The State of Liquid Token Markets | DAS New York

Transcript

Hey all, Blockworks co-founder Michael Ippolito here. Quick break to talk about something we've just launched, Blockworks Investor Relations. As the market shifts toward institutional capital, investors want more transparency, more standardization, and a higher level of professionalism. But, the traditional IR model is slow, manual, and not built for how crypto works. If you're building on chain, your data's already live, your business is already transparent. The challenge is turning that into a clear, credible story for investors. That's exactly what we're solving with Blockworks IR. It's a single platform that brings together real-time analytics, branded investor portals, and hands-on advisory support so you can communicate what matters. If you're an on-chain business looking to level up your investor strategy, check out Blockworks Investor Relations at

blockworks.com/investor-relations. All right, back to the episode. Nothing said on ZeroX Research is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Bocartio, Ryan, and our guests may hold positions in the companies, funds, or projects discussed. Good afternoon, everyone. My name is Dave Rodriguez, and I'm the head of commercial here at Blockworks. Uh today we're here to talk about something near and dear to my heart, which is the state of the union of liquid token markets. Um and to immediately address the elephant in the room, tokens are down bad.

Uh since 2025 cycle high you know, cycle highs of 2025, most tokens are down 60 to 90% obviously like non-including Bitcoin and maybe ETH. I've been around for multiple cycles. Uh this is nothing new. I'd say what's striking about this difference is that institutional interest is actually here. Uh institutions are adopting the technology. Uh the regulatory headwinds that this industry has largely faced are turning into tailwinds. And despite all that, the sentiment around tokens are probably the worst I've ever seen it as someone's been in the market for 8 years. I think everyone on this panel here has been in the market probably at the same amount if not longer than me. And I personally struggle to figure out like what does this actually mean? Does institutional adoption actually will any of this translate into token value? Um

and yeah, I think we're trying to figure out like what is the market getting wrong about tokens? Um what is it going to take to actually change the sentiment around tokens? And I'm not a subject matter expert on this topic, but what I do have here are some of the sharpest capital allocators in the room to really help us I think determine what's the next stage for for liquid token markets. So, uh without further ado, I'd love to hand it off to you guys to introduce yourselves, uh the fund that you represent, and also maybe even like a one-word blurb or one-sentence blurb about where do you think the the state of the union is today for liquid markets. So, Seth, I'll pass over to you, and then we can go down the line.

Hey, I'm uh Seth Gins. Uh I'm managing partner at CoinFund, and I'll explain the co-founder TBA. So, uh I'm managing partner, run the liquid fund at CoinFund since the beginning of 2020. We're spinning the liquid fund out, uh so that that's what that is a reference to. My background is 18 years of uh public equities investing at Genesis Associates. So, large-cap growth investing, uh and then running a uh fundamental liquid crypto fund. Um State of the market, uh one-liner, I'd say I think we have um the ingredients coming together for what will be a very powerful, fundamentally driven bull market with institutional engagement,

broad institutional engagement as the the backbone for that. I'm sure we'll talk a lot about that, I guess. Kelvin, do you want to go? Sure, hi. Uh my name is Kelvin Koh. I'm one of the co-founders uh at Spartan Group. Uh Spartan Group is an advisory and investment firm. Uh we on the advisory side, we help crypto companies raise capital, do M&A, and do structuring. So, think of it as an investment banking, but focusing on crypto clients. And then on the investment side, uh we have four funds, uh which I oversee. So, we have a directional liquid uh fund that's been running for about 7 years. We have a market neutral fund, which has recently launched, and we have two early-stage venture funds. Um and then in terms of my history, I spent um

the bulk of my career at Goldman. I spent 18 years there, and spent about 3 years working uh in a New York-based hedge fund doing equities long short uh before coming to crypto. Um in terms of the one-liner on the market, um long-term I'm bullish just because of the institutionalization trend and the fact that we continue to innovate and find new use cases every cycle. Uh but short-term I'm bearish. You know, I think there's more downside to token prices um in the coming 6 months or so um before we find a bottom and hopefully get to a new cycle.

