Vits

Dabbles in Web 3, ex-founder looking for the next project to start!

[raagulanpathy @raagulanpathy]

“Crypto people are wrong about Visa/Mastercard”

Many are saying stablecoin payments will take out upto 300bps (3%) from payments, but simply don’t understand the net amount for saving is less than 100bps.

Firstly - about 200 of the 300bps moves to the consumer as points & incentives.

How do you think you get up to 2 months interest free, and tons of airline points?

The rest of the 100bps is incentivising user acquisition, merchant acquisition, processing, refunds, managing fraud, compliance, regulation and the extreme complexities of localisation.

Imagine this - you can move money between 170+ countries and swipe your card at more than 150 million merchants, and it just works.

Absolutely no financial network, remotely beats this.

Visa today for example - has way more merchants, than stablecoins have active end users. Think about that for a moment.

The honest truth is…

Visa and Mastercard are absolutely genius in their design, and will be around for decades (and keep growing).

Their strength in particular: the network is worth more than the sum of its parts - ie. the little pieces in the 300bps add up to be worth way more than 300bps.

Not to say stablecoins won’t improve things.

They will.

First, their magic is smashing open borders, permissions, and access to USD. 100+ countries don’t even have access to money you can send across borders.

Second, the world is moving to greater Debit v Credit, and stablecoins with some smarts can be effective against this network.

BUT - where stablecoins are really effective, is against correspondent banking, the layers built into moving money (especially USD) globally.

For example, if you bank with a global like HSBC or StanChart, it’s faster for you to move USD from Singapore to London via USDC than within the bank itself. And these are the good banks, who move quickly!

Stablecoins will change the world, no doubt about it, but crypto has a lot of innovation to do in consumer payments to challenge Visa & Mastercard.

Simply saying their “bad” shows naivety.

[Roberto Riccio @rriccio]

VCs are sleeping so hard on crypto-enabled payment rails.

Especially US-based VCs, since this is a Global South need. Not obvious to them why the problem is hair-on-fire.

Yet ~1/3 of Alliance latest cohorts are payments, remittances, localized exchanges, on/off ramps, etc. And these startups are growing like crazy.

[Tommy @0xtommyky]

Spent majority of @EthCC 1:1 with serious builders, VC and market makers

Here are my reflection of the current state of the industry:

1) Blame the game, not the player
"We like consumer, but the deals we closed this year are 90% infra"
Heard a lot of builders/VCs saying that we have too many people building infra, but too few consumer applications that have real users

Most of the VCs I spoke to say that they are interested in consumer dApps, however, looking at the fundraising announcement recently, it is not hard to find out the fundraising market is still dominated by infrastructure deals

It is a vicious cycle that is hard to point finger at any individual stakeholders:
- Project & VC hope to get listed on the biggest CEX with good liquidity
- CEX want to list project that can offer good incentive to their users through marketing campaigns (high FDV) with tier 1 backers

Infra projects have valuation premium because of the resources needed to build infra, so more capital is deployed into infra projects, forming the cycle

2) VC losing appetite to invest in high FDV early rounds
Valuation has been rising significantly since Q4 last year. Many Private / Series A rounds are priced at >$1bn FDV, this is even more pronounced with AI-related projects

On the flip side, most of recent big launches are underwhelming to say the least ( $BLAST at <$2bn; $ZK & $W at $3bn; $ZRO at $4bn ). Overall altcoin market is weak, with a lot of VC-backed projects already trading at a FDV lower than the last private round

The chance of VC getting a 50-100x has become almost impossible investing in the current market window. Not to mention that VC are subject to lock up (~1yr lock + 2-3yr vesting). These projects would likely need to survive the next bear market, and compete with many more new projects that will capture mind share given the short attention span nature of the industry

As a result, more VC are looking at liquid strategy (if their mandate allows), or OTC deals with significant discount to the last round valuation (or current FDV if trading). For VC with more resources, they are looking to incubate projects who is founded by their ex-employee, guaranteeing they are the earliest round investors with a much higher upside potential

