1/ Arbitrum doing $100m+ in annualized revenue, which net 30-40% margins today (after calldata costs)

Will expand to 90-95% margins after eip-4844 / proto-danksharding

For perspective ETH is doing $3-5bn annualized fees

L2s on path to being incredibly profitable 2/ Optimism on similar trajectory with ~$60m annualized fees (roughly half of $ARB run rate)

But both chains today are single sequencer, neither OP/ARB tokens used to pay for gas, nor do they have explicit utility (eg protocol fees, burn)

Trading $8-12b fdv

1/ Thrilled to announce our investment in @GammaSwapLabs! They are building a new core primitive in the defi space – monetizing IL/vol and allowing AMM DEX trading to scale by an order of magnitude

Excited to work with this chad team

medium.com/gammaswap-labs… 2/ DEX AMMs have been one of the killer use cases in crypto - with 10% penetration vs spot on centralized venues, and $1Tn+ volume in both 2021/22

Unfortunately their potential is limited due to the significant amount of IL (impermanent loss) that LPs suffer

1/ Impressive to see @GainsNetwork_io reach ATHs in volumes after their Arbitrum expansion (dec 31st)

$2B in two weeks is a new record. 1.5x volume on arbitrum vs polygon ($1.2b vs 800m)

Increasingly see dapps embrace multi-chain deployments. Many ecosystem here to stay 🤝 2/ Huge number of crypto protocols have expanded to multiple layer 1 chains - Aave, Lido, Curve, Frax, OpenSea, Magic Eden, GMX, Gains, Trader Joe, Ribbon, Sushi, UXD etc

Uniswap recently on its way to BSC

coindesk.com/tech/2023/01/2…

1/ Pretty impressive # of protocols building around / stacking on GMX

Delta neutral vaults - @rage_trade @UmamiFinance
Auto compounder - @PlutusDAO_io
Options hedge - @dopex_io @DAOJonesOptions
Risk tranches - @GMDprotocol
Social trading - @STFX_IO

Many more / list goes on 2/ Composability has been one of the super powers of defi

Highly liquid spot DEX markets (Uniswap Sushi Curve) allowed on-chain lending protocol to scale much larger - by allowing for orderly, reliable liquidations

Which further spun the on-chain trading flywheel

A look at Solana NFTs and shift to no/optional royalty marketplaces

Solanart from 0% to 37% of Magic Eden's volume (at peak) back to 0% - all within 2 months Big prize to be won - SOL NFTs have picked up significant momentum this year

Magic Eden currently around 30% of Opensea volumes

~50% on peak week

Started this year at ~0

Been long awaited, but Ethereum is rapidly scaling

Arbitrum/Optimism now at ~30% of ETH daily txns

L2 szn is just beginning TVL across L2s up 130% (in ETH terms) since beginning of year

Dec 31 - 1.6M ETH
Today - 3.6M ETH

1/ Increasingly negative on DAO governance (in its current form) as effective means of decision making. There is good reason why govts / corporations do not have voters involved in *every* key decision. Think longer term model will shift to electing oversight committees et al 🧵 2/ $MKR / Hasu among the folks to propose this concept. Have committees (voted in by token holders) who then set the mission, strategy, execution of the protocol. But MKR still intends to have token holders vote on key decisions prior to implementation

Credit losses this crypto cycle

(prior to bankruptcy proceedings)

Celsius - $1.2B
Genesis - $900M+
Voyager - $650M
Blockchain - $270M
Blockfi - $80M
Vauld - $70M
Zipmex - $53M
Coinflex - $47M
Babel - undisclosed (?)

Still a few (non tier 1) exchanges coming out of the shadows Celsius

decrypt.co/105136/celsius…

Both @tryramp and @mercury are such a joy to use. Products that were built with user delight in mind

Have saved a lot of time and $$ using them and would recommend to any founder / startup Ramp experience
- easy onboarding
- intuitive to use
- receipt forwarding that works
- virtual cards per subscription
- accounting sync with QB is amazing, automates 90%+ of the work (cannot emphasize this part enough)

Main ask is just for a mobile app

ramp.com

Excited to announce the launch of @Modular_Capital with my good friend and co-founder @vincentjow_

We are a fundamental, thesis-driven crypto hedge fund - backed by @multicoincap @paraficapital @altcap @Roadcapitalmgmt @LedgerPrime & others

blockworks.co/investment-pro… Blockchains represent one of the largest tectonic shifts in technology over the coming decade.

The core primitives of decentralized compute, storage, and trustless social coordination (incented via tokens) - have and will create new sets of applications not possible before.

1/ Hindsight is 20/20. But easy to forget a time ago, when it was not entirely obvious that people would openly put their pictures, videos, stories, resumes and dating profiles on the internet - shared among both friends and strangers. 2/ In the early 2010s - LinkedIn still felt a bit weird and not fully normal. College classmates of mine (incl me) would make fun of ppl that wrote "Incoming XXX Analyst" on their LinkedIn *before* graduation.

I think this is now the norm among Gen Z's & new grads. Times change.

