Positioning Ahead: Navigating Crypto’s New Regime - TOKEN2049 Dubai 2025

This is a great panel. Uh, a bunch of liquid venture investors in crypto. Um, just liquid. Just liquid. Sorry.

Uh, we discussed this backstage, the terminology and and how people like to be uh addressed. Liquid fund managers. Um, I'll let you guys introduce yourselves very briefly. Hi, I'm Jordy. Jordy Alexander.

Um, I run Seleni. Uh we do liquid venture, bit of everything. Hi, I'm Jason Cam. We operate out of Asia uh since three and a half years ago. Our book is 70% liquid and 30% private.

My name is Ebikar. I'm the founder of Split Capital. We're a full liquid fund. Okay. And for I guess background, uh earlier previous in my in my career in crypto, we ran a hedge fund.

So, I'm going to be a little bit tougher on you guys than the average moderate about strategies. Um, so let's dive into we'll dive into just that. So, I say liquid venture, I get thrown back at me liquid. I say the word venture. People don't like to identify that way.

What is in 2017, for example, all of the vintage funds that were part of my old firm and others were liquid funds with a small to large side pocket of private investments. Has that hedge fund or liquid model changed more recently? And and why do you think that is the case? And what's your perspective on that model versus a purely liquid model with outside pockets and privates? Whoever wants to take it.

You're pure liquid. So, we'll start with you. Yeah. I think there's two two things. We we learned very quickly or I guess across a few years but relatively quickly as an asset class that um we don't have a real fundamental basis for a lot of tokens uh in in crypto and as a result a lot of the fundamental kind of liquid venture funds have now started to either die out because of performance or because the strategy no longer makes sense and like you can't really make sense of the math.

And so now there's more of a kind of push towards, you know, uh what we like to call like a long short model or prop model um for liquid markets, right? So this is much less dependent on just pure fundamentals, much more dependent on market dynamics, flows, things like this that that are quantifiable that you can actually see in the data. And I think that's also why there's more and more of this kind of trend happening. So counter point, sorry I'm going to let everyone go, but so then why are the largest liquid funds in our industry long biased primarily long only? Yeah.

I I think this really comes down to the fact that it's a it's a legacy model. Yeah. Um when LPs deploy capital into into uh funds in crypto um the duration generally you even if they have no lock up or you know a lock up or not like the duration is usually multi-year, right? right? And they don't really want to think about redeeming capital out of a fund and you know redeploying it and doing this whole thing.

So a lot of this really comes down to the fact that this is a legacy model back from 2017, 2019, 2020, 2021 um these years, the golden years of crypto and the existing LPs into these funds won't write more money, but they're like we'll just keep it in there. We'll let whatever happens. Um and that's kind of what like they've did really really well when it's zero interest rate, right? four trillion dollars of liquidity pumped into markets and you know uh crypto is kind of coming out of its shell in 21 but now it's no longer the case. And then just kind of to frame this out we're going to talk about strategy first then maybe underlying infrastructure that allows you to deploy certain strategies and manage risk and then we'll get into the fun stuff of what this new regime is and what you guys are investing in.

So let's go into it with that mindset. Same question to either of you guys. The structure of today versus 17 which sounds like you're kind of still there with Folius. Uh well we launched as a hybrid model because um I mean a lot of returns in crypto actually came from tokens. Yeah.

And not equity exit. That might change in the future when the NASDAQ market opened up. Um we also did it because it's kind of an unspoken hack within crypto where you know you uh you do a seed round. Uh the time from creating a team and raising capital to launching a TGE is like 6 months. And there was a time there was a point in time when you get unlocks at TGE and you can sell everything in 6 months.

Um that was also a time where there wasn't a lot of projects out there. So any team with a half legit any company with a half legit team actually gets a lot of mind share and with the low float high FDB dynamic you get a huge you know like valuation. Um so so that was a time where you can do a seat deal at 5 million and you exit at you know like $5 billion or something. Um, and that was a that was a game between 19 and 2023. Uh, and that was also the time where VCs go around and showing huge TVPI, right?

10 times, 20 times, 50 times. And the LPC see no DPI, but they they're like, "Oh, this is [ __ ] huge. This is great." So, but that doesn't really work anymore as the dynamic completely changed in the market. There are a lot more projects.

A lot of them get listed. Nobody want to buy that [ __ ] And, uh, there's no value capture. So um and the lockups generally have gone from maybe like immediate investing to like over time one on one plus three you know one year cliff plus three vest. So that model is broken and I think uh uh going forward venture will be just you know probably alliance dow type model or maybe like a you know sequoia US type you know multiple rounds of leads 10ear horizon like the old way of VC. So so I I think we're going to go through a full cycle where a lot of funds will go liquid uh uh like like we do now.

