Part 1: Liquid Startups and How Zero-Transaction Costs Are Turning Founders Into DeFi Degens

From tokenized governance to AI that builds startups faster than you can say “product-market fit,” Web3 is making Sand Hill Road look like a historical reenactment.

Explore all parts of the series: Part 1, Part 2, and Part 3. Additional articles will be linked as they are published. Stay updated in real-time by following Tom Serres on X.com or LinkedIn.

Looking to navigate and invest in the age of Web3? Visit Nautilus.Finance for expert guidance and support in this rapidly evolving ecosystem.

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Sometimes, the perfect tweet lands in your feed at just the right moment. For me, that moment came when Seth Ginns of CoinFund tweeted about liquid startups. I’ve been pondering and theorizing the concept of zero-transaction cost startups for the better part of a decade, but like so many ideas, it had been gathering digital dust in the back of my mind.

Seth’s tweet wasn’t just a thought, it was a well-timed nudge, a reminder that it was time to finally sit down, organize my musings, and shout them into the void we affectionately call the internet. So, a big shoutout to Seth for sparking the motivation I needed to turn years of brain dumps into something (hopefully) coherent, shareable, and maybe even a little provocative.

Zero-Transaction Costs: From the Library to the Moon

Let’s talk about transaction costs. They might sound boring, but trust me, they’re anything but. Ronald Coase, the economist who introduced this concept, explained that transaction costs, the time, effort, and resources required to complete a task, shape how businesses operate. In the past, high transaction costs forced businesses to centralize everything, like an overly controlling parent who insists on micromanaging every detail, just to keep things efficient. But as technology has advanced, these costs have dropped faster than a poorly launched meme coin.

Take knowledge acquisition, for example. Back in the day, learning something new wasn’t just an effort, it was a full-on endurance event. Step one: get in your car, because acquiring knowledge meant burning real gas, not the blockchain kind. And much like Ethereum during a bull run, gas fees could leave you questioning whether the journey was even worth it. Once you arrived at the library, the true test began.

You’d face the index card system, a relic of analog frustration designed to push you to your intellectual limits. Then came deciphering Dewey Decimal codes, which felt like solving a puzzle with no prize at the end. Aisle after aisle, you hunted for the book you hoped contained the information you needed, only to discover it was either checked out, misfiled, or mysteriously missing. If the book was there, you’d pray it wasn’t vandalized by a coffee enthusiast or dog-eared into oblivion. And let’s not forget the actual reading process, which meant manually flipping through pages, skimming at random, and trying to recall where you’d seen that key sentence five minutes earlier.

Get crypto native and dive into When AIs Learn to Ape, The Rise of Machine Economies, or Decentralizing Consciousness.

By the time you walked out with your book, you’d burned through your day, your will to live, and possibly your car’s fuel tank. Gas fees back then weren’t measured in gwei, but in sheer effort and patience. It’s no wonder so many people preferred blissful ignorance.

Then along came Google, and everything changed. Suddenly, the cost of acquiring knowledge was reduced to a few keystrokes and maybe the minor annoyance of scrolling past some SEO spam. Libraries weren’t obsolete, they were just no longer the primary gateway to knowledge. Did Google eliminate transaction costs entirely? Not quite. You still have to sift through ads and questionable blog posts, but the effort required to find useful information has dropped so close to zero that it’s hard to remember how much work it used to be.

Now replace “knowledge acquisition” with “building a startup,” and you’ll see where this is going. Launching a business used to mean months (or years) of painstaking effort. Founders had to pitch relentlessly, negotiate endlessly, and pray someone with capital would finally say, “Sure, I’ll take a gamble on your PowerPoint deck.” Every step of the process, from raising funds to hiring a team, was riddled with inefficiencies that sucked up time, money, and energy.

But the advent of blockchain, artificial intelligence, and tokenized governance is dragging startup transaction costs toward zero. Want to fundraise? Tokenize your project and access global pools of capital in real time. Need collaborators? Tokenized governance allows you to onboard contributors and align on decisions instantly. Looking for scale? AI tools can iterate on your product, optimize it for users, and deploy it on-chain faster than you can say “series A.”

