Podcast Notes | Conversation with Tangent and Dragonfly Investors: What Crypto Sectors and Projects to Watch in 2024?
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Podcast Notes | Conversation with Tangent and Dragonfly Investors: What Crypto Sectors and Projects to Watch in 2024?
In the West, people view meme coins as yet another cash grab or useless tokens without use cases or roadmaps. In contrast, Asians are more enthusiastic about meme coins.
Navigating Web3 tides with focused insightsWriter: Revelo Intel
Translation: TechFlow
In this episode of the Blockcrunch podcast, Jason and Sanat discuss Binance's case, Blast, Celestia, alternative L1s, DeFi, Web3 gambling, and more.
Host: Jason Choi - Angel Investor at Tangent
Guest: Sanat Kapur - Investor at Dragonfly
Original Title: "10 Crypto Projects to Pay Attention to for 2024"
Release Date: November 29, 2023
Impact of Binance’s Fine and CZ’s Resignation
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Sanat was not surprised by Binance’s fine, noting that traders in Singapore had been speculating on the amount. He is curious whether this marks a structural shift in exchange models or if new exchanges will emerge.
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Jason noted that major figures and organizations in the Web3 space, such as SBF, Do Kwon, and Three Arrows Capital, have previously faced legal issues.
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Jason expects many exchanges to cease operations in the U.S. due to regulatory pressure. Earlier during Token2049, there were rumors that Binance could face a $10 billion fine leading to bankruptcy. Now, those concerns have subsided as Binance remains solvent.
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Jason anticipates Binance will evolve into a more legally compliant exchange.
Blur and Its Layer 2 Network, Blast
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Jason explained that Blur chose not to engage in wash trading and instead focused on distributing tokens solely to liquidity providers. This approach helped it become one of the most liquid NFT marketplaces from the start. It dominates trading volume across all NFT platforms, currently capturing around 60% of market volume.
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Jason added that while Blur leads in trading volume, OpenSea has more traders. OpenSea holds about 40% of the market share and remains a significant player in the NFT ecosystem.
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Jason said Blur is seen as more innovative and speculative compared to OpenSea, which is known for its traditional approach. While OpenSea plays it safe, Blur continuously pushes boundaries, exploring new ways for speculation—similar to how Binance surpassed Coinbase through novel speculative offerings. Blur aims to replicate this with its upcoming L2 launch.
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Jason mentioned that with the L2 launch, Blur plans to build a perpetual DEX for market makers, enabling them to go long or short on NFTs. This feature allows market makers to hedge their inventory without suffering major losses. Previously, market makers struggled to effectively hedge their NFT positions on Blur.
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Sanat noted that Blur recognizes the need for structural change in the NFT market to improve liquidity. Their goal is to offer more advanced liquidity than what OpenSea provides.
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Sanat said Blast’s airdrop strategy resembles rebate programs offered by centralized exchanges to market makers. Blast attracted $342 million in TVL within just 48 hours, exceeding market expectations. Other EVM and L2 launches, such as Linea, have struggled with user attraction and liquidity. Despite controversy over Blast’s marketing tactics, it has successfully captured user interest and capital.
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He added that Blast’s success is expected to have short- to medium-term positive impacts on Maker and Lido, both of which will earn yield on $ETH and stablecoins deposited through Blast.
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Jason noted that L2s like Arbitrum and Optimism lock up large amounts of $ETH, which can generate yield. While some platforms have considered staking user deposits in ETH, they view the risks as too high or not worthwhile.
Betting on L2s via Data Availability (DA) Layers
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Sanat explained that rollups scale by executing transactions off-chain and posting results to Ethereum. Optimism handles execution and publishes data to Ethereum for verification. Vitalik Buterin emphasized in a 2020 post the importance of rollups for Ethereum’s scalability roadmap. Ethereum’s technical path has shifted from sharding execution to becoming a base layer for rollups.
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Sanat said initial danksharding (an Ethereum scaling method) will increase available space for Rollup data, while full danksharding is still years away.
