Source: TradingView, CNBC, Bloomberg, Messari
What A Month!
The total crypto market cap of liquid tokens and coins has now risen by $1.3 trillion since the November 4th election. The equities of publicly traded crypto companies tacked on another $100 billion+. And there are countless other private companies and tokens that have most certainly added value as well, even if less easily measured. That’s an enormous amount of wealth creation for a small, niche industry simply due to the removal of certain government officials and the addition of new, presumably more industry-friendly politicians. Imagine if a beach ball was held underwater (for 4 years) and then was suddenly released. That’s an apt analogy for what is occurring in digital assets right now.
Source: Coingecko
Last week, there was an uproar over just how bad Operation Chokepoint 2.0 was under Biden’s administration, with a slew of negative stories emerging from tech leaders and crypto companies. The stories of innocent individuals and companies being de-banked due to having ties to crypto is not new but gained attention last week when
Marc Andreessen spoke about it on the Joe Rogan podcast and then began
retweeting other people’s horror stories. Those in the crypto inner circles already knew how bad this was because most have had similar experiences (I wrote about my own personal
de-banking in 2022). However, Marc Andreesen and Joe Rogan reached a much larger audience, many of whom had no idea how restrictive the environment had been during Biden’s administration. This ,of course, leads to the natural question of “how far along could the blockchain industry actually be if it hadn’t been held back?”. That alone explains some of the trillions of dollars of additional market cap added in just a month.
While higher prices are great, that, of course, cannot be the goal. Now that these companies and protocols have been released from some sort of reverse political asylum, they have actually delivered on the promises that blockchain has always offered. In some ways, this is still pretty binary, and is a bit of a
paradox, since we need more integration between banking, brokerage, and blockchain workflows before the true power of blockchain can be realized. However, in other ways, the industry is definitely innovating again, and the progress seen in such a short time post-election is palpable.
The Hyperliquid (HYPE) Token Launch Brings Value Back to Users.
Take, for example, the recent Hyperliquid (HYPE) token launch. Hyperliquid is the largest, and fastest growing decentralized derivatives exchange, and the team decided to build a great product first and THEN issue a token. The HYPE token was launched on decentralized exchanges only (no Coinbase or Binance listing), and has reached a
$9 billion fully diluted valuation in just a few short days. Why does this matter? Because for what seems like the first time in 2 years, a token actually traded up upon launch instead of straight down. Instead of selling endless rounds of private tokens at discounts to VCs (because regulatory policy restricted fair launches and ICOs), and then having exchanges, market makers, and founders complicitly list the token on Coinbase or Binance at some egregious valuation only to watch it trade straight down, Hyperliquid went back to the early days of crypto where early users and adopters get the benefit. Just over 30% of the tokens were airdropped directly to early users, meaning HYPE created an almost $3 billion wealth effect with no upfront investment, and no VCs. Once again, we have written about this
countless times over the past few years, but people have to see it firsthand to believe it. This is the way!
This wasn’t just an airdrop. Rather, it was a statement that crypto founders are ready to distribute value back to users again instead of this convoluted capital markets system that developed over the past few years post the ICO boom. As we’ve said over and over, tokens are the greatest capital formation and customer bootstrapping mechanism ever created, turning early users and adopters into quasi-equity holders, power users and evangelists. Hyperliquid proved this, by creating immense, genuine value for those who believed in the project from day one. Thousands of early users experienced life-changing increases in wealth, but the real win is the model itself, and it is refreshing to see the early success of ICOs coming back in modified form. No doubt other entrepreneurs saw this, and we can’t wait to see how many other types of businesses see this and learn from it (calling all restaurants, hair salons, gyms, etc).
The Rise of AI Crypto Bots
Moreover, in the early days of 2020 and 2021, DeFi, NFTs and stablecoins started to grow like wildfire, introducing crypto users to new blockchain products and functionality. Today, we’re seeing the same thing with the rise of AI and crypto. These are not new concepts (we wrote about
Bittensor and
Truth Terminal (GOAT) previously), but the willingness to experiment without risking jail time has pushed the envelope with regard to what AI and crypto can do together.
The convergence of AI agents and crypto has emerged as one of the most exciting narratives in recent weeks. AI agents, powered by advanced machine learning models, can execute trades, make investment decisions, participate in governance, manage treasuries, and perform various other tasks autonomously or semi-autonomously.
Virtuals is a protocol built on Base that allows users to launch AI agents with corresponding token pairs in a straightforward manner. These agents are multi-modal, capable of communicating through speech, text, and even 3D animation. Additionally, they can interact with social media platforms such as Telegram, TikTok, and X and gaming platforms like Roblox. These AI agents are fully autonomous influencers, engaging users across diverse digital spaces. The first AI agent created on the Virtuals protocol was
Luna, a virtual pop star and leader of an AI girl band. Luna has amassed over 500,000 followers on TikTok and actively interacts with users across multiple social media platforms.
AiXBT is another AI agent built on Virtuals that is essentially a crypto analyst, which may directly compete with crypto research platforms like Nansen, Kaito, Messari, and the Tie. The developers have given “him” the ability to pull information from Twitter and all of the major research platforms and can distill important pieces of news/information faster than any manual research. Upon an AI agent’s creation on Virtuals, one billion tokens specific to that agent are minted. These tokens are tradeable only through the Virtuals application.
Building on the successes of Truth Terminal and Virtuals, a wave of innovative AI agents has emerged in the crypto space, each offering unique capabilities and personalities. Zerebro, an “artistic” AI agent, engages users through unpredictable and creative interactions, minting NFTs, inscribing ordinals, and even releasing a mixtape. Dolos takes a more provocative approach, deliberately stirring confrontation on social media, while Aethernet, an AI agent on Farcaster, introduced the $LUM token.
Next, new and novel ideas about what AI agents can do were created. Ai16z represents one of the most ambitious use cases of AI agents to date. The ai16z DAO (an obvious wordplay on the successful a16z venture fund) operates as a decentralized investment fund. Two ai16z general partner AI agents will decide which other agents to invest in and can trade any token in the portfolio at their discretion. The fund's two general partners are AI agents Marc Andreessen and Degen Spartan AI. The general partners were built using an open-source framework called Eliza, which is now used to create all different AI agents through a platform called VVAIFU and developers forking the Github.
VVAIFU.fun is an AI agent launchpad. In a similar fashion to pump.fun, which allows anyone to create and launch a memecoin, users can put in basic information and launch an AI agent and token without needing to know how to code. The first agent was created by the team behind VVAIFU and is named Dasha. Dasha acts as the platform token and must be burned to launch an AI agent and unlock additional features like connections to X, Telegram, and more. Users can opt-in to use the Eliza framework for a slight additional fee, and in doing so, 5% of the supply is transferred to the a16z DAO.
Needless to say, the market has gone crazy trying to stay on top of advancements in these AI agents and platforms. And this sector is so new and growing so quickly that it would be impossible to gain exposure to this growth area via any ETF or passive index product.
Source: Messari
It seems like the U.S. elections were months ago. It’s hard to believe it has only been a few weeks. But the genie is now out of the bottle, and we expect crypto innovation, and thus excitement, to continue after years of repression.
