This episode asserts that crypto's future hinges on building for the non-native user, challenging the industry's insular focus and exposing critical monetization and governance flaws in established protocols.
Crypto's Mass Adoption Imperative
- Dougie argues the crypto industry has primarily built for its existing "crypto-native" user base, a strategy that limits growth. He contends that mass adoption requires building for the broader world, as large companies already integrate blockchain rails.
- Dougie states the default assumption that "the world would just become crypto-native" is incorrect; existing crypto users are already engaged.
- He emphasizes the need for projects to identify and target their "next proximate customer" beyond the initial crypto-native base.
- James highlights a critical gap: most crypto teams lack dedicated sales personnel, confusing business development (BD) with direct sales to non-crypto businesses and users.
- James notes that historical crypto market cycles trained users to expect token rotation, but current trends show that "just because crypto wins doesn't mean that your token's going to catch a bid."
"I'm here to suggest that that is not going to happen. I think the people who want to be crypto-native are already crypto-native and we need to start building for the rest of the world." – Dougie
The Battle for Onchain Finance
- The discussion shifts to how L1s and applications monetize, contrasting Solana's success in spot trading with Hyperliquid's dominance in perpetuals. James and Dougie analyze the competition for asset listings and user volume.
- James argues that a blockchain's true customers are application developers, not end-users, likening it to AWS serving builders, not individual consumers.
- Dougie cites Moonshot as an example of successful non-native onboarding, where users quickly acquired memecoins on Solana via Apple Pay, bypassing traditional centralized exchanges. This demonstrates the technical means (e.g., Turnkey wallet infrastructure) exist for direct onchain access.
- James points out Solana's strategic win with the Monad spot listing, which generated significant volume and positioned Solana as a "NASDAQ on chain" for asset issuance, attracting future high-volume listings.
- Noah explains that while 90% of crypto BD is unproductive, successful teams like Morpho actively engage institutional funds with built-out CRMs, demonstrating effective sales.
"If you win the assets, you win the innovation around it and that's how you end up being the long-term winner." – Dougie
Evolving Infrastructure Investment
- Figment Capital's investment strategy has shifted, moving beyond general-purpose infrastructure to focus on application-enabling components. Noah provides an investor's perspective on the changing landscape for tokenized infrastructure.
- Dougie confirms Figment's continued investment in infrastructure, but with a new "applications-first" approach, funding infra that enables specific, currently impossible applications.
- Turnkey, a "boring business" providing wallet infrastructure, exemplifies this new model: it enables applications like Moonshot, creating value through application volume rather than direct user monetization.
- Noah notes that historically, many infrastructure projects with tokens lacked clear monetization strategies, relying on token price appreciation.
- Noah now finds infrastructure tokens more attractive because founders, facing market downturns and runway issues, are now focused on monetization, making customer willingness-to-pay a critical factor.
"There's still room for infra but it has to be applications first and you invest in the infra that enables the applications that you believe should and can exist but can't due to some missing piece." – Dougie
Stablecoin Wars & Monetization
- The conversation explores the trend of chains launching native stablecoins to internalize yield, contrasting this with the industry's prior emphasis on unified stablecoin liquidity (USDT, USDC).
- James suggests native stablecoins offer a monetization pathway for chains, especially in high-interest environments, by internalizing yield.
- The panel questions the long-term viability of fragmented stablecoin ecosystems, noting the potential for a "nightmare" of "a billion stablecoins."
- Danny highlights the ideal user experience for a native stablecoin: a fintech app where users receive yield on their dollar balance without realizing it's underpinned by a unique stablecoin.
- Dougie reiterates that applications will drive adoption, with users interacting with infrastructure unconsciously, similar to a Starbucks customer not thinking about Square payments.
"There's a very real world where let's assume memecoins are dead... then there's a world where Solana is also in that boat where it just doesn't make enough money." – Bacio
DAO vs. Labs: A Governance Conundrum
- The panel dissects the complex relationship between protocol DAOs and their associated "Labs" entities, using Aave and Uniswap as case studies for value accrual and governance alignment.
- Noah argues that separating the capital structure (equity-backed Labs vs. token-governed DAO) is problematic, potentially leading to value leakage from the token.
- He cites Aave Labs' pivot to Lens and subsequent return to Aave, noting the Labs entity has outside equity investors and a 50% revenue share with the Aave DAO.
- James points out the contrast with Uniswap Labs, which actively works to make its UNI token value-accretive, suggesting Aave Labs is making "mistakes that have been made in the past."
- The panel expresses concern that Aave Labs owns critical IP (intellectual property), front-end, and logo, creating misalignment where the Labs team might diversify revenue away from the Aave DAO if governance proposals challenge their control.
"The cap structure is like very clearly a bit of a mess today as far as like Aave Labs has outside equity investors. They've moved fully back to Aave, have moved away from Lens... and I think that's like net negative for Aave." – Noah
Investor & Researcher Alpha
- Capital Reallocation: Investors should shift focus from general-purpose L1/L2 infrastructure to application-enabling infrastructure (e.g., wallet tech, specific data layers) that directly facilitates non-native user onboarding and clear monetization.
- Monetization Imperative: Research into novel, sustainable monetization models for L1s and L2s beyond transaction fees or token appreciation is critical. Chains must develop strategies to capture value from applications or native assets without resorting to "king-making" that alienates builders.
- User-Centric Design: Research into seamless user experiences that abstract away blockchain complexities (e.g., gas fees, wallet management) for non-native users is paramount. Projects prioritizing this will capture significant market share.
Strategic Conclusion
The crypto industry must abandon its insular focus, prioritizing application-driven, non-native user experiences. The next step involves L1s and L2s developing robust, application-centric monetization strategies to capture value from a broader, less crypto-aware user base.