Um for now I've kind of day run the hedge fund at VanEck. Been doing that since 2022. Uh tried to file like everyone else here, I guess. Uh was a millennium prior to that. Um so, we have a hybrid fund. We do both public equities and tokens. We're kind of agnostic to the instrument we're investing in. Um one-liner on the market, I would say we've been in a structural kind of bear market for tokens, altcoins since 2021. That was kind of the top in terms of market cap for these assets. Obviously, the market cap top then, but the number of assets competing for that limited pool of capital has more or less exploded to the upside. So, lot of supply, lack of demand, prices go down. So, if you look at any kind of benchmark on how altcoin performance has been, uh it's been kind

of horrendous since 2021. So, I think we've been in a structural bear market. So, I think that's going to persist for the foreseeable future. But within that, I think there'll be sort of three to five tokens that do really well in any given year, and that will change. You're supposed to treat these as trading vehicles um and and you know, not buy and hold and disappear. Everyone, I'm Cosmo. Uh I'm general partner at Pantera. We're a lead investment strategy and research. Um my day job is uh portfolio manager for all of our liquid products. Uh The uh most of my background is from long-short equity and you know, some private equity and banking like before that like every good old New York boy.

Um I uh I you know, as far as you know, a statement on the market, I'd say it's sort of tautologically true after a long drawdown, the risk-reward for investing in these assets is much better than it has been in a very long time. I do think the tailwinds are there uh for there to be a for for this uh you know, we have a we have a situation where prices have gone down for a long time. But the fundamentals in a lot of cases have improved. And so, eventually, as you know, my old PM used to say, price follows fundamentals. And so, we are uh this doesn't necessarily mean draw the drawdowns don't necessarily mean and oversold oversold technicals don't necessarily mean things have to bounce here, but it doesn't feel I don't feel like there's a lot of downside left, and

the upside is is pretty tremendous for investing in to pronounce point a select group of high-quality assets. So, yeah. It's an interesting time. Thank you. The recurring theme I think I heard was um long-term bullish. Some people are currently bearish. Uh what is it going to take for yourselves and the broader market to say like the market is turning now. Um like what would it what is it going to take? Like is is it a post-clarity passing? Uh is it just fundamentals improving five to tax because the fund you know, the the valuation of these assets in the most fundamentally strong ones are not uh are still you know, uh an order of magnitude lower than they need to be in

order to support the fund the valuations that they are today? Like is there one or two things that you think you need to individually want to call out that would change your mind about the state today? And not like long-term, sure. We're we're all structurally bullish long-term, or else hopefully we we wouldn't be at Digital Asset Summit. But uh yeah, what what do we think it's it's going to it's going to take today to uh position yourselves accordingly for a for a bullish upside? So, I think I'll go to something that Cosmo said, which was eventually price follows fundamentals. And um we we've had some extraordinary fundamental developments across the space, and we haven't had um price follow those uh developments in a broad-based manner.

We've certainly had individual names. If you look at hyperliquid versus Bitcoin breaking out to to new highs right now. Um so, I would say we we have a setup for what I like to think of as a hindsight narrative where fundamentals looking really good, price has lagged. Uh as I was talking about, institutions really starting to pay attention. So, this has been the year of almost weekly announcements of traditional financial institutions doing more and more with crypto, touching more parts of the market. Um but you wouldn't know it talking to to people that spend their days looking at crypto prices. So, I think we're we're setting up this really

nice dynamic where something will trigger price. Maybe maybe it was the war, because if you look at Bitcoin versus gold, bottomed right at the start of the war. So, maybe that was the start of the rotation from from gold to uh to Bitcoin. Maybe it will be clarity, maybe it will be something else. But we're primed for the this hindsight narrative of oh yes, like prices should have been moving. Now we're getting the move with that catalyst, and look at all of the good things that are happening from a fundamental perspective. Awesome. Hey Rails, want to Yeah, I guess it's uh my general take is look at the top 200 tokens on CoinMarketCap. I would say like 99% of them are complete trash. Like they're garbage businesses.

