The $TIPN point of a sustainable microeconomy

Illustration by @ekaitza.

At first glance, Tipn is straightforward: programmatic tipping for the Farcaster ecosystem. Tipn's core like-to-tip mechanic makes it easy to reward anyone and everyone whose content you enjoy, via automated microtransactions. Open the mini app, authorize a sum of USDC, decide how much you want to tip with each like, then scroll and interact like normal.

Tipn is that, but it also goes deeper. Tipn is a burgeoning microeconomy composed of carefully balanced incentives and psychology. Micropayments are the first layer; standardizing on USDC ensures a stable substrate for everything else.

Cofounders Cameron (@kompreni) and Matthew (@niftytime.eth) told Splits that Tipn originated from three insights:

1) "Oh, you can actually program the like button to send money," because Farcaster is an open protocol and every user has a wallet.

2) It's possible to bootstrap with a project coin: "One of the key learnings from Clanker is that businesses have the potential to sustain purely on fee revenue, as opposed to needing to sell tokens to investors," Cameron pointed out. This model can be effective: "We set up an attractive market for [buyers], and then trading fees fund the operation, which is how we've sustained ourselves to this point." Tipn is part of a new wave of these "appcoins" incubated on Farcaster.

3) Liquidity can be community infrastructure, versus a purely mercenary cost center. This bears elaboration.

Before coming up with Tipn, Cameron and Matthew were focused on Rebase, an approachable frontend for managing liquidity incentives. "Coins are exploding all over the place from Clankers and memecoins, all that stuff," Matthew recalled. "They're all different, but they all have a very similar problem. No liquidity — but they do have tokens. So, you can use the tokens to incentivize liquidity and reward LPs. The problem we encountered was that no one understands liquidity providing. You say those two letters, and people die inside, right?"

However: "These token communities were more engaged than we expected. They were actually donating their tokens to incentivize the campaigns, and they were actually LPing. They were giving ETH and their native token." Unlike typical liquidity players, "They weren't chasing the highest yield possible, but they were doing it altruistically," for the sake of supporting their community. "Almost as if they were tipping their token with a loose expectation of earning."

Matthew and Cameron decided to take this kernel and repackage it without the conceptual cruft and fear-inducing jargon of DeFi. "Hey, tip and earn," Matthew told Cameron. "Let's strip it down to the essence. Let's make it dead simple."

How it works#

Under the hood, Tipn is clever rather than simple. (Even so, the guts of the system are more intelligible than the average DeFi scheme.) Of course, you don't have to understand all the intricacies to participate. It goes to show that a "happy path" for the end-user is the result of careful thinking about infrastructure.

Three interlocking programs form Tipn's economic core:

• Like-to-tip: Tip with USDC every time you like a post
  • Set the price: $0.05 or $0.10 per like, for example
  • Each tip is sent to the recipient's synced wallet whenever you like a post
  • Tipn charges a fee of 10% per tip, capped at $0.01
• Activity rewards: Earn $TIPN rewards for your USDC tipping activity
  • The project treasury earns $TIPN from market trading fees; "each day a fixed percentage of this $TIPN balance is paid out to USDC tippers based on their daily tipping activity," per Matthew
• Staking rewards: Stake $TIPN to earn USDC rewards from Tipn platform fees
  • All fees from like-to-tip activity are distributed pro rata to $TIPN stakers, in proportion to their stakes
  • Currently 500+ million $TIPN has been staked, more than half of the total supply

With these three initiatives, Tipn sets up a loop of participation:

1. Like-to-tip the users who post content that you enjoy
2. Earn $TIPN activity rewards
3. Stake that $TIPN to earn USDC rewards
4. Go back to the start — or, use the USDC to buy more $TIPN to stake

Will you earn back more than you tip out? In the immediate term, probably not. If $TIPN moons, then sure. For now, what's important is that the loop is satisfying. It feels like completing a puzzle. And it turns generosity (tipping creators) into a bet on Tipn as a product.

