December 5, 2023

Progressing from New Plateaus

By Sam Rosenblum

As the saying goes: most people overestimate what they can achieve in a year and underestimate what they can achieve in a decade. As 2023 comes to a close, I thought it’d be fun to share some reflections on the evolution of the crypto ecosystem through my lens over the last decade, as well as my (buoyant) take on what may come next.

I entered the crypto ecosystem in 2013 as a nights-and-weekends Bitcoin enthusiast, while working a day job in Visa’s global network processing group. When Bitcoin began to garner more attention that November with BTC crossing $1,000 for the first time, I had the opportunity to help inform the executive team on this frontier innovation as related to global payments that I felt we should be paying close attention to. Shortly thereafter, in 2014, I made the jump to working in crypto full time as an early employee at Coinbase, where we endeavored to make using Bitcoin safe, easy, and compliant for the average person.

This was a special moment in the history of our space, with a small group of early practitioners optimistic about use of the Bitcoin protocol beyond just “digital gold.” Bitcoin was the protocol that first brought decentralized consensus to life and we were willing to look past the constraints of the day to believe in a future of open, decentralized applications running atop this singular protocol.

Proportion of total crypto asset market cap coming from BTC through 12/31/2015

Admittedly, this led to various ahead-of-their-time efforts and an over-emphasis on Bitcoin as a catch-all solution (often in a quasi-tribal maximalism). We spent countless hours pushing forward merchant payments, social micropayments / tipping, global remittances and gig economy payouts … all atop the Bitcoin protocol. And of course, while this work would ultimately pave the way for things to come, we simply didn’t have sufficient technology to enable the user behaviors we hoped to see.

Streamium was a 2015-era global micropayments service

In hindsight of course it's easy to see our efforts were hindered by significant limitations across the board. Confirmation times were too slow, price volatility was too high, products were mostly hacked together solutions, and barriers to entry were too tough. Hence, most of these early attempts would ultimately be wound down in favor of yet-to-be-invented technologies.

2014 launch of USD wallets on Coinbase; prior to the existence of stablecoins

Ten years later: Bitcoin is no longer the only game in town. Programmability and tooling have reached a whole new level. Scaling has improved by orders of magnitude. Cryptonative assets are complemented by onchain representations of fiat currencies like USD stablecoins. Digital assets no longer just mean digital currencies. Onchain UX is beginning to look and feel palatable to a wider audience beyond early adopters.

And as a result we’ve seen the ecosystem explode. While Bitcoin has soared from millions to several hundred billion dollars in market cap, become one of the most popular brands in the world, and has potentially major ETFs on the way, Bitcoin dominance (its share of the value of the total crypto space) has dramatically decreased from roughly 100% to about 50%. Over the last decade, we’ve seen the market cap of the ecosystem as a whole balloon from ~$1B to over $1T. The number of people building in this space has increased by an order of magnitude. The number of people who have interacted with digital assets has increased by multiple orders of magnitude. And all the while, Ethereum itself (and hence modern onchain programmability) is today only eight years old.

 Proportion of total crypto asset market cap coming from BTC through ~12/1/2023

As I reflect on the state of our nascent ecosystem just a decade ago and the incredible amount of progress since then, I’m energized thinking about what may come next. The familiar rhythm of past crypto cycles (infra-app and bull-bear) paired with the high quality of founders and teams that continue to head into our space make me optimistic for the year ahead and beyond.

Expectations for 2024

With all of that in mind, here are a few of my expectations for the year ahead:

The Bitcoin narrative will come roaring back. The idea of tech-enabled self-sovereignty was foundational to the origins of the entire crypto ecosystem. While the space has trended less ideological over the years, the grassroots narrative of a borderless, self-sovereign store of value will re-enter mainstream discussion in 2024, alongside a global political and economic backdrop that has many more people tuned in.

Stablecoin usability and usage will reach new heights. 2023 showed many in the US what much of the world was already aware of – the banking system isn’t necessarily what you thought it was. Stablecoin transaction volume will reach new peaks as individuals and businesses embrace the benefits of globally open payment rails for stable-value digital assets. Global payouts for remote and microjobs, tipping, and money streaming are all coming in hot, this time with UX as good or better than incumbent solutions.