Like I don't know why anyone would traffic in any of them. Uh especially when you look at tech equities, right? That's that's your benchmark. Uh the biggest problem for even the good ones for the longest time was that the valuation mismatch again relative to tech equities is pretty large. Like you'd have like some project doing like 5 10 million bucks of revenues and being priced at like several billions of dollars, and that never made any sense. Um now, to both Seth and Cosmos point, the 60 plus percent correction they've had has reset a lot of these valuations lower. But, a lot of people have lost money along the way. So, there's like this apathy {slash} like this thing is kind of messed up feeling among people that has to settle and and people need to start generating positive returns

first before a lot of capital then comes back into this stuff. Um it's going to happen, I think. Uh I think I think to your other question on what's going to get you more bullish the market, I think what represent what's represented in the top 200 assets also have to change. Uh and I think there's a path there, which is ideally you get Clarity Act done and then you start to get better businesses in token as equity form on chain. Um so, people can underwrite high-quality businesses that have this sort of new element of their essentially stock being tokenized. Um better founders. And then you have this rotation that So, the market has the market structure has to really shift.

Yeah, I think it's uh Look, all public markets are reflexive. Actually, let me take that step back. Everything about businesses are reflexive, right? Even startups are reflexive in the private world and and and public markets are especially reflexive. But, in particular, crypto markets are very reflexive. And so, you know, as much as I I do believe that the most important thing is fundamentals, the reality is price can drive fundamental a lot for uh for a token businesses, many of which rely on trading assets. And so, there's a little bit of I'm not sure if it's cart leading the horse, which one's going to be first, but we do need some sense of either it's very strong price appreciation, so people start making money again. And so, you know, allocators start waking up to oh, this is an asset class I can't miss.

Or fundamentals become so good that price does reflect that. Um there's another there's another element and you know, I think Pranav sort of tried to slip this in and and sort of this nuance in, which is that you know, there are many ways to express your bullishness on digital assets. There's many different types of assets you can invest in private companies, you can invest in public equities, you can invest in in tokens. And right now, there just uh there is not a large enough number of investable tokens for for a lot of larger allocators to take it that seriously. Now, I and I'm sure many my colleagues on stage believe that will change over time, but the reality is if this kind of you know, top 200 tokens, maybe there's 10, maybe there's 20 or 30 that like have the semblance of real business model that will succeed.

That's not enough really to generate um to to generate enough large enough investable universe. And so, to a large extent, I am looking at my venture partners and saying, "Hey, like let's keep funding really exciting young companies that are built as tokens so that the investable universe can expand." Today, we're pretty happy with what we own, but we really need more things to own. I mean, go ahead, Calvin. Yeah, I'll I'll add a few more points. Um so, I think first the first thing is that um we track a bunch of different metrics, right? Indicate whether we're closer to the top or to the bottom.

Um now, obviously, we're looking at how quickly they are approaching the bottom, but none of the metrics that we track were there yet, right? So, that's the first thing. Um the second thing is we still see a lot of supply coming on, right? Particularly in terms of all coins, right? Every month, basically, there's 2 to 3 billion dollars of supply. And there's not 2 to 3 billion dollars of capital coming into the space, right? So, how do you adjust that? Prices have to go lower, right? It's as simple as that. And only once prices get lower, do you does that 2 to 3 billion maybe become a billion or half a billion and and then the supply and demand starts to to make more sense, right? So, that's the second thing

that we're tracking. The third thing is, you know, we're shorting more stuff than we are able to find long ideas, right? And um you know, you look at a lot of these projects as as uh Cosmo and and Pranav mentioned earlier, you've got trash businesses that are trading at billions of dollars and it makes no sense. And the reason that they're able to do that is because they're the insiders are controlling the price, right? But, at some point, the investors who invested in these projects get unlocked, typically a year after um the TGE happens, and all that supply hits the market and suddenly overnight these tokens tank 80, 90%. Right? So, you have a ton of these types of tokens that are sitting out there. And so, until those things get flushed out, um

we're not going to see any meaningful recovery on a sort of broader basis. You may see certain tokens do well, but you're not going to see a broad-based recovery. So, I think there's an interesting One one of the things that's been discussed a few times is how few investable tokens there are, how few fundamentally driven tokens there are. And um it it's interesting. I think like if we if we dialed back to December, they were probably December into January, there were two tokens that that people were focused on. Like there there were only two that were outperforming Bitcoin that were large cap um and they they were top of mind for everyone. They were Canton and Hyperliquid.

