’ I think we can use some common understanding to know what you mean. We will get more specific as we filter the potential markets down.

Potential Markets:

  • Existing DeFi Users
  • Other DeFi Protocols
    • Solana native
    • Ethereum and other chains
  • DeFi Aggregators
    • Solana native
    • Multichain
  • DeFi Games
  • Traditional Banks
  • Consumers who haven’t used crypto
  • Consumers who have crypto but have not used DeFi
  • Traditional Hedge Funds
  • Crypto Hedge Funds
  • Insitutional Funds

These are just some I came up with. Please do come up with others or pick one of the above for analysis.

I think we as a community should start to filter down this list to the market or markets we want to target. This will help us as a community form the vision and product roadmap for Jet Protocol.

It’s also important to note that the market we decide to target first will not necessarily be the only market we target. But we need a starting point.

Please don’t be shy! Don’t be afraid of ‘getting it wrong’ or ‘getting it right on the first try.’ This is about having the conversation so we can build something better together.

Your voice, opinion and thoughts are important!

This is based on my own Product Management experience. I also pulled some language from the Where to Play Framework.

10 Likes

Awesome, it is all well spelt out,
I can just chip in a little i.e partnership with other project/product. It will help grow Our project/product too.

1 Like

Hello!

Great topic! The clear first use case for Jet protocol is to allow any user on Solana to have access to leverage. What is leverage in crypto terms? From what we’ve already seen on the ETH ecosystem, the ability borrow by using your ETH, WBTC, LINK, AAVE has unlocked value in tokens that users want to hodl, and this has achieved product market fit (Deposits on AAVE: ETH - 5.87bn, WBTC-2bn). Likewise, our target should be to list SOL, ETH, wBTC, SRM, RAY etc. as collateral for borrowing. The market is basically the entire market cap of ETH, SOL, BTC etc…

I think Jet can stand out and attract capital better than competitors by 1) gaining credibility for security 2) Adding features that facilitates a great UX 3) integration with other projects 4) rewarding early users.

Point 1 (security): Given the team’s experience, point 1 can be achieved, but yet cannot be emphasised enough. The liquidation system should also work, such that the system continues to be secure.

Point 2 (UX): Being on Solana already allows for better UX compared to ETH. However, we have to stand out from other competitors from the SOL chain, and others such as those on Terra. Hence, we should start out by having clear documentation for all stakeholders - lender, borrower, liquidator. Risk parameters might also hopefully be more favourable for borrowers, considering liquidation is more efficient. Then, we should quickly add features like the auto repayment, and interest rate derivatives (to hedge interest costs). This should make Jet protocol most appealing and quickly win over TVL

Point 3 (integration): I think the team is really focused on this (with all the development on anchor). We have to keep making it easy for developers to work with us, and talking to protocols to work with Jet for leverage. This will be the best way to anchor ourselves within the ecosystem.

Point 4 (incentives): Rewarding early users can go a long way because we become the “super-advocates” for Jet. We will help advocate the protocol during good times, and support the project during the bad times.

In short - leverage is a big deal, a big market! In my opinion this market can already occupy us for 6-9 months! We should crush it and bring in a new paradigm that no-one knew we could achieve with a lending protocol!

6 Likes

here is a list of borrow-lending projects on Solana –

Solend
Everlend
Ratio
Parrot
Apricot
Oxygen
Solaris
Soda
Acumen
Port

2 Likes

Reading market attractiveness and product market fit made me think about Terra

Seeing what SBR and MER managed to do and bring in some massive TVL Solana wise, i think tapping into Terra world is a great way - not sure how those two are really competing in any way vs Jet - to have a quick and relative boost
Recently terra TVL approx = SOL one

Cost to get them does not look very high

  1. Would imagine them not as ETH maxis / no SOL aversion at least
  2. Apart from couple apps, pretty empty right now the Terra ecosystem - so wouldn’t shock me to have users looking for usage on their assets and bridge it with Wormhole v2 underway

And might fit better with the SOL initial user base
Most are on SOL to avoid the high fees and so it makes more sense (to me) to have Jet ‘sending us’ to Terra for further usage or bring back assets than on Ethereum

On this specific question: Are customers expensive (in resources and time) to acquire or market to?

I think Saber is a good example too - they initially got ton of TVL thanks to high farming APY with many pools of SOL friendly tokens (PAI, SRM, FTT, could even add LUNA there…)
Jet is not the same product but enticing people to borrow/supply with some initial juicy APY looks (unfortunately or not) the way to go
Not sure how much SBR 'gave away" with this but cemented themselves as a go to product within SOL in couple months
Doing some with Jet (maybe only to borrowers?) would likely bring on some people
To my knowledge, Solend & Port launched w/o any incentive and TVL still stayed relatively low (been very much recent) and you do not hear much about it

4 Likes

Great! Are there some specific partners that you think we should be considering? And what type of markets do you think those partners would unlock?