DeFi will finally break out from the crypto echochamber. Globally open, composable financial tools have been proven out with cryptonative assets like ETH, particularly by those looking to leverage existing holdings. In 2024 however, user orientation will shift beyond speculative trading and onchain representations of “real world” financial assets will kick off their long awaited adoption curve. Faster and cheaper transactions will enable a wider array of users to not give up on the first attempt.

Open and composable consumer / social products will reenter the spotlight, this time with tangible advantages for mainstream users. Open social graphs like Farcaster and integrated marketplaces like Bountycaster will provide magic moments that will be far more convincing to new users than ideological talking points.

Stretch goal: mainstream understanding that most onchain assets are not “cryptocurrencies” (and most NFTs are not 10k PFPs). While the branding of bitcoin, the original onchain asset, as a cryptocurrency has resulted in predictable challenges for the space, Zora’s Magic Machine will help onboard a new cohort of users whose first impression is oriented around new forms of ownership rather than currency.

Looking to the decade ahead 

Ten years in, I find it easier than ever to be optimistic about the future of this space. While the memorable segments of market cycles tend to be peaks and troughs, it’s the new plateaus that say the most about the progress we’ve made. 2024 seems to me to be a new plateau, from which the ecosystem will continue to build from.

We’re entering 2024 with an order of magnitude more builders in the ecosystem than a decade ago. Those entering the industry for the first time have the benefit of starting from a significantly more robust foundation than that of prior cycles. Lower barriers to entry and higher leverage per person are a recipe for something great.

We’re also entering 2024 with orders of magnitude more users than 2014. And the cohort of first time users in 2024 will have so much more to do and significantly better ways to do it than in 2014. A larger top of funnel and higher conversion rate for people coming onchain are how we will break outside our echochamber, further into the mainstream.

What will these new entrants to the ecosystem, both builders and users, be able to imagine that would have been unfathomable a decade ago? The next decade in crypto, standing on the shoulders of what’s come before, has the potential to create even more change for the world than the last.

Thanks to Spencer Bogart, Jesse Walden, Linda Xie, and Jacob Horne for reviewing this post, as well as Haun Ventures teammates Chris Ahn, Breck Stodghill, James Rathmell, and Rachael Horwitz for conversations and contributions going into it.

This post is for informational purposes only, and does not constitute a recommendation to buy or sell securities or to pursue any particular investment strategy. This post should not be relied upon in evaluating the merits of any investment or any particular investment strategy. You should consult your own advisers as to business, financial, tax, legal, and all other related matters concerning any investment. The views expressed in this post reflect the current opinions of the authors and do not necessarily represent the opinions of Haun Ventures Management LP or its affiliates. Certain information in this post may have been obtained from third-party sources, including portfolio companies of Haun Ventures. While taken from sources that the authors believe to be reliable, Haun Ventures has not independently verified the accuracy of such information. Content is as of the date posted and subject to change without notice. Haun Ventures makes no representations about the enduring accuracy of information or its appropriateness for any given situation. Please see https://www.haun.co/disclosures for additional important information.

Sam Rosenblum
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September 15, 2022

The merge: base-layer incentives at work

By Sam Rosenblum

tl;dr – the Ethereum merge is a historic milestone for the crypto ecosystem and a good reminder that core infrastructure is still in an early development phase; the full crypto tech stack will continue to evolve in parallel for a long time to come.

The merge took place late last night (PT), marking the transition of Ethereum from Proof of Work to Proof of Stake consensus. It was the culmination of years of work among participants in a decentralized ecosystem: research by the Ethereum Foundation, software implementation and refinement by individual contributors from around the world, and coordination among a global set of independent validators all motivated by the greater good and economic self interest.

For Ethereum, this was nothing short of a historic accomplishment. The core processing unit of a globally open, distributed network was seamlessly upgraded without downtime, while supporting hundreds of billions of dollars in value. It also represents a key milestone towards the intended end state of the protocol. With several major upgrades now behind us, we stand roughly at the halfway point of Ethereum’s current engineering roadmap.

