state of crypto/where my head is at

shorter post but giving everyone a refresher on what i am up to

(Note: This was originally written for my new personal site - knwr.site - so make sure to check that out going forward. I did not proofread this, so don’t take it too seriously).

First things first, I am aware the market kind of sucks right now, so consider this post a reprieve from the sea of red. Instead of focusing on things like valuations or durability of revenues in a bear market, I’ll target some out of the box scenarios and take a look at things that have actually gone right, because there are quite a few positive things to highlight.

If you’re still actively paying attention to crypto and aligning yourself or your career with it, more than likely you care quite strongly about its future and probably believe it’s going to continue doing well from here on out. When I got into crypto in 2021, institutional adoption was mostly a meme, and aside from the occasional BTC on the balance sheet announcement, actual adoption was rarely visible.

These days it’s difficult to spend a day on Twitter without seeing a genuinely meaningful announcement or growth metric. Here’s a short list of things that are, in my opinion, actually very strong signal and indicative of crypto’s sticking around:

• Stripe’s stablecoin chain, Tempo, and its plans for SWIFT/ACH disruption

• Kraken receiving a $200m investment from Citadel

• Total RWA on-chain value adding $20b in 2025, up to $35b total

• Over $175b sitting in BTC and ETH exchange traded products

• Monthly application revenue sitting at roughly $400m a month

• Trillions in stablecoin transaction volume globally

Very basic examples, but these are tangible things we can point to and say yes, this is working in an otherwise sea of red. Demand for tokens both privately and publicly is a different story, as most alts have not done great, yet crypto-backed venture has seen its total deal generation ($ denominated) reach the average levels of 2022 (not accounting for its peak).

It’s evident there is still significant interest in crypto at nearly every part of the stack.

The reality is that it’s difficult to be an average investor, trader, or holder of crypto, considering how ruthless alt price action has been outside of smaller pockets (more recently visible with ORE, MetaDAO, ASTER). It has not paid off to be a longterm believer in crypto while simultaneously holding alts for extended periods of time.

It’s fine to acknowledge this, but it’s difficult selling people on the crypto vision when only a handful of assets go up and stay up on a multiyear timeframe. This isn’t to say that the market dynamic won’t change over time (as it should, if the industry continues to mature and TGEs become more selective) but at the moment it is the single largest threat to the expansion of fun crypto.

What do I mean by fun crypto? In my eyes, fun crypto is all of the stuff that gets discussed on Twitter and takes up the vast majority of the average crypto user’s time. These are activities that might not be as consequential as something like stablecoin usage in developing countries, but ultimately consume attention because they can result in making money.

Fun crypto can be any or all of the following:

• Buying coins prior to bonding on pump fun

• Writing a thesis about a memecoin you own 5% of and shilling it online

• Farming DeFi protocols

• Arguing in group chats about L1 price and why your favorite L1 is better

• Using a perp DEX and losing money

• Experimenting with every new perp DEX and farming these

• Putting all of your money into AI coins at the top

• Writing a report or thread about modular money

• Yelling at crypto VCs on twitter

• Selling all of your NFTs

• Tokenizing Pokemon cards

This isn’t a comprehensive list, but it gets the point across. As it’s slowly become a lot harder for the average market participant to make money, fun crypto has become less fun as narratives and short term trends get more and more compressed. It’s like the image of the euthanasia roller coaster, but it’s been extended out for some time now. And outside of crypto’s venture industry, it’s almost impossible for the average person to get early exposure to a product or narrative at the ground floor (but this is another discussion).

Projects like Monad and MegaETH have attempted to reverse this dynamic, but running a public token sale at $2.5b and $1b valuations respectively is not the same experience as being a venture fund and investing in a project’s seed round at $25-50m. This isn’t to say that public token sales or ICOs aren’t a welcome step towards the right direction, but they aren’t a perfect way of aligning interests. I’ll discuss more of this in a future post, but it might be useful to go back and read Cobie’s 2024 post on private v. public value accrual.

Where am I going with this?

The short answer is that if we’d like crypto (as an asset class) to continue its existence as a wild west variation of financial markets, it should be in everyone’s interest to think a bit harder on the topic, because posting on-chain revenue metrics or stablecoin volumes is a good thing, but 99.9% of us aren’t able to make money off of this.

