Some general thoughts on the state of the market -- or how I think crypto evolves from here. 1. Crypto at its core is money is rails in its current form. Blockchains do to money/assets what the internet did to information. The after-effect of that, is that speculation continues to be the dominant use case in the industry. The velocity and quantum at which speculation happens may vary - but the largest outcomes (and biggest sinks of revenue) will continue to be speculation - and its second order use cases (lending, derivs, broker-dealers etc) 2. The stablecoin opportunity will reach a local maxima with Circle's IPO. Imo lowering interest rate will be another domino that affects it. Between distribution moats and regulatory challenges - the next big opportunity in stablecoins may not be as hot. The marginal opportunity is in geo-local fintech use cases that can use crypto pay-rails. It is not in exporting the US dollar. Especially if you are a founder that is not from SV. Whole different story if you can raise $10mil from the get-go and are based in the US. 3. DePin - is hot in theory, but when clubbed with SLAs and the kind of scale large AI projects will need - the opportunity (to invest) will cluster around networks that can manage ±100mil in demand side revenue. Those kinds of networks will almost (always) work with PE funds or hedge funds to bridge short term capital liquidity needs. I am yet to see a token based network that can scale to that extent (and be reliant). The good news is - the networks that can scale to such scale do exist. The bad news is, much of that revenue does not touch tokens. 4. We talk of tokens and revenue because of two seismic shifts. - The premium that exists for being a token has vanished in a post pump-fun world where hitting $100mil in fdv is challenging once assets vest. - The marginal bid in crypto has vanished in a world where stocks/currencies are just as volatile with clearer directional tendencies The real reason teams will worry of revenue going forward is that for liquid funds (last line of marginal bids) - the mix of assets that can be bid is around ±50 tokens with revenue. Within which maybe there's sub 30 with meaningful upside. 5. VCs have a strong incentive to argue tokens as a business model have not died. That Web3 is around the corner. If your incentives are to be blind about the writing on the wall - you may pretend to be illiterate for a while. IMO we are going into a phase where fewer founders issue tokens and instead hold on to revenue as smaller teams. Crypto VCs are probably not well equipped for this shift because historically liquidity came from exchange listings and retail bids. One could argue that the reason crypto VC deployment reduced is broader macro. The real reason is that the ability of portfolios to provide a return has eviscerated in how the market shifted in the years since FTX. 6. IMO the number of funds that can sign cheques to produce uber/cisco like outcomes are sub 10. Within which, the number of partners that understand what it takes to produce those outcomes is sub ±30. One thinks the reason crypto has no large consumer apps is the UX or bad marketing or whatever. Part of the challenge is how the nature of capital has a timeline of 3 years, and a fixation on token listing liquidity. It's the opium of crypto VC. There's probably an opportunity somewhere in there to build large scale consumer apps with longer time horizons. 7. Crypto x AI feels hot but struggles to keep pace with how AI itself moves. This is probably the first time a sector has shown the emperor has no clothes to our industry. Things like provenance and sourcing distributed compute feel hot in principal but it remains to be seen how they scale. Most networks that have scaled rely on distributed data centers who still collect revenue in dollars. Models have not shown a premium simply because the source of the data was "compensated". The one part that feels hot - or rhymes with P2E is crowd-sourcing IP addresses. I think that segment is very interesting. 8. There is an opportunity for mid to high income banking in a way that is crypto native. Think everything from payroll management wiring money portfolio building (stocks/tbills) loans for crypto native users. The user persona here is someone that earns ±5-20k within crypto and wants a bank that can handle all of it. The TAM for such a bank is ±5-10k people. But IMO there's value to be generated in building it. 9. Farcaster will make DAOs great again. Those things died because it turns out people don't want to govern how lending or derivatives platforms work. If communities on Farcaster grow to 10k individuals and these communities coordinate resources (like community assets) on-chain - DAOs will be relevant again. My hope is that this is how meme coins make a return. Such assets could be far more sustainable than dog/cat coins if done right. Farcaster's big challenge will be navigating the needs of its content creators and the financialisation of its platform. In the absence of financialisation - it could be perceived as yet another protocol. In the presence of financialisation, its the future of the web. 10. Crypto gaming feels dead but on a r:r perspective - among consumer apps, it is the single highest ROI segment. It takes a certain kind of madness to still want to be building there and anyone doing it - if worth their mettle will probably have millions of users and market places that are sustainable to show for it. People think the sector died in 2022 (post Axie) - but if accounting for 1 year for mania to stabilise, and 2 for products to be shipped - ±2025/2026 could be breakout year for it. 11. Long-tail of altcoins will struggle to make a come back .This is not like 2018/2023 where retail is no longer bidding. Retail is here. They are active. They just don't want the 50th token doing the same thing. IMO this will change how we do comp/raises within crypto. Historically, the bet was "can this token list". Now it will be "will this token matter". The two are very distinctly different questions - with few people having the answers to them. 12. Crypto's talent glut will hit us faster than a liquidity glut. That is - seeing people leave for AI or the lack of progress within crypto pushing people to work elsewhere will affect morale worse than prices will. Unlike 2018/2023 - the macro environment is one that suggests longer term pain while AI continues to compound on its improvements. In such a market, specific firms will evolve to be beacons of hope. Culture does become a moat. Very few founders equipped to see that transition. 13. Crypto research/media is undergoing a period of consolidation. Average creative is done with the industry because primary source of financing historically were L2s - and working with them has become a pain. The only way creatives will survive in the next 18 months is through hyper-financialisation. Margins large enough to have the luxury of spending time on putting together good work. Firms that combine the craft (of writing/research) with financialisation (of assets/deal-structuring) and moats (of distribution/process) - will make a killing. That DNA however is extremely scarce. 14. If fewer founders issue tokens and more founders are able to scale to millions of users - then the next pool of capital that will unlock in crypto is private equity. We have not seen this (at scale) yet - but PE firms will probably be a dominant force in the next 18 months so long as firms have north of $10mil in revenue. The sea of firms that have it is probably around ±50. And maybe there's 20 that are privately owned. So that's currently a small market. 15. I think there's opportunity for a ±10 mil fund to be set up that explicitly focuses on combining creative output (music, art, writing) with crypto-native primitives and distributing at scale. But that requires partners with taste, understanding of consumer distribution and empathy for creatives. Just one of those things that interest me. 16. Crypto is equal parts morally bankrupt and idealistic in how it can shape the world. It has ±100x more PMF than it did in 2018 - but a fraction of the premium it once collected. In such a market, knowing to block out the pundits and looking at what the numbers suggest is an art form. Perhaps even a skill. Important to remember that one moulds the world one belongs to as much as one is moulded by the world one is in. Agency is a moat.

too soon?