However, the merge is not only significant because of the transition of Ethereum to Proof of Stake; it’s also a demonstration of the core values of crypto at work, a reminder of where we stand in the grand scheme, and a hint of things to come.

Given how many “crypto-years” seem to fly by every 12 months, it’s easy to forget that crypto as financially incentivized open-source software development has only really existed for about seven years now (counting from the initial release of Ethereum in Summer 2015). In fact, the crypto tech stack is the first example in history of compelling financial incentives in place for continued innovation at the protocol level.

Consider this: while the number of emails sent worldwide increases each year and the Gmail application is updated multiple times each month, SMTP (the core email protocol) has not been meaningfully upgraded in decades. Meanwhile, the world’s most valuable smart contract platform, which was just upgraded by a decentralized community of individuals and organizations, will continue to be improved upon for as long as we have effective incentive mechanisms in place.

While we’re still so early in the scheme of what we hope to accomplish as an industry and ecosystem, the rate of exploration, iteration, and invention has never been higher. The best is truly yet to come.

This post is for informational purposes only, and does not constitute a recommendation to buy or sell securities or to pursue any particular investment strategy. This post should not be relied upon in evaluating the merits of any investment or any particular investment strategy. You should consult your own advisers as to business, financial, tax, legal, and all other related matters concerning any investment. The views expressed in this post reflect the current opinions of the authors and do not necessarily represent the opinions of Haun Ventures Management LP or its affiliates. Certain information in this post may have been obtained from third-party sources, including portfolio companies of Haun Ventures. While taken from sources that the authors believe to be reliable, Haun Ventures has not independently verified the accuracy of such information. Content is as of the date posted and subject to change without notice. Haun Ventures makes no representations about the enduring accuracy of information or its appropriateness for any given situation. Please see https://www.haun.co/disclosures for additional important information.

Sam Rosenblum
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June 7, 2022

Euler

By Sam Rosenblum

Crypto technologies are driving a transformation of the global financial system that has only just begun. DeFi Summer was less than two years ago. Since then, a flurry of builders and participants from around the world have entered the space to innovate with the goal of building a peer-to-peer financial system that is characterized by more inclusivity and transparency.

DeFi (decentralized finance) has the potential to remove key structural obstacles to building wealth that have been root causes of inequality for centuries. We believe these technologies could present meaningful competition to legacy players and expand access to economic opportunity for more people around the world. At the core of DeFi is the ability for anyone with an internet connection to borrow or lend crypto assets without an intermediary. With time, we believe this could be the key to unlocking financial services for the unbanked.

As with any new innovation, approaches to DeFi protocols vary and activity in the space over the last few years has produced many important technical, structural, and social lessons. We have been very interested in a new generation of DeFi builders who are bringing a deep knowledge of financial markets and crypto-native technical skills to the task of moving DeFi into its next chapter.

As we set out to understand and research new players in the space, we were introduced to Euler, a next generation DeFi protocol for permissionless borrowing and lending of crypto assets. Euler is led by an exceptionally talented, experienced team, including alumni of Oxford University’s doctoral program, Goldman Sachs, and the Federal Reserve Bank of New York. Euler has taken a unique approach to addressing the risks associated with lending and borrowing crypto assets which we believe represents a meaningful step forward for the DeFi ecosystem. While incumbent DeFi protocols have made trade-offs between permissionless asset listings and capital efficiency, Euler has developed a nuanced strategy for risk management that we believe enables the best of both. Additionally, Euler has implemented improved mechanics around liquidations which we expect will facilitate the maintenance of healthy markets without being overly punitive to borrowers.

We believe that DeFi borrow/lend volumes will significantly expand in the coming years as new entry points and improved user experiences make the category more accessible. The first generation of DeFi protocols were not designed to handle risks associated with illiquid or volatile assets and have largely relied on permissioned listing systems as a result. In the Euler white paper, the team details how the protocol addresses these challenges while preserving the DeFi ideal of permissionless listing with risk-based asset tiers to protect the protocol and its users.

