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What 9 crypto areas is Multicoin Capital looking at?

Multicoin Capital

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Prototypes of the next generation of creator monetization tools are being invented.

Announcing Venture Fund III

By Multicoin Capital

Runsheng & AMP; Hu Tao, chain catcher

We are pleased to launch our latest Venture capital Fund, Venture Fund III. This is a $430 million fund that, combined with our long-term liquidity fund, can invest $500,000 to $25 million in early stage opportunities and up to $100 million in later-stage projects.

We have been investing in the crypto industry for about five years now and have seen a slow uptick in innovation. As we continue to make deep technology and infrastructure investments, we are spending more and more of our time on direct-to-consumer things that have the potential to reshape the vast consumer-to-consumer marketplace. Here are some areas we are most interested in:

Physical work certificate

正如我们之前所写的，加密经济协议最强大的功能之一是它们能够创建激励结构，允许世界上任何人无需许可地为一系列共同目标做出贡献。为实现特定目标，这些激励结构可以进行微调以促进大规模协调。虽然绝大多数加密创新都集中于协调数字社区和经济，但 Token 也为资本形成和人类协调方面的创新创造了机会，这些创新超越了数字世界并进入了实体世界。

We call this topic "Proof of Physical Work." Agreements that fit this theme inspire people to do verifiable work to build real-world infrastructure. The two that stand out in our portfolio are Helium and Hive Apper. However, we are increasingly interested in this space and actively looking for projects to disrupt the existing industry with this model (e.g., Web3 AirBnB, Uber, Microgrids, etc.).

DataDAOs

DataDAOs is similar in spirit to physical proof of work, but it is for data rather than physical infrastructure.

There are many pieces of data that, when combined, are worth more than the sum of their parts. Currently, this data cannot be aggregated because it is too sensitive or personal, or because the aggregator is not managed by the user. Encryption helps solve this problem by: 1) providing stronger incentives for users to contribute data that exceeds their current risk-reward; 2) Expand access and inclusion by creating decentralized, permissionless, trust-minimised data intermediaries; 3) by promoting the transfer of governance power from the hands of the few to the community of the many (also known in crypto industry jargon as "trusted neutrality"). Encryption incentives are key to inviting participation and unlocking data that is worth more than the sum of its parts.

We recently invested in our first DataDAO, Delphia. Delphia is aggregating investor contributions to improve the trading algorithm, which will become smarter with each new investor and contributor (known as the DAO).

Creator monetization

While creator monetization isn't a new idea, its opportunities are actually just emerging as platforms and tracks mature. As we speak, prototypes of the next generation of creator monetization tools are being invented. For now, inventing the most effective and profitable model is a global experiment, but once it takes shape, there are millions of creators waiting on the sidelines to get into the game. Opportunities for creators to profit will come slowly and then suddenly.

We expect millions of new creators to build meaningful new businesses on countless online platforms, using cryptocurrencies for payment tracks, DeFi, NFT, social Tokens, and more. For example, Kyle talked extensively about the idea of Music VC Daos during his keynote at the Multicoin Summit in December 2021.

我们已经投资了一些创作者盈利工具和平台，包括：Metaplex，Solana上的NFT标准；Audius，一个web3数字流媒体平台；Strata Protocol，一个围绕个人、项目或想法发布 Token 的开源协议；FanTiger，一个 NFT 歌曲平台。

Consumer products

As the underlying infrastructure systems (Solana, Aptos, Ethereum, etc.) mature, it becomes easier to build consumer-facing applications of all kinds. The entrepreneurs at Myriad Web2 are exploring cryptography and working to build world-class consumer experiences that leverage the unique properties of cryptocurrency systems to unlock new consumer behaviors.

We've already invested in a number of consumer social products, but haven't announced them yet, and we want to be the industry's standard-bearer in terms of user experience and show the world how to build world-class cryptographic native consumer experiences.

New business model of intellectual property cooperation

One of the most misunderstood superpowers of cryptocurrencies is the mechanism by which cryptocurrencies enable new forms of capital formation. Bitcoin started with mining, and since then there has been a wave of capital formation innovations: ICOs, airdrops, liquidity mining, NFT casting, Helium coverage certification, and more.

Before the Internet, there were only a handful of major media companies in the United States (Hearst, NYC, Sinclair, News Corporation, etc.). Over the past 20 years, however, the media landscape has changed radically with the rise of blogs, newsletters, social media and more. There are now billions of media resources around the world.

Similarly, there are only a handful of major IP studios in the US today (Disney, Marvel, Comcast, Warner, Paramount, etc.). We expect the next wave of IP studios to be crypto-native and community-driven.

Web3 infrastructure

We've written extensively about the Web3 stack (see 1,2, and 3) and the opportunities within it. We have been one of The most active investors in Web3 infrastructure since early 2018, investing in Livepeer and The Graph.

We will continue to invest in core Web3 infrastructure, with recent investments including Ceramic and Fluence, some of which have yet to be shared.

Open financial

Open finance is one of our crypto grand themes. Open finance, often referred to as decentralized finance (or DeFi, which we consider a subset of open finance), is one of the most important areas of innovation in cryptography. In the period 2018-2021, we saw DeFi's heyday rise and innovation explode. Since then, the market has cooled but certainly not disappeared. We talk to founders every day to build new DeFi tools to replace the status quo or create an entirely new category. Innovation is always at the forefront.

With DeFi, we can (re) build many more inclusive and open markets. One such example is BetDEX, which specialises in sports betting, a highly restricted area these days. Another example is DFlow, a pioneer in the pay-per-order market in the crypto industry.

We want to invest more, and we want to see the ability to leverage composability in our creator monetization and unlicensed finance themes to build higher-level applications.

India

Among our investment teams, Shayon and Vishal spend a lot of time in India, Dubai and neighboring markets.

We believe India is particularly well positioned to adopt Web3 technology considering the following factors: 1) market penetration difficulties of US and Chinese tech giants; 2) Opportunities to establish and own local Web3 enterprises in India; 3) Relatively young, tech-savvy and English-speaking demographics; 4) The explosion of remote working.

We also believe That Indian entrepreneurs will be best able to design products to serve the local market and intend to invest heavily in Indian Web3 startups like FanTiger.

The DAO tools

We are seeing early experiments at the intersection of cryptocurrencies and online communities around mutual interests. With their ability to tap into a global pool of talent and capital, cryptocurrencies drive this community. However, better coordinated infrastructure is needed to achieve this vision on a large scale. We are actively looking at it, participating in it and investing in it.

Cooperate with us

While we have come a long way in the past few years, the way we do business has not changed. We're still theme-oriented, founder first. Regardless of who leads the investment, each member of our investment team works directly with all the companies in our portfolio. Our combined skills are the levers we deploy to help the best cryptographic ideas succeed.

While we are sometimes accused of being anachronistic, our reputation with our founders is what matters most to us. As an organization, we deliberately choose to stay small and focused. We vet each member of the team to ensure they are contributing in new and differentiated ways. We avoid groupthink at all costs and strive to add value in a way that other investors cannot. If you're building anything that fits into the themes above, we'd love to talk to you and hear your thoughts. Our DMs is open and you can reach any member of our investment team via email or Twitter.