Do you think it's healthier for So I I have this debate a lot with a lot of folks and I'm more on the venture side, but I always think about liquid markets because your job is to return money to investors. Um longer cliffs investing schedules, net benefit for the market and the project or net detriment. So I'll give you my opinion. I think it's smarter to get quicker to market with more of your supply and have a a a force of your cap table around you to support that than to drag it out over multiple years because those tokens are your incentive for your community. What's your That's probably right.

I I I think the M the issue is not how long or short the vestings are. It's just the projects were founded with the goal to do TG and dump it. Yeah. Like I don't think amount of vesting is always found to dump. I I I think maybe 95% of the projects are doing it that way.

Uh and then they kind of put on a facade of shipping, but in reality they're just they're just done after TGE. Um and hopefully I think the industry changes with you know a real path to value capture in the US landscape. But but I think there's a lot of debt we have to pay into the future for that. And Jordy, how has your model evolved? No, I mean I agree that um this like oneplus threeyear model when the main product market fit of a lot of projects is just the t and the price discovery around that and oh is it going to trade at 3 billion or one or two and then and then you know a year later uh it's just this unlock forever thing.

I'm a huge bear on these like unlock schedules. have said it. I think generally um it creates a you know like the forward expectation is always negative because there's always more and more supply coming in. Yeah. There's a few cases where it's worked where by the time they come in you know things are growing and then they kind of absorb.

Y but it's very different than um I guess a few years ago where people were I guess like not so bifurcated on on TG and then like the long-term the unlocks were contra indicators. The unlocks were typically bullish. Yeah. You know and bullish unlocks. I have not heard that phrase in a while.

Yeah. Yeah. Um okay. And then so now we'll take a Yeah. But we'll step into kind of your strategies at some form of that is research data driven and otherwise then risk management some form of that is your trading systems your guies how has that progressed custo custody in 2017 you guys remember it was like air gap devices in tamper proof bags and Faraday cages and now we have you know regulated custodians so in terms of your specific strategies um how do you inform your investment your investments your investment research um what matters right does does you know transactions wallet addresses matter or do flow of funds matter more and I think we all generally know the answer of that but and then um in terms of risk management you know what this is an opportunity to kind of like shout out some of your favorite service providers or something you've built intern like a lot of people you know again we had to build out our own back and middle office right uh tech technically so feel free to to talk about any part of your stack that you think has gotten significantly better and allowed you to invest and perform better and then where you think there's a glaring gap in the market.

I mean, you definitely don't want to have a lot of friction if you're going to find something on chain. You just want to be able to buy it. You um we use for DeFi. That's our um MPC solution. Works really well.

It's quick, nice, easy, safe. Um I remember, you know, yeah, it used to be really bad. Um so that's gotten better. And you have a market making business too, right? Like as a part of it.

Does that change how you inter interact with the market versus like a straight out hedge fund like us? Because that we have with Fireblocks with Anchorage, you know, we use central exchanges, we use um Prime Brokers, which really developed over time, Galaxy, Falcon X, but I I feel like you guys do something a little different, you know, at your setup. We we I mean, like I said, 45 is our main solution. You can just make as many vaults as you can. We I thought I saw we just had uh Evenny on from Wintermute and because they they don't make as many wallets.

They just have like, you know, a couple big wallets. So, everyone sees the big Wintermute wallet and tracks it and then oh, they're selling, they're moving from Binance. We like to just have hundreds of wallets. No one knows what's going on. And um yeah, we sleep better at night that that way.

Yeah. Uh I guess we're we're more discretionary, long short. we long biased. Uh I came from Trafi. Uh so uh it it's a good way to underperform the market because it a lot of what happens here is flow and mind share versus like what actually happens underneath.

Most of the time what happens underneath is not enough to drive the prices. Uh but for me most of the time, you know, it's is it a good business? Is it a good founder? Uh does it capture revenue? And then in the end, did they give a [ __ ] about token holders?

And is there a lot of unlocks? Mhm. when the stars do align and when it's you know a lot of mines share aggregating onto this name it usually tends to outperform but in the end it might not even outperform Bitcoin but uh but we have a small all basket there. So does that culminate in you having conversations with other fund managers and project teams um or is it more you're monitoring particular data points or is it all the above? What what is the what's like is it you know traditionally if you're doing equity research you talk to the management team you talk to the sell side research analysts you look at you know market you call your you call your trading desk and say what are you seeing in flows is what's the well it's talking to you beautiful people as far as ideas and and sometimes we get we pick up stuff it's like Jordy tells me this guy is an absolute scam so we'll we'll we'll figure it out uh uh I created a service called bitclub.

io IO b I dclub I'm shilling it. You can check it out. Uh it basically has a lot of secondary market liquid thesis on there so I get better sourcing. But it's the same process. It's you ring a management team.

