Much respect for the good folks at Gearbox for iterating, pivoting and re-inventing themselves in the middle of a bear market.
There's chewing glass, and then there's whatever the crew here has been doing.
Automated Leverage for @MidasRWA's mF-ONE and mGLOBAL, managed by @FasanaraCapital, is now live on Gearbox
Eligible users can access one-click leverage and one window redemptions by borrowing @fraxfinance's frxUSD
No waiting, no looping: real RWA leverage. Curated by @kpk
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In 2023, we wrote a note about the new web. In 2025, we followed it up with how everything would become a new market. Looking back at both now, we were directionally right about verifiability, but wrong about how the product would reach scale.
Some quick notes on what we missed, why Fomo is leading this iteration and where this could go next.
The New Internet was written on the premise that user-owned social profiles and verifiable content would matter. It was written when Farcaster and Lens were in their infancy. When Elon Musk took over Twitter, owning one’s social profile felt necessary. Directionally, the thesis was right. But it did not hold up over time. Users cared about verifiable expertise - just not on an isolated, distant network which required managing keys.
1. First, creator incentives and scale on Web2 social networks are incredibly strong. Expecting creators to move to Farcaster and rebuild their audiences was a far-fetched vision.
2. Second, without enough content, retention on blockchain-based social networks was always going to be a tall task.
In its later stages, Farcaster did take trading as its GTM, but that strategy depended on the seasonality of meme-driven markets.
Fomo combined two graphs that had largely remained separate: a user’s social graph on X and their financial graph on-chain. That creates market-specific feeds without asking users to rebuild an audience. We missed this possibility because FriendTech led us to the wrong conclusion. We presumed app stores would never allow a trading-oriented social network to scale, and therefore the web-native user experience will always have a ceiling.
Fomo, proved us wrong and offered a glimpse of the current iteration of Web3 social. It takes a user’s expertise, expressed through their theses, makes it verifiable through on-chain activity and abstracts away the complexity of managing a wallet altogether.
Where does this go next? On-chain assets now extend to stocks, RWAs and prediction markets. As the surface area of assets grows, combining existing social feeds with on-chain activity becomes more useful. I think we will see niche apps emerge around sports, politics, weather and even collectibles—each combining expertise with verifiable on-chain proof to create a new kind of social network.
Our investment in @0xppl_ was a bet in that direction, but we may have been early: there was not yet enough on-chain activity to make the financial graph useful to a mainstream user. We continue to look for companies combining great content, unique distribution wedges and on-chain assets to create new financial primitives. If you are building one, drop us a DM.
In the spirit of admitting what we missed - here are Fomo’s (very impressive) numbers. They have done $12B in volume across 86M transactions and generated $71M in fees.
These are but early days for what will be a steady transition on the web. From one of ads to one of verifiable expertise monetised through transactions and for what it's worth - it excites us. We're here for it.
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We are in the arena (writing)
Some may work (we back the right firms)
Some wont (we miss out)
Here's the two pieces where we lay our perspective on the transactional web's emergence
1. The new internet decentralised.co/p/a-new-int…
2. Everything is a market - decentralised.co/p/everythin…
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We have been thinking about what happens when the buyer of software is an AI agent.
@MonidHQ is building a layer where agents can find the right tool, understand its cost and use it without creating an account or subscription each time.
Here's a quick note on why its on the list of startups on our radar.
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1.3% of crypto companies account for 65% of the industry revenue. The extreme power laws at play skew who raises money. This is partly why transaction-oriented apps are the ones raising the most.
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The Barbellification of crypto VC
There are only two kinds of firms being backed within crypto today.
One is the kind that can show a great deal of revenue in a short spurt of time by feeding into a frenzy. These firms are ironically also the ones that need the least venture capital, as their revenue helps them scale exponentially.
The other is usually the kind that can absorb a great amount of financing from funds managing billions of dollars. Financing becomes a contributor to their moat. As the time to establish revenue and PMF increases, the need for funding goes up as well.
In both instances, dollars help build a competitive edge that is hard for new founders to beat. The environment leads to one where novel ideas struggle to find capital until founders pitch to specialist, niche investors within the industry.
Companies can move across these quadrants depending on markets and sentiment. A long build deserves investors’ patience only when each additional year makes the business harder to compete with. And the moat should compound instead of growing linearly with time.
The challenge with many firms that accelerate in revenue on short spurts is their seasonality and lack of defensibility. Once a “meta” dies, a high revenue firm that struggles to retain users will see value quickly dwindling. With no IPO windows on the horizon for many of these upstarts, underwriting venture financing for them becomes a tall ask.
The opportunity for investors is finding companies that are in the first two cohorts of revenue that will eventually graduate to higher cohorts.
Pendle and Polymarket are great examples here. Mechanism Capital led a $3.7 million round in Pendle in 2021 when it was an idea with ~$20 million in TVL and barely any fees. Towards the end of 2023, Pendle crossed $1 billion in TVL, and now generates $13 million in annualised revenue.
Ploymarket raised $4 million from Polychain and others in October 2020. It took four years for them to find PMF around the 2024 US elections.
If more investors demand either immediate revenue or an established franchise, fewer businesses will survive the journey towards becoming the next Deribit or Fireblocks.
This creates room for seed investors who can distinguish an emerging competitive advantage from an expensive development pursuit. Their opportunity is to recognise a future category leader while its value is still clearer to users than to other investors.
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It might be a bear market but there are great teams incredible things at the frontier. Often without noise.
Kicking off a series notes on some of them.
For today, we have @get_truenorth questioning what happens if you put an analyst in everyone's pocket. 📱
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New essay: Building A Virtual Nation
What happens when agents become economic actors? Our latest written with @virtuals_io explores how crypto is becoming infrastructure for this new world.