A lot of VC analysts/research partners are moving to join as ecosystem/BD for uprising L1/L2s, or founding their own projects. Working on the project side seems to be a higher EV option compared to doing investment. One advantage is to leverage their experience/connection to fundraise for the projects they work with, as they know inside out what VC likes to hear/care

Additionally, the overall poor performance of altcoins has led to low dpi (Distributed to Paid-In Capital) of LP funds. It is hard to raise for your new fund if you cannot provide a strong track record. Some of these funds have already spent most of their capital in deals over last year, they have no dry powder left to deploy even if an attractive investment opportunity presents itself now

3) Old wine in a new bottle
Narrative that didn't pick up as expected get rebranded into something new. Intent was a very hot topic for a short period of time, before it was overshadowed by the likes of DA, restaking etc.

Many projects have now branded themselves as "chain abstraction", or even "AI" for intent-based projects that embedded some kind of LLM or algorithm element to it

Additionally, most DePin projects have added "AI" into their branding strategy to attract VC's eyeballs

These are similar to how security tokenization projects last cycle becomes real world assets in this

imo there is nothing wrong in rebranding, finding a narrative that market buys in is not easy. However, market is still waiting to see the next new narratives that is not repackaged from the old ones

4) Not all narratives are "investable"
There is a difference between a hot narrative and a hot vertical

Account abstraction is a hot narrative, it is a great tool that offers much better UX. But this is not a vertical, it is a feature that will be embedded in different use cases, from wallet to games, from defi to socialfi. You still need a product to sell, that is, there couldn't be a project that says "we do account abstraction", instead it would be "we create an AA wallet", "game with AA features" etc.

Simply chasing on the narratives without analyzing which vertical (product) is a dangerous slope for VC, as you could be investing in the hottest narrative in the wrong vertical

5) Market maker is not care free
It is clear that market maker can be a lucrative business, but this sector is getting more competitive ever since some of the US player withdrew from the market due to regulatory concern, and new players entering the game

Some market makers are racing to the bottom in order to win over deals. In a call-option model (preferred model by most MMs), MM gets a loan of the token from project team for the asks, they need to put in stablecoin for the bids. It is either capital intensive (if they use their own balance sheet), or costly (if they take a loan somewhere and pay back interest). Call option model is not really "costless" to the MM

To win the deal, it will take i) relationship & reputation, ii) attractiveness of the proposals, iii) value adding services to clients

Projects are also getting more and more educated about different market makers, so the MM advantage from the lack of transparency in negotiation is disappearing and driving a more competitive market

6) Catalyst for the market (ETF, election, interest rate)
Most people are waiting for ETH ETF to come live, hoping for similar price movement to what we observed post-BTC ETF

Different from BTC ETF, there is a hope that ETH ETF will be a much stronger catalyst to Ethereum-related (I refuse to use the word "aligned") altcoins

There is also expectation that after ETH, we will get more altcoin ETF approved (SOL ETF up next?)

If there are more altcoins ETF going to get approved, the end-game for projects will be getting ETF approval, instead of landing Tier-1 CEX listing, this can totally change the sentiment on old coins if they can potentially become an ETF

Another catalyst people looking forward to is the US election, hoping for a more crypto-friendly regime and favorable policy-makers

Interest rate is expected to cut once this year, and expected more in 2025. This will drive more liquidity into crypto

Even though the current state of the market is a little lackluster, most people are bullish for what is going to happen in the next 2-3 quarters, the sentiment is trying to keep calm and not to get ahead of ourselves, but with optimism

[Carl Vogel @CarlKVogel]

Recommendations:
1/ Bias Airdrops to Core Users over Widespread audiences
Given the improved performance of Core cohort airdrops, it's preferred to increase rewards for the early community. Airdropping to Widespread audience will result in greater selling, and imo it's very inefficient to "convert" airdrop recipients into actual users

2/ Bias Smaller Airdrops over Larger
Given no definitive differences in price between smaller and larger airdrop sizes, there's benefits in keeping additional tokens in reserve for future incentives/bootstrapping

Observation
1/ “Low-Float” likely isn’t the primary driver of price performance
For lower-float tokens we'd expect to see materially higher prices and increased volatility, but this did not occur

[Mustafa Al-Bassam @musalbas]

People keep saying we need more crypto apps and less infra.