Today, we’re proud to announce that we are leading a funding round to diversify the Euler DAO treasury, with participation from other investors including Variant, FTX Ventures, Coinbase Ventures, Jump Trading, Jane Street, and Uniswap Labs Ventures. We’re very excited to support the Euler protocol and meaningfully contribute to the DAO’s governance. Welcome Euler!

This post is for informational purposes only, and does not constitute a recommendation to buy or sell securities or to pursue any particular investment strategy. This post should not be relied upon in evaluating the merits of any investment or any particular investment strategy. You should consult your own advisers as to business, financial, tax, legal, and all other related matters concerning any investment. The views expressed in this post reflect the current opinions of the authors and do not necessarily represent the opinions of Haun Ventures Management LP or its affiliates. Certain information in this post may have been obtained from third-party sources, including portfolio companies of Haun Ventures. While taken from sources that the authors believe to be reliable, Haun Ventures has not independently verified the accuracy of such information. Content is as of the date posted and subject to change without notice. Haun Ventures makes no representations about the enduring accuracy of information or its appropriateness for any given situation. Please see https://www.haun.co/disclosures for additional important information.

May 5, 2022

Zora

By Sam Rosenblum

Haun Ventures is leading Zora’s latest fundraise to accelerate the growth of one of web3’s most important protocols. The future of the internet needs Zora—a hyperstructure that can “run for free and forever, without maintenance, interruption, or intermediaries.”

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Haun Ventures is dedicated to backing teams building a better internet. That means a web defined by more opportunity, creativity, security, and accountability than the version of the web that came before. Non-fungible tokens (NFTs) are a core building block that are central to the future of the web. We believe NFTs will produce a new generation of creators and makers who will enjoy more equitable economics thanks to a web built with better incentives that fairly values the contributions of those who create the culture. We also see web3 innovations like NFTs as a positive force for openness and decentralization in a web currently weighted too heavily toward centralized, opaque gatekeepers.

The future, in some ways, is already here thanks to what founders Jacob, Dee, Tyson, and the incredible team at Zora have built. Zora is an open protocol that makes it possible for anyone in the world to launch independent NFT collections, marketplaces, and experiences. We have only seen the tip of the iceberg of NFTs in web3 and believe Zora will become one of the most important protocols (and DAOs) as the NFT ecosystem and associated use cases meaningfully expand in the years to come.

Zora has already established itself as a key figure in the web3 / NFT zeitgeist, with close relationships with leading DAOs and specialized marketplaces, a popular online community publication, and well-attended weekly workshops led by Latasha, their talented Head of Community. As web3 expands and NFT use cases along with it, we believe Zora is well-positioned to become a critical layer in the web3 creator ecosystem.

Today, we are proud to be backing Zora during the next step in its journey: Zora Labs, the company building open developer and community tools, and the Zora Protocol, the DAO-governed hyperstructure. Taken together, this combination of open, permissionless protocol and tooling will enable and empower a new wave of creators and communities.

Jacob described our team as “venture contributors” and we have every intention of living up to that distinction by contributing to the growth, culture, and success of the Zora ecosystem. We feel deeply privileged to be along for the ride. Welcome Zora!

This post is for informational purposes only, and does not constitute a recommendation to buy or sell securities or to pursue any particular investment strategy. This post should not be relied upon in evaluating the merits of any investment or any particular investment strategy. You should consult your own advisers as to business, financial, tax, legal, and all other related matters concerning any investment. The views expressed in this post reflect the current opinions of the authors and do not necessarily represent the opinions of Haun Ventures Management LP or its affiliates. Certain information in this post may have been obtained from third-party sources, including portfolio companies of Haun Ventures. While taken from sources that the authors believe to be reliable, Haun Ventures has not independently verified the accuracy of such information. Content is as of the date posted and subject to change without notice. Haun Ventures makes no representations about the enduring accuracy of information or its appropriateness for any given situation. Please see https://www.haun.co/disclosures for additional important information.

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