Ryan Zurrer is principal and venture partner at Polychain Capital, where he leads investments in decentralized blockchain protocols and distributed projects.

The following article is an exclusive contribution to CoinDesk’s 2017 in Review.

If 2017 is to be remembered as a time when cryptographic tokens enabled novel distributed network concepts and significant capital was raised, 2018 will bring more maturity in crypto-economic systems and decentralized applications.

With that in mind, I have been calling summer 2017 the “Summer of Crypto Love.”

Here in San Francisco, it was the 50th anniversary of the “Summer of Love” – a magical unique moment where artists and intellectuals came together to explore new ways of thinking. But this summer, which was just as astounding, was defined by everyone’s love for crypto.

The scope of the impact that blockchain technologies will have in reorganizing capital and intelligence (both human and machine) was recognized by business leaders all over the world. We saw extreme excitement for tokenized projects which drove high valuations in token crowdfunds (ICOs).

Clearly, there were examples of overvaluation in some assets, but discounting the ICO model as merely a bubble or temporary hysteria would miss the forest for the trees.

When a token is designed correctly and distributed thoughtfully to drive network effects, the leverage that a project can get from a massive globally distributed investor base is remarkable. Crowdfund participants contribute significant technical resources, evangelize and market the project and generally add value that is very difficult for even a very talented venture capitalist to match.

Capital is no longer a scarce resource because private VCs are no longer the gatekeepers of capital, so investors are being forced to actually deliver value-add for projects beyond writing a cheque.

I see this trend as generally positive and the natural evolution of the early-stage funding model.

Tuning up

But while the world was getting hyped on ICOs, here at the Polychain office, we were spending most of our time “jamming” on crypto-economic models with our portfolio entrepreneurs. The results have been very compelling. In case you are unclear on the meaning of cryptoeconomics, it is the emerging field of study of how we use digital incentives to drive specific resources and behaviors on decentralized networks that lead to some globally desired result such as security or network effects. I call the brainstorming process of designing the right cryptoeconomic model “jamming,” as a tip-of-the-hat to the music creation process. I observe that very few technologists possess the entire suite of competencies necessary to build a great crypto-economic model alone. It requires expertise in game theory, computer science, behavioural psychology, various fields of economics, math, logic, distributed computing, security and a deep understanding of blockchain technologies and their limitations. So as in music, the best results are achieved when a fantastic group comes together and each talented individual shares their respective skills in a complementary fashion while being open minded to improvisation.