This episode reveals a major shift in the crypto investment landscape, where true alpha may no longer reside in native tokens but in established public companies strategically adopting blockchain technology amid widespread market confusion.
Unprecedented Investor Dispersion in a Confused Market
- The episode opens with a striking anecdote from a liquid fund dinner, painting a picture of a crypto market gripped by confusion and a complete lack of consensus. Yano describes a scene where investors are taking wildly divergent actions: one has completely exited the market, another is levering long despite a 25% downturn, and others are either raising or closing debt funds.
- This dispersion highlights a market at a crossroads, where historical playbooks no longer apply.
- Yano observes, "I've never seen more dispersion between investors in this cycle, which is great. It means a lot of money will be made."
- Strategic Implication: The absence of a consensus trade signals high volatility and opportunity. For investors, this environment demands a clear, high-conviction thesis rather than following market sentiment.
The Evolving Search for Alpha Beyond Crypto Conferences
- Pranav from VanEck explains his fund's strategic shift away from traditional crypto conferences, arguing that alpha is no longer found in those circles. Instead, his team is focusing on identifying the non-obvious winners of crypto adoption, particularly in the public equity markets.
- The fund's thesis began by looking past stablecoin issuers to identify businesses where stablecoins could dramatically improve margins by reducing interchange fees.
- This strategy involves investing in public companies that are well-positioned to leverage blockchain technology, treating the underlying instrument—whether a token or a stock—as secondary to the business case.
- Actionable Insight: Investors should expand their scope beyond the top 100 tokens on CoinMarketCap. The real, durable value may accrue to established companies with strong distribution that can integrate crypto rails to enhance their core business models.
Tokenized Equity as a New Growth Lever
- Pranav elaborates on the next frontier: tokenized equity, which is the representation of company shares as digital tokens on a blockchain. He argues that this will unlock powerful new models for customer acquisition and loyalty, especially for B2C companies.
- Using Starbucks as an example, he suggests that instead of loyalty points ("stars"), the company could programmatically reward customers with tokenized shares of its stock for purchases and referrals.
- This creates a closed-loop system where customers become owners, aligning incentives and fostering a loyal retail investor base, which can lower a company's cost of capital.
- Yano connects this to a 2017 podcast discussion about Nike potentially offering exclusive shoe drops to its shareholders, a model that bridges the gap between customers and owners.
- Strategic Implication: Researchers and investors should monitor regulatory developments around tokenized securities. Companies that successfully pioneer these models could gain a significant competitive advantage in customer engagement and capital formation.
The Mamdani Election and Its Market Implications
- The conversation shifts to the political landscape, analyzing the victory of Jabari Brisport and other DSA-backed candidates, including Zohran Mamdani, in New York. The hosts interpret this as a powerful signal of widespread public disillusionment with the current economic system.
- The discussion connects the election results to a 2020 Peter Thiel email to Mark Zuckerberg, which argued that millennials' support for socialism stems from a "broken generational compact" where student debt and unaffordable housing prevent capital accumulation.
- Thiel's email noted, "if one has no stake in the capitalist system, then one may well turn against it."
- The hosts see this dissatisfaction as a key driver of market behavior, pushing younger generations toward two outlets: voting for radical change or seeking high-risk financial "gambles" to escape their situation.
Investing in an Era of Disillusionment
- The speakers translate this socio-political analysis into actionable investment theses, breaking the market into two distinct economies driven by different motivations.
- The Luxury Economy: Wealthy investors, concerned about potential wealth taxes and socialist policies, may increasingly seek out privacy-preserving assets to protect their capital.
- The Degen Economy: A generation feeling left behind by traditional capitalism will continue to channel its energy into high-risk, high-reward assets—previously memecoins, and now increasingly AI-related equities—in an attempt to gamble their way to financial security.
- Actionable Insight: This dual-market framework suggests opportunities in both privacy-focused crypto assets and speculative narratives that capture retail attention. The key is identifying which assets will attract these distinct capital flows.
