Weekly Newsletter, 28 February 2025

The SEC drops its Gensler-era cases

We had another encouraging week on the legislative front with the SEC dropping its Gensler era litigation against Coinbase, OpenSea, Uniswap, Robinhood, Gemini and Consensys (MetaMask). As we have said several times before, the change of tone vis-a-vis blockchain technology is remarkable and seems unprecedented for any industry in the world’s largest economy. And as a result, we also see Wall Street preparing to get much more involved. This week for instance, the CEO of Bank of America publicly mulled about BofA launching a stablecoin as soon as it is allowed.

On the flip side however, there is still enough news to scare off investors. This week the big news was the $1.5bln hack of crypto exchange Bybit, the largest hack in the industry’s history. The FBI has since confirmed that North Korea’s Lazarus Group was responsible. There’s no denying that this weighs on (short term) sentiment and we saw public crypto prices drop viciously. To us as investors, the key is that our strategy and structure allows us to focus on the longer-term economic transformation the tech enables and not to be distracted by short term sentiment swings.

So focusing on the technology’s fundamental progress and use cases is what we shall continue to do. An interesting highlight of the past week is the launch of Story Protocol. Story Protocol is a dedicated blockchain for intellectual property rights. It allows creators to register their intellectual property so they can track and monitor its use. Although others can fork and remix it permissionlessly, it makes sure that the creator is properly compensated. The world could certainly use such a system as generative AI is becoming far more prevalent and producing more and more of the internet’s content. While these AIs are being trained on content created by humans, the attribution part is lacking, which poses the question how going forward creators will be compensated and be incentivized to produce original creations on the open internet.

Story Protocol is a nice example because it showcases how blockchain is also becoming relevant outside the pure financial realm. The protocol addresses a real problem of how creators get compensated in a world where AI is feeding us all the information. It is something uniquely enabled by blockchain technology. Like so many things we see, the idea is massive and, if successful, the protocol could become a tremendously valuable network over time. This is also reflected in the $5b+ valuation at which the network is trading after launch. In terms of early traction, over 200 teams, and over 20 million addressable IPs are registered on the network. The largest investor from the early private seed rounds is a16z, an underlying manager of ours.

To quote a16z’s Chris Dixon: “A new wave of AI-powered search engines give comprehensive answers instead of guiding users to websites. Social networks are increasingly populated by AI-generated images and videos,” Dixon writes in a blog post. “These AI systems were likely trained on original, human-created content but often don’t credit or cite their sources. If there’s no attribution or compensation, what incentive will there be to publish original creations on the open internet?”

Also this week

Relevant financial updates

Raise, a digital prepaid and retail payments platform that enables consumers to buy and sell gift cards online at a discount, raised $63mln from Haun, GSR, Seleni, and Paper Ventures
Bitwise*, a crypto asset management firm that operates a publicly traded crypto index fund and offers its clients other investment strategies, raised $70mln from Electric Capital, ParaFi, MassMutual, among others
Geodnet*, a project that gathers real-time geospatial data from Earth and the atmosphere using roof-mounted Space Weather stations, raises $8mln from Multicoin, ParaFi, DACM, Pantera, VanEck, and CoinFund
Memes Lab*, a blockchain platform focused on the creation, trading, and distribution of memecoins, raised $2.3mln from Lemniscap, Animoca, OKX, among others
Redstone*, a developer of data oracle solutions that deliver data feeds to DeFi projects across different chains, had its TGE this week, launching at a $400mln FDV
VANA*, the decentralized user-owned data sharing platform for AI training, raised capital from YZi Labs (previously Binance Labs).
Ethena*, a DeFi protocol developing a synthetic stablecoin backed by delta-hedged Ethereum, raised $100mln from Franklin Templeton
Orichi Network, a developer of a data availability layer addressing scalability, privacy, and data integrity challenges in the web, raised $12mln from the Ethereum Foundation, among other investors
Layer 3*, a platform that connects users and blockchain ecosystems, offers tools for identity management, incentives and interoperability, raised $4mln from Greenfield Capital

*Underlying TBV portfolio position | Prices as per 28/02

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