Token Advice - #13 📈

Onchain Identity & Social Networks

Often when we think of blockchains, self-custody, or crypto, we envision a new financial network. One that can facilitate transactions where you can buy, sell, lend, borrow, or simply hold your assets onchain. These are all crucial components of being able to facilitate value transfer around the globe. Without a doubt, financial transactions have been the number one use case of onchain systems. However, they’re not the only groundbreaking innovations that come along with blockchains. Something we’ve been contemplating lately and also participating in is how blockchains can be used in other ways, not just for pure financial purposes. The example we’re going to touch on today is the concept of onchain identity and social networks.

Imagine a world where your online identity isn't tied to a single platform but is universally recognized across all platforms. A “digital passport” of sorts. Let’s say you want to port your identity from Twitter to Instagram, or LinkedIn to YouTube. This process is extremely fragmented today because the major companies mentioned own the social graph. Therefore, they have incentive to make it challenging to bring your “identity” to another platform. Your username, the advertising dollars your content generates, the words or images you post, how often your posts are seen, etc. In centralized social networks like Twitter, the things I just mentioned are not owned by you. They’re owned by the company who built the platform. Just this summer, when Twitter rebranded to “X”, a longtime user experienced this firsthand when his username @x was taken from him by the company. They sent an email informing the user that the username is the property of X, and he was offered no financial incentive in return except for some merchandise and a trip to the X offices. To be quite frank, we don’t “own” our identities on these platforms. We also only receive a tiny fraction of the hundreds of billions in advertising revenue the platforms generate. But is there a better way? In our view, a potential new solution is in its early stages of development. Let’s talk about Farcaster.

First an introductory video:

In short, Farcaster is a social network that is being built on the Ethereum blockchain using the OP Stack. Technical I know, what’s important to understand is that in its end state there will be no single person or company that controls the network. Everyone will be able to participate. The code will be entirely open source, meaning developers will be able to build alternative social networks on top of it freely. Without asking anyone for permission. If we compare Farcaster to a traditional social network such as Twitter, we can think of Farcaster as the user database that the network is built on. Because Farcaster is built onchain, you can freely transport your “identity” to any applications that utilize the open Farcaster social graph. Do you see the similarities to onchain finance? No intermediaries, no gatekeepers, no company profiting off of you. You own your identity on Farcaster. So what is built on Farcaster exactly?

One of the fully functional onchain applications built today is called Warpcast.

To expand on the Twitter comparison above, Warpcast is the user interface application. It looks and feels like Twitter, but has the core differences outlined above. Additionally, users can meet people who own similar NFTs or join communities of likeminded people. Everything they post is owned by them. They can choose what they want to share or allow other users to have access to. Just think for a moment if a season ticket for a college football team was represented onchain. The fan who owns the season ticket would be able to easily see who else is a season ticket holder and interact with them directly on Farcaster. To take it a step further, let’s say a local restaurant wants to give a special deal to all season ticket holders and find a way to get the word out. They’d be able to reach this community directly on Farcaster. They wouldn’t be paying for an advertisement or getting permission. They also would be able to trust that the people in the community are in fact season ticket holders because they own the official NFT - that cannot be replicated. These are two very small examples, but hopefully they give you an idea of what is possible when building networks onchain.

Farcaster itself isn’t just an idea, it’s a top notch product already. We’ve been posting there and getting a feel for it over the last several months. The user experience is high quality. You simply link your Ethereum address, setup your profile, and start posting. As of yesterday, Farcaster announced that they have 100k waitlist signups for their official public launch in a few weeks. We’ll be watching closely to see what all is built as the protocol expands over time. It’s safe to say we’re pretty excited about the future of onchain identity and social networks.

Saving for Education Expenses

As the school season kicks off, there's no better time to assess your strategy for saving toward education expenses, both in the present and the future. Our focus today is on an exceptional tool for this purpose: the versatile 529 plan.

The Power of the 529 Plan:

The 529 plan stands out as a stellar savings and investment vehicle. Beyond its traditional association with college tuition, it covers a wide spectrum of qualified education expenses. A 529 plan is a tax-advantaged solution crafted to facilitate education funding. Initially aimed at post-secondary education costs, its scope was expanded in 2017 to encompass K–12 education and further extended to include apprenticeship programs in 2019.

Benefits for All, Not Just the Wealthy:

Contrary to misconceptions, 529 plans aren't just for the affluent. Middle-class families can harness the power of these plans to secure their children's educational future effectively. Here's how:

1. Accessible Contribution Levels: 529 plans allow for contributions that align with various budget sizes, making them a viable option for middle-class families seeking to invest gradually over time.

2. Tax-Efficient Growth: The potential for tax-free growth within a 529 plan means that even modest contributions can accumulate into a substantial sum, bolstering your child's education prospects.

3. Versatile Usage: Beyond college tuition, 529 funds can be used for a range of educational expenses, such as tutoring, school supplies, and technology needs. This flexibility ensures that your investment remains valuable even if unexpected educational needs arise.

For those looking to delve deeper into the nuances of 529 plans, we recommend exploring the comprehensive Investopedia primer here.

Empower yourself with the knowledge to make informed decisions about securing a brighter future through education financing.

Wishing all our families a prosperous school year ahead.

At 401 we believe that ‘holistic’ financial planning involves conversations around all areas of a clients life, especially their health. If health is truly wealth it’s imperative that we help our clients align their financial and physical health. Our health planning program is designed to support clients that want help maintaining a highly quality lifestyle. We provide some base level biomarkers for health tracking, personalized health plans and encourage having ‘walking meetings’ whether in person or virtual. 

Above you’ll see an example of the 401 Financial Wellness Portfolio. It is a health version of our financial portfolio allocated to the areas we think are the core of any quality health and wellness program. You’ll also see the activities to from very ‘crypto’ risky like sprinting to a ‘cash equivalent’ like walking. Like any good portfolio the activities chosen should be adjusted based on age, goals, time horizon and current physical status. Feel free to share it with family and friends as they embark on their journey to health, wealth and prosperity! 

401 Financial Cohort

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