Variant 2024 Investment Focus: On-chain Infrastructure Remains Key, with Strong Interest in Gaming and Sports Betting Applications
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Variant 2024 Investment Focus: On-chain Infrastructure Remains Key, with Strong Interest in Gaming and Sports Betting Applications
This article outlines Variant's expectations for startups, covering areas such as consumer payment user experience, DeFi tools, gaming, betting, and prediction markets.
Navigating Web3 tides with focused insightsWritten by: Variant Fund
Translated by: TechFlow
At the start of the new year, Variant Fund discussed the types of projects they hope to invest in during 2024. Below are their expectations for startups, covering consumer payment user experiences, DeFi tools, gaming, betting, prediction markets, and more.
Crypto Payment Infrastructure
Currently, there is significant potential to improve global payments using cryptocurrency technology. However, using crypto for payments—and moving between crypto and traditional payment rails—remains challenging for both users and developers. Within the crypto payment value chain, numerous opportunities exist to reduce friction among developers, users, and merchants.
Institutional-Grade DeFi
In the medium term, as most areas of crypto and traditional finance converge, the distinction between them will fade. There remains an opportunity to build high-performance financial applications and infrastructure that fully leverage the capabilities of crypto, serving existing crypto users while gradually onboarding new ones—including institutional users.
Consumer-Centric Trading
Geoff Hamilton, investment partner at Variant, believes there's substantial design space around applications for buying and selling crypto that could deliver highly compelling user experiences. Providing current and future users with more ways to interact with crypto will be highly beneficial.
Information Markets
Regarding information markets, investment partner Alana Levin and data scientist Jack Gorman believe blockchain makes it easier to create two types of information markets: markets for accessing existing information and markets for generating new information. The former involves pricing access and reducing information asymmetry; an example might be paying for proofs about specific consumer behaviors or demographics. The latter focuses on making previously unobservable information measurable through unique data aggregation or new exchange mechanisms. Examples in this category could include novel risk-pricing structures, on-chain simulations, or prediction markets with real liquidity. The financialization of information is already evident in systems like Friend.tech’s keyholder rooms, Polymarket, and Arkham’s Intel Exchange—representing new ways to assign value to information that was previously hard to discover.
Payment Applications
Product-led payment applications—especially microtransactions—may present significant opportunities in the future. These apps leverage crypto rails to open up or expand markets: reaching global audiences typically excluded by currency conversion fees, users with lower willingness-to-pay than traditional customers, and others.
New Namespaces
Investment partner Alana Levin believes subdomains are undervalued—they are digital resources with verifiable ownership. Trusted entities (e.g., parent organizations) issuing subdomains can help verify legitimacy. Charities are a prime example: the U.S. Federal Trade Commission estimates hundreds of millions of dollars are lost annually to charity fraud. A trusted issuer granting verifiable subdomains to registered charities could create a useful log identifying which organizations are genuinely legitimate.
Privacy Infrastructure
Privacy infrastructure is still in its very early stages. This category is exciting due to its vast scale. We firmly believe that, in the long run, most on-chain states will be private, given the advantages it offers in market efficiency, security, and consumer preferences. Solutions leveraging FHE, ZK, MPC, and TEE each come with different trade-offs, making them suitable for distinct applications. The design space at the infrastructure layer is broad and full of opportunity.
Uniswap V4 Hook Market
Investment partner Derek Walkush notes that one of the most exciting new designs in DeFi has emerged: Uniswap V4 hooks—plugins for designing pools with unique characteristics and functionalities, such as new auction mechanisms, fee models, and more. With the launch of intent-based trading protocols (like UniswapX), the line between on-chain and off-chain liquidity is blurring. As a result, hooks are becoming a new frontier in DeFi mechanism design—making on-chain liquidity more competitive against CEX liquidity, which DEX traders can now leverage.
Betting Applications
Top creators like MrBeast produce videos with viewership rivaling NFL games. While sports betting apps already exist, social media and “great online game” players (such as creators) have now grown large enough to support their own dedicated betting and prediction experiences. Think of it as crypto sports betting on social media.
Real-World MMORPGs
Stepn demonstrated the potential of crypto lifestyle games that combine mobile-first Web2-like experiences, gamified IRL activities (like running), and subscription-based assets (such as degradable sneaker NFTs). However, Stepn had flaws: the gameplay was largely single-player, relied on complex tokenomics, and was overly financialized. New types of real-world games centered around social habits, combining incentives with verifiable off-chain actions, hold great promise.
On-Chain AI Agent Markets
Investment partner Mason Nystrom believes that as crypto AI agents become increasingly sophisticated, developers will design agents specialized in specific tasks. Instead of building a general-purpose agent that knows how to do everything, these universal agents could purchase services from specialized ones. A market for crypto AI agents would allow people to buy targeted agent services or trade trained consumer-facing agents within platforms or games (e.g., Parallel Colony NPCs, ASM brains, Frenrugs, etc.).
On-Chain Reputation Systems
Data scientist Jack Gorman notes that while blockchains are designed to be trustless systems, trusting various participants on-chain remains difficult. He sees a major opportunity in building reputation systems powered by blockchain data—systems that help us trust the contracts and individuals we interact with. Such a system could not only easily prevent bad actors like scammers or airdrop sybil attackers but also reward good behavior on-chain, enabling use cases in areas like undercollateralized lending or freelancer marketplaces.
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