Written by: Multicoin Capital Partner Team
Compiled by: Yangz, Techub News
Amazon founder Jeff Bezos's comments on future trends are often thought-provoking. Bezos believes that "what will change in the next 10 years" is an interesting but also very common question. On the contrary, in his opinion, "what will not change in the next 10 years" is more important.
Earlier this week, we published a “cookie-cutter” venture capital article about the emerging sectors our investment team expects to see in 2025. In the spirit of Bezos’s statement, we thought it would also be appropriate to highlight some trends that we believe are generally immutable, quietly compounding, and providing a stable foundation for our investments.
Kyle Samani, Managing Partner of Multicoin Capital: The relentless pursuit of capital efficiency
When DeFi first emerged, capital efficiency was very low. Uniswap was criticized by many investors for this problem.
However, over the past 5 years, capital efficiency in DeFi has been improved in various aspects, such as CLOB, revolving/multi-product, centralized liquidity, using USDe as collateral on derivatives exchanges, using derivative collateral to facilitate lending, using LP positions as derivative collateral, etc. The market will always relentlessly pursue capital efficiency.
That’s the beauty of DeFi. Permissionless innovation facilitates all of these capital efficiency gains.
We believe that Drift, the leading derivatives DEX on Solana, represents a version of the logical endpoint for capital efficiency in DeFi. Spencer and David also spoke about these issues in their 2024 Multicoin Summit presentation.
Tushar Jain, Managing Partner of Multicoin Capital: Unlimited Desire for New Financial Games
Everyone has a gambling nature, but the game is constantly changing.
Memecoin is the next generation of gambling. Memecoin is more volatile and therefore more fun than traditional casino or sports betting. Memecoin offers higher maximum returns than other forms of gambling, and its extreme volatility creates a level of excitement and risk that exceeds that of traditional casino games or sports betting. In addition, its potential for large returns is a huge attraction for those with a high risk tolerance. This potential for large gains, combined with the inherent unpredictability of Memecoin, creates an experience that cannot be matched by traditional gambling.
Memecoin also has unique social attributes. Tokenizing internet culture into Memecoin provides social attributes that other forms of gambling lack. They are often associated with online culture and online communities, promoting shared experiences among gamblers. This social attribute transforms the trading of Memecoin into a group activity where individuals can connect through common interests and experiences. This creates a sense of belonging and shared identity that other forms of gambling do not have.
Memecoins represent a fusion of gambling, internet culture, and social interaction. They offer a high-stakes, high-reward experience that appeals to the human thrill-seeking nature while also tapping into the social and collective nature of online communities. As internet culture continues to grow, Memecoins will likely continue to be an important part of the gambling industry, providing a unique and highly engaging experience for those willing to take the risk.
The human desire to gamble has always existed, but the games we play are constantly changing. Memecoin is the next node in this evolution, but it won’t be the last.
Multicoin Capital Investment Partner Spencer Applebaum: The pursuit of transparency in financial markets
In TradFi trading, brokers are able to offer zero-fee trading to retail traders because Citadel Securities, Susquehanna International, Wolverine Trading, and other high-frequency trading firms compete to bid for execution of order flow. This is known as Payment for Order Flow (PFOF). These firms are willing to bid for large amounts of order flow at or near the mid-price because order flow is, by definition, not public. There is a lot of literature on why PFOF is good for the world (despite its generally negative connotations) .
The challenge with Robinhood and E-Trade type payment for order flow is that it is opaque and the auction is limited to market makers working with the broker. In addition, there are multiple layers of intermediaries such as clearing houses, exchanges, brokers, etc., all of which charge hidden fees to the end user, which are often built into the spread.
Regarding the opacity of PFOF, the research article states, “Robinhood’s agreements with wholesalers sacrifice PI (price improvement) in exchange for an increase in PFOF. This is exactly the conflict of interest that Gensler is concerned about… This would not be a problem in itself if consumers could easily tell the difference in execution quality between different brokers. However, these differences cannot be inferred from the current disclosure system.”
The beauty of DeFi is that it compresses settlement, exchange, custody, and execution into a single API, and all of this is transparent. This gives DeFi a natural advantage because the market always values transparency.
DFlow (invested by Multicoin) pioneered the concept of "conditional liquidity", which means that liquidity can only be obtained if the front-end application recognizes that the transaction recipient is harmless (or the receiver obtains better pricing from the sender through an algorithm). Transaction senders can provide liquidity on on-chain CLOBs (such as Phoenix) or on-chain AMMs (such as Orca) and provide significant price improvements for private retail orders while avoiding being robbed by harmful receivers. The entire stack is open and transparent, and PFOF can be built on it using "conditional liquidity". This approach combines the advantages of TradFi and DeFi, which can split order flows and provide better prices for retail investors, while having the openness, transparency and auditability provided by DeFi.
Multicoin Capital Investment Partner Shayon Sengupta: Value capture will always be unbundled and rebundled across the stack
Last year, I published an article on the “Value Attention Theory” which described a core unlocking method for cryptocurrency in consumer applications: permissionless asset issuance and exchange in arbitrary interfaces and environments.
In 2024, asset issuance is concentrated in a few venues, with pump.fun being the most prominent. These venues dominate asset issuance, but importantly, these assets are traded elsewhere, such as Telegram group chat bots, aggregators such as DexScreener and Birdeye, or directly in Phantom. The issuance and trading of assets have been decoupled for as long as the cryptocurrency capital markets have existed. Bitcoin was launched on a crypto mailing list called metzdowd.com, and today it is traded on Nasdaq (via an ETF). In addition, tokens launched on ICOBench in 2017 continue to trade on major CEXs.
