Primitive Ventures

Scris de @DoveyWan
Fondatorii au acum o adevărată criză de identitate în AI, observând același tipar în SF și Shenzhen: fondatorii returnează bani și încearcă să se alăture marilor laboratoare LLM din SUA / companiilor de robotică din China cât timp mai pot. Mai mult de unul mi-a spus că costul oportunității de a nu te alătura acum se simte mult mai mare decât EV-ul de a-ți conduce propriile startup-uri.
Din conversațiile cu fondatorii care au renunțat, un consens general este că în ultimii 20 de ani, „tech” era aproape interschimbabil cu internetul. Acum, întregul pendul s-a întors către muncă hiper-industrializată în atomi mai degrabă decât în biți. Următoarea generație de oportunități antreprenoriale în care AI-ul va accelera cu adevărat rezultatele în aerospațial, energie, științe ale vieții, materiale, robotică, nu mai sunt domenii pentru un grup de studenți care au abandonat facultatea sau fondatori fără un context industrial profund. AI-ul a făcut construcția mai ușoară, dar face ca succesul să fie mult mai greu.

written by Yetta (@yettasing), investment partner at Primitive Ventures and Wildon, researcher at Primitive Ventures
With gold and silver at new highs, Trade.xyz approaching $2B in daily volume, and Binance moving quickly to launch TSLA perps, TradFi assets are entering the crypto arena in a way that pulls in global liquidity. Maybe just a year ago, CEX operators wouldn’t have believed an onchain venue could start flipping them, using TradFi tickers as the wedge.
We know crypto money loves fueling volatility, but structurally equity perps as a product is exactly sit right at that convergence point of a few major upgrades:
Crypto collateral mobility levels up when CBOE/CME move toward accepting crypto in-kind margin soon this year.Settlement rails are inching toward onchain connectivity once DTCC gets direct onchain hooks, equities get a native settlement path at the sourceThen the fun part starts: Tokenized equities as collateral → perp venues accept them → institutions farm basis
Onshore Issuance,Offshore Distribution
US doesn’t export finance by exporting institutions, it exports access. The petrodollar system pushed inflation offshore by distributing dollars globally; stablecoins repeated the playbook by warehousing T-bills and turning the world into a new class of dollar holders without banks or brokers. Onchain equities are the next step, issuance stays onshore, access goes offshore.
CEXs saw both the opportunity and the threat, and moved to guardrail it early. While Ondo and xStocks focused on issuance — partnering with brokers, custodying real equities, and minting 1:1 tokenized stocks— issuance alone didn’t create a market. The first real demand came from traders without access to U.S. brokerage accounts and crypto-native users seeking equity exposure without TradFi rails. For them, offshore venues were the default.
Issuers did the hard compliance/custody work; flow gravitated to whoever owned trader attention and distribution. Offshore venues embedded the product directly into trading surfaces, and the volume followed. As a result, the overwhelming majority of tokenized equity trading volume consolidated on BNB Chain, accounting for 80%+ of total activity.
If offshore venues unlocked retail demand, onchain equity perps captured more pro flows. Its users are global traders hedging or expressing views on U.S. equities without being constrained by brokerage access, market hours, or jurisdiction. For example, HIP-3 is a surface to farm basis, exploit cross-market dislocations, and run systematic strategies across equities, crypto, and indices for pro traders. Add credible airdrop incentives on top, and the result is mechanical: volume keeps printing new highs.
Prime Time for Onchain Equity Perp
Once spot anchors exist, perps become the most efficient trading instrument as always with features such as:
24/7 trading, no market hourscross-margin with all assets, insane capital efficiencyhigh leverage that lets risk appetite actually show upcomposability into DeFi strategiesa clean path for RWAs/tokenized assets to become margin
We are seeing the stack is forming fast:
Infrastructure
HIP-3 / HyperCore: arbitrary perp markets on a high-performance order book engineOrderly: unified omnichain orderbook where anyone can launch their own no-coded perpChainlink: equity price feeds (oracle backbone)
Platforms (where trades land)
Trade.xyz: HIP-3-based, currently the largest equity perp DEX by scaleOstium: FX/commodities/equity via CFD-style modelVentuals: pre-IPO markets (HIP-3)Felix / Vest / Aster / Architect: various flavors of settlement, breadth, and distribution
Terminals (upper funnel driver as of now)
Based: aggregating Hyperliquid + HIP-3 + prediction markets into a multi-asset interfacePhantom / Metamask-style frontends: turning wallet traffic into trading activity
Looking forward, the center of gravity shifts from tokenization to collateral mobility & monetary velocity, where onchain GPD will be created. The winning venues are much more than the ones that can mint an onchain wrapper, they’ll be the ones that can turn any asset into usable collateral, at scale, with the deepest liquidity and the cleanest matching/risk engine.
