WTF Happened at Token 2049??

GM/GE/GN to my indefatigable crypto savants! In case you are surprised or slightly discombobulated by the headline, hopefully this one gives you a clearer picture. I spent 1 week in Singapore during the worlds largest crypto conference of this year. Largely touted as the passing of the torch from The West to the East, I had a lot of expectations for what might be upon us.

However, most of the conference did not live up to the hype. While Asia holds the keys to certain massive unlocks for crypto, it is not all that it is marketed to be. 90% of what I saw led me to believe that there are still many fair-weather operators that are in the process of being weeded out by the brutality of this bear market. Success is defined by courage in the face of adversity. In Singapore, I saw an abundance of shakeable faith. Enough for me to realise that for me to be the truest version of myself, I must evolve. And for me to evolve, Farming Alpha must die.

I’ve had fun writing about each of the issues I have tackled so far. RWA, Curve and TG bots in particular. Naturally, my piece on TG bots made the most impact on folks, which made sense, as it was a builders perspective. I am and always will be a builder. While unlocking alpha opportunities on-chain has been fun, I don’t see myself having any unfair advantage over folks doing this for a living. Since I build for a living, I want to focus more on what are the biggest hurdles to mass adoption of decentralised systems, as well as the areas that I am most excited to explore as a builder. This does not mean that I will stop writing. On the contrary, expect a much higher volume of writing from me to round out 2023.

Hopefully, some of what I write might give you all some inspiration to build. It is the hardest, but most rewarding journey. And I would be remiss if I spoke about anything other than that!

For our final version, a builders perspective on Token 2049.

Hope you enjoy this, the last Farming Alpha, before we bring in Abstract(ed).

Lessons from Token 2049

Disclaimer: This is not my first crypto conference and certainly wont be my last. I never buy tickets for the mainstage. Side events is where its at. Here is what I learned from attending a large volume of side events at token 2049.

1. Regulatory Arbitrage is a major draw!

As a resident of Dubai, I can comfortably say Singapore is miles ahead as a financial base. Dubai is quickly building its reputation, but Singapores proximity to China and autonomy from it, have cemented its position as a global financial hub.

The Singaporean regulator, alongside the Central Bank seem to be on top of regulation and policy, thus attracting plenty players from the west. The expectation here is that a lot more Tradfi firms dipping their toes in tokenisation will likely have their custodian entities based in Singapore.

What is this good for?

• RWA

• Institutional Liquid Staking Derivatives

• Institutional Crypto Custody Businesses

• ETFs

• Structured Products

• OTC Desks

2. Banks are there, but not fully

Banks are in the conversation, but not fully. Wealth management and private banking teams sit on billions of dollars of wealth. They have been making tonnes of money on AUM. This is a significant distribution unlock for crypto.

However, none of the banks are willing to take on the custody risk of crypto assets. Most are still building their theses. Expect more to happen here.

3. Asia Loves Arbitrum

The Asian market is obsessed with DEFI. In that same vein, there are plenty DEFI protocol users/builders out of Asia. This is really promising to Arbitrum, which has become the hub of DEFI on-chain.

Builders are innovating around Futures, Options, Yield Vaults and more! The fascination with DEFI was striking to me. Had fun hanging with the Vaultka team and wish them the very best for their TGE. Make sure to check them out here!

4. LSDfi is not finished at all

Yield is the name of the game. LSDs were one of the main draw, if not the main draw all week. LSDs have every chance of being the new financial primitive on top of which DEFI (and Eth security) is built.

Innovation around LSDs is unlikely to stop, with players innovating in new ways. Asymmetric Finance is using an index method which has a basket of the top LSDs, presenting a very interesting alternative to the pvp dynamic between Lido and Rocketpool.

Home staking is a huge focus, and now with StaderX and Rocketpool, it does not take more than 8ETH to become a validator. Decentralizing and self- limiting Lido was a huge talking point, with many a bit nervous to comment. Naturally, Lido has the most power at the moment, and its influence does not seem to be waining. Large exchanges and institutions are choosing to stake via Lido.

