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source:Alana Levin, Variant Fund Investment Partner; Compiled by: Bitchain Vision
The crypto industry has undergone a major shift in the past year.
In terms of regulation, the U.S. Congress has made significant progress in the clear rules of the GENIUS Act/stablecoin.The White House has set up a Digital Asset Markets Task Force, which meets numerous industry participants and works to provide them with clear guidance.The Securities and Exchange Commission announced the “Project Crypto” aims to build the United States into a cryptocurrency capital by exploring how to tokenize broader assets in the financial markets.
Cryptocurrency builders have also made great progress.There are currently multiple large and highly liquid forecasting markets (and some upcoming new markets).Stablecoins are both supply and use at all times, with more people holding these assets (in more regions) than ever before.Many on-chain protocols have revenues of eight to nine digits.Some of these protocols also act as a developer platform with a strong ecosystem of startups (those startups are also profitable!).It can be said that now is the best time for cryptocurrency builders.
My favorite saying is: The total potential market for digital assets (TAM) is the largest and the smallest ever.This feels especially true now.Given these developments, I put together a list of some of the entrepreneurial ideas I’m most excited about.
Stablecoin-backed market
Most of the current discussions about stablecoins are focused on their payment areas.But historically, emerging markets with demand for stablecoins have actually played a bigger role in driving the adoption and growth of stablecoins.The growth of Asian cryptocurrency exchanges is the main driving force behind Tether’s rise: traders no longer exchange cryptocurrency profits into local fiat currencies, but instead deposit USDT on exchanges as a means of store of value.Similarly, the 2020 DeFi boom has helped USDC find a foothold as it provides new places for demand for digital dollars.
Currently, the stablecoins in circulation are worth nearly US$300 billion.There is a strong interest in using them to pay.But it is undeniable that the payment field is largely the winning strategy for existing companies, and existing distribution channels and infrastructure make existing fintech companies have more advantages over emerging startups.
I’m looking for a whole new market that is empowered or created by stablecoins.We have two invisible investments that fit this topic.One is to build infrastructure that makes all stablecoins interchangeable for end users.The other is to build a local liquidity market.
What are the specific examples of the stablecoin market?Here are three examples:
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A new leverage tool that requires instant funding.Stablecoins can be circulated 24/7, meaning users can immediately deposit more collateral into their accounts (while in traditional mode, exchanges may need to inject capital into margin accounts in advance while waiting for wire transfers).
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The company borrows from the company.I think many companies will hold some of their cash (and cash equivalents) in the form of stablecoins in the future.Stablecoins can flow 24/7, while transferring funds through traditional channels can take several days and incur material costs.Holding cash in stablecoins allows companies to earn profits from these assets in a broader and more creative way—such as participation in short-term capital markets (such as overnight buyback markets) or on-chain liquidity supply.
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Global Lottery.Cryptocurrencies provide access to, aggregation and allocate funds around the world.Not only does stablecoins help expand the size of the lottery, their programmability also means that lottery deposits and benefits can be used in a more interesting and exciting way.
Stablecoins-backed markets can occur in a) where stablecoins are used as at least one means of trading; b) products built around large (idle) capital pools held by stablecoins; c) markets that use stablecoins to benefit from global scale.
Second-order forecast market opportunities
There are currently multiple large and growing forecast market platforms, and a series of platforms will be launched this fall.Market volumes remained strong throughout the year, refuting critics who claimed that the market was predicting that it only existed in the election season.
This model creates more new opportunities for founders to within or around the forecast market—these opportunities can take advantage of new market liquidity, broader user distribution, fragmentation of market platforms, and more.Here are the products I particularly like to see.
Conditional betting.Parlays (parlays, bet on the next one with the capital and profit) is very common in sports betting.They are difficult to construct in the forecast market because the participants are betting against other opponents rather than dealers.The difference is that the bettor is betting against multiple different opponents rather than a single opponent (the dealer).Therefore, if parlays fail, it is not only more difficult to close positions, but also more challenging to price/control the overall risk.