Um and Hyperliquid actually wasn't outperforming until like mid-January and then and then it started taking off as commodities trading picked up um on on Hyperliquid. So, um if you look today, the breadth of the market has expanded materially from just 3 months ago. And this is what we see as we look at the progression of bull markets, where and again, I I'm not trying to to be um particularly bold in calling this a a bull market right now, but as markets heal, as they progress, you'll see more and more names, either new issues or older issues that that are from a prior cycle. And it it's actually

typically the new issues, but you do see some of these prior cycle names reinvent themselves and and get a lot of traction. We're starting to see that come together. Um whether it's uh Layer Zero, whether it's Near, bunch of names that that have been around that that have been close to product market fit, but weren't quite there. And now and now they seem to be a lot closer to to that product market fit and actually having some um fundamental excitement and price excitement. So, we're we're seeing an expanding of breadth, which I think is really interesting.

Yeah, I fully agree. Um not investment advice, but like would you feel comfortable sharing like certain verticals that you guys are obviously multiple teams are multiple products already brought up to you. Like Layer Zero, Hyperliquid. Uh is there specific verticals that you think is going to have a secular bid with the, you know, institutional adoption of the asset class? They think they're like primary beneficiaries of stablecoins coming on chain, tokenized assets coming on chain, all that good stuff. But yeah, is there certain verticals that you are very bullish on short, mid, long-term? Uh and if you are, you know, so kind, maybe even specific projects.

So, I'm not going to mention a specific project, but I'll give you a category I think it's kind of interesting. Um so, I think privacy is a category is like very particular interesting, especially in like there's intersections of privacy and store value, there's intersections of privacy and AI. Uh I think crypto's got a very unique role to play there and I think we're finding many projects at reasonable valuations achieve product market fit, generate real fees revenues. Uh assuming that's relevant. If it's not a store value, it's not relevant. So, I think that's an area that we are particularly focused on into the future. Yeah, I think for us um the AI agent space is interesting just because, you know, there's so much interest in that space.

And there are a few, you know, crypto projects that are sort of trying to do that in a web3 context. So, that's an area that we're very focused on. I'd say the other area would be um RWAs. Um just given that there's a real product market fit. And uh with all of the institution institutions coming into the space, I think there'll be more capital uh being built into the ecosystem. Yeah, I mean, my my simple framework is like where are there large TAMs with secular growth tailwinds, where I think monetizing it is possible. And you know, I I I have the least amount of experience on this on this on this panel of like solo managing a crypto dedicated vehicle. And I'd say and I'd say, you know, most of

my career has been investing in long short public consumer internet companies. And as a tech investor, I just I think crypto's like a fantastic place to be spending your time because it is so wildly disruptive to capitalism. Uh and that I do think there will be many exciting businesses being spawned, which is why I'm focusing on this now. But, it's also very clear as a, you know, generalist tech investor, you're obviously supposed to be spending all your time thinking about AI. Um and and so, with the blockchain expertise that we have, then you know, then actually says, "Well, actually we're supposed to be spending as much of our time as possible at the intersection of blockchain and AI. What are all the ways that blockchain can uniquely enable AI adoption?" And similarly, in what ways does AI adoption uniquely

accelerate blockchain activity? Um I think, you know, Calvin spoke about one, which is, you know, blockchain will be accelerated by AI agents. And we're seeing this massive boom in agenting finance and the innovation around what we can do as, yeah, uh AI becomes increasingly autonomous and um and and starts to interact on chain, which we think it'll naturally well. But, even more excitingly to me is like how does blockchain uniquely accelerate AI, right? Like how do we get attached to the end market that's growing the fastest? And there are just so many use cases that we're excited about, whether it's across identity, whether it's across, you know, resource aggregation, or just this idea of open source open systems and open communication. And so, we're, you know, really as a firm, we're spending almost all our time at that

intersection. So, I I would say um I I think we're at an interesting inflection with with this convergence of traditional finance and crypto that's happening in real time right now, 2026. And and I think DePIN, uh so, decentralized physical infrastructure, was a little bit of a preview of this. So, um, lots of real-world applications that we saw come together, um, a few years ago. Um, and analyzing those tokens was more about Now, there wasn't direct value capture for most of them, but analyzing the tokens was more about what's happening with this traditional-looking business

that happens to have crypto rails. And I think it if we fast forward 12 months or 24 months from now, the vast majority of what we have in our fund is going to be traditional businesses, but instead of being traditional equities, they're going to be crypto tokens. They're going to have some component of crypto infrastructure involved that's going to accelerate the business. It's going to lower the customer acquisition cost. Um, that that's going to you know, one of the problems with with DePIN was the businesses that were most attracted to to crypto at that time were ones that had trouble with customer acquisition.

