Post
With the market going through a major reshuffle, where do you see the crypto industry's key sectors heading next?
Replies
At its core, cryptocurrencies are the trajectory of money in its current form. Blockchain is to money/assets what the internet was to information, and as a result, speculation remains the industry’s primary use case. While the pace and scale of speculation will fluctuate, the most significant results in this space will come from speculation and the secondary use cases that derive from it, such as lending, derivatives, broker-dealers, etc.
With Circle filing its IPO application, the stablecoin track may be reaching its peak. In my opinion, the interest rate cut will be another domino that affects the field. Given the dual pressures of channel moat and regulatory challenges, the next big opportunity for stablecoins may not be so hot. Especially for founders who are not from Silicon Valley, the real marginal opportunity lies in regional fintech applications that can take advantage of crypto payment rails, rather than exporting US dollars. Of course, if you can raise more than $10 million in funds from the beginning and set up headquarters in the United States, the situation is another matter.
The DePIN track should be hot in theory, but combined with the service level agreement and the scale required for large-scale AI projects, the real investment opportunities will be concentrated in those networks that can generate demand-side revenue of about $100 million or more. Such networks will almost always work with private equity funds or hedge funds to meet short-term capital liquidity needs. So far, I have not seen any token-based network that can scale to this extent. The good news is that networks that can scale to such a scale do exist. The bad news is that most of the revenue generated by these networks will not touch the token system.
The reason we started to focus on the relationship between tokens and revenue is due to two fundamental changes. First, in a post-pump.fun world, the valuation premium enjoyed by tokens has disappeared. When assets vest, it becomes extremely difficult to maintain a fully diluted valuation of more than $100 million. Second, the volatility of today's stock and foreign exchange markets is no less than that of cryptocurrencies, and the trends are more clear, causing marginal buying in the cryptocurrency market to completely dry up. The fundamental reason that projects really need to worry about revenue is that for liquidity funds, there are only about 50 tokens that can generate revenue, and there are probably less than 30 of them with real growth potential.
VCs have a strong incentive to insist that tokens as a business model are not dead yet and tout the impending arrival of Web3. If you choose to ignore industry trends, you can continue to be deaf and dumb for a while.
Crypto x AI
DAO
GAMEFI
PMF
Circle
