1. The core of cryptocurrency is the monetary trajectory in its current form. The role of blockchain for currency/assets is like the role of the internet for information, with the consequence that speculative activities remain the primary application scenario in the industry.
Although the speed and scale of speculative behavior will fluctuate, the most significant outcomes (and the largest sources of income) in this field will still come from speculation and the derived secondary application scenarios, such as lending, derivatives, brokerage traders, etc.
2. With Circle submitting its IPO application, the stablecoin track may be approaching its peak stage. In my opinion, interest rate cuts will become another domino effect impacting this field. Considering the dual pressures of channel moats and regulatory challenges, the next significant opportunity for stablecoins may not be so explosive.
Especially for founders not from Silicon Valley, the real marginal opportunity lies in leveraging regional fintech applications of crypto payments, rather than 'exporting' dollars. Of course, if you can raise over $10 million from the start and base your headquarters in the US, that's a different story.
3. The DePIN track should theoretically be very hot, but considering the scale required for service level agreements (SLA) and large AI projects, real investment opportunities will concentrate on networks that can generate over $100 million in demand-side revenue. Such networks almost always partner with private equity funds or hedge funds to meet short-term capital liquidity needs. So far, I have not seen any token-based networks that can scale to this level while maintaining reliable operations.
The good news is that there are indeed networks that can scale to such size. The bad news is that most of the income generated by these networks will not touch the token system.
4. Our attention to the relationship between tokens and income stems from two fundamental shifts. First, in the 'post-pump.fun' world, the valuation premium enjoyed by tokens has vanished. When asset ownership is established, maintaining a fully diluted valuation (FDV) above $100 million becomes extremely difficult; secondly, the volatility in today's stock and forex markets is no less than that of cryptocurrencies, and the trends are clearer, leading to a complete depletion of marginal buying in the cryptocurrency market.
The fundamental reason project parties should genuinely worry about revenue is that, for liquidity funds (the last marginal buyers), there are only about 50 tokens that can generate revenue, and among them, those with substantial growth potential may be less than 30.
5. Venture capital firms have a strong motivation to assert that 'tokens as a business model have not died' and to tout that 'Web3 is coming soon'. If you choose to ignore industry trends, you can continue to pretend to be deaf and dumb for a while.
In my view, we are entering a phase where the number of founders issuing tokens will decrease, and they will hold revenues in small teams. Crypto venture capital firms may struggle to adapt to this shift, as traditionally their liquidity sources stem from listings on exchanges and retail buy orders. Some may attribute the reduction in crypto venture capital deployments to the macro environment, but the real reason is that the ability of portfolios to provide returns has been significantly weakened by market changes in the years following FTX.
6. In my view, there are no more than 10 cryptocurrency funds capable of writing checks and achieving Uber/Cisco-level accomplishments. Among them, there may be fewer than 30 partners who truly understand how to achieve such feats. People often believe the lack of large consumer-level applications in the cryptocurrency field is due to poor user experience or ineffective marketing. In my opinion, part of the core challenge lies in the nature of the current capital being constrained by a 3-year return cycle, and an excessive obsession with the liquidity brought by token listings. This has become 'opium' for cryptocurrency venture capital. Perhaps, in this environment, there exists an opportunity to build scalable consumer applications with a longer-term vision.
7. The combination of cryptocurrency and artificial intelligence (Crypto x AI) seems hot, but it struggles to keep pace with the development of AI itself. This may be the first area to expose the 'Emperor's New Clothes' phenomenon in our industry. Concepts like data provenance and distributed computing resource allocation are theoretically appealing, but their scaling potential remains to be validated. Most networks that have achieved scaling rely on distributed data centers, which still settle revenues in dollars.
AI models do not show premium advantages simply because of 'compensation' from data sources. The truly promising area, or one that has a similar effect to the P2E model, is in the field of crowd-sourced IP addresses, which I believe is a very worthy niche to focus on.
