Author: Multicoin Capital, Compiler: 0xjs@金财经

Jeff Bezos Bezos famously said:

"What will change in the next ten years? This is a very interesting question and a very common question. But almost no one has asked me: 'The future What won't change in ten years? 'And let me tell you, the second question is actually more Because you can build your business strategy around things that are constant over the long term. … In our retail business, we know that customers want low prices, and I know that ten years from now they still want fast. Delivery, want rich choices, it’s hard to imagine that in ten years’ time, customers will come to me and say: ‘Jeff. , I love Amazon, I just hope the price can be higher', or 'I love Amazon, I just hope the delivery can be slower'. Therefore, our efforts in these aspects continue to promote these aspects. development, we know that the energy we invest today will still pay dividends for our customers ten years from now. When you know something is a long-term truth, you can safely invest a lot of energy in it.”

Earlier this week, we published a typical VC article. The article introduces the new areas that the Multicoin investment team is looking forward to focusing on in 2025. In the spirit of Jeff Bezos’s famous quote, we feel it’s equally important to highlight some of the trends that we often take for granted, but which are quietly building up and providing a stable basis for our investments.

The relentless pursuit of capital efficiency

Author: Kyle Samani, co-founder of Multicoin Capital

When DeFi started, capital efficiency was extremely low. Uniswap’s xyk curve is notorious for being capital inefficient.

Over the past five years, DeFi’s capital efficiency has improved in all aspects. Limit order books (CLOBs), revolving/multiple products, centralized liquidity, use of USD-pegged stablecoins (USDe) as collateral on derivatives exchanges, use of derivatives collateral to facilitate lending, liquidity providers (LPs) Positions are used as collateral for derivatives and more. The market will always relentlessly pursue capital efficiency.

This is the beauty of DeFi. All these improvements in capital efficiency are driven by permissionless innovation.

We believe that Drift, the leading derivatives decentralized exchange (DEX) on Solana, represents a form of the logical end point of DeFi capital efficiency. Spencer and David addressed these issues in their presentations at the 2024 Multicoin Summit.

The endless desire for new financial games

Author: Tushar Jain; Multicoin CapitalCo-founder

Human beings will always want to gamble, but the form of the game is changing.

Memecoins are a new generation of gambling. Memecoins are much more volatile, making them more interesting than traditional casino gambling or sports betting. Memecoins offer the highest rates of return than other forms of gambling, and their extreme volatility brings a level of excitement and risk that transcends traditional casino games or sports betting. The potential for huge rewards far exceed those of traditional forms of gambling, which is a huge attraction for those who dare to take risks. This potential for huge gains, combined with the inherent unpredictability of memecoins, creates an experience unmatched by traditional gambling.

Memecoins also have a unique social dimension. Tokenizing internet culture into memecoins provides a social element that other forms of gambling lack. They are often associated with internet culture and online communities, creating a sense of shared experience among gamblers. This social aspect turns memecoins trading into a group activity, allowing people to interact with each other based on shared interests and experiences. This creates a sense of belonging and shared identity that is not found in other forms of gambling.

Memecoins represent the fusion of gambling, internet culture and social interaction. They offer a high-risk, high-reward experience that appeals to humans’ thrill-seeking nature while also leveraging the social and communal nature of online communities. As internet culture continues to evolve, memecoins are likely to continue to occupy a prominent place in the gambling space, providing unique and engaging experiences for those willing to take the risk.

The human urge to gamble remains the same, but the games we play are changing. Memecoins are the next step in this evolution, but they won’t be the last.

The pursuit of transparency in financial markets

Author: Spencer Applebaum, Investment Partner at Multicoin Capital

In the traditional financial (TradFi) trading market, brokers are able to provide zero-commission transactions to retail customers , as high-frequency trading firms such as Citadel Securities, Susquehanna International, Wolverine Trading and others compete to execute these order flows. This is called "Payment for Order Flow (PFOF)".

These firms are willing to take on these order flows in large quantities at prices close to the mid-price because, by definition, these order flows lack inside information. There is a lot of literature on why order flow payments are good for the world and not a bad thing (although it often has negative connotations).

