Dragonfly

Flew to Singapore just to talk about the USA VC market and the effect of the US elections on crypto. Shoutouts to Monad Labs and Polymarket hidden in here https://lnkd.in/ezsDGvbR

Really enjoyed recording this with Konstantin Shulga back in May, one of the best podcasts around to go deep into evolving market infrastructure in crypto.

Cheap internet access is a privilege right now, but it won’t be in the future. Like Starlink, DAWN will enable ubiquitous internet coverage for the millions of people unable to afford it. We’re proud to support Neil Chatterjee, James Smits and the team as they continue to deliver the dream of creating the first global bandwidth marketplace.

I'm proud to have submitted a comment letter with Bryan Edelman to the Commodity Futures Trading Commission (CFTC) on behalf of Dragonfly on the proposed rule that effectively bans prediction markets in the US.  Along with Coinbase, Crypto.com, and Robinhood, among others, we disagree with the overly broad definition of "gaming" and hold that the proposed rule exceeds the statutory authority of the CFTC - especially given we are in a post-Chevron world (more on Chevron here: https://lnkd.in/gYkBHgfc). Banning innovation is not the American way. We hope the CFTC will consider our recommendations and welcome discussions on our letter Coverage: https://bit.ly/46IAMx6 Full letter: https://bit.ly/3LWaxd9

Shared my thoughts broadly this morning on both macro and crypto and re: sharing them here. ISM point has already come and gone Macro - Strongly believe the severity of this broad sell-off is primarily related to a major deleveraging event due to people utilizing the yen for cheap leverage and the carry trade. This looks to almost be over with JPYUSD up over 10% last month and the Nikkei down over 20% on the same period - There is risk we will see some contagion related to the above but likelihood of Japanese financial intervention even higher which should fend off some risk - The 2 yr is clearly showing that the market is concerned the fed is behind the curve after a bad jobs report but lots of intricacies that indicate the concern is potentially overblown, with many temporary layoffs and jobless claims linked to weather. Trend is bad, but specifics are mitigating and at historically strong levels. ISM manu miss also linked to the unease but that has been on trend and services more important, which i'm optimistic on - Consumers still look like they are strong, with strong retail buying and historically normal rates of charge offs - Concern about the ROI on the AI related capex is resetting tech growth expectations, but believe those concerns to be over sold. Expect these stocks to come roaring back when risk on - VIX and Fear/Greed spiking, likely in for lots of short term vol and Aug is a low liquidity month, but risk/reward likely to get into decent ranges if we see the VIX turnover and we get solid footing as early as this week - Market pricing in an emergency rate cut, which I believe doesn't happen and extends fear until Jackson Hole - Iran seems to be backing off it's language around any large scale conflict - We are probably within months (<1yr) of new QE, large rate cuts, and a return to accelerated business growth - Overall some continued short term pain, but medium term bullishness Crypto - Lots of endogenous things have happened to crypto recently, Germany selling, Mt Gox distributions, Jump slamming the markets, etc and we've had relative strength until now - This seems like capitulation, so expect we find bottom soon before equities. Moves down will be primarily macro + leverage - Non native retail not coming for awhile - too much pain, we need sustained growth again. Native retail was over leveraged in long tail assets and have been bled dry the last few months, most "high quality" alts down 70%+ - Liquidity coming back in is going to coalesce around the majors. Most alts are never reaching ATHs again, especially without strong PMF - Overall lots of things to be bullish about, beyond the business cycle / macro we also have ETFs now reach a broad set of investors, banks selling those ETFs, broad tokenization, growing PMF in stablecoin/payment usage, increasing amounts of defi activity, professionalization of the cefi markets, coming regulatory clarity in the US, and more general acceptance of decentralized systems

Don’t miss out on our upcoming panel discussion on August 20 from 1:30 p.m. to 2:15 p.m. at Plug and Play Tech Center in Sunnyvale! Join us for “Under-Appreciated Ideas in Crypto VC,” featuring: - Ani Pai, Partner at Dragonfly - Catrina Wang, General Partner at Portal Ventures - Miko Matsumura, Managing Partner at gumi Cryptos Capital - Moderated by Spencer Swanson, Ventures at Plug and Play Register here: https://lnkd.in/gME7TMMw

Super excited to double down on Caldera with Founders Fund and Sequoia Capital in their quest to innovate at Ethereum's frontier and bring a billion users into crypto.

We’re thrilled to announce our investment in Prodia! Like many others, Dragonfly has been watching the galaxies of crypto and AI collide; we suspect that this intersection will produce some of the most generational companies of this era. And we think that Prodia perfectly fits this mold. Their image generation API has generated over 300 million images in the cheapest and most performant way possible. On the surface, according to Bloomberg, the generative AI market is set to expand to $1.3 trillion by 2030. And yet, this demand requires, in turn, a tremendous amount of chips, but the market is currently fragmented on the supply side. Interested parties must typically go to a large vendor like AWS or GCP today, sign multi-year contracts, and have to pay per compute hour. Many companies overpay because they have to include projections of expected demand – high demand means they have to pay above market rates for these GPUs at peak time, including when demand is normal most of the time. If there is a spike in usage, it will often temporarily make the customer’s service unusable or slow down inference. Conversely, if there is not enough usage, the customer is wasting money by letting GPUs run empty as they have already paid for the supply. Prodia swiftly sidesteps this issue by charging per generation, meaning all their performance benefits go straight to the consumer, alongside unrivaled optimization on their backend to juice speed. It’s cheaper because the customer doesn’t have to spend engineering efforts to deploy nodes, maintain servers, and design complicated servers to reduce empty GPU capacity. It's the equivalent of serverless compute for AI — paying only for your workload, rather than for the underlying hardware, and allowing the vendor to manage the load balancing and hardware efficiency. Ultimately, the Prodia team has done this before: they previously worked on Storj, one of crypto’s OG projects in storage. Ultimately, we’re incredibly grateful to be on this adventure with them and can’t wait as they unveil more over the ensuing months.

"Chevron Doctrine" overturned! In a landmark decision, the US Supreme Court has overturned the long-standing "Chevron Doctrine" in Loper Bright Enterprises v. Raimondo, marking a pivotal shift in agency authority. This decision, splitting along conservative/liberal lines, ends decades of judicial deference to agency interpretations of ambiguous laws. My take on the implications for ongoing and future cases:

Ever wondered why software companies can release buggy software often without being found liable? In my recent TheLawVerse.com blog post, I explore the legal barriers and industry norms that protect tech giants from liability. From contractual moats to recent case law trends, discover the factors that allow these companies to dodge legal bullets. 🔗 : https://lnkd.in/gRSRUmaN