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What Multicoin Is Excited About For 2024
At the end of every year we come together and discuss some of the biggest changes we’re expecting in the year ahead. For the first time, we’re publishing these ideas. Please feel free to reach out to any of us to discuss these ideas further.
Oracles and the New Frontier for Application-Owned Orderflow Auctions
Today, we are excited to announce our investment in Pyth Network, the leading first-party oracle in crypto. The implicit premise behind legacy oracles in crypto has been that all data—including financial data—is freely available and accessible to on-chain contracts. Accordingly, oracles simply need to incentivize supply-side network contributors to scrape and aggregate this data, come to consensus on it, and bring it on-chain.
The Hidden Costs of Modular Systems
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Over the past two years, the scaling debate has narrowed and fixated on the central question of modularity vs integration. (Note that discourse in crypto often conflates “monolithic” and “integrated” systems. There is a rich history of debate in technology over the last 40 years about integrated vs. modular systems at every layer of the stack. The crypto incarnation of this dialogue should be framed through the same lens; this is far from a new debate).
New Investment Partners at Multicoin
Today I’d like to announce that two of our longest standing members of our investment team, Spencer Applebaum (LinkedIn, Twitter) and Shayon Sengupta (LinkedIn, Twitter), have been promoted to Investment Partner. Both of them have done great work in finding lucrative trades in public markets, and in sourcing and winning competitive deals in private markets. But most importantly, both have also worked closely with many of our founders over the past several years to help them succeed.
Announcing Venture Fund III
Today we are excited to announce our latest venture fund, Venture Fund III, a $430M fund that invests $500K-$25M in early-stage opportunities all the way up to $100M+ for later-stage projects when combined with our evergreen liquid fund.
Proof of Physical Work
One of the most powerful features of crypto-economic protocols is their ability to create incentive structures that allow anyone in the world to permissionlessly contribute to a set of shared objectives. These incentive structures can be finely tuned to facilitate large-scale coordination to achieve specific goals. This represents a step-function improvement in capital formation.
Rendering the Metaverse
Over the last year, Fortnite has pushed the boundaries for large scale synchronous online virtual worlds via concerts (Travis Scott and Ariana Grande on Fortnite). In hindsight, these concerts will be looked back on as the first mainstream precursors to the full blown Metaverse (shout out to The Sims and Second Life for trying this before the world was ready).
Scaling Reads and Writes
A blockchain is a database with unique trust-minimization properties. Like all databases, there are two kinds of operations: reads and writes. Most of the discourse to date around scaling blockchains is about writes. This is often measured as transactions per second (TPS). For example, Ethereum supports 15-30 TPS, Binance Smart Chain supports up to 160 TPS, and Solana supports up to 50,000 TPS. Investors have invested billions of dollars to scale blockchain writes.
Technical Scalability Creates Social Scalability
This essay assumes familiarity with Nick Szabo’s essay on Social Scalability, Vitalik Buterin’s essay on Weak Subjectivity, and Haseeb Qureshi’s essay on Why Decentralization Isn’t As Important As You Think. This essay is not a rebuttal of Szabo’s essay.
Announcing Venture Fund II
Building on the success of our first venture fund, we’re proud to announce that Multicoin Capital has raised a new $100M venture fund to back entrepreneurs building companies (equity), and protocols (tokens) in and around the crypto space. We have been investing out of this vehicle for several months already.
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