Read here: decentralised.co/p/building-…
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DCo retweeted
The world’s markets are undergoing a once in a generation transition.
We’ve spent the last year building ATLAS (Aggregated Trading Liquidity and Settlement), a first-of-its kind, headless exchange designed for the future of global markets. It combines the performance and fairness of a traditional exchange with the verifiability and self-custody of a decentralized exchange. The best of a CEX meets the best of a DEX.
ATLAS has been built alongside the world’s leading financial institutions and is designed to deliver fair, performant markets around the globe. It delivers deep, global liquidity for both open and institutional trading venues.
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"Institutions deeply care about the sovereign properties of blockchain. When technology automates trust, then banks can run a much better business."
@gluk64 discussing with @Decentralisedco why Infrastructure is destiny and how Prividiums enable banks to own their stack.
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NEW post on startups & angel investing
All my fumbles, some lessons, a few funny stories + everything that I've learned along the way
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DCo retweeted
"public fintechs build where the margin is, and right now that is here."
great read by @desh_saurabh (@Decentralisedco) — decentralised.co/p/non-conse…
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New essay : Non consensus and right
Why we believe the next era of crypto venture will be defined by slow, patient capital.
Read here: decentralised.co/p/non-conse…
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Written with inputs from
1. @_kinjalbshah - Blockchain Capital
2. @pet3rpan_ - 1kx
3. @hosseeb - Dragonfly
4. @bhpollack - Hutt Capital
5. @richardchen39 - Varrock
6. @spvenino33 - Strobe
7. @0xave - Frachtis
8. @kichsr - Quantstamp
9. @mhdempsey - Compound
+ a lot more
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I guess I get to do one of these posts now!!!
For years I built crypto infrastructure for institutions: custody where sovereign wealth funds keep their BTC, insurance that companies like Galaxy and Coinbase rely on.
Regular people got almost none of it. Key management still sucks. Recovery is still painful. Extraction happens at every swap.
So for the past year I've been quietly building Tara.
One app, two accounts. Hold what you own. Spend what you need.
@tara_dot_com
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Highly recommend working with Xavier if you're an early-stage founder doubling down on crypto
In the next 12 months, the crypto industry will see an incredible pool of talent go live with venture ideas.
Founders who demonstrate commitment to the industry in very challenging times, think outside the box, dare to try new things and have a decade plus of experience in crypto, are naturally going to be resilient, long-term players (perfect for venture) as opposed to short-term players pouring in when times are good and everyone is making money.
Crypto is not going anywhere. It’s actually the best time to be building with original ideas right now.
If you can align your thesis with the right VC and raise enough funds to prove PMF to get to the next round, it’s a phenomenal time to be optimistic. You’ll also team up with people who are committed to the cause and in it for the right reasons.
I have really enjoyed seeing who is still dedicated to the industry this year. Some incredibly talented researchers and engineers are still floating around experimenting with ambitious new ideas.
This cycle will look nothing like previous cycles. We will have an entirely new economic actor transacting onchain (AI agents). There is a massive opportunity to rebuild the stack and applications on top from first principles.
Don't miss the forest for the trees.
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Crypto is becoming increasingly connected with existing businesses and it’s a good thing.
Every few weeks we see an example where crypto expands possibilities for existing businesses.
1. Either in the form of boosting the bottom line by saving costs or bringing additional revenue
2. Or by expanding TAM by letting companies reach new customers
AZ-COM Maruwa Holdings, a Japanese logistics company, buying a stake into JPY stablecoin issuer was an example of how crypto is merging with traditional businesses.
If you think about it, a stablecoin acts as a loan the user makes to the issuer for free. You give Circle a dollar, you get a token that doesn't pay you anything. Circle keeps the interest your dollar earns while sitting in Treasury bills. You forgo the interest for convenience. Everybody is happy. Circle can keep all the interest as long as it is dealing with many small holders (B2C). The equation changes when Circle has to go B2B2C.
Stablecoin issuers are like asset managers. Their income is directly proportional to stablecoin’s float. But the float needs a reason to grow, a reason for the end user to hold your stablecoin. This is where distributors enter the picture.
Circle pays Coinbase and Hyperliquid a significant chunk of the interest earned because, without Coinbase making USDC the default and Hyperliquid making USDC the collateral, the float itself would collapse.
For years, a yen stablecoin was pointless because Japanese bonds paid zero or less, so the free loan earned nothing. Then the BoJ raised rates to 1%, the highest since 1995, regulators let issuers hold government bonds in reserves, and the spread finally exists in yen. JPYC is the first registered issuer, and an investor in its new $38M round is the trucking company AZ-COM Maruwa.
Maruwa is JPYC's Coinbase. Both convert a captive capital from their audience into a stablecoin float. Coinbase's audience is people with exchange accounts. Maruwa's is its workforce. It runs payroll for about 2,300 drivers and contractors and pays them in JPYC. Payroll might be the strongest distribution channel money has, since salary is how money enters a person's hands in the first place.
Every payday, yen flows into JPYC's reserves. The drivers become holders by default, just as Coinbase users ended up with USDC. The issuer earns bond yield on every unspent day. Since payroll recurs monthly, the float is replenished.
Coinbase and Maruwa are different means to the same end. Coinbase charges Circle rent, and the rent now eats most of Circle's income. Maruwa bought equity in the issuer instead, so every yen of float it routes in raises the value of its own stake. Japan just put the distributor on the cap table from day one.
Users lend issuers money for free; rates determine what it is worth; and distribution decides who keeps the interest. So I'd skip the volume charts for now and watch who is responsible for the float.
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