The problem with order flow payment models such as Robinhood and E-Trade is a lack of transparency and the fact that auctions are limited to market makers that the broker cooperates with. In addition, there are clearing houses,There are layers of intermediaries such as exchanges, brokers, etc., all of which impose fees that are hidden from the end user and are often included in the bid-ask spread.

Regarding the opacity of order flow payments, this research report stated: “Robinhood’s agreement with wholesalers sacrifices price improvement (PI) in exchange for more order flow payments—this is what the U.S. SEC The conflict of interest that Chairman Gensler is concerned about... is not a problem in itself if consumers can easily identify differences in execution quality between brokers. However, these differences cannot be inferred from the current disclosure mechanism."

< p>DeFi The beauty of it is that it compresses settlement, trading, custody and execution into a single application programming interface (API), and all aspects are transparent. This gives DeFi a natural advantage, as markets always value transparency.

Multicoin's portfolio company DFlow is pioneering a concept called "conditional liquidity", which stipulates that only when the front-end application recognizes the recipient as a non-harmful trading party (or the recipient is selected from the market through an algorithm) Liquidity can only be obtained if you can obtain a more favorable price from the merchant). Market makers can provide liquidity on an on-chain capped order book like Phoenix, or an on-chain automated market maker (AMM) like Orca, providing significant price improvements to retail order flow that lacks inside information while avoiding Being taken advantage of by harmful recipients.

The entire stack is open and transparent, leveraging conditional liquidity on which order flow payment models can be built. This model is ingenious because it combines the advantages of traditional finance and decentralized finance: it can segment the order flow and provide better prices for retail traders, and it also has the openness, transparency and decentralization provided by DeFi. Auditability.

Value capture will always be split and reorganized throughout the system

Author: Shayon Sengupta, Investment Partner at Multicoin Capital

Last year, I published an article on "Value Attention Theory" ” article, in which I described the core breakthrough of cryptocurrency in consumer applications as permissionless asset issuance and trading (issuance-trading platforms) in any interface and environment.

In 2024, asset issuance is concentrated on a few platforms - most prominently pump.fun. These platforms became the dominant platforms for asset issuance, but crucially, trading of assets took place elsewhere – through bots in Telegram group chats, aggregators like DexScreener and Birdeye, and sometimes directly in Phantom wallets conduct. Asset issuance and asset trading are not coupled in one issuance-trading platform, but are split across a series of decentralized platforms. Since the birth of crypto capital markets, the issuance and trading of assets have always been separated. Bitcoin was launched on a cryptography mailing list called metzdowd.com and today trades on Nasdaq (via an ETF). The token launched on ICOBench in 2017 is still traded on major centralized exchanges (CEX).

So, while pump.fun dominated asset issuance last year, the trading part was dominated by Telegram bots and retail aggregator products - these were new sources of order flow. In the long run, I expect being able to control trades or order flow is a more profitable business.

For issuance-trading platforms, this is only the initial stage. Venues for asset issuance and trading will be split up and reorganized thousands of times across thousands of platforms, as attention on the internet isn’t limited to one set of applications – it exists in forums, live video platforms, instant messaging tools and the various other interfaces we interact with.

More importantly, I expect these applications will realize more clearly that by controlling attention comes the opportunity to control order flow, and order flow can be a very profitable business. Get ready to see wallets and transactions embedded in more consumer apps in 2025.

Funds are always looking for income

Author: Eli Qian, Investment Partner of Multicoin Capital

Everyone with funds is looking for a simple and direct way to earn income.

Until recently, most sources of income were reserved only for experienced market participants and investors. For example, if you put your money in a savings account at Bank of America, you'll only earn an annualized return of 0.01% (whereas Bank of America will lend your money out at 10%!). Only when you buy money market funds can you get a more reasonable rate of return. But the need for income is always there, and products like exchange-traded open-end index funds (ETFs), which save you the trouble of picking individual stocks, and robo-advisors that can manage your entire portfolio, make it easier for non-professionals to Market participants have greater access to previously restricted gains.

There is a similar situation in the cryptocurrency field. Obtaining income through staking or borrowing is not easy and requires users to have relevant knowledge. Products that simplify the process of earning income will continue to develop, putting an end to this phenomenon of knowledge arbitrage that disadvantages retail users. Nowadays, you can simply bring your cryptocurrency to a wallet or app and earn staking or lending benefits with a few simple clicks—no knowledge of staking, lending, etc. is required. Products like Fuse Wallet, StakeKit, and others do just that. In the future, wallets and DeFi applications will automatically allocate and rebalance assets among validators, lending protocols, and liquidity pools to obtain the best returns for users 24/7.

