Fantom Foundation team members Juan Angel and Sam Harcourt welcome Aric Chang of Wave Financial in the third episode of the Vertical Blocks podcast.
In this episode, the Fantom team discusses what is next for Fantom, and asks Aric about his experience in VC, what he sees in store for crypto, and more.
Read our notes to get a quick overview of what they went over.
Background on Previous Episode: How Fantom is Onboarding VCs
● Check out our notes on Vertical Blocks Episode 2
● Fantom foundation is streamlining deal flow from Fantom projects and is trying to get this closed with investments from VC ecosystem partners.
● Giving people free money with no strings attached is not going to be a successful user retention strategy in the long term.
● Fantom has 8 VC ecosystem partners.
● Team looking at other commercial opportunities together.
What is in Fantom’s Future?
● Fantom has seen a lot of growth in other verticals such as GameFi, NFTs, and working with different institutions.
● GameFi is especially important because you could play a game for 12 to 14 hours a day which would increase the demand for block space, rather than a DEX which you may only use to make a few transactions per day.
● In DeFi, Fantom is focusing on security and partnering with Dedaub for the Watchdog platform that will monitor contracts.
● Fantom foundation is going for as much market share as they can across all sectors.
● Eventually, you will see L1s trying to form a specialization around one use case, however, some L1s are better suited for general use.
Background on Aric Chang of Wave Financial
● In the past, Aric did regulatory consulting for crypto asset managers.
● ETHGlobal hackathon was the first project that got him into crypto.
● Currently, he is a venture associate at an investment advisor Wave Financial.
● Analyzes early-stage projects across various ecosystems.
How Do You See NFTs Evolving?
● NFTs becoming multi-faceted and utility-driven.
● Protocols building gated access using NFTs.
● Aric sees NFT ticketing as a use case, even though many web 2 solutions work.
How Do You Look for Investment Opportunities In Different Ecosystems?
● Multi-chain is the future.
● Aric is looking for the type of specialization, real strength, or use case each layer one (L1) has.
● ETH has the largest NFT market, and strong decentralization, however, it lacks scalability.
● Solana is focused on scalability but decentralization might not be as strong as for other L1s.
● Sometimes L1s necessitate certain types of trade-offs so that they can serve special use cases.
● It’s important to look at how a foundation is supporting the L1 to help it craft out that specific niche.
What Are Your Indicators When You’re Evaluating A Team Or Product?
● The ability for a certain protocol to build network effects.
● Enthusiasm and active participation from the foundation.
● Users are actively participating and are actively invested in the success of the protocols that they’re using.
Where’s The Balance in Providing Enough Sustenance to Founders but Not Too Much?
● There is a risk that incentives are used as a short-term money grab rather than an asset to provide value.
● When Wave Financial talks to founders they make sure they have a plan for the use of proceeds.
● The team is trying to be involved in the process of growth and helping as strategic investors.
What Is the Value Wave Financial Brings?
● Aric spends a lot of time talking to founders, going into regular meetings, helping craft tokenomics, strategizing, etc.
● The founders are allowed to dictate how they want to be helped.
● They have a strong pipeline with TradFi institutions that want to work with Wave Financial, and that network could prove to be useful in the future.
Next Hurdles to Overcome
● The next step is mass adoption.
● It’s important to make crypto seem more secure and easy to use.
● Protocols becoming more regulatory compliant to seem less scammy.
Fat Protocol Thesis
● Fat protocol thesis is the idea that blockchains can accrue more value than the apps built on top of them. This differs from Web1 / Web2, where apps came to be valued much more than the infrastructure they were built on.
● Aric does not subscribe to this theory as he thinks the future being multi-chain doesn’t allow the underlying chain to accrue as much value.
● People are starting to get more critical when measuring how value is accrued on the L1 token.
● If many people buying and using an NFT, does that directly contribute to the value of the Fantom L1 token?
● There might be instances where a DAP on top of the protocol is accruing a lot more value than the L1 itself.
Crypto economy That’s Less Tied to Speculation
● The utility is key.
● Once the bull market comes back, people might be a little bit smarter.
● When looking at a protocol, is there an actual need for a token?
Is there a specific vertical that you’re focused on now?
● Aric is looking at multiple sectors.
● For NFTs, he is looking at consumer-facing products and certain NFTs that fill in on inefficiencies that make NFTs more dynamic.
● On the DeFi side, he is looking at institutional DeFi.
Privacy infrastructure and regulatory compliance
● It’s a gray line for the Tornado Cash creator to be culpable.
● Regulators need time to understand how crypto works.
● A protocol being able to mitigate regulatory risk is a moat and a differentiator against competitors.
● Aric sees value in protocols where you must undergo KYC to access the privacy layer.
● It’s about how you want to configure your privacy layer when it comes into play with other platforms.
● If everything is visible on the chain, it would break the fiduciary duty of VCs.
Wave Financial Wealth Management Product
● Clients are traditional financial institutions or asset managers, family offices, and high-net-worth individuals as well.
● KYC and onboarding processes for clients.
● Assets are held with custodians and managed by Wave Financial.
Protocol Inventory Management Product
● Wave Financial has a treasury management division where they work together with various protocols or foundations that have a treasury.
● Some protocol teams try to do things, such as managing treasures, in-house but by outsourcing you can get a more efficient outcome for a fraction of the cost.
Crypto and Equity Market correlation
● Crypto is an investment asset, it’s going to be tied to the macro environment to some extent.
● The key is the utility - a protocol should have a real-world use where its value is not driven solely by speculation.
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