So, um, and that's a generalization, but they they saw crypto and the excitement and the hype as an opportunity to to kind of have this unfair customer acquisition, uh, window. Um, but but I think we're going to as we come into this next year, two years, we're going to start seeing businesses that don't have trouble with customer acquisition, are are really really strong high LTV to CAC businesses that say, "We want to add even more fuel to the fire by by using crypto rails for either, um, as a superior way of customer acquisition or as a lower cost rails to build their their business on."

So, I think it's going to be more about um, having analysts that are going to all the AI conferences and finding the best AI businesses that happen to be built on crypto or finding the best fintech businesses that happen to be built on crypto, but analyzing a lot of traditional businesses with a lot of traditional domain expertise where our crypto nativity is is a great way to get comfortable with the upside potential, but it's not going to be the core part of the analysis.

Actually, speaking of customer acquisition, you know, what excites me is the fact that a lot of these fintech companies are now coming to crypto, right? So, whether it's Robinhood or Revolut and others. And, you know, we saw the announcement, I think last week, where Robinhood is going to be allowing its customers to access, um, you know, hyperliquid markets right? And um so, if they can do that, um, obviously that solves the user acquisition problem that cryptos have had for a very very long time. Right? And if they can bring, um, their customers to hyperliquid at some point, they can bring them to Kalshi, the Polymarket, to all these different markets, right? And so, that will speed up the adoption significantly. So, that's something that, uh, we're quite

excited about. Thank you. You know, there's one one quick thing that I would point out, which is crypto rails are better for financial infrastructure. And what do I mean by that? So, nice announces that they're they're doing, uh, 24/7 stocks by year end. And they said, "We're going to do that in a tokenized form." Right? You you look at the payment side, you're you're seeing Stripe lean in heavily on Tempo, their blockchain, right? Like, for for financial infrastructure, whether it's payments, whether it's market infrastructure, crypto is better. It was just not quite at the level of maturity that we needed three, four years ago. We're getting there now.

And that's what's making like the the convergence of everything that we're seeing in '26 so powerful. Switch up a little bit. I have like a multi-part question, but it's all kind of tied to the same, uh, I guess point. How do you guys think about like token holder rights? Like, where do tokens fit in the capital stack? Um, obviously for for cycles and even still say there's a lot of projects that have dual they they get a double dip. They have the equity and they have the token. You're unsure exactly where the value accrues. How do you think about this from like when you're doing DD and underwriting, uh, you know, portfolio companies in your in your book? Um, yeah, and are you are you starting to tell teams that like uh, do do you not even participate in investing in projects that have this like double

dipping equity and then token market structure? Um, I know there's been a lot of conversation around this, uh, for the past few years. Obviously, the regulatory environment's starting to change and we might, you know, a lot of projects might be forced to, uh, align with one or the other, maybe. But, yeah, I'm curious how you guys think about like tokens, what's the purpose of them, where do they fit in the capital stack, how do you think about token holder rights? Cuz this is just something we have, uh, internally from Blockworks' perspective we've thought a lot about over the past couple years. Anyone can take that first and then obviously Yeah, I I think the announcement from the SEC/CFTC last week is going to go a long way in solving that problem. I mean, we've been largely out of most tokens for a while now, for almost, call it, six plus

months. That was part of the reason cuz you spent time with like founders who have, you know, a token as well as an equity kind of thing. And one one thing you'll end up with is realizing these founders think of tokens as like kind of monopoly money with multi-billion dollar market caps. So, when they treat it that way or think about it that way, it just becomes uninvestable. So, that's that's been the problem. Now, I think uh, what the regulators did last week is like a direction in the right solution. So, obviously what I did was I took the entire kind of PDF that the SEC put out, put it into Claude, have it do a deep analysis and say, "I'll give you a ticker and you tell me is this a commodity utility token or a tokenized equity?" So, if something's a tokenized equity, which if you run this analysis,

you'll be surprised a lot of DeFi tokens that you might think are commodities are actually going to potentially end up as tokenized equities unless they change that token design or they then treat it as a tokenized equity and have the governance rights and have the required filings for that. So, projects will have to have to make a choice. But, I think this is kind of a step in the right direction. Before everyone else, I just do you think like investor trust is arguably the biggest, I guess, gap stopping from like net new capital to invest in these things? Like, there are seemingly good projects, good founders uh seemingly fundamentally strong, but until they know exactly where they stand when they own that token, like they're