If that's true, then why is it, 16 years later, we have not succeeded at wide adoption of the original and most obvious crypto use case: payments?

How do we expect to reach "mainstream adoption" for more complex use cases, if we haven't succeeded at the original use case? There is still no crypto-based payment product that competes with the likes of PayPal and Venmo.

[Vits @vits65]

@jillgun Hey Jill! Are you still in London? I'm here as well, would love to catch up if you've got time

[Ignas | DeFi @DefiIgnas]

Launching the optimal airdrop campaign.

Here's how I imagine it:

✦ Mission: Reward early adopters, keep users hooked, and attract new users.

Current airdrops fail to encourage commitment. Token farmers and sybils cash out and vanish. Mission failed.

Here are the criteria airdrops could consider based on current best practices. Each criterion acts as a multiplier for higher allocation.

✦ Rewarding early adopters:

• Bigger deposit = bigger allocation. Whales matter.

• Skill-based boost: Platforms like @blackwing_fi DEX let you trade points. Higher PnL = bigger allocation. Plus, users learn the platform.

• Content creators rewarded: scan X, blogs, newsletters—give allocation to those who grow the protocol’s mindshare. E.g. @AvailProject did this.

• Frequency boost: More transactions = higher allocation.

• Consider usage of other protocols: Real DeFi users use multiple protocols. Sybils don't.

• (Optional) Make campaign unique with gamified experience: E.g. @sanctumso Wonderland with pets and cupcakes for referrals

✦ Keeping users post-airdrop:

• Vest airdrops (especially for whales) to also reduce dumping.

• Offer an initial airdrop but give a boost through continued platform use. Think Magiceden diamonds.

• Plan multiple airdrop seasons, like Bitcoin halving with reduced allocation.

• Offer allocation boosts for future seasons when locking tokens, e.g., @KaminoFinance $KMNO staking.

✦ Attract new users

• Convert competitor protocol users: Incentivize them to switch by unlocking allocations for using the platform.

• Airdrop to DeFi power users: Engage governance participants and stakers from other DAOs.

• Award builders and devs: Based on contributions on Github. Reward ETH solo stakers.

• Reward NFT holders: Boosts project awareness & sybils don't hold expensive NFTs.

-----
I wanted to share the "perfect airdrop campaign."

Yet no airdrop is flawless, and a criteria-based system can be risky if insiders know the rules. Team integrity is key.

Finally, I agree with @gluk64: "go bold and do something unexpected."

We need bold new methods for airdrop distribution. Sure, some might be unhappy, but it's time to reset expectations with more experimentation.

What do you think would be the perfect airdrop?

[Vits @vits65]

Great analysis of TON ecosystem by my friend @blockhiro !

[blockhiro @blockhiro]

TON has rapidly ascended this year to become the 9th largest crypto project, with a circulating MC > $21 billion, 10x in under a year!

I did some research to understand why.

First, @ton_blockchain has an intimate relationship with @telegram which has an intimate relationship with crypto communities and is approaching 1 billion monthly active users, positioning it uniquely in the crypto space.

On the tech, many think TON is just a blockchain, but the protocol actually encompasses several other subprotocols:

+ TON DNS: Human-readable names for accounts and services, over 76K sold so far

+ TON Storage: Decentralized file storage

+ TON Proxy: Decentralized VPN service; a blockchain-based Tor alternative

+ TON Payments: Instant, off-chain micropayments with zero fees via payment channels

The TON blockchain itself is a high-throughput network enabled by dynamic horizontal sharding, with the network scaling as activity scales. It demonstrated a record-breaking 104,715 TPS in a public demonstration on 256 highly-powered nodes.

