--:-- Sonal: Yeah, I was just going to ask, you know, one thing that a company like Apple would argue is that because of the curation that they provide, they are owed some fee on both the purchases or the activity that goes on in their app store. How does that square with the permissionlessness that you see in the crypto arena? I would say at this point, there isn't a lot of thoughtful curation. So I would disagree with the first part of that potentially. The second part of that, the great thing about crypto is that you can then move to another platform. Similar thing, games need quite a bit of capital to launch. And for the past several years, blockchains have acted not just as a platform to build upon, but a publisher as well as a distribution and discovery mechanism. And what I've been seeing is many of these game chains now have their own marketplaces, and they're able to feature key games that are built on those blockchains. And that is a key benefit because they are able to take users and move them from game to game. And that is the thesis of a lot of our investments. I don't think that they'll be stuck in any one of these decentralized app stores, for example. I love watching all these experiments, like the Solana phone, it breaks every rule. Don't compete with Apple on the iPhone. And then they're just like, screw it, we're going to do that. Yeah, totally did a wonderful job on our podcast explaining some of the impetus behind it and the innovation bet that they were making with it, which I think was fantastic. So I just want to call out that episode in case listeners haven't heard it. Yeah, that's a great one. And then one other point, Maggie, you brought up like, it's actually not all fun and games. Like there are some challenges as well, which is, for example, you know, if a product has existing distribution, like on messaging apps, it's hard to port that distribution on chain. And that's one of the things that's going to be difficult for some of these companies that are maybe Web 2 coming to Web 3. One example you cited was Telegram and the TUN network. I want to be very clear, we're not talking about the token, just the network. I think Telegram has been one of the exceptions. What I've heard from speaking firsthand to many, many organizations that have large incumbent distributions, so they might have a platform in Web 2, they might actually have something like Web 3, is that they still find it hard to bring those users on chain. And one example that you can look at the public data, Coinbase has something like 100 million verified users that have ever transacted with Coinbase. If you look at both the active users, so the daily actives monthly, that's something like 8 or 10 million transacting. And the number of those users on base, I think those numbers have just went up recently. They went up from something like 10 million to 18 million, but that's still about 10% of their total base. So there's this large number of dormant users. And we actually talk about this in our State of Crypto report, which I think is fascinating because it's absolutely true. You talk to any large, could be a messaging app, it could be a centralized exchange, anything like this. And they're all trying to figure out, you know, we got them in somehow. They created an account, but they haven't done anything more. And how can we keep them coming back and transacting on chain? Yeah, I agree. Maggie, thank you so much for joining. Thank you. It's really fascinating to think that there are so many people out there who have crypto. They hold it, they've interacted with it, but they're just not doing anything yet. They're sort of like lying in wait. They're dormant, just like waiting to get activated. They've got like the broadband going to their house. They've got the phones in their pockets. They're just like, what do I do with this new tech I have? And so it's just a matter of switching that on and people becoming like really actively transacting with it. Let's hear what's next. When we were doing the State of Crypto Report, we really wanted to do our best to size up the crypto industry. There's a lot of noise out there. Measuring users is very tricky in the crypto world for a number of reasons. But when we did this market sizing exercise, we actually found that only 5% to 10% of people who own crypto are actively using crypto. And to me, that stood out as a big gap, but also a really big opportunity for the industry, given where we're at on the technology timeline with blockchains and the infrastructure getting better. The UX continues to get better. And I think we're finally ready for primetime. And given where we're at on that curve, I think, you know, this next year is the perfect time to bring people on chain, convert those passive crypto holders into active crypto users. For me, that was a very eye opening idea because so many people talk about mainstreaming these new users and it feels not like insurmountable, but it feels like it's skipping a phase stage-wise in the technology readiness and development. And your idea was like a wonderful bridge to like, here's a way to bring in existing people, convert them into users. Do you guys have any theories about what brought them? I mean, we don't know the exact answer, obviously, because we don't have that data. But like, what do you think they did in the first place? And then why they stalled out before they did something else? Well, this is like the perfect time to talk about the price innovation cycle. Sure. We have this concept, which is this idea that when crypto prices go up, people get interested. And then people that get interested, you know, ultimately decide to build something. The developers come in, they build the products, you know, and those products then kickstart the next wave. And we've seen this happen now many times over the history of crypto. And it speaks to the fact that prices are often a leading indicator for the types of activity that we want to see. And I think we're at the beginning of potentially the next wave. So sorry, just to be more concrete about it, though, because I totally agree that's a great framework for it. Like, if I were to speculate, a lot of these people that came on that got wallets might have done it to buy an NFT because they saw like Constitution DAO. Remember when all those people were trying to buy the U.S. Constitution? I think one of the most exciting things about that is