1/ Have had many friends ask (in eng, product, finance etc). Any $1B+ startup I tell them to ask for heavier cash comp or 2-3X typical equity, to account for 50-80% public mkt corrections

Otherwise just go hang out at mega cap until cycle fully resets (or start ur own company)

https://twitter.com/jasoncwarner/status/1531724288230760448

2/ Anecdotally the startups with big cash war chest have tended to elect for larger cash comp route (rather than issue too much more sbc / addt'l dilution) - to win over prospective hires

Think co's growing quickly, raised recent mega rounds ($200M+) and v good gross margin / UE

1/ current neobank/broker landscape 🧵

(both public & private) 2/ public neobank/broker market caps since ipo:

$SOFI -21% ($8.7B -> 6.9B)
$NU -54% ($41B -> 19B)
$HOOD -72% ($32B -> 9B)
$DAVE -79% ($4B -> 860M)
$COIN -80% ($86B -> 17B)
$ML -86% ($2.9B -> 420M)

don't have info on if economics work. but if they do, prob need at least $500M-1B+ in further funding to get to end state?

for context, shopee has $70B GMV (runrate) and not ebitda breakeven for core mkts (SEA/TW) until end of 2023 ($100B+ gmv by then)

techcrunch.com/2022/05/29/ast… total private funding raised:
Doordash $2.5B
Getir $1.8B
Gorillas $1.3B

these are very capital intensive biz models to build out - to attempt to have unit economics work at scale

hard not to imagine global consolidation next 2yrs in quick commerce (if the UE do in fact work)

1/ Crypto punks and cool cats were both very blue chip nft collections. Both have floor prices (in USD) down ~80% over last 6mo (vs -30% bayc, -50% meebits, -50% btc, -60% eth). Times change quickly. Still believe in nfts as a category but hard to see enduring value w/o utility. 2/ The OG nft collections will have substantially less "lindy" compared to what btc has held onto over last 13+ yrs. Store of value attributes (once in place) are more difficult to dislodge vs individual preferences for collectibles - which change w culture and the times.

1/ Choice b/t default alive (profitable) vs default investable (product mkt fit + health UE) is a tricky one. Not needing external funding let’s u 100% control your own destiny. There is appeal in that. At the same time, markets / oppys also don’t sit around waiting forever 🧵 2/ Building a co is a delicate balance b/t solving for certainty & survivability - while maintaining real sense of urgency.

You can have a biz w 10 yrs of runway, that moves too slow and fades into irrelevance. Or a biz that burns too quickly and dies on the way getting there.

Been investing in tech for almost 6 yrs now. While that is still a relatively short span of time (esp thru mkt cycles) - have been grateful to learn from incredible mentors. Some reflections below on what has stuck out most to me (public focused): #1 - coverage is versatile. I started from IT services -> info services -> payments -> fintech -> privates -> crypto -> liquid tokens. Been a wild journey looking at all sorts of diff sectors, ecosystems, biz models, and co's at various stage of S-curve.

1/ Growth software, internet, fintech, BTC, ETH all down 40-50% last 3mo. For the most part, appears growth / risk assets broadly moving together. Crypto sell off less idiosyncratic than headlines suggest. Who knew growth fintech down more than crypto! Multiples normalizing. 2/ High growth fintech multiples now down 50% from 2021 avg (47x ->23x EV/GP). Trading ~15% below pre covid levels.

Can debate if these multiples are new normal from higher rates. Or whether effect of massive de-grossing by funds. Many of which are in world of hurt / pain...

1/ Really fascinating to see crypto bear mkt dialogue / conversations. Lots of focus on price, % from peaks. Much less around fundamentals, users, txns, gas fees etc. Maybe just continued evolution of the market over time. Crypto gradually turning into productive asset class. 2/ Ultimately L1s derive mkt cap / value from DCF of fees paid by users for compute + MEV. Surprisingly Eth fees have held up - partly driven by strong NFT activity (or mania?). OpenSea having best month yet - will see if persists.

$16bn run rate based on Q4 / Jan activity.

1/ I've long been a fan of @BanklessHQ podcast. Hugely important and valuable to my journey in crypto.

This week's 100th episode with @cobie is BY FAR my favorite.

Deeply inspiring story. Cobie's empathy for users is his superpower. My dive in 👇

2/ Cobie comes from humble beginnings. His family lost their pension during the 2008 financial crisis. He got into crypto bc he was looking for a way out - against a system that felt rigged.

Bitcoin was that to him. Impartial, non state money.

paradigm.xyz/Bitcoin_For_Th…

1/ Altimeter is excited to back @Checkout in their $40B Series D round 🔥🔥

@GuillaumePousaz is building a global payments juggernaut. Tripling txns processed. Global coverage w/ best auth rates. Leading clients like Netflix, Grab, Shein, Revolut, FTX.

checkout.com/newsroom/news/… 2/ Global ecom is a $5Tn+ market today - growing 15-20% annually.

We are still in early innings of merchants looking to consolidate their payments stack - towards providers with single tech platform / API, global coverage and best auth rates. That's Checkout.