How does the founder of Revelo Intel view L1/L2 competition, crypto narratives, payments, and regulation?
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How does the founder of Revelo Intel view L1/L2 competition, crypto narratives, payments, and regulation?
For users, technology is not important; the market consists of different groups who care about different things.
Navigating Web3 tides with focused insightsWritten by: Revelo Intel
Compiled by: TechFlow
In this episode of the DeFi Podcast, hosts JF Saine and Morrissey welcome Nick Drakon, founder of Revelo Intel. The discussion covers a range of compelling topics, including cryptocurrency market trends, the future of DeFi, competition between L1 and L2 blockchains, and the evolution of Rollups/L2s. Below are the summarized notes from Revelo Intel, offering deeper insights for listeners.
Introduction
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Nick Drakon is the founder of Revelo Intel, a service dedicated to gathering and organizing new information for DeFi investors.
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He started the project as a full-time investor who found it difficult to access standardized DeFi information.
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To save time and gain deeper insights, Nick pays people to watch and summarize AMAs, YouTube videos, podcasts, and Discord channels related to projects he follows.
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Revelo Intel currently tracks around 230 entities in the crypto space—including individuals, projects, chains, events, and organizations—providing event summaries that help investors save time.
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Drawing from his own experience, Nick identifies needs shared by other investors and builds tools accordingly.
Focusing on What Matters
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During 2021 and parts of the prior year, there was almost nothing to analyze in the market because everything was new, with no comparables or track records available.
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Back then, the only guide was trend-following. Now, as the industry matures and more data becomes available, multiple analytical advantages can be gained.
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No single sector is inherently better; it's about which sectors people prefer and where they believe they have the least resistance in predicting what comes next.
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2023 will be the year when winners and losers in the market become clearly separated, as some long-promised projects fail dramatically after two or three years, and narratives can only last so long.
Information Disparity Between Traditional Finance and DeFi
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Traditional stock markets offer highly structured, objective, and unbiased information—scoring a solid 10 out of 10. In contrast, information availability in crypto scores only 1 or 2, making it difficult for investors to make informed decisions.
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Documents released by crypto projects are often incomplete, hard to use, and lack detailed explanations. Understanding how certain crypto systems work requires significant effort, and investors frequently have to hunt for scattered information. Even asking rigorous, objective questions in a project’s Discord may result in being banned.
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Information asymmetry is widespread in crypto, giving experienced traders an edge while making it easier for inexperienced ones to lose money. Regulators and laws may not resolve this imbalance in the crypto space.
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Narrowing the information gap between protocols through standardized reporting that everyone can understand would be beneficial.
Crypto Regulators
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There is little incentive for individuals to expose fraud within crypto protocols and tokens, especially since some tokens cannot be shorted.
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Shorting acts as a market protection mechanism and helps uncover fraudulent activity.
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Shorting is not evil—it's simply how markets should function.
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Trying to expose fraud without allowing shorting brings many drawbacks and few benefits.
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Allowing token shorting makes crypto more like traditional finance but also increases susceptibility to manipulation.
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The inefficiency of crypto markets renders efforts to protect people from fraud largely futile.
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Self-protection in crypto requires individuals to do their own research. Creating an environment conducive to better research could help.
The Information Race in Crypto
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Providing raw data and tracking services is a low-marginal-cost, profitable business model suitable for subscription-based offerings.
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Research and analysis, particularly those offering insights, represent a large and competitive market in traditional finance—and increasingly so in crypto.
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Messari Crypto falls into the category of companies providing research and data aggregation.
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The more market participants competing in this space, the more resilient and efficient it becomes.
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Revolo Intel’s core product is intentionally low-tech and low-IQ: listen to podcasts and summarize them.
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The DeFi research industry is still in its infancy. As the sector grows, skilled operators will thrive.
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DeFi research has enormous growth potential within the crypto space.
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Betting on DeFi growth over the next five years is a safe investment for any company operating in this domain.
Exciting Narratives in Crypto
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Interoperability is a compelling narrative, as value and information must move across chains in a multi-chain DeFi ecosystem. Investment opportunities lie in building rails and systems that facilitate cross-chain movement of value and data. Oracles belong to the same category, as they provide essential infrastructure for the DeFi ecosystem.
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Payments—specifically enabling online transactions settled in stablecoins—is another exciting theme, offering alternatives to high-fee payment processors like PayPal and Stripe.
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Businesses that extract fees from massive economic value—such as oracles, interoperability, and payments—have the potential to become trillion-dollar companies over the next decade.
Solving the Payment Problem
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The Binance Card already enables spending without requiring a traditional bank.
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Some in the crypto space focus on creating solutions that bypass traditional finance entirely, but this may be impractical or undesirable.
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An ideal solution would integrate Web3 and Web2, allowing non-custodial wealth to be recognized and used via debit cards linked to Visa or Mastercard.
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Regulatory and tax authorities must also be taken into account.
Payments in DeFi
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Adopting decentralized transactions (e.g., using USDC on Ethereum) requires both parties to agree to transact without centralized intermediaries.
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The issue is that the vast majority of people do not agree to transact this way, often due to external factors such as loans or reliance on traditional financial institutions.
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Due to these constraints, adoption will be slow, and decentralized transactions may be among the last use cases to achieve broad acceptance.
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On-chain real estate purchases face similar challenges and may be one of the last problems solved due to bureaucracy and entrenched institutions.
The L1 Wars
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It's hard to predict which L1s will remain relevant ten years from now. Sustainable systems tend to feature strong leadership, financial stability, and robust communication strategies. Two projects exhibiting these traits are Fantom and Polygon.
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Fantom demonstrates strong leadership, financial resilience, and clear communication. Polygon shows powerful execution capability and has built partnerships with major enterprises, potentially enabling real-world applications.
Avalanche & Solana
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Nick believes Solana's founder Anatoly is highly intelligent, genuine, and not a fraud or empty talker. However, Solana's association with FTX last year and related controversies have cast a shadow that's hard to ignore.
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Not everything needs to adhere strictly to decentralization ideals; Solana prioritizes speed optimization.
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Avalanche is interesting, and its subnets are exciting, though Nick sometimes finds the founder annoying.
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Competition within the industry is healthy, as it leads to more resilient systems.
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The personal challenge lies in learning as much as possible about these systems to make better decisions in the future.
Rollups / L2s (Layer 2 Solutions)
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Polygon’s founder has stated that Ethereum will be the only Layer 1, with all activity taking place on Layer 2 rollups.
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Nick does not yet have deep insight into rollups/L2s and therefore offers no valuable commentary at this stage.
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Nick values maintaining an open mind and actively strives to understand new developments at a deeper level.
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Due to attractive risk-adjusted returns, Nick has been actively trading on Binance Smart Chain (BSC).
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People will naturally gravitate toward platforms offering the best returns, regardless of the underlying blockchain.
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One or two dominant blockchains are likely to emerge, as new chains continue to appear with fresh incentives and reward opportunities.
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For users, technical details are unimportant. Markets consist of different groups that care about different things.
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