5. TON-TG Reunion

The announcement of the reunion of Telegram with TON was significant. $TON is now sitting at a $12bn market cap, even more than Solana! Asia looks at TG as crypto We-chat. They have a clear preference for this type of UX, particularly for DEX trading and payments.

TON announced a built in Self custody wallet. I fully expect them to bridge to ETH/EVM to create a powerhouse. A lot more information to come!

6. There are 2 types of Asia VCs

Type 1: Coupled with Centralized exchanges/their founders

• There is no secret that exchanges like Binance, Bybit, Huobi, Bitget and more have a hold on the asian audience. Many of the exchanges have venture teams or are LPs in venture funds.

• These VCs usually have a thesis, which is viewed from a lens of what type of companies/ideas/protocols can add volume to their exchanges. Many to all of the start ups funded by these VCs list a token before users use their protocol/product/service.

• Success for these VCs is the added volume to their exchange, not so much the growth of a protocol over a long period of time.

Type 2: Co-investors building theses alongside Lead’s

• These VCs put in small cheques alongside larger signal investors. These signal investors are usually Binance Labs or syndicates that are investing in North American/European VC backed start ups.

• Very rarely invest more than $500k and do not have a very strong thesis.

• They are focusing on building relationships with potential high signal founders, VCs, market makers.

BONUS: Research Driven, High Conviction Investor(s)?

• While most Asia VCs fall into the buckets above, IOSG Ventures is clearly in a league of its own.

• Their approach is akin to Paradigm/a16z, operating and investing with a clear thesis.

7. Zero Knowledge is Coming, but slowly..

In one of the better panels, the Co-Founders of

• ZKSync

• Arbitrum

• Scroll

• Polygon

• Celestia

were having an intellectual discussion around ZK. Arbitrum, the only purely optimistic roll-up on stage made it very clear that they will adopt ZK only when it makes sense for their users. Given the sheer volume of DEFI and TVL on Arbitrum, it makes sense that they would not want to do anything to compromise the UX for their users.

While ZK is the future, production ready applications specific to ZK will bring TVL. Hacker houses were where we could see the best of the ZK track idea, with games, primitives for permissioned communication and more being built on ZK rails.

8. Airdrops Must Go

Airdrops are weirdly mainstream. Back when DYDX had theirs, airdrops were a great way to reward genuine users. Folks like Bankless and airdrop farming bots have effectively ruined the viability of airdrops. Recently, someone was revealed to be farming with 21,837 wallets on ZKSync. Think about the insanity of this number.

Dune Dashboards, Airdrop threadoors and the likes are setting the stage for life changing gains via airdrops. However, protocols will be big losers if they give airdrops to users who they cannot retain. The criteria for airdrops is going to get stricter, which will likely lead to capital flight.

Overall, airdrops are no longer a good indicator of user engagement, and thus protocols will have to innovate on how they look to engage genuine users.

I am very nervous about the Layer Zero and ZkSync airdrops, as I believe that these 2 ecosystems are the first to be targets of at scale airdrop farmers. Should they censor most of the sybil farmers, it will be difficult for them to put up the numbers that they have been putting up. A great deal of capital has gone into the funding of these 2 ecosystems at astronomical valuations.

9. Builders are SAVAGE

This is one of the worst markets to be a builder. Everything is hard. Funding, valuations, regulation. AI companies are raising money on a dime. It takes some courage to stay building.

It was a privilege to be in the company of such builders. You will have my undying respect, until the end of time!

10. Crypto needs America

There is a different DNA for innovation in the USA. As the worlds largest economy, they have the ability to invest in game changing ideas and systems in a manner that nobody else can.

So much of our critical research infrastructure, capital and technical talent is from there. I fear that without having America as the fulcrum of crypto, the risk appetite will go down considerably, and innovation will be unable to go beyond Financial Engineering.

Asia is getting there, but is not quite ready to bear the burden of the free world, the way America can.

Conclusion

That is about all I have the time for. I hope this was useful for those of you that were curious, or had FOMO. This was the final Farming Alpha.

On Friday, we usher in the first edition on Abstract(ed).