🥳 Worth the HYPE

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A16z is kindly requesting that the SEC allow registered investment advisors to hold crypto directly — within some parameters of course.

We have yet another fun flow chart from them to showcase how those parameters should work.

In all seriousness, it’s an interesting topic, and one that will open up even more doors for institutional adoption. However, SEC Commissioner Hester Peirce and the rest of the crypto task force will need to clarify that RIA’s self-custodying crypto aren’t violating current SEC rules about custody. 

Add that to their very long to-do list, please.

Meanwhile:

• Keep holding on: Bitcoin’s still at $84K, a slight increase over the past day.

• Hyperliquid’s HYPE is up 9% to $16 in the same time period. 

• DEX volume’s soared in the past 24 hours — up 10% to $8.39B, per Blockworks Research.

⚾ Inside baseball

We’ve talked a lot about where venture capital stands in crypto right now. I had the chance to catch up with Dragonfly’s Rob Hadick and pick his brain about the industry, VCs and, of course, stablecoins. 

Hadick believes that the backdrop for crypto right now “is as good as it’s been” now that the US is mulling regulation and overall friendlier to the industry. Add in Hadick’s overall bullish stance on things like stablecoins, and bam, he says he’s “never been more bullish for crypto in the US.”

However, he noted that valuations across crypto are still “very high.”

Dragonfly is slowing down a bit in order to properly pick and choose its spots, he told me. But that makes sense, given that it focuses on Series A and B rounds rather than pre-seed or seed stages (which is a rare find in the industry, though not abnormal given the relative youth of crypto).

“We frankly haven’t done a lot. In fact, Q1 was maybe our slowest quarter ever in terms of new terms sheet out, new term sheets signed,” he said. But that’s not necessarily because of the overall macro situation, he was careful to add. It’s partially due to Dragonfly balancing itself out because it was “very aggressive last year.”

It’s also because Dragonfly’s “really sensitive” to the fact that valuations have taken off. “And to us just changing the way we’ve invested over the last few years. We do less deals, but we do larger check sizes and take more ownership,” he noted, so that they can partner more with their portfolio companies. 

So far, the firm’s been very busy as the second quarter gets underway. 

“We did one term sheet out of all of Q1, and the first two weeks of Q2, we’ve actually had [a few] term sheets out already at the seed stage,” he said.

One thing I was curious about, admittedly, was Hadick’s thoughts about stablecoins. He told me there’s a lesson buried in the success of stablecoins for the crypto native folks.

Despite the volatility we’ve seen across DeFi and crypto, stablecoins have managed an upward trajectory — and yes, there’s still a slight correlation between stablecoins and crypto. But the difference is that they’ve managed to hit the nail on the head when it comes to solving real-world issues. 

For DeFi projects looking to succeed in crypto right now, Hadick advises founders to “solve the problems” that folks in the real world are experiencing. 

“Let’s continue to make DeFi rails better than traditional rails,” but it’s about usability at the end of the day and “bringing a better experience for the mass market.”

Now go out there and build.

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• Galaxy Ventures Fund, focused on early-stage startups, passed its goal of raising $150 million to invest in roughly 30 portfolio companies. 

• The Trump-linked World Liberty Financial received a $25 million investment from DWF Labs. 

• Raydium debuted its token launchpad after its Pump.fun breakup.

🫂 Embracing the hype

When I talk to folks about success stories in crypto, Hyperliquid is often the common answer. 

“Over the past three months, the platform has averaged $6.4B in daily trading volume, which sits just above 50% of the daily trading volumes of Bybit and OKX,” Blockworks Research’s Boccaccio wrote in a recent report. 

“As of today, the BTC OI on Hyperliquid sits at $1.4B, which is 15% of Binance ($9.2B), 46% of OKX ($3B) and 25% of Bybit ($5.6B),” Boccaccio wrote. 

To put that into perspective, Jupiter Perps — the closest competitor to Hyperliquid — averages $704 million in daily trading volume, 88% lower than Hyperliquid.

He also noted that its UX and ability to list popular tokens quickly have helped boost its popularity. 

Hyperliquid’s core businesses are HyperCore (the order book exchange) and HyperEVM (the EVM network). Right now, HyperCore is the dominant business, with a valuation of $11.2 billion to HyperEVM’s $61 million. 

But that “discrepancy” is warranted, Boccaccio wrote, “given that the core product is, and should be, the HyperCore, while the HyperEVM initially will likely act as a supporting chain.”

The report notes that HyperEVM could be a more profitable product later on, especially if it integrates token launchpads, SocialFI, NFT marketplaces on the chain.

Guess there’s a reason for all that HYPE.

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On my mind: Tokenizing everything

Yesterday, Base endorsed a token called “Base is for everyone,” which promptly crashed and, well, pissed some folks off. 

Of course, this once again kicked off the discussion of whether or not everything should be tokenized. 

I’m a big supporter of free will so, candidly, I’ve been fairly neutral about this debate in the past. However, watching Base for everyone’s chart was painful — and I didn’t even bother trying to play the trade. 

Instead, I’m a big fan of what X user @lucacseth said, and I don’t think I could say it better myself: 

“Memes, moments, and culture are all expressed implicitly through social capital. the solution is to surface and quantify that capital by curating a venue where culture becomes explicitly tradable, without tokens.”

On the flip side: it’s so inherently crypto to want to tokenize everything, and that’s part of the industry that I love. 

I’m torn. I don’t necessarily want folks to take on losses because they decided to ape into a Zora coin from Base, but I also don’t necessarily want the industry to lose shitcoins and memecoins as it matures. 

At the very least, the fallout from things like the Base-Zora situation make for enticing debates.