I’ve experienced this phenomenon firsthand many times, but more recently noticed it when I was writing a research report on prediction markets. For months I’d believed Polymarket was (and is) a generational company, but unless I was able to find a way to purchase secondaries, or farm it in hopes of a potential airdrop, there was zero way to capitalize on this belief. This is far too common.

Writing a research report is a really valuable experience. It can help you do all of the following:

• Grow your audience on Twitter

• Receive praise for a job well done

• Help you network

• Improve your critical thinking abilities

• Maybe turn into a full time job somewhere along the way

But writing research reports cannot consistently net you good returns in the public crypto market, especially when discussing topics like distributed training, prediction markets, TEEs, FHE, zk technology, and so on and so forth. There’s been a gradual but apparent shift on crypto twitter where instead of growing an audience through research or unique perspectives, most of the attention flows to PnL posts or early CA shills. This isn’t a bad thing and I’ve enjoyed trading on Solana on-chain almost exclusively since probably August/September 2023, but it just isn’t as exciting.

Even when comparing crypto twitter to fintwit or the citrini equities side of twitter, there’s almost nothing we are doing as an industry to compete with how much fun all of those guys are having. With equities, obviously many AI-adjacent sectors have been ripping, but there’s a vast and unimaginably large pool of assets to trade, from all over the global, with an actual correlation between doing the work on a thesis and turning that into a successful trade. This is more than possible in crypto, but it’s far less important to actually do the work - sometimes you can just hit a goldmine like September-November 2024 onchain AI coins. When I wrote about DePIN in 2024 with Smac, I felt that it was a good exercise in sector analysis, but none of the publicly trading liquid tokens came across as a screaming buy.

This is a problem, and I’ll admit that there isn’t a clear path I have in mind for fixing it. Anytime a friend or relative asks me what crypto coins they should buy, I always tell them to just stick to majors, because I can’t tell them in good faith that X Y or Z DePIN / Gaming / DeAI / DeFi coin will be a good buy, because historically - even great businesses like Uniswap or Ethena - don’t have the most appealing charts.

Where does this leave us?

Well, I don’t intend to leave crypto after dedicating such a large amount of time to it, and if you followed along with the first few paragraphs, there are more than enough tailwinds blowing in the industry’s favor right now. With that in mind, there is more than enough work to be done on the research side, and I’ll dedicate the rest of this post to listing these out in varying amounts of detail.

TLDR: i am very excited by all of the following and more, with the idea that each of these will turn into research reports sometime soon.

1. Top of mind for me is working on a tokenomics-focused DePIN post. It’s been over a year since I last examined the sector, but for a variety of reasons, DePIN is one of the more exciting places to spend time. The main idea behind the DePIN flywheel is that introducing tokens as an incentive mechanism can help early stage companies grow into a place of healthy demand, while also serving as an alternative to providing huge sums of upfront capital to acquire infrastructure or hardware. However, many DePIN projects have struggled to see their token price go up, yet total DePIN revenues have grown 400% YoY (via 1kx) - what’s up with that? There isn’t a one size fits all approach to “solving” DePIN tokenomics, and personally it would be fun to analyze a few different subsets of DePIN and work through how the relationship between project & token can be improved. Beyond that, there’s a large number of new projects in DePIN that have raised funds but yet to TGE, many of these being related to energy markets (I enjoy reading about this on energy crystals’ substack) which are red hot right now. DePIN has always stood out to me because its one of the few areas outside of stablecoins where real businesses can access the benefits of blockchains or tokens while still, at the end of a day, operating in a real world industry like telecom or solar power.

2. I wrote a short tweet about it just yesterday but DeAI is once again pulling my attention. I never got around to taking a closer look at the sector like I’d intended to, but now is a good time to give it more than a glance. Decentralized/distributed training is far and away one of the largest success stories of DeAI, but there’s tangible growth in other cool stuff like agentic payments/trading, x402 and other infra/rails, bringing GPU loans onchain, and many other smaller trends finally seeing consistent growth. It’s hard enough for the traditional AI world to explain its massive appetite for funding and larger data centers, let alone a crypto-based AI project to explain this in the early innings, so I think it’s time to be a bit more considerate of what the good faith teams are working on. I’m overdue to spend more time studying progress in traditional agent infra, see what’s working, and think overall agents are one of the coolest rabbit holes to go down. There are other projects like Ambient that have been on my to-do list for a while, so keep an eye out for that. I’d say that it’s also time to revisit Bittensor, but I don’t know if I have it in me.

