📱 Shift to apps

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I know we’ve been talking a lot about Permissionless and some of the takeaways, and there’s still a lot to digest. 

However, I had one conversation last week that was pretty fascinating, and it focused on a part of crypto we haven’t talked about in a while.

So, without further ado:

💂 Old guard

So yesterday we talked about how crypto’s kind of in a weird spot, but the good news is that we’re still seeing improvements across certain parts of crypto. Take consumer, for example. 

We’re seeing a “big dispersion in consumer crypto right now,” Dragonfly’s Tom Schmidt told me.

Part of that comes from the fact that there’s been a shift away from infrastructure. 

“The applications themselves monetize better. They have more leverage. They end up often launching their own infrastructure,” he said. “I think there's been a shift in venture dollar allocation towards applications, and so applications could launch tokens too.”

Schmidt cited Hyperliquid as an example, noting that it started as just Hyperliquid and not a chain, but it’s since built the infrastructure for a bigger platform.

“I think that's kind of more and more the model that…I hear from builders that people are pursuing. In some respects, it fits more than the traditional model of venture capital, which is: You started out as a product, and then eventually you morph into a platform. But you're only a platform if there's more value created on top of you than [you] created,” he said. 

Schmidt noted that he’s seeing a bit of a shift, similar to what happened from 2014 to 2018 crypto, in which talent is really entering the space. 

And one of the success areas is iGaming or casino gaming. 

“It's sort of this classic story for crypto, where it's like you get around — kind of the old guard — old companies by making things more efficient, making it 24/7 by putting it onchain, trying to do the same thing, but [for] the lottery. 

“So…there's certainly Web 2.0 equivalents, but the crypto ones are growing like crazy, and they have all these properties that people have kind of come to expect from companies that use stablecoins for payments, or companies that operate in the space. So, yeah, I think that's kind of where we've seen more growth and more attraction,” Schmidt explained. 

It’s not to say this is the first time crypto projects are making this attempt, but it’s one of the first times that some have been venture-backable.

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