Picture the future as a global tokenized margin network: BTC, equities, gold, and Tbills all become plug-and-play collateral; perps become the universal risk expression layer; stablecoins become the cash leg; and strategies get composed 24/7 onchain.
Running against the Time
The window is open, but it’s closing fast. The biggest risk to onchain equity perps is onshore adoption. Once U.S. regulators bless a perp, distribution snaps into existing brokerage rails almost overnight. We’ve seen this movie before: when 0DTE options were green-lit, they were immediately absorbed by mainstream brokerages and dominated flow. The same dynamic will apply here.
The signals are already flashing. SEC and CFDC has explicitly begun studying perp. That’s usually a tell the perimeter is being actively drawn. In parallel, perp-like behavior is already sneaking onshore:
Bitnomial is the first CFTC-regulated perpCoinbase has launched 5-year futures with funding mechanisms designed closely like a perp.
Offshore players move faster because the product isn't standardized yet. But once it is, the advantage collapses. The winning players won’t wait for clarity, they’ll use the window to acquire users aggressively while coordinating with regulators to shape the rules, not react to them. Time is the real constraint, and it’s already ticking.

In 2025, the crypto industry got almost everything it had been hoping for. Structurally, this should have been a great year. But why it feels… so dead?
Not “prices didn’t go up” dead. BTC made new highs. But the vibe, the sentiment, the internal confirmation, the reflexive alt follow through, the retail heat. Maybe the most concerning, what used to be a "hot money leading asset" now has lost its appeal in both wealth effect and volatility.
Related crypto sector assets stopped syncing to BTC and ETH like past cycles:
Memecoins topped first in 2024 Q4 to 2025 Q1, with the Trump token launch as the climax.Crypto stocks peaked around Circle’s IPO and rolled over between May and August 2025.Most altcoins never built a sustained trend at all. Asymmetry on the way up, full participation on the way down.
Zoom out one more layer and it gets even weirder.
Despite a friendly policy backdrop, BTC underperformed almost every major TradFi asset in 2025. Gold, US equities, Hong Kong, A-shares, even some bond benchmarks. It was the first cycle when Bitcoin performance decoupled all other assets classes
That divergence matters: new highs in price, no internal confirmation, and better performance elsewhere. It tells you something simple and uncomfortable: Bitcoin has undergone a major liquidity supply chain changed, and the native 4 year fulfilling cycle has altered by bigger market forces elsewhere. So we dig further into who bought the top, who quite the game, and where is the floor.
The Great Divide: Onshore vs Offshore
We have gone through 3 distinct phases this cycle -
Phase A (Nov 2024 to Jan 2025): Trump’s victory and a friendlier regulatory tone triggered joint onshore + offshore FOMO. BTC broke $100k for the first time.
Phase B (Apr to mid Aug 2025): After a deleveraging selloff, BTC resumed the move and cleared .
Phase C (early Oct 2025): BTC printed the current local ATH in early October, then suffered the 10/10 flash crash and moved into a corrective regime.
In every phases we have seen the great divide between onshore and offshore behavior -
Spot: onshore buys the breakout, offshore sells into strength
Coinbase Premium stayed positive during phases A, B, and C. High-level buying demand originated primarily from onshore spot capital
Coinbase BTC Balance trended downward throughout the cycle. Sellable inventory on the US side decreasedBinance Balance rose significantly as prices rebounded during phases B and C. Offshore spot holders rebuilt inventory and potential sell pressure increased
Futures: offshore leverage up, onshore positioning down
Offshore OI (Binance and other offshore venues) climbed through phases B and C. Leverage ratios rose. Even after 10/10, leverage snapped back fast and returned to, or exceeded, prior highs (Figure 4).Onshore OI (CME), trended down from the start of 2025. Institutional interest did not re-risk with the new highs
At the same time, BTC volatility diverged from price. In August 2025, when BTC first broke $120k, DVOL sat near a local low. Options markets did not pay up for continuation risk
Every "top" seemed to be in disagreement between the onshore and offshore players. When onshore spot flows drove the breakout, offshore spot sold into it. When offshore levered capital chased the high, onshore futures and options desks reduced exposure and stayed in sideline
Where are the marginal buyers?