just not going to invest. Like, is that a barrier you yourselves like face today when you're thinking about investing? And also, I'm sure there's a lot of capital that's like this edge capital that doesn't invest in crypto today. It thinks it's Bitcoin and meme coins. Uh, but like yeah, is this a question that comes up when you're talking to like capital that is kind of standing on the sidelines? Uh, not necessarily, but look, I think people come to crypto for two kind of main reason or one real main reason, which is can you generate outsized returns that you can't get in the public equity markets, right? That's the only reason you come to this stuff. Um, and that has not been the case for the last couple years, uh, especially altcoin world because of this problem.

So, I think it's I think this problem is manifest in the end result, which is you can't beat the equity markets asset class if you're just going to spray and pray. So, when we make venture investments, right? Typically, I'd say these days it's structured as equity plus token warrants. So, that way, as an investor, you get protected. Right? If they decide to issue both equity and tokens, you get both, right? And and um typically, we would also try to understand what, you know, if they do generate revenues, get broad market fit at some point, what of those revenues go to the equity company and what goes to the token company.

Sometimes they decide that everything goes to one and not the other, but sometimes they have when they have multiple revenue streams, they would they would, you know, um, have it be directed that. So, we try to understand that as as venture investors, uh, I guess as public market investors because we focused on tokens, but not equity at this point. Um, we have to understand very clearly whether the token accrues value, right? Um, so, say something like Uniswap, for instance, they have token and they have equity. And for a long time, the, you know, the, um, before they turn on the fee switch, um, it wasn't clear that over time, you know, the token is actually what accrues value. Um, obviously, they've had multiple forums and debates and and and votes to to to turn on the fee switch and accrue value.

Um, and and the market for a long time was telling us that they believe that ultimately the value accrues a significant part of value accrues to the token, right? So, we have to make that judgment as to whether we agree with the market or we disagree with the market, right? And whether we feel comfortable investing in a particular token because of that. That that's going to be an interesting example, right? For the longest time, the debate was like where does the value go, the equity or the token? And ultimately got resolved and it seems like it's going to the token, but then once that happened, everyone's like, "Wait, how much are the fees and what's the market cap?" >> [laughter] >> That's when people realized, "Oh, wait, this is actually very mispriced. It's very overvalued."

Yeah, no, I I think was it about a year ago when Blockworks put out the, uh, the transparency framework and It was Blockworks' token transparency framework. Well, which was fantastic because I mean, it it really it it met with the the zeitgeist of the investment community, which was we want to see clarity between, um, where value is accruing, whether value is accruing on the token side or the equity side. Um, it's very clear that when you have teams that that have both, um, equity and tokens over the long run, not not when they're private, but but when they're liquid, um, you you end up with big incentive mismatches. And I

would say today, we we almost exclusively invest in token-only projects because you need to see, um, the the incentive alignment. Like, there there's just so much already that you can't control and then if you have founders that are The other really interesting thing is like um for for the longest time when when you had equity and and you had tokens, again there there was a little bit of a monopoly money type dynamic that you were mentioning Cron of where um people felt like, "Well, I'll issue a token for this project and and if it doesn't just have a complete rocket ship like launch, I'm just going to like abandon it and go

launch another token, do another project." And when when you force people to to kind of dial down into one instrument and commit themselves to one instrument, you see some more longevity. Now, we're in the early days of this. Well, we'll have to have that proven out over time, but but that's a bet that that I think we're willing to make that you'll see more perseverance, more longevity with tokens when when the teams are really committed to the token as the the value capture dynamic.