The result is liquid startups: ventures born into a world where the friction of traditional entrepreneurship has been replaced with fluidity, transparency, and speed. These startups aren’t just reshaping the rules of entrepreneurship, they’re rewriting the entire playbook. And like Google before them, they’re about to make us forget just how painful the old system really was.

Liquid Startups: Instant Gratification, Tokenized

So, what is a liquid startup? It is a venture designed to be as fluid and frictionless as possible. Think of it as a startup with the composability of DeFi, the transparency of blockchain, and the patience of a sugar-high toddler. Liquid startups are born liquid, with tokenized governance kicking off before a single line of code is even written. They skip the awkward growing pains and dive straight into decentralized collaboration.

Picture this. You open a GitHub repo and instantly tokenize ownership. Contributors, investors, and curious collaborators can stake tokens to influence decisions. Before you have even decided on a logo, a global network of stakeholders is voting on your project’s direction, its features, and its governance. This is not just a theoretical model. It is happening now with platforms like Radicle.

Radicle is pioneering decentralized peer-to-peer infrastructure for code collaboration, allowing developers to build, share, and manage software projects without reliance on centralized platforms. The founder has spent the last six to seven years turning this vision into reality, creating what many consider the holy grail of software development for liquid startups. With Radicle, tokenizing the repo becomes more than a gimmick. It is a foundation for sovereignty in software development. Developers anywhere in the world can seamlessly contribute, iterate, and even vote on changes through tokenized governance, taking collaboration to the next level.

Why spend months haggling over equity splits and governance structures when platforms like Radicle enable tokenized collaboration in minutes? Ownership and accountability are distributed from day one, transforming startups into decentralized ecosystems of innovation.

Get crypto native and explore Nautilus: A Brand That Unfolded, The Foundations of Tokenized Real-World Assets, and Tokenize the Untouchable: Compute, Code, and AI.

But let us be real. This is not just about cutting down paperwork. Liquid startups fundamentally flip traditional dynamics on their head. In the old world, founders spent months perfecting pitch decks and knocking on investors’ doors. Liquidity came years later through an IPO or acquisition, if it came at all. With liquid startups, liquidity is not a destination. It is built into the DNA. Ownership and governance are tokenized from the start, creating a real-time market for participation. Contributors can join, exit, or trade their tokens as easily as swapping assets on a decentralized exchange.

Of course, with early liquidity comes early chaos. The roller coaster ride of finding product-market fit now unfolds in public, with token holders riding shotgun for every pivot and misstep. But for those who can embrace the volatility, liquid startups are rewriting the playbook for how ventures are created, scaled, and governed. With tools like Radicle, they are building a world where software development and entrepreneurship are more collaborative and accessible than ever before.

AI: Eric Ries’ New Best Friend

Now let us throw AI into the mix, because why not? AI isn’t just a buzzword anymore. It is the secret sauce taking zero-transaction cost startups to the next level. Today, AI tools can generate code, design interfaces, and optimize workflows. But the future promises something far more transformative.

Imagine sitting down with your AI and saying, “Build me a decentralized platform for tokenizing imaginary pet rocks.” The AI writes the code, designs the interface, deploys the app on-chain, and iterates based on user feedback—all while you sip coffee and marvel at how little you had to do.

Then imagine that same AI using Eric Ries’ The Lean Startup as a playbook. Feedback loops, customer-centric development, and hypothesis-driven iteration are baked into its DNA. While humans debate MVPs in meetings, AI is testing, launching, and optimizing products in real time. It is like The Lean Startup was written with machines in mind.

AI will not just iterate in the background. It will iterate as you use the app, dynamically improving the experience and tailoring it to your needs. For instance, if you are using a trading platform, the AI could notice you are struggling to find the right liquidity pools and immediately adjust the interface to simplify navigation. If you are experimenting with features, it could generate a step-by-step guide tailored to your specific behavior. By the time you return later in the day, the app has already evolved into something sharper and more aligned with your preferences.