that even though they failed their bid to win the Constitution, it brought a lot of new people into crypto. But that's probably the only thing they did. And then they didn't do anything more with it. I mean, again, we don't know exactly, but like that's what I would sort of speculate. And then now they're just holding these wallets, but they're not active users. I guess the question I have, what do you think would take to get them like to that next thing? Like, what is that gap? Yeah, crypto as a technology has a number of different use cases, but it's also kind of has these different movements underpinning the technology. Yeah. In 2024, for example, we saw a lot of progress with crypto as a political movement. We saw key politicians and policymakers speaking very positively about the technology. We also saw it make incredible developments as a financial movement, right? So Bitcoin and Ethereum ETPs were approved, which broadened investor access. And so, you know, these are the types of things that ultimately bring a lot of people into the space, make them aware that this is something that they can participate in. But where we believe crypto has the most promise is as a computing movement. And Chris Dixon talks a lot about this in his book, Read, Write, Own. The real power of this technology is to create a better version of the internet that is more fair and open and transparent. And I think we are, like I said, at the inflection point here, where we may in 2025 see more developments of crypto as a computing movement because, you know, we have the people that are in there, right? And with the infrastructure developments we've seen with fees coming down, with the UX improvements, with new application categories starting to emerge, we potentially could see a killer app like ChatGPT kind of showed us on the AI side that really kickstarts the entire industry and kind of delivers on the promise of crypto as a computing movement, a new internet. And that's what I think I and a lot of the team here is really excited to watch. Yeah, this is something that we've talked a lot about. But the fact that stablecoins, they've found product market fit. And all it really is going to take is one big company to realize that not paying merchant fees on credit card transactions with your customers could be tremendously profitable for them like transformative for their bottom line for these thin margin businesses It going to take one big company to do that before this thing takes off At least that's one pathway where you could see this thing really kind of hit the big time. Yeah, I'll add just that. What I again find very interesting about your idea is that notion of bringing adjacent users. And then when we're ready, we bring in more of the mainstream users. And we were not ready for that on the UX side anyway. Because when you really think about the mainstream users, I don't know if they're going to come through these paths. Like they're going to be, those interfaces are going to be very abstracted away from them. They might not even know they're using crypto. And so it's actually really interesting when you think about all these different waves that are going to come in through all these different paths. It's very exciting. Awesome, Darren. Thank you so much. Awesome. Thank you. Okay. So now on to the next one. So Joachim, to quickly summarize, your idea was builders will reuse, not just reinvent infrastructure. and your main point you talk about is how it seems like we always see a bespoke validator set, consensus protocol, da-da-da. And what you say in the post is the outcomes were sometimes only slightly better in specialized functionality, but they often lacked in broader or baseline functionality. That this year you expect to see crypto builders leverage more of the contributions of each other, like using off-the-shelf infrastructure, and that it'll save them time and effort, but really allow them to really focus on differentiating the value of their product, which I think is a fantastic big idea. Much needed call to action even. So the quick question I have for you is, it sounds like it's great in theory. Will it actually happen? And like, what do you see as maybe obstacles of making this happen? I think the crucial ingredient for this idea is whether or not the tech stack keeps changing going forward. Yep. If the hypothesis is correct, that the tech stack has stabilized or is stabilizing, and we see certain layers of the tech stack getting well-defined in terms of their interface and how they interoperate with other layers of the tech stack, then you would expect that those layers, there's specialized teams, specialized products, specialized services working and improving these layers. And that leads to the professionalization of those layers. And then instead of being spread across the stack, like working on each of these layers simultaneously, it becomes prudent to basically focus on the pieces of the stack that you can make the most impact on. And so the critical question here is, has the tech stack materialized enough and stabilized enough? If there's like a surprising turn around the corner that turns this tech stack upside down, then this may not happen. Joachim, so your point about people sort of gravitating toward certain products or services or components that are existing out there, It makes me wonder, when do you know that the tech is actually good enough to say, okay, we are going to use this tech. We're not going to try to build something new and better than what already exists off the shelf. That's a great question. You're basically asking, how do you know the builder? Yeah, yeah. Because it's nice to say, just use something that's already out there. But what if you're like, but I think I can make something better than that, you know? So, yeah, I think advice that I would give that person is to always be aware of the larger ecosystem and the larger ramifications and the larger use case or application. There's a wider context that the product or service is going to be used in than you may perhaps initially think. Yes. So one can make an analogy with like a car, right? So maybe you're very, very good at like building engines and your idea is I'm going to build a new car. I'm really good at building engines. And that's really the one key distinguishing factor. But your customer will not only want to have a fantastic engine, right? The car also has to have a