In this deep dive, a16z crypto partners Ali Yahya and Arianna Simpson dissect the current state of crypto, arguing that after 15 years, the industry has finally built the infrastructure for its first true killer app: stablecoins. They map out how this financial revolution is intersecting with AI and what a new, friendlier regulatory landscape means for builders and investors.
The Stablecoin Moment is Here
- "There's something like $16 trillion in volume on stablecoins per year... many traditional financial institutions are beginning to use stablecoins to rip out a lot of the back end of their financial systems."
- "I think the odds are good that stablecoins are that thing [the iPhone moment]... it's a non-speculative use case... and so it's just a good entry point for some of these larger institutions."
After years of promise, crypto’s first mainstream killer app has arrived, not with a speculative bang, but with the quiet hum of utility. Stablecoins are solving real-world problems by enabling near-instant, ultra-low-cost payments (under a penny, under a second), fundamentally disrupting the slow, expensive traditional financial rails.
- Mainstream Validation: This isn't just a crypto-native phenomenon. Fintech giants like Stripe are going all-in, using stablecoins to re-architect their backend systems, signaling a major wave of adoption.
- A "Baby Step" to Mass Adoption: For risk-averse institutions and everyday users, stablecoins offer a non-speculative, easy-to-understand entry point into the crypto ecosystem, addressing pain points from corporate treasury management (e.g., SpaceX) to providing dollar access in nations with unstable currencies (e.g., Zar in Pakistan).
Crypto as the Counterweight to AI
- "Crypto can help decentralize the power structures that are emerging in AI."
- "On the internet, nobody knows you're a dog... and that is very, very true now in 2025 where on the internet nobody knows you're human... Crypto happens to be a really good technology to help authenticate media."
As AI centralizes power and floods the internet with synthetic content, crypto provides the essential tools for decentralization and authentication. The two technologies are seen as powerful counterweights, with crypto offering guardrails for AI's explosive, and at times chaotic, growth.
- Proof of Humanity: In an era of deepfakes and bots, projects like WorldCoin are using cryptography to solve a critical problem: proving you are a human online without sacrificing privacy.
- Decentralizing AI Infrastructure: Projects like Jensen are creating decentralized compute marketplaces, allowing anyone to contribute idle GPU power. This creates a more resilient and potentially more efficient alternative to the handful of Big Tech companies that currently control AI's foundational layer.
A New Dawn for Builders
- "Crypto is a fundamentally radical set of technologies that is very, very hard for incumbent players to adopt... precisely because it is so fundamentally disruptive to the way that they do things."
- "I actually think it's a great time for folks to be building token networks. I'm hopeful that, you know, more entrepreneurs kind of realize that the situation is again very different from what it was just a few months ago."
Unlike AI, which has largely been a sustaining innovation for Big Tech, crypto remains fundamentally disruptive. Incumbents like Google and Meta have struggled to embrace it because it would mean cannibalizing their centralized business models. Now, a major bottleneck has been removed.
- The previous hostile regulatory environment in the U.S. stifled innovation, but a recent shift to a "much friendlier administration" has changed the game.
- This creates a massive opportunity for startups. The speakers believe it's a prime moment for founders to build and launch token networks, arguing this message hasn’t yet fully permeated the builder community.
Key Takeaways:
- Stablecoins are the Trojan Horse. They are crypto's killer app, driving real-world utility and legitimizing the space for institutions and mainstream users by solving tangible financial inefficiencies.
- Crypto is AI’s Essential Counterbalance. As AI centralizes power and blurs reality, crypto provides the critical infrastructure for decentralization, authentication, and new economic models for creators.
- The Regulatory Winter is Over. A friendlier U.S. political climate has opened the door for a new wave of crypto innovation. For investors and builders, this is the signal that it's time to build.
For more insights, watch the full discussion here: Link
This episode reveals how stablecoins are finally delivering on crypto's original promise of a peer-to-peer cash system, creating the financial rails for the next wave of innovation at the critical intersection of crypto and AI.
The Maturation of Crypto: Stablecoins Take Center Stage
- Stablecoins: Digital assets pegged to a stable currency like the US dollar, designed to minimize the price volatility inherent in other cryptocurrencies.
- Ali highlights their staggering scale, noting, "there's something like $16 trillion in volume on stable coins per year."
