Weekly Newsletter, 28 March 2025

Crypto is a new business model

Maybe the biggest misconception we run up against speaking to investors is that crypto is all about cryptocurrencies. That’s understandable—after all, the first application of the technology was Bitcoin, a peer-to-peer electronic cash system that also introduced a decentralized digital currency. But focusing only on the currency aspect very much misses the broader picture.

The real shift crypto introduces is not digital money—it’s a new business model. It’s a way to build decentralized networks that generate revenue and can compete with the existing centralized business model.

Crypto can create provably scarce assets like Bitcoin, but that’s just one use case. In the Bitcoin example, a decentralized network of validators (‘Miners’) enforce rules like capping supply and prevent double-spending. But what if validators could enforce any set of rules? What if you could embed complex business logic into a network itself—no company or CEO, just software that executes. That is what modern blockchain networks do.

The tokens of these networks aren’t just speculative instruments. They are productive assets. They combine equity-like characteristics (capturing economic upside) with serving as something akin to oil (powering the network’s operations). Token holders often have an active role in securing and operating the network.

Almost all networks we invest in are just that: productive businesses. And yes, while some generate revenue from facilitating the issuance and trading of a digital currency (or even memecoins), the vast majority power services like payments, banking services, asset exchanges, social networks and even physical infrastructure networks (dePIN). They are generally boring infrastructure businesses, but built using this new paradigm.

Take Ethereum. It lets anyone send value (dollars, euros, stocks, NFTs) or use applications (smart contracts) in exchange for a small fee, known as ‘gas’. Token holders earn these fees by staking their Ether and validating these transactions. Their stake acts as a bond. If they misbehave, it gets slashed. If they perform their work honestly, they earn fees.

Crypto networks swing the door open to two things:

1. Replacing incumbent, centralized services with decentralized alternatives

2. Enabling completely new behavior that was hitherto not possible without these global, frictionless networks.

A useful analogy is AI: we’ve reached a point where models trained on massive datasets can now produce intelligence that rivals – and soon may exceed - our own. Crypto is similar. We’ve reached a point where networks – built with enough redundancy and computational power – can offer more trust than traditional financial institutions that rely on human judgement and manual processes.

Until now, these new ‘businesses’ have been hard to launch. Many governments and regulators have treated them with suspicion. But that’s changing and these businesses are now starting to be embraced, led by the US.

We believe that’s the start of something big. Expect an explosion of real, revenue-generating crypto businesses. And don’t be surprised when they start to outcompete the old ones.

Also this week

Relevant financial updates

Walrus*, a decentralized data storage protocol built in SUI, had its TGE and currently trades at $2.36 billion FDV
Nillion*, a private computation and storage network, had its TGE and currently trades at $560 million FDV
Warlock*, an omni-chain oracle and liquidation engine designed to enhance the safety and profitability of decentralized finance (DeFi) protocols, raised $8 million from Polychain Capital I, Greenfield Capital, Symbolic Capital and Reciprocal Ventures
Be Water, a digital media company that operates as the publisher of Chora Media and Will Media, raised $10.8 million from Tether
Fragmetric*, a liquid restaking protocol on Solana designed to enhance network security and economic stability, raised $5 million from Rockaway X, Hypersphere Ventures, Robot Ventures, Amber Group and BitGo
Chronicle Protocol*, a blockchain-agnostic oracle solution that aims to provide transparent, scalable, and cost-effective data transmission for decentralized applications, raised $12 million from Strobe, Fenbushi, Robot Ventures, Galaxy Ventures and 6th Man Ventures
Rain, a card issuer integrated with the Visa network providing an issuing infrastructure for platforms, banks, and custodians, raised $24.5 million from Norwest, Coinbase Ventures, Galaxy Ventures, Lightspeed Ventures and Canonical
DeCharge*, a decentralized infrastructure project focused on electric vehicle (EV) charging solutions, raised $2.5 million from Lemniscap, Escape Velocity, Colosseum and Echo
Spot Zero*, a 3D role playing adventure game, raised $4.5 million from Bitkraft Ventures, Spartan Group and Cogitent Ventures.
Hibit, a decentralized exchange (DEX) designed for the Ton ecosystem offering omni-chain compatibility through Threshold Signature Schemes, raised $5 million from Waterdrip and NVIDIA

*Underlying TBV portfolio position | Prices as per 28/03

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