reasonable stereo or it has to have reasonable seats. It has to maybe have air conditioning, right? Are you going to reinvent all those parts as well? Or is there a way for you to focus on the one thing that you're very, very good at while leveraging best-of-class products that are provided by others that provide other parts to the stack. That's fantastic. It's a great analogy. That's a perfect analogy, actually. But it's also very apt coming from you, Joachim, because you're German. And in Germany, they have all these very, very specialized auto parts makers that completely make the best possible tiny component in the BMW car that nobody else can top. So it's also extra. I'm just laughing because I can't believe you went there, but that's a great point. It's easy to say when you have the best scar components around. Totally. Yoakim, you know, I was joking with you about this big idea that one of my personal observations is that I think people in crypto have this thing which I call constraints porn, that there's a lot of people in this early phase of crypto that are just really into it because of the constraints. And I think your big idea is going to be very annoying for that crowd because they actually really like that part of the problem. And in a way, your big idea actually welcomes more new builders to the space, which is quite democratizing, in my opinion. I mean, it's really an amazing time to build in this space, right? Because so many code bases that people can tap into when they build their products or their services. And, you know, there's really so little you have to genuinely do yourself, right? Like you can really focus on what you're good at. And for everything else, there's highly specialized parts already out there. So probably a good idea to reuse them whenever you can. and tap into the expertise of other teams, of people who build on other parts of the stack. Thank you. Wonderful. Thank you, Joachim. And now we have the last one. So Chris, you've had a lot of different roles at A16Z over the last decade, but in your job, you come across a lot and you work with and you've onboarded a lot of fashion, music, media executives into Web3. And so I think your vantage point is not just speaking for yourself, but like thousands of the people that you've met with. So can you tell us like your big point for 2025? Of course, of course. So my big idea for 2025, which has been my big idea for 2024 and 2023 and 2022. But I think now we finally are at a state where, you know, we can really make this happen. I call it hiding the wires. And so what that means is that obviously everybody knows the benefits of crypto and how it's going to be the future of so many different industries, whether it's music, whether it's fashion, film, the power of ownership, the power of decentralization. But there's a little bit of a lack of knowledge from people that aren't in the crypto industry when we're using technical terms like ZK roll-ups or L2s or gas or gas fees. And I just have a PSA to the crypto industry that we don't need to start with the phrase of, hey, this is an NFT project, or hey, this is a token, or hey, you know, if you connect your wallet into the, like, those are great things for people in the crypto industry. But if you're gonna really take something and have it go mainstream, we can't lead with the technical terms, because unfortunately, most people do not know, nor do they care. And what I mean by hiding the wires is not necessarily leading with the technical infrastructure, with the technical terms, the technical products that obviously are the benefits behind the application, but don't necessarily need to be the overarching sell. I love this thesis because it's about cutting through the jargon and like, okay, we talk about NFTs. What is a non-fungible token? It doesn't really matter. What matters is it's a way for creators to get paid. Exactly. Or like even somebody at our own company the other day was like, why do I need a stablecoin? But like, what if you didn't call it a stablecoin and it was just a way to save like 50 bucks over the course of a year on coffees that you're buying? You know? Exactly. All of a sudden it's like, oh, whatever it's called. I don't know. I just, I want it because it makes sense. I want it. And I can't believe we didn't have this beforehand. Yes. You know, I came from the music industry and when I used to go to conferences, nobody ever went to an MP3 conference. You know, like, why are we starting conferences in using technical terms in order to try and attract mainstream users into the space? But we're very happy to put an NFT conference on a billboard at any moment. A great example is the SMTP, right? Like that's actually like a extremely technical protocol, you know where anybody could build on top of it but through apps like Gmail and Superhuman and Yahoo Mail and all these things made it extremely simple for people to utilize and get the benefits of SMTP software And when I'm sending emails and blasting back and forth and crushing through my day, I'm not thinking, oh, wow, like this SMTP software is working perfectly. I'm just doing what I have to do. And because of that, I'm getting the benefits of the technology. And I think the same thing really needs to happen when it comes to crypto, where there's so much benefits. I mean, you think about decentralization, you think about, you know, ownership, you think about, you know, knowing your customers and disrupting middlemen and, you know, being able to have direct. I mean, my hope is that for next year, if we can have more businesses and more companies that are thinking that intuitively for the customer and for the everyday people, it's going to, you know, get us creating new industries and reimagining how the future of creatives, how the future of small, medium businesses, you know, the future of restaurants, you name it, will all be able to leverage the benefits of crypto. And interestingly enough, all those people you cited, creators, the small businesses, etc., are the ones that would benefit the most from the features of crypto. But to your point, they're not able to directly access it yet. Exactly. And it's not their fault. It's not their job to understand how to swap tokens or to, you know, have different wallets that go off different chains. Like they just want to be able to get access to the benefits. This is why like we're all working in this space. And that's