Is the Crypto Dream Still Alive?
- The hosts debate whether crypto's core promise remains intact. Yano presents a nuanced view, arguing that while sentiment on Crypto Twitter is low, the "crypto dream" has never been brighter from the perspective of institutions, regulators, and major tech companies like Stripe.
- Pranav and Santi question whether future value will accrue to Layer 1 tokens or to established, crypto-enabled public companies like Robinhood, Block, and MercadoLibre.
- Pranav states he is firmly in the latter camp, believing the most significant value creation will come from great businesses using blockchain as an accelerant, not from most native tokens.
- Strategic Implication: The conversation signals a potential decoupling. While the institutional and regulatory embrace of blockchain is bullish, it may not translate into broad-based gains for altcoins. Investors must differentiate between the protocol layer and the application/integration layer where value may be captured differently.
Public Equities vs. L1 Tokens: A Valuation Debate
- Pranav expresses deep skepticism about the valuations of most Layer 1 blockchain tokens, arguing they lack a sound economic basis relative to their future earnings potential.
- He contends that from a risk-adjusted perspective, a basket of top tech equities has massively outperformed a basket of top L1 tokens over the last couple of years.
- Pranav states, "most layer 1 blockchain tokens have valuations that make no sense to me like relative to what they're going to earn in economics in the future."
- He believes that many crypto-native projects are fundamentally mispriced and will eventually trade down to a level where their cash flows justify their market caps, creating future buying opportunities, particularly in sectors like DePIN (Decentralized Physical Infrastructure Networks).
Navigating Risk and Portfolio Strategy
- Pranav outlines his fund's current defensive strategy in a market he deems uncertain. The approach prioritizes capital preservation and high-conviction bets while avoiding over-diversification into lower-quality assets.
- The strategy involves holding only their highest-conviction "10 out of 10" ideas and moving to cash instead of holding "7 out of 10" ideas.
- This has resulted in a larger-than-usual cash position, which serves as dry powder to deploy if high-conviction assets experience a significant drawdown.
- Actionable Insight: In a directionless market, investors should consider concentrating capital in their highest-conviction assets and increasing cash reserves. Selling lower-conviction holdings, even at a loss, can provide the liquidity to capitalize on future dislocations.
The AI Gold Rush: Siphoning Capital from Crypto?
- The discussion concludes that speculative retail capital, which once flowed freely into crypto, is now being redirected to the AI narrative. The story around AI, energy, and compute is currently more compelling and accessible for investors seeking exponential returns.
- Pranav notes that the "risky capital is not in crypto" right now; it's chasing AI-adjacent plays, from GPU manufacturers to energy and nuclear power stocks.
- This is because AI has captured the public imagination as the primary engine of future growth, while the narratives for most altcoins have grown stale.
- Strategic Implication: The crypto market is no longer the only casino for speculative retail. Crypto AI projects must compete directly with the broader AI equity market for attention and capital. The relative performance of crypto assets may remain suppressed until a new, powerful narrative emerges.
The Future of Crypto Adoption: Native vs. Incumbent
- A key debate emerges on how crypto will achieve mass adoption. Will it be through crypto-native founders building the next killer app, or through established Web2 giants integrating blockchain technology into their existing products?
- Pranav argues firmly for the latter, stating that the path to a billion users runs through existing companies with massive distribution channels adopting the technology, rather than through the crypto-native route.
- The stark contrast between ChatGPT's user growth (800 million) and crypto's on-chain active users (40 million) is presented as evidence that the world has already chosen its preferred "killer app" for now.
- Actionable Insight: This thesis suggests that the most impactful crypto-related investments over the next cycle may be in the equity of public companies that master blockchain integration, not necessarily in the tokens of the protocols they use.
Conclusion
- This episode argues that the search for alpha has shifted from crypto-native tokens to crypto-enabled public equities. With speculative capital now favoring the AI narrative, investors should focus on high-conviction assets, maintain significant cash reserves, and analyze how established companies are leveraging blockchain to drive real-world value.
