Key Takeaways
- • Theta Capital CIO Ruud Smets argues Ethereum, up roughly tenfold in three years, is a productive asset rather than a speculative currency, valued at about USD163 billion in October 2022 or 25 times its last twelve months' revenues of USD7 billion.
- • Blockchain and crypto venture funding reached about USD21 billion in H1 2022, roughly ten times the prior bear market trough, within global VC dry powder of USD540 billion, per the Legends4Legends event discussion.
- • Theta Blockchain Ventures has invested USD500 million in crypto-native funds since 2018 and has bought discounted secondary interests from LPs who defaulted on capital commitments during the 2022 downturn.
- • Uniswap has earned USD2.4 billion in fees on USD1.7 trillion exchanged since inception, roughly 14 basis points per trade, illustrating the fee economics speakers attribute to Web3 protocols.
- • Point72 Ventures' digital assets strategy targets firms that help traditional finance adopt crypto, with Adam Carson saying large institutions will adopt crypto within a few years despite the FTX collapse.
Summary
Speakers at the sixth Legends4Legends event, held at Amsterdam's Eye Film Museum, argued that crypto assets remain volatile risk assets that sold off in 2022 alongside other risk assets, but that strong revenue growth in parts of the sector can offset valuation compression. Ruud Smets, CIO of Theta Capital Management, described Ethereum as a productive asset, noting it was valued at around USD163 billion in October 2022, or 25 times its last twelve months' revenues of USD7 billion. Staking yields and optionality from protocols built on Ethereum, such as Lido and Uniswap, were cited as support for that view.
Lasse Clausen, founding partner of 1kx, said Ethereum is up roughly tenfold since Covid and is a better innovation proxy than Bitcoin. He estimated that the hit rate for blockchain ventures may be only about one in ten. 1kx grew from USD5.6 million to USD1.2 billion of assets by end-2021, according to the article. Theta Blockchain Ventures has invested USD500 million in crypto-native funds since 2018, allocating to leading VCs and often negotiating fee discounts and capacity rights. Theta also acquired discounted secondary interests from defaulting LPs during 2022.
According to the article, blockchain and crypto venture funding of around USD21 billion in H1 2022 was about ten times the prior bear market trough. Point72 Ventures' Adam Carson, who leads its digital assets work, said the firm focuses on companies that help traditional institutions custody and trade digital assets, and cited its investment in Messari. Carson said large institutions will still adopt crypto within a few years despite the collapse of FTX.
On protocol economics, the article cites Uniswap's USD2.4 billion in cumulative fees on USD1.7 trillion exchanged, about 14 basis points. Evan Fisher of Portal Ventures argued that Web3 businesses can eliminate most fixed costs, with Maker reportedly earning 90% gross profit and 65% EBITDA margins five years after launch. Flexa, a payments network, was cited as aiming to reduce the variable cost of payments, where merchants spend an average of 3-4% processing payments. Proof Group's Noah Jessop proposed combining Moore's Law and Metcalfe's Law as a framework for measuring hyperscalability.
Lasse Clausen, founding partner of 1kx, said Ethereum is up roughly tenfold since Covid and is a better innovation proxy than Bitcoin. He estimated that the hit rate for blockchain ventures may be only about one in ten. 1kx grew from USD5.6 million to USD1.2 billion of assets by end-2021, according to the article. Theta Blockchain Ventures has invested USD500 million in crypto-native funds since 2018, allocating to leading VCs and often negotiating fee discounts and capacity rights. Theta also acquired discounted secondary interests from defaulting LPs during 2022.
According to the article, blockchain and crypto venture funding of around USD21 billion in H1 2022 was about ten times the prior bear market trough. Point72 Ventures' Adam Carson, who leads its digital assets work, said the firm focuses on companies that help traditional institutions custody and trade digital assets, and cited its investment in Messari. Carson said large institutions will still adopt crypto within a few years despite the collapse of FTX.
On protocol economics, the article cites Uniswap's USD2.4 billion in cumulative fees on USD1.7 trillion exchanged, about 14 basis points. Evan Fisher of Portal Ventures argued that Web3 businesses can eliminate most fixed costs, with Maker reportedly earning 90% gross profit and 65% EBITDA margins five years after launch. Flexa, a payments network, was cited as aiming to reduce the variable cost of payments, where merchants spend an average of 3-4% processing payments. Proof Group's Noah Jessop proposed combining Moore's Law and Metcalfe's Law as a framework for measuring hyperscalability.
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