Glassnode estimates BTC held by corporations and DAT-type vehicles rose from roughly 197k coins in early 2023 to about 1.08m by end of 2025. Net increase around 890k BTC in two years. DATs became one of the biggest structural bids in the system. Another one (often misunderstood) is ETFs, nd of 2025, US spot BTC ETFs held around 1.36m BTC, up about 23% YoY and around 6.8% of circulating supply. Institutions (13F filers) hold less than a quarter of the total ETFs, and majority of them are hedge funds & advisors, apparently not our diamond hand fam.
Vanishing Retail
Traffic data for Binance, Coinbase and other top exchanges tells a clear story since early 2025, and the retail fatigue is quite persistent after trump dropped its meme coins. and overall retail social sentiment is technically bear since early 2024.
Since the 2021 peak, overall site traffic has trended lower.New BTC ATHs did not pull visits back to prior levels
You can read more about this topic in our last year's article "Were are the marginal buyers"
Exchanges strategies have adapted accordingly. Facing high acquisition costs and low activity from legacy users, exchanges have pivoted from "fighting for growth" to "retaining existing capital via yield products and multi-asset trading" (aggressively listing US stocks, Gold, Forex)
Bull Market Elsewhere, Everywhere
The real “wealth effect” of 2025 sat outside crypto: the S&P 500 (+18%), Nasdaq (+22%), Nikkei (+27%), Hang Seng (+30%), KOSPI (+75%) and even A shares is up 19%, all delivered strong gains. Gold (+70%) and silver (+144%) have also ripped, making“digital gold" look almost clownish by comparison.
And it's appeal is tripled killed by AI stocks, 0DTE and commodities like Gold and Silver.
Degen capital did not rotate into alts. Many quit entirely and went back to equity vol, and new degen have been happily printing in US stock market or their domestic stocks.
Even the Korean retail army retreated from Upbit to bet on KOSPI and US stocks: Upbit average daily volume in 2025 fell around 80% versus 2024.Over the same period, KOSPI rallied more than 75%, and Korean retail net-bought roughly $31bn of US equities
The Sellers
Every cycle there are OG whales sell into the local top, but this cycle the sellers timing are interestingly coincided with RS divergence
BTC has been tracking US growth tech closely, until around August 2025, BTC started lagging ARKK and NVIDIA materially and then suffered the 10/10 Crash, and has yet to recover the gap. Timely right before this divergence, In late July, Galaxy disclosed in its earnings and media briefings that it had executed a >80k BTC sell order on behalf of an OG holder. That transaction brought “Satoshi Era whales taking profit” into public view
Miners sell into AI capex
From the 2024 halving through late 2025, miner reserves saw their most persistent drawdown since 2021. By year end, reserves stood near 1.806m BTC. Hash rate down roughly 15% YoY.
Under the “AI exodus plan,” miners moved about $5.6bn equivalent in BTC to exchanges to fund AI data center builds.Bitfarms, Hut 8, Cipher, Iren are converting sites into AI and HPC campuses, signing 10 to 15 year compute contracts, treating power and land as “AI era gold.”Riot, a HODL poster child, announced in April 2025 it would begin selling all monthly production.
Estimates suggest by end of 2027, around 20% of mining power capacity could be redeployed to AI workloads.
China added a harsher layer. In December 2025, Xinjiang was targeted again by PBoC and ministries. Roughly 400k ASICs forced offline, cutting global hash rate by 8 to 10% in days
Grey Whales: Black Bitcoin Hang Over
Similar to PlusToken scam materially made the 2021 cycle, several large-scale fraud and gambling cases in 2025, including Qian Zhimin’s ponzi/cult network and Cambodia’s Prince Group/CHEN Zhi are likely the major hidden forces in building up the bitcoin chart. Both cases have revealed seizures in the tens of thousands of BTC, with totals at or above the 100k-coin black bitcoin hang over. Read more on Who is CHEN Zhi, the man who has never went to college but richer than CZ ..