8. There is an opportunity in the cryptocurrency sector to create native digital banks for middle to high-income groups. Think about it, from payroll management + fund transfers + portfolio construction (stocks/Treasury bonds) to loans, all of this is provided for native cryptocurrency users. This user group consists of those whose monthly income in the cryptocurrency field ranges from $5,000 to $200,000 and who want banks to handle all these services. While the potential market size (TAM) for such banks is between 5,000 and 10,000 people, I believe building such a platform has unique value.
9. Farcaster may revive DAOs. Many DAOs have declined because it has proven that people do not want to participate in the governance of lending or derivatives platforms. If the community on Farcaster can grow to tens of thousands and coordinate resources on-chain (such as community assets), then DAOs will gain attention again.
I hope this will be the way for Memecoins to return. If executed properly, such assets may be more sustainable than Dogecoin/Catcoin. The core challenge facing Farcaster is how to balance the needs of content creators with the financialization process of the platform. Without financialization, it may become just another ordinary protocol; if successful, it will become a prototype of the next generation of the internet.
10. Current blockchain games feel lifeless, but from the perspective of return on investment, they are one of the highest ROI segments in consumer applications. Teams still working in this field need some 'crazy traits', and those truly capable builders are likely to create a sustainable gaming market with millions of users. People often think this track perished in 2022 (after Axie), but considering the cooling-off period after the frenzy and the two-plus-year product development cycle, 2025/2026 is likely to become the explosive year for cryptocurrency games.
11. Long-tail altcoins will find it difficult to make a comeback. This is different from 2018 and 2023 when there was a lack of retail buy-in; now retail investors are still active in the market, but they no longer chase the 50th homogeneous token.
In my opinion, this will change the investment logic in the cryptocurrency industry. The past bet was 'can this token go on the exchange?', while now it has become 'is this token important?'. These are two completely different questions, and few can find answers.
12. The talent drain in the cryptocurrency industry will be faster than liquidity depletion. Specifically, witnessing practitioners shift to the AI track or seeking other opportunities due to stagnation in the cryptocurrency field, the impact on morale will far surpass that of falling token prices. Unlike in 2018 and 2023, the current macro environment signals a more prolonged pain, while the AI field continues to make exponential progress.
In such a market, certain companies will evolve into beacons of hope. Corporate culture will eventually become a moat. However, there are very few founders who can perceive this shift.
13. Research and media organizations in the cryptocurrency space are undergoing a consolidation phase. Ordinary creators have become disillusioned with the industry - mainly because the primary sponsors have historically been L2 project parties, and cooperating with them has become a struggle. In the next 18 months, creators will only survive through super-financialization. In other words, they must obtain sufficient profit margins to luxuriously invest time in refining high-quality content.
Companies that can combine creation (writing/research), financialization (asset/trading structure design), and moats (distribution channels/processes) will reap significant rewards. However, teams with this gene are extremely rare.
14. If the number of founders issuing tokens decreases while the number of founders achieving millions of user growth increases, the next capital pool to be released in the cryptocurrency field will be private equity. Although it is not yet scaled, as long as a company's annual revenue exceeds $10 million, private equity institutions are likely to become the dominant force within the next 18 months. The total number of companies meeting these conditions is about 50, among which perhaps 20 are privately held. Therefore, for now, this is still a tiny market.
15. I believe a fund of about $10 million can be established to specifically invest in projects that combine creative content (music/art/writing) with crypto primitives and scale distribution. However, this requires partners to have aesthetic taste, understand consumer distribution, and resonate with creators. This is one of the things that particularly interests me.
16. In terms of shaping the world, the cryptocurrency industry has both a morally degenerate side and an idealistic side. Compared to 2018, the current industry has achieved a hundredfold product-market fit (PMF), but can only capture a small portion of the previously inflated valuation. In this market, understanding how to filter out the academic voices and focus on data signals has become an art, even a survival skill. Please remember: you are both shaping the world you are in and being shaped by it. Subjective initiative is a moat in itself.