But while the tech is impressive, it's not the main driver of TON's recent momentum. TON's momentum picked up coinciding with a series of significant events. For example:

+ TON Space (Sept 2023): TON’s new self-custodial wallet was announced jointly by Telegram and the TON Foundation, marking Telegram’s renewed involvement with TON *after years of distancing*.

+ The Open League (March 2024): A community initiative distributing 30 million $TON (now worth ~$200 million) to accelerate TON ecosystem development. The pilot was a big success.

+ Native USDT on TON (April 2024): @tether launched USDT natively on TON, with total authorized USDT already at $330 million now:

To put that into perspective, that’s 80% more USDT authorized on TON than NEAR, and twofold that authorized on Cosmos.

This integration of native USDT into TON is something especially important to keep watch of. Telegram is one of the best platforms there could be for people to transact value around the world, to anyone, at any time.

(Other key events are discussed in more detail in the full report linked below.)

The emerging TON ecosystem

TON DeFi has picked up momentum, with TVL reaching $620 million, positioning it alongside other major high-throughput blockchain projects like Sui, Aptos, and NEAR.

Source: @artemis__xyz

GameFi on TON made a breakthrough this year with the viral success of @notcoin, the simple “tap-to-earn” mining game that attracted over 35 million players within months of its launch.

TON stands out for its mobile-first, community-developed, and messaging-integrated approach. It stands out for being one of the only crypto projects that started with a massive global community.

Looking ahead, there are several investment areas within the TON ecosystem that are promising:

+ DeFi: TVL in staking, swaps, lending, and derivatives on TON exploded this year. People are doing DeFi on TON now and I expect that to continue. DeFi with a social+ model is particularly interesting here.

+ GameFi: More games like Notcoin combining simplicity, social, and timeliness are likely to pop up, and can go viral too.

+ Infra: Innovative projects developing TON infrastructure could be interesting. Projects here could unlock better overall UX and utility to attract a larger share of Telegram users to TON, as well as a larger share of general crypto users to try TON.

+ Interoperability: Building bridges / cross-chain messaging protocols to better connect TON with the broader blockchain ecosystem.

+ Non-TON crypto apps on Telegram: @here_wallet, the Telegram-integrated self-custodial wallet for @NEARProtocol, stands out for demonstrating that Telegram apps integrated with non-TON blockchains can now rival the rich interactive experience of TON-native apps. I’m on the lookout for projects like these from non-TON blockchain ecosystems leveraging Telegram’s user base and its mobile-first, social-first orientation.

[Tether @tether]

Tether Collaborates with @ton_blockchain and @oobit To Create Seamless Crypto-Payment Solution
Read more: https://t.co/Qaf6gTPhK9

[Vits @vits65]

I just subscribed to Asia Tech Review, good content by Jon Russell, https://t.co/QKhq9IFZMy and much more: https://t.co/N9Ap3gZjWD

[Steve Schlafman @schlaf]

I’ve been reflecting on my previous career as a VC, and with the benefit of hindsight, I'm realizing that I was a decent investor but could have been a great one.

Here’s the advice I'd give myself if I could go back to 2010 when I was just starting out as a VC 🧵

[Vits @vits65]

Super compelling opportunity!

[CZ 🔶 BNB @cz_binance]

Africa is primed for crypto adoption. 10-20% banked. Need financial access and inclusion. Blockchain provides that with a smart phone.

[vitalik.eth @VitalikButerin]

Thread: some still open contradictions in my thoughts and my values, that I have been thinking about but still don't feel like I've fully resolved.

[Sanchan S Saxena @sanchans]

Earlier, I shared the product preview of @Coinbase_NFT and how it will be super easy for anybody to get started.

Today, I want to share how easy it will be for anybody to buy an NFT on @Coinbase_NFT using a self-custody wallet of choice (CB Wallet, Metamask etc.)

🧵 👇

[Vits @vits65]

@ZhangZhengLong Check it out re our arb chat y'day

[Vits @vits65]

@Chow4649 https://t.co/4UlA5FV3QU

[Alasdair Maclay @AlasdairMaclay]

#rhodesgiving. Great new participation push