1 Like

Hi!

These points are great examples of the value Jet can provide. Thank you!

While I don’t completely disagree, I am going to push back on this wide of a market. It is certainly true that borrow lending can provide value to a wide swath of users. In my opinion, I don’t think it is reasonable to build something that serves so many different use cases.

I’ll use a the classic case of Amazon as an example. From my understanding Amazon always intended to sell everything on the internet but they started with books because they saw a specific market opportunity. As they began selling books online, they built out all the parts that could be leveraged in other ecommerce and gradually moved into other markets. If they had started trying to sell everything to everybody from the beginning, logistics of shipping and handling alone, would have been insurmountable.

In my opinion we need to choose a market that has a specific use case. Then with that use case we learn how Jet can provide value to those users. Then it’s just a matter of choosing the features and support that will drive the most value to those users.

What do you think? Am I thinking too small here? Is there a way we can build out an optimum use case for the major crypto market cap that I’m not thinking of?

2 Likes

Thanks for putting this list together. It will come in handy when we go to size up some specific markets.

One thing to consider when thinking about market competition, is that it may or may not be limited to solana based borrow lending protocols. Other borrow lending protocols are competition if you’re thinking in terms of who is the biggest on solana. You could measure metrics like Total Value Locked or Daily Active Users, or whatever. But in my opinion those metrics aren’t necessarily important when thinking specifically about market competition. This would be our list if our target market was just users who exclusively used solana based products. To be clear this could be our market if we decide. But I want to keep our scope beyond solana exclusivity at this early stage of market differentiation.

Let’s say purely for example’s sake we decide for our first target market to be institutional funds. “Institutional Funds” is definitely too broad. We would likely find some subset of that. But for this example, it works. If I was just thinking through this I would make an assumption (rightly or wrongly) that none of these other solana protocols are in serious talks with institutional funds. I honestly don’t know much about the Institutional Fund market but without thinking too long about it I would make the assumption that competition within the institutional fund market is primarily comprised of investment banks. It’s possible that some of the more established protocols like AAVE or Compound are in the mix. But if we decided to target Institutional Funds as our market our competitors would be Investment Banks and we probably wouldn’t be too concerned with other solana based borrow/lending protocols.

4 Likes

Love what you say.

Maybe we might ask – how to win market share with specific firms in mind? For example, Alameda or Jump.

The reason I list out Solana projects only is because nothing in the blockchain space competes with Solana for defi. Sounds arrogant to say so flatly, but after spending hundreds of hours looking into the question, that was the solid conclusion I came to. Would be glad to discuss further, where there are specific considerations to dig into.

Ah, one more to add to my list above: Aave. Did you see they alluded to launching on Solana? Pretty exciting!

2 Likes

Aave

announcement here

1 Like

There is a potential market we have to consider: “users of other chains”. It has many potential customers from the outside who have the purpose of jumping into Solana but somehow, they hesitate to leave their position, especially on Etherium. So the idea is that Jet should focus on supporting ETH, BTC,… as a simple way to attract simple users, further might be stETH, interest-bear tokens of other chains,… that can help the users be able to engage with protocol without leaving their position on their chain as soon as possible.

3 Likes

+1 on Terra.

I’m a LUNAtic and I can safely say that we have a very enthusiastic community that’s willing to try something new.

Furthermore, Terra’s willingness to partner with teams in different ecosystems is high, as the tokenomics for the terra ecosystem is very clever. Greater adoption of UST = LUNA moon. Therefore any partnership is symbiotic and win-win.

So i think the inclusion of UST as lending asset + LUNA as collateral, along with some onboarding tutorials and committed time from a community manager can very easily bring onboard a huge amount of TVL.

2 Likes

Would you be able to elaborate on why you think this is a wide market?

From my perspective - I’m trying to say that Jet protocol should focus on becoming the best money market/lending protocol by optimising parameters for capital efficiency, and then building features to make the lending UX as best as possible (auto-repayment, interest derivatives, API for traders to easily integrate/access leverage). All these are focused on lending.

3 Likes

Sure! Thank you for the continued discussion. :smiley:

Let’s just take “traders” as an example. I’m not a trader but I do know that different traders use different tools. Some traders will use whatever UI is available on the protocol or exchange website, other traders will use something like tradingview, some traders want a robust endpoint so they can run complex automated strategies and I’m sure there’s different modalities that traders work in that
I’m not aware using with custom or other off the shelf software.

