Authored by Jake Brukhman with insights from Seth Ginns and Pete Gatti

Over the last week, CoinFund’s Seth Ginns, Pete Gatti, and I represented the firm in Singapore at Token2049, a truly global conference that offered glimpses of where the industry might be headed.

Notably, it was my first time at an Asian crypto conference since I attended Devcon2 in Shanghai in 2016. At the time, Devcon2 was a 1,000 person conference. Token2049 is the largest crypto show I have attended in nearly nine years since becoming a crypto investor, and I was blown away by the sheer scale and international representation converging on Singapore. Reportedly 20,000 participants from Asia and all over the world attended the event.

And maybe that’s the headline: depending where you sit, you may not be operating in a bear market at all. There’s a large and hungry industry out there comprised of founders exploring all avenues to bring their vision to market, and LPs ready to back a new generation of technologists. Sitting in the U.S. it is easy to navel gaze, to become almost obsessed with shifting day-to-day commentary or any signal, good or bad. It’s a real risk as an industry to allow our focus to be tethered to a constantly moving tide. For CoinFund, with about 45% of our founders headquartered outside of the U.S., we’re both inspired by the energy in the Asian market and responsible for interpreting these opportunities for our portfolio.

These are our collective observations after speaking on three panels, meeting with 30+ Asian institutional investors, meeting numerous founders on the ground, and attending countless events:

 

The Now

 

• As mentioned, there really was no sense of an industry in a severe bear market. On the contrary, countless booths of startups promoted projects building in full swing, and investors were writing checks.

 

• Overall, there was very little discussion of global macro conditions, the Fed, or interest rates. The focus was rooted in innovation and the future built on blockchain technology and its bottom-up use cases. Asian investors did want our take on the current regulatory environment in the U.S. — perhaps the U.S. is perceived as an important pulse check for jurisdiction competition and to gauge global acceptance of crypto.

 

The Capital

 

• Allocators in Asia are extremely engaged and eager to learn more about crypto. Traditional allocators like banks and insurance companies, many of whom do not have exposure, are registering interest for the first time. Those who missed the last bull run want to be fully prepared for the next one if it arises. Many with whom we spoke have the expectation that we will exit this bear market without necessarily positing what will be the driver.

 

• We had meetings with over 30 allocators. Binance, Mt Gox, and FTX-selling questions come up as much or more often than higher-level US regulatory concerns, but we did discuss regulation in every conversation. A couple of conversations began with “Are there any tangible use cases for crypto?” though that was the exception, and selection bias as the allocators we met with had interest in getting a crypto update. There’s a general feeling that the bull market inflection will happen in the next six months, between Bitcoin spot ETFs, court wins, technical progress, and the halvening. Looking for the right entry timing is a priority for the next fiscal year. Venture investment is the default, there’s a general openness and excitement for the next cycle with regard to investments in liquid tokens. Importantly, we heard no discussions around whether the space is a real asset class, or debates about whether it’s going to be shut down. In this court of public opinion, that seems to be settled…

 

The Tech

 

• AI x web3 is its own industry, with companies feverishly working on GPU hardware, ZK proofs, and applications of AI to make smart contracts truly smart. The Asian market was receptive and curious to CoinFund portfolio company Worldcoin’s idea of biometric web3 identity. My Token2049 panel, moderated by Richard Muirhead, featured Alex Blania (CEO of Worldcoin), Illia Polosukhin (CEO of NEAR), and Jamie Burke, all talking about the future of AI and web3’s role in its privacy, security, and distribution.

 

• DePIN (decentralized physical infrastructure networks) had a stronger presence at 2049 than at the larger US crypto shows in 2023, with multiple dedicated side events drawing thousands of curious founders and technologists. I participated in a DePIN fireside hosted by IoTeX. We often talk about the divide between the promise of the technology and the reality that a small fraction of developers are still the adoptive set. Perhaps DePIN is heating up because it’s one of the likely steps to reach mass adoption?

 

• RWA looks like it’s real this time, not a headfake. The irony is that increasing interest rates led to crypto bear market, but they also led to pressure for yield-bearing stablecoins, which resulted in a more aggressive exploration of what was possible and a bunch of new products, including Robert Leshner’s Superstate, a project we backed twice this year. Yield bearing stables have now been the Trojan horse for broader RWA momentum; RWA.xyz has some stats.

 

• There appears to be a lot of mainland Chinese developer interest in web3. Hong Kong opening up to crypto seems to be a key unlock of that talent base, as they’re still hesitant to operate in the Chinese mainland. Mainland is known for being very strong at consumer application development, and Asia is seen as potentially bringing a wave of innovation to crypto at the app layer in this next cycle. This fits nicely with current views (out of EthCC) that there’s plenty of focus on infrastructure, not enough on app layer. My view is when you get the infrastructure rich and performant, as we’re doing, you will see a Cambrian explosion of applications. Seems to be setting up nicely.

 

• The CoinFund brand seems stronger than ever with projects, allocators, and peers. One founder told me on the ground, “We hear something about CoinFund every day.” We’re also excited to welcome our first Hong Kong based analyst to CoinFund, and we’ll formally announce him very soon.

 

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