This might also add potential government sell pressure, also, will have major chilling effect on mega size grey market holding bitcoin for long-term, which might be a shock in the sell pressure for short to mid term but generally positive in the long run
2026 Outlook
Under this new structure, the old "4 year halving cycle" is no longer a viable self-fulling path
The next regime is driven primarily by two axes
Vertical: macro liquidity and credit conditions, rates, fiscal stance, the AI investment cycle.Horizontal: valuation and premium levels across DATs, ETFs and other BTC proxies
Early BTC winners, OGs, miners, Asian grey whales, are handing coins to passive ETF holders, DAT structures and long-dated state capital. Think Bitcoin will follow the path starts to look like FAANG from 2013 to 2020.
A slow rotation from a high beta story driven by early retail and growth funds into passive allocation dominated by index funds, pensions and sovereigns
Bitcoin is now the easiest crypto asset to own without touching crypto. You can buy it through a brokerage account, custody it like an ETF, account for it cleanly, and explain it to an tradfi investment committee in five sentences. While most other crypto assets have not earned their valuation through real utility or legitimacy on both mainstreet and wallstreet. We are always wishful for another bull run, but if this time the bull run is more than just the price bull but also the utility bull that can converts the ETF era’s legitimacy into onchain demand, that turns passive holdings into active usage, that makes capital return because it’s real yield generation, not because it’s a on-going musical chair of narratives.
If that's built, today’s “top buyers” will look less like the end of one cycle and more like the first investors in a new one
Bitcoin has finally become nation states' reserve.
Code is eating the banks.
Crypto still has to become a new civilizational tool.
Co-authored with my badass intern, Ada (@adaYen72), who did a big chunk of the plumbing work behind the charts and the buyer/seller profile mapping in this piece.

O inovație cu adevărat nativă este ceva ce nu a existat înainte și devine posibil doar odată cu apariția unui nou paradigm tehnologic. În Web3, ne-am întrebat de mult: ce face o inovație cu adevărat nativă pentru stiva crypto?
Fred Wilson oferă un cadru atemporal în articolul său din 2009, Provocarea Mobilității:
Prin "nativ" ne referim la oportunități care pur și simplu nu existau anterior și nu pot exista fără telefon. De exemplu, nu am considera livrarea de știri de ultimă oră pe mobil o oportunitate nativă, deoarece un startup are rar o șansă mai bună de a fi "CNN pentru mobil" decât are CNN.

Scris de Yetta Sing(@yettasing)
În industria noastră, există un playbook familiar de auto-prezentări: „Am fost unul dintre primii în acest domeniu.” „Vin dintr-un background tehnic.” „Sunt un adevărat credincios în acest vertical.” „Am absolvit o universitate de prestigiu.” Acestea sună ca niște credențiale simple. Dar, în timp, ele evoluează adesea într-un ceva mai personal: ancore emoționale, chiar declarații de identitate. Ceea ce începe ca un context devine treptat o sursă de valoare personală și, în cele din urmă, o parte din modul în care cineva se percepe pe sine.

written by Ada @adaYen72
Crypto Saturation, Structural Shift
This cycle has made one thing clear: we’ve hit a saturation point, not just in capital, but in attention.
Global Google Trends tells the story. Only Solana managed to set a new high in search interest. Bitcoin, Ethereum, and even Dogecoin, despite ETF approvals, fresh BTC ATH, and meme fueled political buzz, all failed to recapture their 2021 peak interest levels.
And as attention cooled, so did price. Most major assets still trade below their last cycle highs. The implication is stark:
crypto as an asset has reached mainstream mindshare saturation. But crypto as a monetary rail is still vastly under adopted.
This duality defines where we are. Speculation is familiar; utility is still misunderstood. The next marginal buyer may not be here for bags, but for rails.
Player Structure: The Gameboard is Emptying
To understand why even top-down narratives can’t sustain momentum, we need to map who’s still playing.
The classic CEX spot trader, once the backbone retail force, has faded. As the get rich effect of CEX wears off, new user inflows have stagnated. Worse, many existing users have either left or shifted to riskier perp trading. Meanwhile, the rise of spot ETFs has quietly drained another layer of potential buyers. CEXs are no longer the default gateway.
Yield farmers, typically larger capital allocators, are increasingly looking off-chain. As on-chain yield opportunities shrink and risk adjusted returns fall, capital is rotating toward more stable real world income streams.
NFT and GameFi participants, once cultural drivers of crypto adoption, have largely been sidelined. Some shifted to memecoin, but that wave appears to have peaked with the Trump craze, leaving most players disillusioned.