You build a model. Uh you figure out the token investing. You figure out who's dumping and then you underwrite a thesis. Um to be fair it it un it underperforms pumped off on coins and it underperforms the cabals and it underperforms all the [ __ ] which uh it's a little disheartening. I don't know.

Yeah. The biggest like thing missing in um crypto markets for efficiency I think is um so basically the amplitude between the lows and the highs is completely unnatural from anything else and I understand part of it is because we don't know the the fundamental DCF analysis value of a token but really like you just get this constant you know goes up 10x goes up 98%. Like these things are insane. And I think um you know as liquid traders, liquid managers, liquid strategists, the biggest lowhanging fruit is um keeping cash to just deploy into these absurd dips we get. The dips are just like way too deep.

And then just being like not as greedy on the upside, smoothing out a little bit this uh this absurd amplitude. And it's trading 101, you know, buy low, sell high. you just still talking about back very simple. Um so on the on the having cash to deploy as a fund manager, you're always thinking about being efficient with your balance sheet or maximizing your capital base. Does that mean sitting in cash?

Does it mean having a super USDC vault that's yielding you something while you wait or is it leveraging options to have, you know, risk replacement where you can have exposure and still maintain a cash balance? What's what's the what are your guys general views on cash management and strategy? Yeah, I mean it really depends. Right now rates are pretty down bad across the board. Um you should still be efficient with your balance sheet uh as much as you can obviously.

But there's also I mean the big thing is always the payoff, right? Like if I'm getting 3% on like cash that I have out outstanding, what's the point? Like within reason because now I have a bunch of smart contract risk or I have a bunch of counterparty risk if I don't like my counterparty. Now it's gotten better. Now you know there's there's better primes and stuff like that.

Um, but I I I think it just really is is contingent. C- crypto market neutral is a really funny world where it's like the yields get really really good when the price goes up a lot obviously. Um, so then you're kind of like, well, why am I even doing this if you know, Bitcoin's implied is like it's going to double in a year, you know, and now it's like I get 25% APR or something like that on on futures curve or something like this. Um it it really just depends on like how much kind of LTV you can get against some of these positions as well, right? So, but I the thing is like for for a lot of people this isn't going to really become like a major issue.

I think Jord's obviously probably you know most uh efficient with his capital or at least I hope so better than me at least. We're paying 14% interest on uh loaned capital. So yeah, we have to exceed that. My assumption would be you're making well north of that. Yeah.

15%. Yeah. Um and then so in terms of your holdings, right? And I don't know, it sounds like Jason, you're fairly involved with your portfolio companies. What is your take on involvement in the protocol versus just passively holding the liquid ones?

The all of yeah all the above like I mean if you're a large hold so for example do you participate in governance votes? um for for a long time the largest holders of Maker Dow didn't necessarily vote on governance proposals and that was detrimental I think for you know holistically for yeah I think there's a difference between public and private like if if we cut a check privately I I'm personally responsible for for that for that founder so I I have to participate we do a lot more work there on the public side it's it's no different than kind of well in my mind it's like a share ownership so we're almost leasing and renting the relationship in a Okay. And historically I haven't really done much governance uh on the public side of things. Uh in terms of help I think uh a lot of it is coaching them on investor relations. Uh a lot of them is sometimes putting them in touch with the right party and uh we also do one thing which is I I run a podcast with them.

I do introduce them to other liquid you know managers and say hey this is interesting. You should talk to the founder. But I think I'm doing a lot of investor relations work for them. Um by the way in uh founders love Jason. They love him.

Okay. Just Well, thank you. This is true. Yeah. Um they love you too.

Yeah. So, and then even again for you on the market making side or people who are leveraging, you know, maybe principal balance sheet capital, do you guys view protocol involvement or yield farming or, you know, airdrop farming as a legitimate strategy or is it something that you guys would do? for example, would you guys be heavily involved in a in a new per DEX to farm, you know, or is it really just about your obviously you don't own ETH to stake it for 3%. You own ETH for the 150 ball asset class that or asset that it is. Um, but what's your take on airdrop farming or other?

I mean, there's there's stuff that like is very good for individuals to do that we don't get involved with. like airdrop farming is a good example where it's just um it's not something that I want to spend a lot of time trying to do at scale. Um you guys run up nodes on projects that you're involved in or uh rarely really. Yeah, we're trying to add value less on um running nodes and farming airdrops and um trying to just strategize with with them and like you know it's it's a hard industry. It's very competitive.