Interestingly though, when we're talking with LPs and prospects, this doesn't really come up that much. And I think that was kind of what you're saying as well. Like you want to see outsized returns. Again, I think Cron of like spot on. You need a healthy value capture dynamic to drive outsized returns. And what LPs are looking for are outsized returns, which we should be able to get from higher growth global day one we we should see outsized returns in crypto versus equities. The one thing I'd add to all this is that if you then go in with this mindset that like most token projects and founders think of their token as monopoly money and hence you should stay away. The ones that don't tend to stand out. And then the market will ultimately

gravitate towards those and capital will get essentially concentrated in the handful. So, finding the handful is actually easier in some ways. Cosmo, I think I'll leave you. Anything you want to add to this? No, I mean I think this is I I I sort of didn't wasn't very engaged because it's like sort of an obvious thing I feel like to most of the people in the digital asset summit crowd that obviously value only goes to things that have fundamental value. It's sort of it's it's a lesson that crypto people have had to learn for some reason over the last few years. But it's sort of like always been true and that's and that's that's this law of gravity. And it's also always been true that there are multiple cap structures and multiple different types of ways to cut how you decide to distribute that that that value. It does so happen that

tokens we think are Shouldn't say we. I I I do believe that people on this panel believe that tokens are really unique form of capital structure and capital capital formation mechanic that I think has many reasons to exceed equities in many ways. But that a lot of people haven't treated them with that level of respect both in the developer community and the investor community. We're starting to see that rationalization play out, which is good because ultimately to your point of trust, like yeah, companies trade based on trust, right? When you when you value a company you value it based on the durability of its earnings and how much you trust the management team to to to make decisions that you make decisions that benefit the equity holder or the token holder.

That's why US equities trade at higher multiples than emerging markets equities, right? And and and so I'm hopeful that as all this becomes more transparent over time, we'll start to see that play out to in tokens. Awesome, thank you. Um switching gears to talk more about like regulatory and you know upcoming midterms you know back half of the year. How do you think about that like as you're underwriting and doing due diligence? I guess underwriting your your investment process heading into 2027. Um Clarity's not officially passed yet. Hopefully we have that sometime in Q2, but does post clarity change your your thesis on crypto or are you just kind of assuming like that's going to get passed? And also how do you think about the change dynamics in Congress?

Republicans own you know uh I'm not a political expert, but I think they're largely in control today. There's maybe some headwinds on that side where the Democrats might be coming back in control. How do you think about like the the regime changes in in the admin? Like right now the admin has never been more bullish on digital assets, but that could easily change tomorrow. Yeah, I mean I think I think what's really been exciting to see this year is well, one exciting not exciting. You know, on the not exciting front market structure legislation has taken longer than I think many people in the industry had hoped. Um it seems like we are making meaningful progress now and there's a shot that we get it passed before midterms. But if it's not in the next couple months, it's not going to happen for some time.

Uh it's very nice. The nice to see is that in the interim we've seen the SEC and CFTC step up and say, "Hey, without market structure legislation, we're going to start publishing some of the guardrails and really some of the text that we expect to play out in market structure legislation and let the market know that, 'Hey, we are going to start uh start guiding people towards and regulating people in this fashion.' And that clarity is really nice to see even in absence of legislation, which is ultimately more important, more permanent, but it's very nice to see the regulators step up in the interim in case it doesn't happen.

Yeah, I I think it's critical to get the you know, market structure legislation through um hopefully before the midterms um because it's easier after the midterms. Um and I think that could serve as a catalyst for the broader space. Um but also, you know, once you have that through, then the financial institutions that want to come into the space can have a more um a clearer direction, right? And they can start getting the ball rolling in terms of getting involved. And I think once you have the financial institutions involved, you have a very powerful group that can lobby for the industry, right?

And then whether it's the Democrats that come into power or the Republicans that stay in power, I think it matters less because you you have that that group with the vested interest to keep the industry growing. Wholeheartedly agree. I mean I I would say I I love the the movement that we have in Congress with obviously genius last year. Uh clarity now, I I love the executive orders. I I love the regulatory movement. But in the end, commercial adoption is the way we de-risk the regulatory side for the space like unambiguously. And what's beautiful about crypto is like it's taken us a long time, but we're

kind of like getting to and I'm just speaking like broadly as the industry. We're getting to this point where like people realize fundamentals matter. You need value capture in the tokens. You can't double dip with equity and and tokens. You need to narrow that down. So, we're we're kind of like we're getting on the right path. And and as we've talked about a bunch of times on this panel, like the momentum that's building right now, the the convergence of trip crypto and traditional finance, that's driving that initial. And on the payments side both payments and market structure, that's what's driving this this inflection in commercial adoption, the potential that's coming together. And that's the real de-risking. And then clarity is

like the icing on the cake. It's obviously very important icing on the cake, but but it's the icing on the cake with the the commercial adoption hopefully de-risking regardless of which party is in power when we go out a year, two years, five years. I'll take the question maybe in a little bit of a different direction, but it's more follow on from where you are, which is So, we raised a lot of dry powder in our strategy probably like 6-9 months ago. And and we've been waiting and a lot of our LPs ask us, "What are you going to get back and what are you going to do?"