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Sanat added that Celestia recently launched its token as a data availability layer for rollups. The bullish case for Celestia is its alignment with Ethereum’s roadmap and technical superiority over other solutions. However, competition from other DA layers like Polygon, EigenLayer, and Espresso Systems poses challenges.
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Sanat noted that Celestia’s token launch initially confused many users, but prices surged recently as the market recognized its potential. Although the concept of data availability layers may take time to gain mainstream adoption, it is gaining increasing attention.
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Jason said early investors like Spartan Group recognized the importance of DA layers before broader market awareness.
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Jason added that unlike L1s, it's unclear how one data availability layer differs from another. In L1s, there are clear trade-offs between monolithic and modular designs.
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Sanat said execution layers lack traditional network effects in terms of Ethereum composability and liquidity advantages. Selling only to developers on rollups may require building brand trust. The future competitiveness and outlook of execution-layer projects remain uncertain.
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Sanat added that brand effect might play a role in DApp spaces, though network effects are currently lacking. Celestia is cited as a project with strong branding. Sanat wonders whether DApps will become commoditized or retain differentiation.
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Jason said the debate centers on different philosophies of blockchain scaling. Modular infrastructure uses rollups to expand blockspace across multiple chains. Monolithic chains aim to increase block size or achieve full composability on a single chain. He cited Solana as an example of a monolithic chain aiming for high TPS.
Alternative L1s
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Sanat said Monad is an alternative L1 to Ethereum using parallel execution technology similar to Solana. As global focus increases on EVM (Ethereum Virtual Machine), Monad’s approach becomes increasingly valuable. The team is committed to improving EVM scalability and has attracted many talented developers.
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Jason added that Sei Network, another portfolio company, also enables parallel execution for EVM. He noted that Sei was initially built on Cosmos SDK but faced challenges due to low user adoption and preference for Ethereum tools. User-friendly tools like MetaMask and Etherscan have boosted Ethereum’s popularity.
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Jason said the current narrative has shifted toward building in Solidity and using EVM. EVM is considered Ethereum’s greatest export.
The Future of DeFi
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Jason said Ethena is a stablecoin offering internet-native yield. Users stake $ETH and earn yield by shorting $ETH on centralized exchanges. This project delivers fully crypto-native yield without relying on real-world assets.
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Jason added that funding rates for shorting ETH on exchanges like Binance and OKX currently range from 10% to 18% annually. By combining Lido staking yields (~3–4%) and positive funding rates, users can earn 15–20% yield on Ethena’s stablecoin.
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Jason pointed out that Ethena is the only project offering purely crypto-based yield without reliance on artificial inflation or real-world assets. Despite concerns about negative funding rates during bear markets and counterparty risk from relying on centralized exchanges for hedging, the project remains compelling.
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He also said new technologies allow users to collateralize assets via custodians and open exchange positions without directly depositing collateral. This mirrors traditional finance by separating custody, settlement, and execution.
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Sanat said Aevo, a DeFi project founded by the Ribbon Finance team, combines options markets with perpetuals. Even during bear markets, Aevo’s trading volume continues to grow. It is seen as a strong competitor to Deribit in decentralized options.
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Sanat added that Aevo has successfully launched pre-launch futures for tokens like $TIA and $PYTH, demonstrating its achievements even under challenging market conditions.
Revival of the Web3 Gaming Industry
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Jason said Rollbit falls under the gaming category because it offers casino-like games and gambling services. It has achieved significant scale, generating approximately $300 million in revenue within a year. Though centralized, it has a utility token that provides benefits such as rakeback and trading fee discounts to holders.
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Jason added that Rollbit uses on-chain burns to track revenue, though the accuracy of this method is uncertain. He believes Rollbit’s success has spurred increased interest in decentralized casino projects within the crypto space.
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Jason said Rollbit’s claimed $300 million in revenue makes it one of the highest-earning crypto applications. Ethereum earns about $2 billion in fees annually, followed by Tron at $900 million. Only Uniswap and Lido surpass Rollbit, earning $500 million and $560 million respectively.