There's 100 projects for each category. Each category has so many founders, so many builders trying to compete for that exact same vertical and maybe the vertical is dead. I generally tell founders that don't worry so much about like your competitors. Just worry that the vertical will actually be a thing and then you can compete for it later. I mean in those it's less than zero sum because I mean the vertical's declining as their position could be declining within it.

Yes. Um, yeah, it does feel like for the last two years, maybe it's changing slightly, but for the last two years, it was really a zero sum game across the board. So, you know, you weren't seeing a I don't know, a broad-based rally up until more recently. We've seen more market breath. But for a while, it was, you know, if you know, one all L1 is running, it's because another is being, you know, sold down to to to generate cash to buy that asset in the book.

Is that you feel like that's evolved a bit or you think it's still pretty zero sum? I mean that just matters a flow of funds into the space but what's your take? I think the the biggest thing here is like one fundamental miscalculation I made and I'll be very honest about this is that I you know back in 22 and 23 the my my assumption was that more so 23 equity market you know performance would drive capital into crypto. M and that was a horrendous, you know, kind of take because equity market returns have very little to do with new capital coming into crypto. Actually, what matters is interest rates more than anything else, right?

So, you're not going to get private fund deployment. You're not going to get, you know, net new buyers of of longtail crypto assets, i.e. anything outside of Bitcoin out, you know, except in a market where people are so, you know, risk tolerant that they will deploy money on anything without DD, right? So, I mean, Mike, you know, this like back in 21 or 2020, you could get a call with an investor and, you know, it would just they would turn around and send you $5 million and it would not even be a thing, right?

Now, it's like a six-month process. you have to like talk, you know, it's a whole. And so that's like a big reason why we're not seeing asset valuations kind of stabilize for a lot of assets outside of, hey, this narrative is hot for Suie because they have some Pokemon, you know, something or another or Avalanche or whatever and then it like, you know, cycllically will do one of these, right? Um, so I think it's much more to do with the fact that there's just not enough private capital demand that's coming into to bid this stuff. Yeah.

And there's enough spivy equities for people to get their you know, their uh their vault dose in uh small cap or micro cap equities, right? I mean, in even in our world, right? You have the new Salana Treasury assets that are $20 million stocks that are trading hundreds of millions of dollars in volume and ripping 5x in a day. It's that kind of pulls away some retail from the the funkier stuff in crypto. Yeah.

I think to that point too, right? Like now, you know, a few years ago it it was this thesis that Coinbase would become this like mega, you know, institution and it has become that, but I think we have to ask ourselves the question of maybe there's just a handful of assets within crypto that will kind of port over to Tradfi, right? And and beyond Tradfy interfaces like I IKR or Robin Hood or, you know, what have you. And the universe of investors probably does not want to like trade dog money and cat money in perpetuity, right? So that's like kind of the reckoning that we're coming to at this point.

Which companies will graduate? I mean, Bitcoin did and then Solan is on its way there. Like is there a longtail asset that you think would graduate? I I think we're finding this out in real time, right? And like if you look at in in my opinion, the ones that will graduate are the ones that are mostly focusing on that route, right?

They kind of see it. all the ones that are kind of doing these like sole strategy, you know, this that and the third, pushing the ETFs, whatever it is, they have massive foundations with hundreds of millions, billions of dollars in capital. The people running these foundations are not crypto people on average, right? Um they come from Tati, they come from the hedge fun universe. They're positioning themselves in a way to get to that, you know, mainstream outlet, right?

Much more so than focusing on like, you know, what's, you know, going on in the meme memecoin market. They still do that on like at the periphery but it's not the core focus anymore. But but what then then what do you how do you feel about those assets that are basically a pseudo equity like their stocks that are doing massive buybacks like hyperlquid. Do you feel like that class that is I mean depends on what the SEC says about it but like do you think that will ever graduate? I mean hyperlquid is like kind of end of one asset in a way right where it's like organic flow kind of one on its own doesn't have insane incentivization between different parties and I think that's also why it's angered a lot of uh existing kind of uh big players right so that might become one of like the model that a lot of people are pushing which is actually really good because now I'm sure this is the case for all of you guys you know a lot of the port codes that you guys probably deal with are looking at hyperlquid and being like maybe I should go down this route of doing as close to a fair launch, as close to a, you know, giving out a bunch of tokens to the community, not gatekeeping, not putting on a bunch of investors on the cap table.

And so I think that can become the graduating factor. And so I guess we'll get to the title of this panel, which is navigating crypto's new regime. Take it however you guys want. I want to hear a little bit about how you feel about the new regime. You could talk about Trump.

