This episode declares the "crypto-native" era over, arguing that blockchain technology must now solve real-world problems for mainstream adoption. Dougie DeLuca, Yan Liberman, and Josie discuss the industry's shift from insular speculation to pragmatic utility, challenging long-held decentralization ideals and redefining investment strategies.
The Crypto-Native Divide Ends
- Shift to Utility: Future success hinges on building products for everyday people, solving tangible problems, and leveraging blockchain only where it offers a superior solution.
- Blurred Lines: The distinction between "crypto" and "non-crypto" products will vanish as underlying blockchain technology becomes an invisible enabler.
- Speculation Merges: The speculative "casino" element of crypto will integrate into broader finance, mirroring traditional markets where speculation coexists with fundamental value.
- Adapt or Fail: Builders and investors who recognize and adapt to this shift will thrive; those who cling to the old paradigm risk obsolescence.
Dougie DeLuca: "The people who realize this shift, whether you're a builder, investor, anything in between, will do very well, but those who refuse to accept it, I think for the most part will be left behind."
This Time Is Different: Institutional Collision
- Evolving Access: Improved user experience (UX), regulatory clarity, and institutional involvement now enable broader interaction with on-chain systems.
- Mainstream Collision: Institutions like BlackRock and the proliferation of stablecoins signal a significant collision between the insular crypto world and traditional finance.
- External Challenge: Crypto-native startups, builders, and investors face their first substantial challenge from the outside world, necessitating a broader market focus.
- Long-Term Vision: While short-term macro factors may cause fluctuations, the long-term trajectory points towards this integration and utility-driven future.
Dougie DeLuca: "This is the first time I've really seen crypto-native startups and builders and investors get challenged by the outside world, and I don't expect that to change."
From Imagination to Reality: The AI Contrast
- Imagination Phase (2020-2024): Crypto was perceived as a world-disrupting force, with visions of NFTs for everything, decentralized corporate governance, and a complete overhaul of financial systems.
- Post-Imagination Phase (Current): Reality sets in as many ambitious promises remain unfulfilled. This leads to declining conviction and a sense of unease among participants.
- AI's Rise: Artificial Intelligence (AI) currently occupies its own "imagination phase," attracting significant speculative capital and talent, drawing attention away from crypto.
- Price as Symptom: Current low prices and negative sentiment are symptoms of this post-imagination phase, not the root cause.
Dougie DeLuca: "We're now currently in the post-imagination phase. It's where reality sets in. And you look around you and you're like, have we actually accomplished any of the things that I believe this industry would? And honestly, I think the answer to most of those questions... is a resounding no."
Product-Market Fit: Centralized Winners
- Token Issuance: Includes Layer 1 (L1) blockchains, platforms like Pump.fun for memecoins, and broader tokenization efforts.
- Stablecoins: Digital currencies pegged to fiat, exemplified by Tether, which operates as a centralized IOU.
- Perpetual Futures (Perps): Decentralized derivatives trading platforms.
- Pragmatism Over Ideals: Successful projects like Ethena demonstrate a willingness to make trade-offs on decentralization for efficiency and user appeal, diverging from early "decentralized money" visions.
Josie: "The ones that did work out are nothing like what was promised in the sense that they had to make so many trade-offs to the ideals of decentralization and stuff that actually make this space interesting."
The Future of Rails and Value Capture
- Superior Rails: On-chain trading offers a vastly superior experience compared to traditional finance (TradFi) systems, with faster settlement and fewer intermediaries.
- Asset Problem: The core issue is a lack of "real" or compelling assets to trade on these efficient rails, leading to speculation on valueless tokens.
- Real-World Assets (RWAs): Tokenizing real-world assets (e.g., Superstate, Metal X bringing tokenized shares) could unlock immense value by leveraging crypto's superior infrastructure.
- Corporate Chains: Many corporations may build their own application-specific chains (e.g., Worldcoin, Saga Mobile, Kraken) rather than paying rent to existing L1s, potentially compressing L1 valuations. These corporate tokens often function as customer acquisition cost (CAC) mechanisms, not traditional investments.
Yan Liberman: "It is way better to trade on-chain with these rails than it is anybody who's traded with Interactive Brokers or in TradFi or with bonds via Bloomberg terminals compared to the experience you have transacting on-chain using crypto-native rails. It's night and day."
Investment Strategy: Quality Over Narrative
- VC Strategy: Early-stage investing focuses on teams solving real problems for a broad audience, not just crypto-natives. Infrastructure investments target clear bottlenecks for application builders.
- Personal Investing: Concentrate on liquid assets that offer genuine utility and are actively used (e.g., yield products, trading platforms).
- Quality Focus: The current environment necessitates a "rush towards quality," a hallmark of a maturing industry.
- Apathy as Opportunity: Low conviction and widespread apathy often signal peak opportunity for long-term investors willing to research and hold through volatility.
Dougie DeLuca: "I always believe that when conviction is the lowest, opportunity is the highest... I strongly believe that you're going to be rewarded down the road for that."
Investor & Researcher Alpha
- Capital Reallocation: Speculative capital is shifting from crypto's "post-imagination" phase to AI's "imagination" phase. Investors must identify crypto projects that offer tangible utility or integrate with these new tech frontiers.
- Centralization as a Feature: The most successful crypto applications (stablecoins, perps, token issuance platforms) often embrace pragmatic centralization. Research should focus on hybrid models that balance efficiency with sufficient decentralization to avoid single points of failure.
- RWA Integration: The "asset problem" presents a significant opportunity. Research into tokenization standards, regulatory frameworks for on-chain securities, and platforms facilitating real-world asset integration onto blockchain rails is critical. This is where crypto rails can capture substantial value.
Strategic Conclusion
The "crypto-native" era is over. The industry must pivot from insular speculation to building genuinely useful products that leverage blockchain technology for a mainstream audience, often through pragmatic centralization and integration with real-world assets. The next step for crypto is to become an invisible, superior infrastructure for global finance and applications, attracting real value to its unparalleled rails.
