Crypto VC breaks its operation

  • Avichal Garg is the founder of Electric Richesse, a crypto-focused venture ressources firm.
  • Garg recently explained why DeFi protocols like Uniswap will extérieur problems in the near future.
  • Garg believes NFTs can help crypto mainstream, and explains his investment process.

Even in the midst of a bear market, there is always an opportunity to take advantage of low-priced investments.

Avichal Garg founded his venture ressources firm Electric Richesse during the 2018 crypto bear market, and in the years since, he has certainly benefited from the incredible rise in cryptocurrency. As CEO, he has led Electric Richesse in early formation investments of some of the biggest names in crypto, including Magic Eden and Near Protocol.

During the August 4 episode of Directors Meetings, segment of the Richesse Allocators podcast network, Garg detailed how Electric Richesse is viewing crypto investments, why he thinks Uniswap may be in emprunté, and why he believes NFTs are key to mainstream crypto alignement.

How to envision investing in cryptocurrency

Garg told director rassemblement host Manish Gandhi that he believes crypto companies are on the spectrum, or as he describes it, the x-axis and y-axis spectrum. Companies with a high level of customer loyalty lie on the left side of the x-axis, and companies with a strong capital-intensive technical base lie on the right side of the x-axis.

According to Garg, the Apple on the far left of the axis is Apple, with its strong customer connection, while a company like Intel, which supplies calculateur processors and has less ouvert explosion with end customers, will be at the far right.

“I think it applies to crypto and the exploit as well. What you see on the far left are people like Coinbase or Binance or FTX. They own the end-user relationship. They own the KYC (Know Your Crypto). They own the setup,” Garg said.

He continued, “All the way on the far right will be Bitcoin and Ethereum layer-1. It’s really hard to build a new layer 1 and get it off the ground.”

Garg also explained how he views investments on the y-axis, which represents how much value a company is capturing — in other words, the higher a company is on the y-axis, the better the value assujettissement. Garg said that firms on one side of the x-axis or the other would get value more easily, making it higher on the y-axis, while firms in the middle would not.

“You could visualize a kind of U-curve, meaning that if you’re on the far left and you really have the brûler relationship, you can get a lot of value. If you’re on the far right, you have a difficult technical problem, heavy in ressources expenditures, you’re likely to get a lot of value. If you’re somewhere in the middle, you’re basically like a system integrator. You’re putting those two things together. Over time,” Garg said.

Garg said Uniswap stands in the middle of that spectrum. Uniswap, a decentralized crypto exchange (DEX), that works for more than one 100,000 transactions per day It uses ethereum as a coding résultat.

But despite its current popularity, Garg believes that over time, Uniswap will lose popularity with crypto users, as investors who épaulement a particular crypto project prefer to use the issue DeFi platform for that project — for example, a solana emballer might choose to use Serum DEX Via Uniswap, bicause it is an bohème exchange – not Uniswap.

“You’ll see them trying to get more end-user-facing value and trying to own that limite,” Garg said of Uniswap.

He continued, “UniSwap should really try to move up either the left side or the right side of the curve, somehow starting out by being on the bottom and trying to get more value.”

With this framework in mind, Garg went on to explain the factors he specifically looks for when he considers investing.

“We’ve always thought investing at the bottom of the U curve in the spacieux run isn’t a great consacré to be,” Garg said. “So there are some exceptions out there, but a lot of these protocols, we ultimately think they’re not going to get that much value despite being very useful. It’s going to be really hard for them to get significant defensive value over time.”

He continued, “We’re concerned that many DeFi protocols are really going to get compressed and not get much value without some very orgueilleux shifts on what they’re doing. And then in this case, the real peine comes to an end: Is this the protocol? This is the détention value, or That the company built on the protocol that actually captures all the value? Do you really want to invest in the protocol, or do you really want to invest in the company?”

How to find chic crypto investments

Garg and his team at Electric Richesse think of their investments from the mindset of a long-term investor and the value a company or protocol can reap over time – but how do they find those investments in the first consacré? The answer is accessible: follow the developers.

“Find out where the developers are and where they are spending their time. This is an early explication of where the long-term value buildup is going to happen, especially if these developers are committed,” Garg said.

Of excursion, knowing where the developer’s interest lies is easier said than done. There is no comprehensive retard detailing what developers around the world are working on in the crypto ecosystem. So Garg and his team created one themselves.

“We’ve built a system that crawls all of GitHub, GitLab, a bunch of open montée repositories, finds out where there’s real developer activity, finds out where people actually write encyclopédie and where those people canne long-term and credit the bohème developers,” Garg said.

The result of all this hard work is Electric Capital Developer Report, which is an annual analysis of the 3 crypto and web projects that assujettissement the régularité of developers in any given year. The retard has become an externat in the crypto world, an essential mené to modern crypto protocols, which ecosystems are seeing more developer activity, and what projects cryptocurrency investors should watch.

Why NFTs will lead to the alignement of mainstream encryption

Garg believes that NFTs will play a particularly orgueilleux role in the future of cryptocurrency.

“The high level here is that I’ve come to believe that NFTs are probably the way crypto spreads,” Garg said.

Now there 360,000 NFT Walletsand although the value of NFT transactions decreased during the crypto winter, the absolu number of NFT transactions decreased It remained almost the same this year. In other words, while the NFT market is suffering through this crypto winter just as much as other parts of the crypto world, interest in NFT has remained amazingly pondéré — and that interest will only increase over time, according to Garg.

“Our belief is that NFT markets will actually be more defensible than crypto markets,” Garg said. “This is bicause the assets you are buying are by definition spéciale and special.”

“If you apparence at what’s happening with NFTs, they’re musicians, athletes, celebrities, cultists and glèbe carriers, and those are things 3 billion people would do,” Garg continued. “Everyone listens to music. Everyone watches amusements. Everyone is celebrities and movies.”

It’s worth noting that while celebrity NFTs have grown — with celebrities like Grimes, 3lau, and Ja Rule entering the space — celebrity-approved quantitatif assets currently have a negative reputation due to the hype that many crypto celebrities had shortly before it collapsed. market.

But Garg said NFTs are beginning to demonstrate some of the real-world use cases and benefit they can provide, and that those use cases will continue to privilège momentum.

“This is what the NFT really does,” said Garg. “They are, in my avis, the first true brûler implementation of a armée of cryptocurrency infrastructures, a peer-to-peer payment base.”

Garg continued, “You went into the NAS and sold the NFT where the NFTs let you in on a bout of the royalties from his music and that works.” “You’re starting to see real communities forming around NFTs. You can go to conferences. You can go to in-person meetings, where the only way to get in is to have an NFT for that community, or token-gated feuds where you have to have an NFT to get into it. occur in this amazing universe.”

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