- Arianna Simpson adds that while the concept has been discussed for years, particularly for remittances and in hyper-inflationary economies, the infrastructure has only recently become efficient enough to support these use cases at scale.
- Strategic Implication: Stablecoins are acting as a trojan horse for crypto adoption within the traditional financial system. As fintech leaders like Stripe and Revolut integrate them to improve back-end efficiency, it paves the way for broader acceptance of more advanced decentralized finance (DeFi) applications.
The Symbiotic Future of AI Agents and Crypto Rails
- The discussion pivots to the profound inefficiencies of the traditional financial system, where a simple credit card transaction involves numerous intermediaries, each taking a fee. International transfers are even worse, taking days and costing up to 10% of the transaction value. Crypto offers a starkly efficient, software-based alternative.
- Arianna points out the impracticality of giving an autonomous AI agent access to a traditional bank account or credit card. A crypto wallet, however, provides a native, programmable, and secure way for an agent to transact on a user's behalf.
- Ali emphasizes this point, stating, "...the only real way to bring online millions or potentially billions or more AI agents into the kind of the financial system is through a technology that's fully based on software..."
- Actionable Insight: The proliferation of autonomous AI agents will create immense demand for crypto's efficient and programmable financial infrastructure. This represents a major, non-obvious growth vector for investors and researchers to monitor.
Stablecoin Use Cases: From Emerging Markets to Global Institutions
- Arianna provides the example of Zar, a company in Pakistan building a network for citizens to deposit local currency and receive stablecoins, creating an ecosystem of financial services on top. This model is highly attractive in countries with unstable currencies.
- For banks and financial institutions, stablecoins serve as a "baby step" into the crypto world. Their non-speculative nature and clear value proposition offer a lower-risk entry point compared to more volatile assets.
- Strategic Implication: Investors should watch for two key opportunities: companies building on/off-ramps and financial services in emerging markets, and B2B solutions that help traditional institutions integrate stablecoin infrastructure.
Mapping the Stablecoin Ecosystem and Value Capture
- The Stack:
- Issuers: Companies like Circle (USDC) and Tether (USDT) that create and back the stablecoins. USDC (USD Coin) and Tether (USDT) are the two largest stablecoins, each backed by reserves of assets like cash and U.S. Treasury bills.
- Infrastructure: The Layer 1 blockchains (e.g., Solana, Ethereum, Sui) on which transactions occur.
- Interface/Periphery: User-facing applications like wallets (e.g., Phantom) that connect users to the crypto world.
- Ali predicts that upcoming legislation will set clear rules for issuance and collateral, which will "to some extent commoditize the issuance layer."
- Actionable Insight: As issuance becomes commoditized, value will likely shift away from the issuers and accrue to the other layers. The underlying blockchain infrastructure will capture value through transaction fees (gas), and user-facing applications like wallets will become critical gateways, capturing value through user relationships and services.
The Search for Crypto's "iPhone Moment"
- The conversation explores whether stablecoins represent the "iPhone moment"—the killer app that brings crypto to the masses. Arianna suggests the odds are good but believes adoption will come in waves from different use cases, including AI and gaming, rather than from a single product.
- She uses a powerful analogy to describe the potential of stablecoins: "Chris always talks about like do you want to be an indie band or do you want to play like at the Super Bowl... I think like stable coins really have the ability to appeal to like a much broader audience."
- Their appeal lies in solving tangible pain points, from individuals in developing nations seeking dollar exposure to corporations like SpaceX using them for efficient treasury management.
- Strategic Implication: The "iPhone moment" may not be a single product but a confluence of use cases built upon mature, stablecoin-powered financial rails. Investors should look for a compounding effect as payments, DeFi, and AI applications begin to interoperate seamlessly.
The Innovator's Dilemma: Why Startups Lead the Crypto Revolution
- Ali argues that crypto is a fundamentally disruptive technology that is difficult for incumbents to embrace. Drawing on his experience at Google X, he explains that large, centralized companies are structurally misaligned with crypto's decentralizing ethos.
- Adopting crypto would require companies like Meta or Google to cannibalize their core business models, which are built on centralized control of data and user networks.
- Ali states, "Crypto is like a fundamentally radical set of technologies that is very very hard for incumbent players to adopt and run with precisely because it is so fundamentally disruptive..."