You could talk about AI agents. You could talk about whatever you'd like. But what is the new regime to you and how are you navigating it? Yeah, I mean the big categories you just mentioned. So AI uh agents are I talked to a lot of the AI luminaries and they are saying that you know this year and going into next year there's there's going to be a lot of transformational technology coming on the AI agent space.

Um and uh I'm firmly firmly in the camp that crypto has a role to play in this in many different ways. Um and specifically I mean AI uh agents obviously um need some some some form of money like we don't understand how important money is but money is like the portal between the AI world and the human world. It's the only thing that kind of you know you can you can uh especially digital money has to be digital money. It has to be permissionless money ideally not necessarily but ideally um that's the end game is like ideally instead of US dollars that can be censored like it's it's a permissionless money. So um stream focus on that category obviously a lot of the crypto tokens that will do well we you know remain to be seen what what's going to exactly like play into that.

It might be a lot of things that don't exist yet. Um and then of course you know Wall Street and the administration in the US there's a lot of openness now for experimenting with different things and some of them might work some of them might not work. Um you know you could say like throwing everything at the wall and like something might stick is okay. It's a lot better than what we had going on a few years ago. So um trying to be opportunistic on choosing the right ones there.

I think it's a little bit trickier. I would I wouldn't say it's uh it's as clean there. Um, and yeah, generally like the biggest alpha remains the same. It's just like buy dips when they're when everyone's just like super panicked and be able to try to buy. Yeah.

Um, I I think of the asset in three segments, the liquid side like Bitcoin graduated. It's going to chop, but there are obviously religious buyers that will just keep buying it as a proxy digital gold. I think it's probably okay long term. Um the large cap betas layer ones I think they are uh both a fintech equity and a uh currency to participate in the underlying wealth effect. Um if there's no wealth effect and by the way the wealth effect driver is way bigger than the fintech itself the equity itself.

So there's no wealth effect they go down. If there is it just pumps um subject to QE I think it's okay risk reward to be quite honest. Um, the long tale of assets, I I think there are maybe 10 to 20 that are actually investable. The founders are not complete scams. They care about token holders.

They're actually building a good business. The rest of them just slowly bleed to zero with no mind share. Um, I agree with Jord's point that there are a lot more potentially good businesses that are being built because it's no longer taboo. But those businesses are potentially fintech equity businesses that uh, retail won't have access to. So I think you know fintech equity in the US might get a bid as VC investors.

I think we're going to see some really good experimentation with stable coins all over the world and then I think the experiments with you know cryptonative entertainment products would be the one something that you know like u align style of the world would would keep on capturing. Um, so for us it's kind of focusing on the longtail and and maybe have a pretty big Bitcoin allocation uh as as the counterweight. Bitcoin stables and entertainment. Yeah, pretty much. Stables for entertainment, Bitcoin for long-term holding.

There we go. Yeah, I guess to talk about like the new administration. I I think we're we're at a very weird point of time um as you know on one side capital allocators and another side crypto and another side you know being at the cutting edge of you know finance in a way um but I I I think we're at this point now where people don't like they've heard for years we're going to get regulation we're going to get regulation but it's actually happening now um and people don't really know how to think about it and so now there's like this mad rush to DC and New York and whatnot to kind of figure out what's going to happen in the stable coin bill either you know stable act or genius act or you know the market you know market structure build that's happening right after this. So truthfully this is like a lot of you know just uncertainty around what the space will look like in 3 years time because we're going to get some amount of regulation across the board on all these assets all the instruments that we trade you know the venues that we trade on. So that's going to be kind of the focus going forward for I think a lot of you know capital allocators and to Jason's point there have been some assets that have graduated.

So you know broadly speaking Bitcoin will not be in the kind of same universe of consideration as some other crypto companies or tokens or whatever right so this is already kind of in its own you know universe it's get you know 600k BTC on IBIT alone right for example so that's in a in a category of itself but I think people need to start really thinking about what the space will look like when it's actually regulated by US regulators and how much of a force that will have on you know everyone here everyone in Europe, right? And and broadly the rest of the world. Bitcoin is the new tier one capital. And and by the way, the beta might not be there once. It could be like Robin Hood or Stripe or like those fintech stocks.

Yeah, that'd be interesting as more as more companies come public over the next few years if that even consolidates further the cryptonative assets that people are willing to hold as the basket gets more equal. Um, okay, great. Well, gentlemen, thank you very much for sharing uh your views and talents with this room. And if anyone wants to reach out to them, ping them all on Twitter. They're pretty active.

Thank you everybody.