Airdrop hunters, often seen as the most persistent class of on-chain participants, are now publicly clashing with projects over broken promises. Many are no longer even covering costs.
Across every user segment, the trend is clear: participation is shrinking, conviction is fading, and retail is leaving.
On the Threshold: Conversion Has Stalled
The problem runs deeper than just fatigue within existing user groups; conversion itself has stalled at the edge.
Top CEXs serve an estimated 400 million users (remove duplicate), yet only ~10% are funneling into on-chain users (wallet users). The penetration rate has barely changed since 2023; the industry’s struggling to convert users beyond the custodial layer.
At the same time, traffic to major exchanges has steadily declined since the 2021 bull peak and has yet to recover, even with BTC’s new highs. The funnel isn’t growing.
Worse, we may have already hit a threshold in crypto awareness itself. According to Consensys, 92% of global respondents have heard of crypto, and 50% claim to understand it. Awareness is no longer the problem, but interest is.
And retail’s excitement curve is flattening. Last cycle, NFTs and Dogecoin brought in the masses. This cycle, even Trump memes couldn’t break through to the mainstream. The curiosity that once fueled retail inflow is fading.
Mantra: The Mirage of Momentum
The OM rally was a well executed script: a pivot into hottest RWA, UAE capital alignment, headline partnerships, KOL amplification, and a float squeezing tokenomics reset.
But despite a 100x climb, there was no meaningful organic spot volume. OM lacked the one thing even a perfect script can’t fabricate: real marginal buyers.
When CEXs adjusted perp leverage and market makers hit internal friction, the system unwound rapidly. A 95% drawdown followed,not due to a mint spiral or bug, but simply because there was no bid.
OM wasn’t a failure of execution. It was a reflection of a structural issue: on today’s CEXs, even a hundredfold rally can’t ignite fresh demand.
Fed QT and the Dollar Drought
A structural shift in buyer behavior cannot be understood in isolation from macro liquidity. Since 2022, the Federal Reserve has embarked on an aggressive balance sheet reduction, initiating one of the most deliberate cycles of QT in recent history.
The Fed’s balance sheet peaked at nearly $9 trillion during the post-COVID era, turbocharging global risk appetite through excess liquidity. But as inflation took hold, the Fed reversed course by draining reserves, tightening financial conditions, and choking off the easy leverage that once fueled speculative activity across risk assets, including crypto.
This tightening didn’t just slow capital inflows, it structurally constrained the very type of buyer crypto had relied on: the fast-moving, risk-on punter.
Structure Shift: Where the Next Demand May Emerge
If the next marginal buyers aren’t coming from crypto native speculators, they may emerge from a structural shift driven by policy, necessity, and real world demand.
The regulatory normalization of stablecoins may spark a new phase of digital dollar dominance. In an era of rising tariffs, capital controls, and geopolitical fragmentation, cross-border capital needs faster, quieter rails. Stablecoins, especially those aligned with U.S. interests, are well positioned to become unofficial instruments of economic influence.
And the adoption is also quietly booming in regions long overlooked by the industry. In parts of Africa, Latin America, and Southeast Asia, where national currencies are unstable and large populations remain unbanked, stablecoins offer real utility for remittances, savings, and cross-border trade. These users are the new edge of global dollarization.
And as RWAs scale, more users will engage not to speculate, but to access real assets, on-chain.
Barbell Era: This Is Not a Collapse, It’s a Rebalancing
The lack of marginal buyers is not just a cycle low. It's a structural outcome, a downstream effect of two forces:
Crypto as an asset has saturated global mindshare. The dream of instant wealth has lost its luster.The shortage of dollars is real. Fed QT and macro tightening have structurally thinned the buyer base.
After all the cycles, narratives, and reinventions, crypto is splitting into two divergent paths and the divide is only getting wider.
On one end, the speculative system, once powered by memes, leverage, and narrative reflexivity, now suffocating under the weight of liquidity withdrawal. These markets relied on constant marginal inflows, and without them, even the best engineered playbook can’t sustain a bid.
On the other, a slow but undeniable emergence of policy aligned, utility driven adoption. Stablecoins, compliance rails, tokenized assets are all growing. Not through hype, but through necessity. Not with froth, but with durability.
We’re not watching a market collapse. We’re witnessing a structural rebalance.