Innovation reduces banking costs

Author: Vishal Kankani, Investment Partner of Multicoin Capital

In the 15th century, the Medici family led the development of modern banking. Banking back then was slow, brick-and-mortar, expensive, and required a high level of trust. Over time, the cost of accessing financial services has dropped significantly. With blockchain technology, we clearly see the prospect of achieving all-weather, global, and zero-cost banking services.

No matter how advanced financial infrastructure becomes, the need for banking will always remain. The emergence of Banking as a Service (BaaS) is because under the framework of the traditional financial system, no matter how innovative the application layer is, it is difficult to build basic financial components; naturally, this achieves modularization at the software level, resulting in front-end and Backend separation. Today, the backend part is just called BaaS.

BaaS providers license their infrastructure to fintech companies, enabling businesses to launch digital banking, corporate credit card and lending products with minimal time and cost. Offering these services through application programming interfaces (APIs), BaaS providers allow technology companies to focus on customer experience and unique products, while BaaS providers handle those "boring but critical" back-end matters: compliance, risk management and financial flows.

Assume that a pre-blockchain BaaS system included banking infrastructure, KYC/AML compliance, payment processing, card issuance, and data aggregation. Although this system is feasible, it is complex and inefficient because it is still based on the traditional banking infrastructure established in the 1970s (SWIFT/ACH), with high fees, inability to provide 24-hour service, capital Inefficient and not globally applicable.

Blockchain will disrupt modern BaaS because it represents a fundamental innovation. By using blockchain-based assets and protocols, we can build a new BaaS model that is simpler, cheaper, faster, global and more transparent.

Blockchain-based BaaS systems may look like this: self-hosted wallets like Squads, on-chain KYC and compliance protocols that enhance programmability (such as zkMe), stablecoin payment infrastructure ( Such as Bridge), as well as DeFi protocols for lending (Kamino) and trading (Drift).

The evolution of BaaS to a blockchain-based model is inevitable. As the infrastructure matures, we will see blockchain protocols replace every component in today's BaaS system, creating a leaner, more efficient, and more transparent model for financial services.

Multicoin’s portfolio company Squads essentially provides a banking-as-a-service protocol on Solana, allowing businesses, individuals and developers to create a secure account that stores value and is programmable transaction. SquadsThe first formally verified protocol on Solana, it has already processed over $1 billion in stablecoin transaction volume, and the number of assets protected using the Squads protocol is growing exponentially. We expect Squads to firmly lead the development of BaaS in 2025.

Removing friction increases usage

By Matt Shapiro, Partner at Multicoin Capital

When you make things easier to do by removing costs and friction, people will naturally do more Go do it. Email has changed the way we communicate. iPhone makes taking photos and recording life easier. Amazon simplifies the process of shopping online for us. Social media makes sharing content seamless.

Obviously, the same results would occur if transactions and transfers were made simpler. Stablecoins may well trigger one of the most significant financial transformations of our time. Being able to transfer money with near-instant settlement around the clock would have far-reaching consequences. This will allow dollars to penetrate new markets and into the hands of real users in a way that Treasury auctions cannot. This will allow business activities to run more efficiently at night, on weekends or during holidays without interruption. This will reduce working capital requirements and significantly reduce the cost and time of cross-border transactions. Stablecoin supply has hit new highs, as has stablecoin trading volume, both of which should accelerate as regulatory clarity opens the door to stablecoin acceptance.

The growth of stablecoins will further promote the concept of open finance. When transactions become easier, more transactions will occur. Stablecoin holders seeking yield from these assets will gravitate toward platforms like Kamino and Drift that automatically match lenders and borrowers by reducing friction. Once on-chain, stablecoin holders can access money market funds like BlackRock’s BUIDL and decentralized exchanges like Drift, Jupiter, Raydium and Uniswap with just a click. As on-chain assets continue to grow, stablecoin holders will undoubtedly have more assets to choose from and participate in. Stablecoins are a "Trojan horse" into the on-chain economy, which is expected to develop into a more inclusive and open global financial system.