This is customer-centric development elevated to a level traditional processes cannot compete with. No waiting for feedback cycles or scheduled updates. AI observes, learns, and improves constantly, delivering personalized experiences to millions of users simultaneously. Each person effectively gets a custom-built app, optimized for their unique preferences.

Get crypto native and dive into When AIs Learn to Ape, The Rise of Machine Economies, or Decentralizing Consciousness.

AI is not just a tool for making incremental improvements. It is transforming how startups approach development, enabling apps to respond to user behavior instantly while testing and refining new features across a global audience. What once took weeks or months is now happening in minutes, and the results are nothing short of revolutionary.

With this ability to adapt in real time and scale across millions of users, AI is poised to become the ultimate architect of customer-centric development. The Lean Startup principles of testing, listening, and adapting are no longer manual processes. They are automated, intelligent, and infinitely scalable. The result is a level of agility and personalization that redefines what customer-focused innovation can achieve.

Fundraising: From Sand Hill Road to Composable Finance

Fundraising has long been the bane of every founder’s existence. In the traditional model, you’d spend months groveling on Sand Hill Road, parading your pitch deck like a desperate contestant on a reality show. The stakes were high, the rewards uncertain, and the process exhausting. Imagine corporate speed dating, but replace the free drinks with endless spreadsheets and a lingering hope that someone, anyone, would slide a term sheet across the table.

Liquid startups, however, are flipping this dynamic on its head. Fundraising becomes composable finance, transforming your cap table into what is essentially a private decentralized exchange. Founders no longer have to beg for attention or endure the awkward tango of pitching. Instead, they mint tokens and open up their projects to global participation in real-time. The result? A fluid, transparent system where anyone who believes in your vision can jump in, trade tokens, and even contribute directly to the venture.

It is as if your cap table got a DeFi makeover. Investors aren’t locked into long-term commitments or reliant on the mythical “exit event” to see a return. They can enter and exit positions as easily as swapping assets on Uniswap, creating a dynamic and liquid market for ownership. Meanwhile, founders can raise capital incrementally, adapting to the needs of the project rather than sticking to the rigid schedule of funding rounds. Need a little more runway to launch your beta? No problem, issue more tokens and bring in new stakeholders.

And let’s not forget the democratizing effect. In this model, fundraising is no longer limited to those with insider access to venture capital. Anyone, anywhere in the world, can invest. A developer in Nairobi, a designer in São Paulo, and a retail investor in Berlin can all own a piece of the startup, contribute to its success, and benefit from its growth. The old-school exclusivity of VC deals is replaced with a global, inclusive marketplace of ideas and capital.

Get crypto native and explore Nautilus: A Brand That Unfolded, The Foundations of Tokenized Real-World Assets, and Tokenize the Untouchable: Compute, Code, and AI.

Of course, this composable finance model doesn’t just benefit founders. It also holds them accountable. With a tokenized cap table operating as a private exchange, transparency isn’t optional, it’s baked in. Investors can see exactly how funds are being used and participate in governance, creating a system where founders are incentivized to stay aligned with their community’s goals.

Say goodbye to groveling for term sheets and hello to a fundraising model that feels more like DeFi trading than a high-stakes bake sale. Liquid startups are rewriting the rules of capital raising, and the result is a faster, fairer, and infinitely more flexible way to build the next big thing.

Liquidity Without the Big Bang

In traditional startups, liquidity was the grand finale. After years of grinding through pitch meetings, late nights, and endless iterations, you would finally hit the jackpot with an IPO or acquisition. It was the moment where everyone, your investors, employees, and maybe even your dog saw a payday. Liquid startups throw that script out the window. Liquidity isn’t the climactic reward; it is the starting point.

But let’s be clear. Liquidity doesn’t mean smooth sailing. Startups are still a roller coaster, and tokenized ventures feel that volatility at warp speed. One day your token is mooning, the next it’s crashing harder than your first attempt at skiing. We’ve seen this play out with meme coins, where speculative hype sends valuations sky-high, only for them to plummet back to earth in record time. Liquid startups aren’t immune to these dynamics. They just live through them faster, amplifying both the thrills and the risks.