Tether, with its vast global circulation and substantial asset base, has emerged as the most crucial liquidity instrument in offshore markets. Yet, questions about Tether persist: why do we call it the de facto central bank of the crypto industry? Why does U.S. regulation remain ambivalent—neither fully cracking down nor offering explicit support? What does Tether’s existence mean for American financial markets, and, amid this tension, where is the breaking point? This article aims to provide a macro perspective on the significance of stablecoins, and explore the structural opportunities within this domain.
What Makes Tether Such a Good Business?
Tether's latest Q3 data highlights its remarkable profitability. With assets totaling $125 billion, including $102 billion in U.S. Treasuries, Tether's Q3 net profit reached $2 billion, contributing to a cumulative annual profit of $7.7 billion. For perspective, BlackRock reported a Q3 profit of $1.6 billion, while Visa's stood at $4.9 billion. Impressively, Tether achieved this with less than one percent of their workforce, demonstrating a per capita efficiency over 100 times greater.
Tether's success story began modestly, addressing a simple need. Initially, exchanges operated solely through BTC trading pairs, causing price volatility and settlement challenges. Bitfinex responded by introducing USDT as a unit of account (UoA), its first utility. In 2019, Justin Sun recognized the potential for stablecoins in facilitating inter-exchange transfers. Leveraging Tron's cost-effectiveness and speed over ETH, Sun subsidized TRC20-USDT with millions from Tron node revenues, offering users yields of 16-30% on transactions. This move established USDT as a medium of exchange (MoE), its second major utility. Subsequently, USDT gained widespread adoption in offshore markets, serving as a store of value (SoV) in high-inflation economies and facilitating cross-border transactions in gray markets as MoE. Being shadow dollar is its third utility. These three evolutionary stages paralleled Tether's growth, reflecting USDT's expanding market cap and liquidity.
For a comprehensive understanding of stablecoin operation strategy, Dovey's article provides an invaluable in-depth guide.
Today, over 80% of Tether's assets are invested in U.S. Treasuries, mirroring a government money market fund—offering both safety and high liquidity. As a store of value (SoV), Tether surpasses traditional bank deposits. While deposits are vulnerable to asset risks (as evidenced by Silicon Valley Bank's collapse affecting USDC), Treasuries stand out as one of the safest financial products available.
Tether also outperforms money market funds in utility, offering currency settlement. This explains Tether's exceptional per capita efficiency: USDT, as an MoE, significantly reduces friction in currency circulation compared to existing cross-border settlement or payment channels. Moreover, as the most recognized shadow dollar and consensus-backed UoA, Tether's network has expanded globally through various channels and brokerages FOR FREE.
This shows the power of a currency business. By combining payment, settlement, and treasury management, Tether has become the de facto Fed of the crypto industry—a feat unimaginable without crypto. Its networking effects strengthen with increasing liquidity, which cannot be disrupted simply by distributing a 5% yield to users or through a token vampire attack.
This also explains PayPal's entry into the stablecoin. As PayPal's business grows, creating liquidity pools and facilitating payments, stablecoin emerges as the ideal vehicle. The question naturally follows: might U.S. banks and money market funds covet such a profitable venture?
From Too Big to Fail to Too Deep to Fail
It would be easy for the U.S. to take down Tether, given the centralization of custodianship. Since 2021, Tether has been under investigation by the DoJ, and in late 2022, the case was transferred to the Southern District of New York’s prosecutor, Damian Williams, who oversees numerous high-profile crypto cases, including SBF’s. The issue is not feasibility but rather intent. Why hasn’t the U.S. acted?
Firstly, there’s the risk to Treasury market liquidity. With 80% of Tether’s assets in U.S. Treasuries, extreme regulatory actions forcing Tether to liquidate its holdings could destabilize the Treasury market. This is "too big to fail".
More crucially, USDT's growth as a shadow dollar in offshore markets aligns with U.S. interests. In regions plagued by inflation, USDT is a store of value; in areas subject to financial sanctions and capital controls, it functions as a transnational currency. Its presence in transactions tied to terrorism, drugs, scams, and money laundering further solidifies its role. The more channels through which USDT is adopted, the greater its resilience becomes. This is “too deep to fail”.
The Fed welcomes this development. While the Fed's official mandate is to maintain price stability and full employment, its deeper mission is to fortify dollar hegemony. The broad circulation of USDT and USDC aids dollar expansion offshore. Whereas USDC serves as a regulated on/off-ramp, USDT helps penetrate into international markets. Local loan sharks using USDT act as shadow banks for the Fed, while local USDT distributors function as shadow remittances service for the custodian bank of USD. This enhances America’s financial primacy, further entrenching dollar dominance.
