Disclosure: We invest in things for a reason, that is why some of the companies / protocols I mention we have invested in.

If you put a gun to my head and asked me what my long term crypto investing thesis is, it would be this:

Invest in protocols, companies, and organizations that are making markets better and easier

What does better and easier mean?

It means making markets more efficient and more liquid - likely by making them easier for anyone to participate in.

Let’s take a step back here so I can expand on the logic:

• tokenization and decentralization are not the same thing

• decentralization is ideologically imperative, but technically (and from an investor perspective) not a priority

• decentralization does not happen naturally, it incurs a cost

• a service that opts for a decentralized solution will generally be more expensive for the end user

  • an obvious example of this is Ethereum mainnet vs Ethereum L2s, but I think decentralized storage and decentralize compute are other areas where this belief will become evident soon

• in other words: decentralization is a liability

  • it is often a competitive disadvantage that hopes to be offset by the benefit of censorship resistance and broad reaching wealth / network effects

• conversely, tokenization is an asset

• tokenization allows for unrestricted capital flows and capital formation

  • this was exemplified by the ICO era, defi summer, the memecoin era, etc.

• pretty much every significant moment in the history of crypto was catalyzed by the introduction of a new asset class to a large pool of capital, or in other words:

Tokenization is about the intermediation of global markets

Crypto’s super power is that anyone anywhere can create an asset X and plug it into a +$2T market by spinning up an X-ETH liquidity pool on Uniswap (or whatever your favorite AMM is).

How does this relate to investing?

• making markets is not a lossless endeavor

• in fact, it often costs money, this is why you usually have to pay a market maker and why they wont typically do this type of activity for free

• it is also why LPs from defi summer got so burnt and why Uniswap has invested so much in developing better infrastructure for automated market making

• over the next few years, we will see a very fragmented and modular future developing

  • every general purpose chain will have L2s and every smart contract will likely roll-up at some point

  • every appchain will need to bridge assets

  • and every competitor will find themselves in a position where they need to work together to provide liquidity for their users so that they can focus their resources on the actual challenges they thought they were going to work on (like parallelizing EVMs, giving ownership of in-game assets, or coordinating physical infrastructure)

Our obsession with modularity comes at the cost of liquidity and we must solve for both simultaneously or we will die of dehydration.

I believe the liquidity problem is the number one issue we have to solve for this industry to succeed because illiquid markets are a real bummer.

There are already more than a million little markets and each and every one of them needs attention and needs to be nurtured.

This was going to be a tweet, but I felt it was too long for such a myopic platform.

Anyways, I appreciate you reading - I’ll end here by giving a shoutout to some teams that are working on this problem:

Uniswap & Jupiter - my homes away from home, we build everything on their shoulders

Panoptic - working to make providing liquidity a delightful experience

Balancer - the home of the 80/20 pool

Gauntlet & Aera Finance - making LPing accessible to DAOs and large organizations

Arbelos Markets - keeping our markets liquid until we’re capable of doing it ourselves

Sorella Labs - they’re doing something interesting, I don’t quite get it yet