Everything is anchored on the USDC like-to-tip mechanic, and the value flowing through it. Choosing to set up USDC tips is essentially altruistic. But Tipn gives you self-interested reasons to participate. Especially if you have high hopes for the price of $TIPN. And that is the tricky magic of a project coin.

Recently, discussing BETRMINT and $BETR, I described how a project coin is powerful fuel, psychological as well as monetary:

Speculation extends beyond the confines of the game itself. If you think BETRMINT is a promising product, it makes sense to buy $BETR, both because it's a direct input to the game and due to the attention economics that govern memecoin investing.

The more popular the game, the more valuable $BETR is likely to become. And speculation doesn't just increase the price, but also earns Clanker rewards from trading. This effect becomes a sort of "distributed venture capital," so to speak, that helps BETRMINT start bootstrapping into eventual sustainability.

Tipn benefits from this same dynamic. (Caveat: Farstore, a token launchpad initiative by the Tipn team, subs in for Clanker. To complicate things, Farstore also involves Clanker, but we won't get into that here.)

Tipn is set up so you have a literal stake in the project, alongside other community members. Sure, you could use any given token to open a Uniswap LP position, but in Tipn's case the process is dead easy, just a few clicks in the mini app. And UX matters.

Ecosystem energy#

"We're part of a network that's growing, that has a bunch of other amazing projects that are mostly mini apps that we believe should also have an associated appcoin," Matthew said. Many already do — project coins are almost de rigeur for today's crop of Farcaster apps.

"We want to be able to feature and promote those projects too. Because the ecosystem grows, the tide rises, we rise with the tides, right?"

In response to this swirling scene — and, of course, to promote the mini app — Tipn has added a fourth pillar to its user offerings:

Comment tipping: Certain users receive a treasury allocation to distribute in post replies

• If you're one of them, you can dispense a sum from your allocation by including "100 $tipn" in a reply
• The user to whom you're responding can claim that $TIPN through the mini app
• You can tip any amount in a given reply, up to your total allocation
• Allocations refresh every Tuesday ("Tipn Tuesday") and any untipped tokens are reclaimed by the treasury

The first season of comment tipping focused on $TIPN, naturally. The second season features $BETR, the token of spin-to-win game BETRMINT. Both teams are interested in token distribution as a means of community-building, so the collaboration is apropos.

"Bringing in another cool project to get people excited, that's part of it. Bringing a whole new network of users into Tipn, that's part of it," Matthew told Splits. Comment tipping acts as an advertisement, sparking interest in the project. When recipients open the mini app to claim their tips, they also learn about the core features and have the opportunity to set up USDC tipping.

Switching out the focus token also keeps things fresh: Tipn will have a new partnership coming down the line for each "season" of comment tipping. "You need that kind of onchain eventness that folks can get really excited and jazzed by," Matthew added.

In the same vein, Tipn introduced an opt-in program called Big Tip Thursdays. Every Thursday, all the USDC "liked out" by BTT participants is pooled. Half of the pool is awarded to "one lucky tipper + like receiver," and the other half is used to buy $TIPN for activity rewards.

Programmable social#

Tipn understands that internet-native money is fluid like information. By threading together micropayments, token incentives, and community psychology, the cofounders have built a compelling loop: USDC tipping feeds $TIPN rewards, which fuel staking, which generates more USDC, which powers more tipping.

This ouroboros of incentives can convert generosity into speculation and back again. As more Farcaster projects adopt similar models, the real test will be whether these microeconomies can sustain themselves beyond the initial excitement.

The experiment is live, and the data is streaming in.

Intrigued? Check out Tipn on Farcaster.

If your own team is like Tipn and has onchain operations, check out Teams. The functionality and security of modern banking (2FA, role-based-permissions, shared accounts) with the speed and programmability of Ethereum. Built for Splits and teams like us.