Resistance and Competition: Tether’s Challenge
While Tether supports U.S. financial hegemony in many respects, its friction with U.S. regulatory agencies remains, echoing Hayes’ assertion that “Tether can be shut down overnight by the US banking system even if it does everything by the book”.
First, Tether cannot assist the Fed in monetary policy. As a fully reserved stablecoin, it doesn’t adjust liquidity with the Fed’s policies, unlike commercial banks that engage in QE or QT cycles. While this independence strengthens Tether’s credibility, it also complicates the Fed’s ability to achieve its monetary goals through Tether.
Secondly, the Treasury Department must consider its potential to disrupt the Treasury market. If Tether were forced to liquidate Treasuries in a crisis, it could place immense pressure on the market. This issue was discussed on October 29 at the Treasury Borrowing Advisory Committee, where possible methods of tokenizing Treasuries to mitigate USDT’s impact were explored.
Lastly and most importantly, Tether is effectively challenging banks and money market funds for market share. The high liquidity and yield of stablecoins are drawing increasing numbers of users, weakening banks’ deposit capacity and diminishing the appeal of money market funds. Simultaneously, Tether’s business is exceptionally profitable, so why shouldn’t banks and money market funds enter the space? The Lummis-Gillibrand Payment Stablecoin Act introduced in April, which encourages more banks and trusts to issue stablecoins, is clear evidence of this.
Tether's journey is a compelling narrative of resilience and adaptability. Regulatory arbitrage, with its original sin, provided Tether with immense opportunities for growth. Now, it has finally gained enough strength to challenge established powers. While its future trajectory remains uncertain, any disruptive innovation inevitably leads to a redistribution of power and interests within existing structures.
A Super-Sovereign Currency System: The Possibility Ahead
For Tether to transcend the dollar system, its future lies not only in maintaining its role as a global payment and liquidity instrument but in pioneering a super-sovereign currency system. The key may well be in linking with BTC. In 2023, Tether took the first step in this direction by allocating up to 15% of its profits to Bitcoin—more than a diversification move, it positions BTC as a foundational pillar for Tether’s stablecoin ecosystem.
In the future, as Tether’s payment network expands and BTC becomes further entrenched as a reserve currency, we may witness the emergence of a new monetary system.
Every revolution begins at the periphery, sprouting from the fractures of waning old beliefs. Just as Roman supremacy was a "self-fulfilling prophecy" rooted in unquestioning reverence, new paradigms emerge from the cracks in established systems.
The birth of new gods may seem coincidental, but the twilight of old powers is inevitable.

Tokens represent a financialized belief system, where the volatility of the token serves as the most powerful GTM strategy. Many first-time crypto founders adopt a bottom-up, milestone-based mentality similar to that of tech startup founders, believing that the price will eventually rise as long as meaningful value is created.However, the growth trajectory of a successful crypto project often follows a different order:
Price leads sentiment.Sentiment leads to the narrative.Narrative leads to awareness.Awareness leads to community.Community leads to adoption and protocol market fit (PMF).
Barbell Distribution & Sunk Cost Fallacy
Crypto embodies the intersection of financial populism and techno-libertarianism. The optimal distribution strategy for a token is a Barbell Distribution, targeting both extremes of the user spectrum — POWER users and MARGINAL users, from IQ 150 to IQ 50. This approach forms the upper funnel for belief formation. Many founders who attempt to restrict the initial token supply to avoid “sell pressure” often fail in achieving upper funnel growth. It’s essential to first successfully engage one end of the spectrum before broadening the barbell.
In its early days, Bitcoin served either POWER users (cypherpunks, miners, and billionaires seeking to avoid wealth redistribution due to local political tensions) or MARGINAL users (average people in broken local currency regimes or those wanting to circumvent sanctions or capital controls). Early DeFi mirrored this pattern, catering best to crypto-native POWER users (self-custody enthusiasts, whales seeking transparent trading, massive long tail assets issuance) or MARGINAL users (those without good access to centralized exchanges or financial infrastructure, motivated by “price goes up” narratives). The large middle segment remains indifferent or insufficiently incentivized due to high mental & product switch costs.
For POWER users, the opportunity cost of not adopting crypto is too high. For MARGINAL users, the opportunity cost is minimal, so they are more likely to give it a try.