One solution might be to have the user actually bet on only one side.For example, it is conceivable that a third-party service emerges/establishes on the open forecasting market, operating in a similar way to a dealer.The service will leverage the liquidity of the forecast market to build odds and provide joint win bets.It can run across platforms and accepts third-party liquidity to support its policies (similar to Hyperliquid’s HLP).If Lianying betting focuses on factors such as Bitcoin’s price trend, the service can also use other mechanisms to hedge the overall risk.
Bet on the user’s ability.A major feature of platforms such as Polymarket is the rankings.It ranks traders based on profit and loss and trading volume and allows third parties to explore positions held by these superusers.Suppose I believe a trader will do a good job-my “bet” is that this trader will perform well.Currently, I mainly increase the exposure of this bet by manually following the user.However, future product formats can allow users like me to deposit funds into a fund pool for professional traders to bet.This design space becomes even more exciting when people start thinking about AI agents betting in the market – and humans can pool funds in different ways and provide information/feedback to these agents.
Liquidity, interest, and growth of platforms that support the forecast market also brings many other types of second-order opportunities.Leverage, exposure to market size, and exposure to market popularity (as far as participating users are concerned) are areas worthy of attention.
Tokenized equity coordinator
We are in the early stages of equity tokenization.This is becoming clearer and clearer as a series of architectures are emerging.
Some products, such as Robinhood’s stock tokens, are designed solely to provide price exposure to real-world stocks.These tools are completely synthetic: They track price movements through a series of structured derivatives without custodying actual stocks.
Other products, such as BackedFi’s xStocks, host target stocks and create their digital representations (similar to stablecoin issuers custodial fiat dollars and create tokenized packaging for those assets).These products not only provide a more direct/safety link to asset prices, but also provide the ability to redeem the underlying stock.
Finally, there are more native on-chain stocks.Last week, Superstate announced it had issued Galaxy Digital common stock directly on-chain — a tokenized asset with the same rights and benefits as traditional stocks.
These are all various structures of “tokenized stocks”.It is not clear which structure will comply with the power law.Consumers may use many of these tools without understanding the complete construction.Therefore, the interface will be responsible for selecting/listing different tokens.I guess liquidity and compliance will be the main factors in listing, but as long as multiple tokenized stock structures meet the interface standards, multiple structures can be integrated at the bottom.It’s easy to end up in a world where an interface provides xAPPL for BackedFi, but offers GLXY for Superstate issue, as each transfer agent provides the most liquid on-chain market for their respective stocks.And to consumers, they should all look like stocks.
Similar models also appear in the stablecoin field.There are many different stablecoins on the market that are designed to replace the US dollar, but they are not all interchangeable.So, there are networks that have emerged to coordinate different stablecoins, making the end user feel like they are trading in US dollars.There is now an opportunity to build a similar type of infrastructure for tokenized stocks, especially as the category continues to grow and evolve.
Next Big Category: New Ways to Make Money Online
One of the most shocking, recurring themes I’ve heard this summer is how many college graduates are struggling to find a job.I originally thought that in a few years, artificial intelligence would eat up some more complex entry-level jobs.As a result, I was wrong.
So, I think the way people allocate their time will change dramatically in the coming years.Second, people will have more free time and are more eager to make money through creative means.This may be reflected in many aspects: more people participate in the financial market, financialization of the entertainment industry, the types of content people can create and make money online continue to expand, and so on.
Cryptocurrencies provide some of the most practical tracks for building such products and services.It offers a cheap global currency track, meaning the potential customer base is almost unlimited.Anyone of any age can build and earn money as long as they have a wallet and internet connection.
There are many companies in the Variant portfolio that fit these topics.Zora provides creators with new tools to monetize media.Remix helps players of all ages create, publish and monetize games.The Clearing Co is working to build and expand markets for trading.
There is a vast space for designing new products and services that help people make money online.Making money – whether through content, creativity, investment, entertainment, or otherwise – has always been a killer use case, and cryptocurrencies offer some of the best ways to help people achieve this.