- He draws a parallel to AI, noting that even Google faces a dilemma in replacing its lucrative search business with a superior but structurally different LLM-based product.
- Actionable Insight: Genuine innovation and disruption in crypto will almost certainly continue to emerge from startups. Incumbents are poorly positioned to lead, creating a durable advantage for agile, crypto-native teams.
The Unfulfilled Promise of Decentralized Social Media
- Despite the vision of decentralized social networks, platforms like Farcaster have yet to achieve mainstream adoption. Arianna attributes this primarily to consumer behavior and the immense challenge of overcoming existing network effects, noting that users are largely accustomed to "being the product."
- Ali adds that the recent regulatory environment has prioritized financial use cases over consumer ones. Furthermore, consumer apps have an extremely high bar for user experience (UX), a challenge crypto is still working to solve.
- However, a successful strategy is emerging in niche, vertical-specific networks. Arianna highlights Blackbird, a restaurant loyalty network founded by Ben Leventhal, which creates value in a space not dominated by an existing Web2 giant and gives true ownership to restaurants and users.
- Strategic Implication: While broad-based decentralized social networks face a difficult path, investors should look for opportunities in vertical-specific networks that solve a unique problem and leverage crypto's ownership model as a core competitive advantage.
The Crypto-AI Intersection: A Counterbalance of Forces
- Ali frames the relationship between AI and crypto using Peter Thiel's observation that "AI is communist and crypto is libertarian." He argues that crypto provides a necessary counterbalance to the centralizing forces of AI in three key areas:
- Authentication in an AI World: As AI generates an overabundance of synthetic media and deepfakes, crypto can provide proof of authenticity.
- Proof of Humanity: A mechanism to verify that an online actor is a unique human being. Projects like Worldcoin use biometrics combined with Zero-Knowledge Proofs (ZKPs)—a cryptographic method to prove something is true without revealing the underlying data—to create a private and secure digital identity.
- Decentralizing AI Power: Crypto offers a way to build open, decentralized alternatives to the handful of large companies controlling foundation models.
- Projects like Gensyn are building decentralized marketplaces for GPU compute, allowing anyone to contribute or access computational resources for training and inference, breaking the dependency on centralized cloud providers.
- New Business Models for an AI-Powered Internet: When AI models provide direct answers, they break the ad-based business model that funds content creators. Crypto can enable new models based on attribution.
- Future systems could trace an AI's output back to its source data and use crypto to automatically compensate the original creators, creating a new economic engine for the internet.
- Actionable Insight: The intersection of crypto and AI is a primary frontier for investment and research. Crypto provides the essential tools to address AI's most pressing emerging challenges: authenticity, centralization, and economic alignment.
Misconceptions and the New Regulatory Landscape
- The speakers identify two major misconceptions holding the space back.
- Arianna’s perspective is that the regulatory environment has changed dramatically. The previous hostility that stifled innovation has been replaced by a friendlier administration, creating a prime opportunity for builders. She asserts, "I actually think it's it's a great time for folks to be building token networks."
- Ali points out the persistent misconception that crypto is only about money, a view shaped by Bitcoin. He clarifies that platforms like Ethereum are fundamentally different—they are decentralized world computers capable of running unstoppable applications, a concept far broader than a simple monetary ledger.
The Smart Contract Platform Wars: Specialization Over Consolidation
- Ali provides a nuanced breakdown of the competitive landscape among smart contract platforms—blockchains that can execute self-enforcing digital agreements. He argues that different chains are optimizing for different trade-offs, leading to specialization rather than a winner-take-all outcome.
- Bitcoin: Has succeeded as "digital gold," valued for its simplicity and immutability.
- Ethereum: Optimized for decentralization and security, making it the preferred platform for high-value DeFi applications and asset issuance.
- Solana & Sui: Optimized for high performance and low transaction costs, making them ideal for payments, gaming, and other high-throughput applications.
- Actionable Insight: The platform wars are not a zero-sum game. Investors and researchers should analyze which ecosystems are best suited for specific use cases, as multiple specialized chains will likely co-exist and thrive. The outcome remains "wide open."
Conclusion
This conversation highlights a pivotal moment where stablecoins are legitimizing crypto's financial layer, just as AI creates new, systemic problems. Crypto is uniquely positioned to solve these issues of authenticity and centralization. Investors and researchers should focus on the emerging infrastructure and applications at this critical intersection.