Most “miners” in a token’s economic landscape are highly mercenary, influenced by their level of sunk costs. The higher the sunk cost, the closer they are to POWER users. Pre-ASIC Bitcoin miners rarely retained coins because there was no substantial sunk cost to recover. Post-ASIC miners retain coins to cover their sunk costs and operational expenses. PoS stakers hold coins at the opportunity cost of capital. The less productive a PoS coin is, the harder it is to establish a strong base of POWER users. Lock drops (including TVL lock drops) and airdrop farming are the worst forms of token distribution. The sunk costs for these behaviors are often proof of meaningless work, making it hard to value the “cost” and failing to attract either POWER users or MARGINAL users.
Active Circulation through Volatility
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Rounds of changing hands through market cycles are the best greenhouse to cultivate a belief system and serve as the litmus test for a founder’s adaptability and commitment. In crypto, these cycles are accelerated significantly, moving five times faster than in traditional finance. This dynamic acts as a natural selection process, with passionate advocates who hold early tokens amplifying the message and spreading it like a mind virus. This transformation shifts the environment from player versus player (PvP) to player versus environment (PvE).
The key to this transformation is strong leadership, a positive feedback loop from delivering on promises, and healthy engagement with upper funnel key members. This converts the funnel effectively within the crypto sphere. Certain sectors, like memes and NFTs, demand even more intense attention and mental agility, moving at a pace five times faster than the already accelerated crypto cycle, resulting in a 25x faster pace overall.
For meme coin founders, it’s a statistical game with a very low hit rate, akin to a crazily spinning wheel. Meme coin dose serve its purpose in the history of financial populism: they are not results of financial nihilism, but financial absurdism & populism movement. Camus said it out loud 100 years ago. Cultural fluidity, identity crisis, death of both traditionalism and modern liberalism, all these led to a substantial void of meaning for modern day autistic monkeys. Trends, narratives and products, ranging from consumerism to internet tribalism, emerge to fill in that void.
So the narrative and identity alignment within each coin now serve as a novel means of expressing meaning and connecting with like-minded individuals — similar to the early days of the internet when cat person, usually introvert and socially quiet, finally found an outlet for posting pictures of their beloved cats. Meme coins, unlike majors or VC coins which may hold onto some grandiose vision and brand legitimacy, offer a land to shelter all those who couldn’t care less of “what’s a long term meaning”. Only the most absurd the most short lived but the most hardest dopamine hits that will retain this group of warriors who have no other war to fight (but have to release their ADHD power somewhere) It’s a great PMF in crypto and fits its degeneracy centric culture so well.
This environment is characterized by survivorship bias and power law at its most extreme, users and traders are fickle in nature. That’s why most coins have only 1–3 months life cycle in terms of liquidity and volatility, very few can stay relavent after 1 cycle. A coin die when there is no liqiudty. information is entropy, and attention is currency. Liqudiuty is the HRV of a coin.
Make Diamond Hands Filthy Rich
Reward early loyalty generously and establish a momentum-driven system to reinforce commitment within this belief system funnel. Imagine a pyramid where the width of the base determines its height; diamond hands form the foundational base for how high the FDV can be built up to. Price always leads the narrative.
Failing to enrich your diamond hands invalidates the conversion path of this belief funnel naturally, then it becomes PvP than PvE. The reward also extends beyond financial gain; it also serves as a identity recognition that boosts self-esteem. As a token community rooted in belief systems, you provide social and psychological value by fostering a shared identity among holders. The decline of both traditionalism and modern liberalism has left a significant existential void for today’s keyboard monkeys. Trends, narratives, and tokens emerge as vehicles to fill this void, offering a sense of purpose and connection: similar to the early days of the internet when cat person, usually introvert and socially quiet, finally found an outlet for posting pictures of their beloved cats.
Diamond hands are the one who are in not just for the wealth effect, but also cultural and belief alignment. Rich diamond hands will further elevate the overall cultural influences of the token, reinforcing the belief system and making it more self-fulfilling
Ultimately, tokens represent a financialized belief system where market dynamics, human natures& mental biases, are not just obstacles to overcome but essential components of growth and adoption. Understanding and leveraging this belief system is crucial for navigating and succeeding in the crypto ecosystem. I am always looking for founders with solid technical skills and a deep understanding of human nature. Crypto entrepreneurship is a process that requires mastering the capital market game, cultural development, and technological advancement all to the fullest.