And while liquidity brings transparency, it also brings a different kind of pressure. Founders no longer get to iterate quietly in the safety of their garage or coworking space. Every pivot, every misstep, and every “we didn’t think this through” moment plays out in front of token holders, whose expectations can shift faster than the market. It is like running a public company, except your investor calls never stop, and there’s no luxury of proving yourself in private first.

Here’s where Web3 adds a twist. Death in the world of Web3 doesn’t mean what it does in Web2. In Web3, a project that fails to find product-market fit doesn’t necessarily vanish. Instead, it might be hardforked into something new, revitalized by a fresh team or community effort. Just look at Ethereum Classic. It is the original version of Ethereum, and despite having no meaningful apps, few users, and little developer activity, it still boasts billions in market cap. Why? Because open source is the lifeblood of Web3. Communities can step in, attract talent through bounties, and breathe new life into a project. Tokens can incentivize developers to take another crack at making it work.

So, in this world, failure isn’t the end. It is just another stage in the lifecycle of a project. A liquid startup might burn through its runway, but if the idea has merit (or even just a diehard community), it can be resurrected, forked, or reimagined. The dynamic nature of liquidity and open-source collaboration ensures that a project never truly disappears. It just becomes something different, sometimes for better, sometimes for weirder, but always alive in some form.

Liquidity at the start changes everything. It makes startups faster, riskier, and more transparent, but it also ensures they remain dynamic and adaptable. Success isn’t guaranteed, but in Web3, neither is failure. It is just another chance for the community to try again, with new ideas, new incentives, and maybe a little help from the next wave of builders.

The Dawn of the Liquid Startup Era

Liquid startups are the lovechild of blockchain, AI, and a world that collectively rolled its eyes at inefficiency and said, “Enough is enough.” They are fast, transparent, globally accessible, and optimized for speed. But let’s not kid ourselves. They are also volatile, chaotic, and not for the faint of heart. The transaction costs of building and scaling a venture are rapidly approaching zero, but that doesn’t mean startups have suddenly become easy. If anything, the stakes and the speed have skyrocketed.

Let’s also address the valuation circus. In the liquid startup era, token prices often have no connection to reality. In Web3, valuations are less about implied value and more about speculative hype. Tokens with no users or utility can suddenly be worth billions, while solid projects with real adoption might barely get noticed. It is like the valuation equivalent of musical chairs, except nobody knows when the music will stop, and some of the chairs are NFTs.

To be fair, this isn’t just a Web3 issue. Private market valuations in the traditional startup world are also detached from reality, often based on the amount of capital raised rather than any meaningful metrics like revenue or user growth. Whether you are looking at a unicorn startup with no path to profitability or a billion-dollar token project trending on Twitter for all the wrong reasons, the game of valuations has always been, let’s say, “creative.”

Despite the chaos, liquid startups have a built-in resilience that traditional startups lack. Thanks to the open-source ethos of Web3, failure doesn’t mean the end. Projects that lose momentum or run out of capital can be hardforked into something new, often led by a community of diehards with tokens to incentivize developers. Just look at Ethereum Classic. It is the original Ethereum chain, left behind after the famous hardfork to recover from The DAO hack. It has no major apps, no meaningful users, and yet billions in market cap. It is a ghost town with skyscrapers. But that’s Web3 for you, failure just means someone else gets to step in and try again.

Liquid startups are not just businesses; they are dynamic ecosystems. They live, adapt, and sometimes spiral into meme-driven chaos. They might crash faster than you can say “product-market fit,” but they can also rise from the ashes in ways that traditional startups simply can’t. It’s a roller coaster fueled by decentralization, transparency, and community-driven innovation.

In Part 2, we’ll dive deeper into what makes liquid startups revolutionary, exploring the opportunities and challenges of tokenized business models. If zero-transaction cost startups sound like a thrill ride, you’re not wrong. Buckle up, because this ride is only getting started.

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Explore all parts of the series: Part 1, Part 2, and Part 3. Additional articles will be linked as they are published. Stay updated in real-time by following Tom Serres on X.com or LinkedIn.

Looking to navigate and invest in the age of Web3? Visit Nautilus.Finance for expert guidance and support in this rapidly evolving ecosystem.