Um And and often times it's like, "Well, is it is it regulatory?" And I say, "Well, it's what is abundant and what is scarce as you look at products, right?" So, SaaS used to be somewhat scarce like good SaaS products. Now the world's saying that's kind of software is abundant. And so, the world's repricing a lot of different assets. So, as as we look at crypto projects, I think the question we ask is um as more people use this product, does the product itself become more scarce? Uh hence I go back to my earlier point on privacy cuz there's that one category in crypto where as people use said privacy product that the privacy feature becomes stronger.

And that network effect is permanently scarce. And so, that's an interesting value proposition in this construct of what's happening in the rest of the world. Um so, that's an area where we're focused on. So, so that's a very small subset. The other thing I've been you know thinking about a lot is um everything in the digital world seems to be predicated around sort of this user experience for a human angle. And I think where where we're heading is really around user experience for an AI agent. Like is said AI agent going to find this product interesting and use that product.

Um and that's more relevant to things around DeFi and RWAs. So, that's a something that I've been spending a lot of time on asking that question. All right, I know we're almost coming up on time. Um I'm just going to ask everyone to kind of have some closing remarks. Uh specifically how do you think from today, 24 months from now, we're sitting on this panel, same exact conversation, state of the union of liquid token markets, what changes? Open-ended. Yeah. Sorry, you Cosmo. Yeah, well, I mean let let me bring this back to the prior question, which is that I think market structure legislation will be important and that that we get because it will set the rules, but that day itself nothing will change. Uh right? What what it

enables is for all the entrepreneurs that we're talking to to finally stand up and say, "Okay, now we have the rules of the road. We can actually launch token-based companies that we that and where we can return value to that token." That will take time for that to play out and create real businesses that are investable that all of us on this stage get excited about. I think 24 months from now, I'm very confident that the the seeds that are being sown by market structure legislation and these really important topics around you know respecting investors and and proper capital allocation will drive a pretty meaningfully large universe of investable tokens and really exciting innovation that we will be able to participate in as token investors.

I don't know if it's a prediction, but I it's a hope, which is I was looking at how I how I spend my, you know, my my money every month and a lot of it is on like Starbucks and ride sharing and all this kind of stuff, right? Um I hope that regulatory clarity allows those large public companies to tokenize their stock and start giving me some stock for using their products so much, like loyalty type stuff. That'd be an interesting unlock. I mean, 24 months from now we'll be thinking about the next election. >> [laughter] >> That's one thing. Um I think the room will be fuller.

Um hopefully. Um and um Yeah, and I think um Yeah, I think the way that we go about managing risk in the earlier panel was talking about 1010. Um and uh obviously with all the institutional capital coming into the space, you know, I hope that doesn't happen again um because 1010 was devas- devastating to the industry and I think we need better risk management systems, we need stronger players and um Yeah, and um you know, some of the AI agents hopefully will be trading alongside us.

Um so those those are some of the changes I expect. So, I um AI has come up a bunch. I I spend a lot of time on AI, probably half of my time right now and um still 100% of my time investing in crypto um but um a lot of time on where AI is is bringing things um or or driving outcomes and I I think every month, every 2 months, the the world is just radically different. The cutting edge of uh startups and uh software development and and the way we engage with systems out there. So, in 2 years, I think everything we're talking about is going to look radically different um and um I

I think that's going to extend to equity. So, I I think we'll have crypto eat the equities world, eat the payments world, but it's just going to be infrastructure. And and a lot of what is going to be enabled by crypto is going to be profound and game-changing. It's going to be all the things that we've been talking about for the last decade actually coming to fruition in a similar in a way that rhymes with what we've been talking about um but with a gigantic uh AI kind of in the background as well. So, I I think it'll be radically different from anything that we're looking at right now. It will come into vision like as an exponential curve. Like week on week, month on month, I think crypto's going to be a

corp a core part of what's powering that. All right. Well, with that being said, that's all the time we have for today. Thank you all for your time. Thank you all for listening. >> Thank you.