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Jason suggested that Rollbit’s controversial centralized nature combined with its high revenue makes it a notable project to watch.
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Sanat said stake.com, a gambling platform without a token, generated $2.6 billion in revenue last year. Gambling businesses are highly profitable but may attract founders with questionable ethics. Regulatory risks make investing in gambling companies challenging. Nevertheless, these businesses generate substantial revenue compared to many other crypto projects.
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Jason said there is no clear distinction between exchange users and casino players in the cryptocurrency market.
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Sanat said operating gambling sites may be seen as low-status in the U.S., whereas in Asia, interesting exchange founders often venture into crypto. Crypto futures trading volumes have significantly increased, with some users engaging in high-leverage speculation. TikTok videos show users attempting to profit from leveraged trades but often getting liquidated due to minor price fluctuations.
The Other Side of RWA: DePINs
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Jason said DePIN refers to using blockchains to coordinate physical infrastructure networks. Hivemapper is an interesting project in this category leveraging blockchain technology.
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Sanat said he currently doesn’t support Hive due to its low circulating supply and limited price discovery. Many DePIN projects have successfully generated supply for physical infrastructure—for example, selling Helium nodes—but often struggle to create demand for their products.
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Sanat added that Filecoin faces challenges attracting users to utilize its storage offerings, competing against centralized providers like Amazon. Hivemapper stands out due to its founder’s deep understanding of the mapping industry and thoughtful approach to building a decentralized, AI-driven map network.
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Sanat said Hivemapper involves installing Hivemapper cameras in vehicles, where users continuously generate real-time map data while driving. Traditional competitors include Google Street View cars, which capture map data at high cost every six months. By incentivizing users to install Hivemapper cameras on fleets or popular routes, vast amounts of real-time map data can be collected, surpassing traditional methods.
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He added that building a decentralized, AI-driven map network and selling data to map companies is an ambitious plan. The project’s founder has laid out a four-step master plan, similar to Elon Musk’s approach when building Tesla’s Roadster.
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Jason said these steps include establishing a decentralized, AI-powered map network, selling data to companies to enhance their maps and databases, creating developer-friendly tools, and expanding into other domains.
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Jason added that Render Network provides GPUs for rendering AI models. These services appear to have some demand, with daily spending around $2,000. The network relies on token incentives to drive both supply and demand.
New Competitors in Oracles
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Jason said Chainlink has long dominated the oracle space. Pyth Network recently launched its token, aiming to provide price data as an oracle.
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He added that Pyth has succeeded in the Solana ecosystem but faced difficulties on EVM chains. Synthetix uses Pyth Oracle to power its products.
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Sanat said Chainlink dominates in total value secured by oracles, followed by Tron Oracle and Maker’s Chronicle. Pyth has a smaller market share but is growing rapidly.
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He questioned why Chainlink has a $4 billion market cap despite insufficient revenue to justify its valuation.
Meme Coins
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Jason said he is uninterested in meme coins like $BONK, viewing them as bubble-driven hype. He finds $DOGE interesting due to Elon Musk’s involvement. However, he mentioned venture-backed Meme Land, a self-aware meme coin that ironically brands itself as useless yet possesses distinct fundamentals.
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Jason added that in the West, meme coins are often seen as another "get-rich-quick" scheme or useless tokens without use cases or roadmaps. In contrast, Asians are much more enthusiastic about meme coins.
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Jason said Meme Land explicitly claims to be a completely useless token with no use case or roadmap. Yet, it actually has a roadmap aiming to become a utility token for a social product network.
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He added that they will offer liquid staking services. The goal isn't to earn revenue from staking but to let users freely earn $ETH yield. He finds this intriguing, as it could encourage non-crypto users to explore and invest in $ETH and crypto.
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Jason said the team behind Meme Land also runs 9gag.com, one of the world’s largest websites with massive traffic—ranked among the top 500 globally. 9gag.com receives more visits than Airbnb and major crypto exchanges and is extremely popular in Asia. With their vast social influence, they could leverage meme coins to onboard millions, even billions, into crypto through fun and engaging content.
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