3. I believe an under appreciated point of discussion is just how active Stripe has been in the last ~1.5 years of going deeper into crypto. Most apparent is their collaboration with Paradigm on Tempo, but acquiring Privy and Bridge indicate some type of full stack aspirations. Mentioned it earlier in a hyperlink, but Patrick Collison’s acknowledgement that the ideal endgame for Tempo resembles SWIFT/ACH is a massive indicator of what’s to come. There are dozens of angles you can take with a stablecoin report (remittances, cross border payments, lower fees for merchants, expanding multi-chain payment options, etc.) but this explicit definition that Tempo will be more like a SWIFT than a PayPal is extremely exciting. I’m still uncertain how Tempo will view things like architecture, or revenue generation, or what their list of partnerships will look like in reality, but it absolutely should be a much bigger story than it is currently. Beyond just Stripe, I think the neobank/stablecoin chain stuff is a bit oversaturated on twitter given actual demand for tokens like XPL, but this might turn into some type of thesis.

4. Something that’s crossed my mind more frequently has been this discussion of internet capital markets and launchpads, especially considering the disastrous run of launchcoin/believe. I’m sure many have noticed it, but it’s certainly felt like the pool of talent entering crypto has gotten smaller since the extreme growth in AI. Anyone that might have previously gone out and built a crypto startup has instead taken their talents to the world of AI, and it sucks, but I don’t blame them. Funding has been off the charts, and even though there’s a large amount of venture capital waiting to deploy in crypto, it’s probably a lot more fun to try and enter the race for AGI. On the topic of internet capital markets, there are two sides. One believes that the launchpad’s design is the most important factor, while others believe the quality of founders are most important to the longevity of this thesis or narrative. Something like Believe is different than MetaDAO, but they’re both examples of companies that want to make it easier for founders to launch a token and explore an alternative to traditional equity structure, without the need for venture capital (or less of a reliance on it). I think ICM has the potential to be a really, really big tailwind but there isn’t quality writing on it, and outside of MetaDAO’s success, you can’t point to examples where having a token at the launch of company has massively benefitted holders or the founder’s QoL. This will change and assuming we get an influx of talent, maybe an improvement in capital formation and incentive structures, ICM can be big and might signal a broader shift of everything moving onchain.

5. I’m also really into the idea of crypto consumer apps again, after seeing fomo raise from benchmark. I think it’s a smart deal for them and fomo has done quite well, but most importantly it’s shown that investors still care about consumer crypto and funding is there for the right ideas. I’m less interested in fomo specifically than I am a combination superapp of sorts, that I would best describe as a combination of Robinhood, ChatGPT, and a DeBank interface. I’m unsure if something exists, but the idea is that companies like Robinhood are doubling down on all types of finance (not just stocks) by offering internal Kalshi-enabled prediction markets, potentially private market stock access, and of course expanded access to crypto tokens. Robinhood is quite popular, and I’m not saying to replicate Robinhood. Instead, I think a mobile app that lets you do all of the following would have potential outside of our crypto twitter bubble: ability to buy, sell, and send crypto assets onchain in an easy interface; interact directly with any app onchain, by querying a ChatGPT-style LLM, preferably a simple and clean UX like Robinhood; ability to look at your portfolio at a glance and ask an LLM to help you “earn 6.5% yield on these assets in DeFi” or “adjust perp positions to account for a 50% BTC nuke, should it happen next week”; etc., etc. It sounds kind of ridiculous, but I think the growth in usage amongst Polymarket and Kalshi shows that people do actually want to speculate (or gamble) they just don’t know much about crypto. If you gave everyone an LLM with native read/write access to blockchains, everyone could be as degenerate or risk averse as they want, without needing to jump through hoops like they would today.

There’s some other stuff, like equity perps, privacy coins, and quantum scares related to BTC, but I’ll save that for another day. If any of these topics seem interesting, reply or message me so I can know what to write about first.

Thanks for reading, and expect more consistent content soon.