While pump.fun dominated asset issuance last year, it was not as good as Telegram bots and other aggregators in asset trading. In the long run, I think being able to control trading or order flow is a more profitable business.
Of course, this is just the first round of asset issuance and trading, which will be bundled and unbundled a thousand times in a thousand venues, because attention on the Internet is not limited to a single application. It is everywhere on forums, video live broadcast platforms, chat tools, and other interfaces we interact with.
More importantly, I hope these apps will more clearly realize that owning attention gives them the opportunity to own order flow. In 2025, expect to see more consumer apps launching with embedded wallets and trading capabilities.
Eli Qian, investment partner at Multicoin Capital: Funds seek returns
If you are a rich person, you will look for simple and efficient ways to make money.
Until recently, most sources of yield were only available to sophisticated market participants and investors. For example, if you put your money in a savings account at Bank of America, you would earn only 0.01% annually (while Bank of America would lend your money out at 10%!). You would only get a more reasonable yield if you bought a money market fund. However, the demand for yield remains, and the advent of products such as ETFs (which abstract away individual stock selection) and robo-advisors (which can manage portfolios) have made it easier for non-sophisticated market participants to earn yields that were previously unattainable.
The situation is similar for cryptocurrencies, but earning income from staking or lending is not easy and requires users to have certain expertise. Products that simplify the way to earn income will continue to emerge, thus ending knowledge arbitrage and putting retail investors at a disadvantage. Today, we can earn staking or lending income with just a few simple clicks in the wallet or application where we hold cryptocurrencies (knowledge of staking and lending is optional). Fuse Wallet, StakeKit, etc. can do this. In the future, wallets and DeFi applications will automatically allocate and rebalance assets between validators, lending protocols, and liquidity pools to provide users with the best returns around the clock.
Vishal Kankani, investment partner of Multicoin Capital: Innovation has significantly reduced the cost of banking services
The Medici family pioneered the development of modern banking in the 14th century. Banking services at the time were slow, physical, costly, and required a great deal of trust. Over time, the cost of accessing financial services has dropped dramatically. With blockchain, we can clearly see 24/7, global, zero-dollar-cost banking.
No matter how advanced financial instruments become, the need for banking services will always exist. The rise of Banking as a Service (BaaS) is due to the difficulty of building basic financial building blocks on TradFi, no matter how innovative the application layer is; naturally, this has led to modularization in the software, resulting in the separation of the front-end and back-end. Today, the back-end is called BaaS.
BaaS providers license their infrastructure to fintech companies, enabling them to launch digital banking, corporate card and lending products with minimal time and cost. By providing these services through APIs, BaaS providers allow tech companies to focus on customer experience and unique products, while the BaaS provider handles the “boring but critical” backend, namely compliance, risk management and fund flow.
In the pre-blockchain era, a hypothetical BaaS stack included banking infrastructure, KYC/AML compliance, payment processing, card issuance, and data aggregation. The system worked, but was complex and inefficient because it was still rooted in the traditional banking infrastructure (SWIFT/ACH) established in the 1970s.
Blockchain represents a transformative innovation that will disrupt modern BaaS. By using blockchain-based assets and protocols, we can build a new BaaS model that is simpler, cheaper, faster, global, and more transparent. The post-blockchain BaaS stack will include self-custodial wallets (such as Squads), programmable enhanced on-chain KYC and compliance protocols (such as zkMe), stablecoin payment infrastructure (such as Bridge), and DeFi protocols for lending (such as Kamino) and trading (such as Drift).
The evolution of BaaS to a blockchain-based model is inevitable. As the infrastructure matures, we will see blockchain protocols replace every component in today’s BaaS stack, creating a leaner, more efficient, and more transparent model for financial services.
Squads is a company invested by Multicoin. Its core is to provide a BaaS protocol on Solana, allowing enterprises, individuals and developers to create secure accounts that can store value and be used for programmatic transactions. We expect Squads to firmly lead the development of BaaS in 2025.
Matt Shapiro, Partner at Multcoin Capital: Eliminating Friction Increases Usage
When costs and friction are removed, usage naturally increases. Email changed the way we communicate; the iPhone made it easier to take photos and document our lives; Amazon simplified the way we shop online; and social media made sharing content seamless.
Obviously, the same result would occur if transactions and remittances were also made easier. Stablecoins could spark one of the biggest financial revolutions of our time. The ability to send remittances with 24/7, near-instant settlement would have far-reaching consequences. It would allow the dollar to penetrate new markets and get into the hands of real people in a way that Treasury auctions cannot. It would make commerce more efficient, with no downtime at night, on weekends, or on holidays. It would reduce working capital requirements and drastically reduce the cost and time of cross-border transactions. Currently, the supply and trading volume of stablecoins have reached new highs, and as regulatory clarity emerges, the acceptance of stablecoins will also increase.
The growth of stablecoins will further catalyze the concept of open finance. When transactions become easier, more transactions will occur. Those who own stablecoins will seek yield on these assets and gravitate to platforms like Kamino and Drift. Once on-chain, stablecoin holders will be able to access the yield of money market funds (such as Blackrock's BUIDL) and DEXs (such as Drift, Jupiter, Raydium, and Uniswap) with just a click of the mouse. As on-chain assets continue to grow, there will undoubtedly be more and more assets that stablecoin holders can choose to own and participate in. Stablecoins are the Trojan Horse for the on-chain economy, which will grow into a more inclusive and open global financial system.