what I'm most excited about. That's perfect. And a great note to end on. Well, why don't we start by just riffing off what we see are the kind of cross-cutting themes. So I think this year I noticed three broad categories of topics that people brought up for their big ideas. The first section was having to do with AI and the intersection of AI and crypto, which is no surprise. It's been just a total, you know, momentous year for AI. The second bucket, I would describe as, you know, we like to talk about digifizzy here. Oh, God, I hate that phrase. But yeah, I know it's a rough word. But this kind of coming together of the digital and physical worlds. Oh, interesting. In a sort of practical way. And, you know, that's everything from kind of like payments to voting to creating networks for physical infrastructure. So if maybe AI is like the software side, maybe this is more of like the hardware or hardware of like reality and life and living. By the way, on that second theme, that's so interesting because I would never have categorized it that way. But now that you say that, I see exactly what you mean because there's examples of tokenizing things in the physical world, putting bonds on chain. I mean, one of the examples is even using your own physical body and biometric data and tokenizing that. So you're right. That is interesting. Right. I mean, how much more physical can you get? Yeah, yeah. I wish I could cut you saying digi-fizzy, but hey, I'll take it because that is what the worst. By the way, where do you stand on digi-fizzy versus figital? They're both terrible words. They're really awful. Figital to me is far worse. I'm holding out for something better. Yes, me too. We'll have to coin something. Anyway, yeah. And that's cool. I didn't see it that way, but I agree. What's the third thing you see? Yeah. And then maybe I'd rank the third category as just like generally the tech improving, like kind of taking what has happened over the past year and just sort of incrementing it up, what will happen if everything gets a little bit better, a little bit easier to use, a little bit more smooth and seamless. And just kind of, yeah. So I feel like those are the three kind of categories that I was detecting. On the last one, I thought of that more It's just really significantly improved user experience and a little bit more of a maturing of an industry that's more ready to think about the people first versus the technology first. That's how I categorize that last theme. So, for instance, like Joachim talks about how, you know, people don't have to design everything from scratch. You can actually build things and use off-the-shelf components and repurpose them. Chris Lyons talks about the other extreme, which is, hey, you may not even know you're using it as crypto. And then Mason talked about how like just as a mindset shift cutting across both of these that people will start with thinking of what they're trying to solve for. And then the technology will follow versus the other way around, which seems like how the industry has led. And I think it's exactly because of the improvements that you're describing. Where would you put Maggie's discovery one on this list, like app stores? That's such a good one. Yeah. I would rank that one as kind of a crossover between the second bucket and third bucket. The second being this kind of merging of the digital and physical. You know, she has this nice point she makes about how we're seeing some crypto hardware like WorldApps Orb and Solana's mobile phone kind of leading to these app store experiences that would sort of kind of, I don't want to say mimic, but would at least echo the way that previous generations of the web kind of hit it big. Like the iPhone and its app store. The iPhone and the app, exactly. Yeah, yeah, exactly. So that's interesting because I would agree, but I would maybe put a twist on Maggie's where it's actually kind of an interesting contradiction, too, because on one hand, we're saying, hey, crypto could be very poised for the mainstream or even the, as Darren would argue, the adjacent mainstream, which is the people who are already wallet owners, but not users. But in Maggie's, I think it's also very interesting because she's also talking about crypto having its own area and like having its own app store, essentially. But, you know, as we've seen with like recent discussions around debanking and other things, like a lot of these app stores were kicking crypto out and not ready for it yet. And obviously their positions have changed. Like Coinbase just announced that Apple wallet integration. But there's enough crypto apps that crypto can have its own app store, which is very interesting. Yeah, debanking has become this like big topic of conversation, this issue of crypto businesses, startups, and also people kind of losing access to the financial system unfairly and without any explanation or justification as to why. And we see something similar from the tech perspective where you have deplatforming. And you mentioned this with the app stores, you know, when an app doesn't get greenlit for an app store or it gets removed inexplicably. And by the way, for arguably similar reasons, because as you saw in our debanking explainer, sometimes it's very justifiable, like a bank is allowed to. And sometimes the app stores will argue it for security reasons or some other, quote, good reason. And oftentimes it might be, but a lot of times you're like, huh, not really. Yeah. And so I see like part of that third bucket I was describing of like things getting a little bit better. I think you could also describe it as kind of like crypto holding its own as its own kind of platform. And, you know, Miles is his big idea. He talks about how, you know, this piece of legislation that Wyoming recently passed, the DUNA, the Decentralized Unincorporated Nonprofit Association, it recognizes these communities as legal entities to operate protocols. That's great. And to operate crypto startups in a decentralized manner for the first time. And that is a platform that didn't exist before. People were kind of just flying the plane and kind of, you know, whatever, the tech works, but it didn't have an exact spot to fit in the legal framework. Right. Well, a lot like Maggie's point where it's a little bit like crypto, the DAOs, the decentralized autonomous organizations, need their own legal entity structure that's not only an