I think you’re right we do need a strong focus on the core offering of a borrow lending protocol with capital efficiency, optimized risk, etc…

But what interface do we work on first? Our native UI, an SDK for us or partners to build integrations with, or an API? Each one of these avenues has more questions:

Native UI: do we optimize UX for desktop or mobile?
SDK: Web, mobile, native applications? Windows? Mac? iOS? Android? Bloomberg terminal?
API: REST or graphql? json-rpc? What kind of rate limits do these traders need?

I could go on, but the questions of what to build and when keep going. If we just say we’re making the best borrow lending protocol for traders, some of the answers to these questions are unclear. If we have some user personas within specific target markets it allows us to make more informed product decisions.

I think a number of Defi products are just rushing to be first to market and capture whatever market share they can. But if you ask me they’re all fishing in the same pond. Maybe we should fish in a pond with bigger fish or smaller fish but more of them. But what I do feel confident about is that we should know what kind of fish we are fishing for so we bring the right rod, reel and bait. Ok. Metaphor over. :grinning_face_with_smiling_eyes: :fishing_pole_and_fish:

3 Likes

Other markets offer a) collateral and b) stables that could add value to Jet Protocol as a whole. Never-mind the potential for integrations of other platforms that require liquidity/interest.

2 Likes

This is an awesome thread, y’all. If there be a data ferret among you, it would be really good to see a summary of the lending market parameters associated with liquidity protocols on Solana and elsewhere, focusing on stables.

1 Like

I think one of the main things that needs to be analzyed first is who are the users that mostly used lending protocols. I haven’t delved into research doing this but I believe the data would most likely show that the users of a lending protocol are individuals who have significant experience using Defi and have a decently sized capital portfolio. If the research does reveal this to be true, then that would most likely lead you to conclude that things such as a mobile app may not be the biggest priority for the project.

In my opinion, I think Jet Protocol has a great opportunity to establish itself and build it’s brand if part of it’s focus was NFTs and Defi gaming. One of the issues that isn’t talked about but I feel is a big problem in the NFT world is the potential illiquidity of NFTs. I’m not talking about projects whose value is 1 Eth or a few Eth but when you look at BAYC and crypto punks you have legitimate market leaders of the NFT world sector that require a significant amount of capital in order to purchase. Not only is the initial investment significant, but due to the costs of the asset selling the asset in a timely manner can prove to be an issue. In order to make the assets more liquid, investors are willing to forego some of their profit by decreasing the price of their NFT in order for it to sell. This is where Jet Protocol can come in and rectify this issue. Jet Protocol can be the protocol that allows the highest quality NFTs to be used as collateral. By doing this, it will entice a lot of holders to collaterize their NFT because it will allow them to use their capital in a more efficient way.

There are challenges with allowing NFTs to be used as collateral. Jet Protocol will have to find a way to properly value what can be potentially an illiquid asset that also has the potential to lose a significant value if and when the NFT bubble pops. In order to remedy this, the loan to value ratio that should be utilized should be low and should have a fairly high liquidation threshold. I’m not sure if the system would be able to determine itself what the floor of these NFT projects are but in order to prevent any gaming of these loans one would need to hire a person to monitor the NFT world on a day to day basis to determine the values.

Although targeting this market would create some challenges, it also would create a significant marketing push and would increase brand awareness of the project. As a lot of punk and BAYC holders are well known throughout Twitter and very vocal and I have no doubt they would be tweeting about this.

Gaming is also one that should be closely looked at as having high potential. Take for example the game Voxies. It has 10,000 NFTs that can be used as playable characters in the game and the floor Voxies sell for .30. The game does not launch until December but people holding Voxies will be receiving a weekly airdrop for 24 weeks. I am a big fan of the game and believer in it, however, with that being said I’m not happy that my capital will be tied down till December when the game comes out. If I could use my Voxies as collateral I would as it would allow me to maintain my investment in Voxies but also use my capital more efficiently.

5 Likes

Re. potential markets, it’s worth looking into composability with DEX protocols that want to offer yield on idle assets on their platform. This could be applied to other protocol sectors as well but DEX’s seems to be the immediate PMF for this type of offering.

Also, finding ways to make Jet’s interest bearing tokens composable with existing Solana DeFi protocols would create nice utility for users.

Finding someone to do a deep dive on the Solana DeFi ecosystem and analyzing the pain points that a lending protocol can solve would be quite fruitful to help determine strategy and target markets.

2 Likes

Awesome proposal. My full support

@eyevzz had a good idea recently that we’ve been discussing: incentivize only borrowers

in theory, drive up the borrows and more deposits will come

as long as there’s borrowers, there will be deposit yields

3 Likes