Investor Relations in the Onchain Era

Michael Ippolito, co-founder of Blockworks, discusses the launch of Blockworks Investor Relations (IR) and the evolving expectations of investors in the crypto market. With increasing institutional capital, there is a demand for greater transparency, standardization, and professionalism in investor relations, which Ippolito argues should be more data-driven and less burdensome than traditional markets. He highlights the challenge of effectively communicating the real-time visibility of on-chain businesses to investors.

Blockworks IR aims to meet these needs by offering curated analytics, branded investor portals, and advisory support, enhancing storytelling for businesses and understanding for investors. The platform has BNB and Jito as its inaugural clients. Ippolito notes the mixed performance of tokens, with a stable overall market cap but a significant decline in the average market cap of tokens, which has dropped by about 50% since 2021. While Bitcoin performs well, the average price of tokens has decreased by approximately 80%.

The relationship between on-chain revenue and token prices has weakened, challenging the expectation that rising revenues would lead to price increases. Trust issues in the market stem from an excessive number of tokens that fragment liquidity and a lack of access to complete and accurate data. This absence of standardized reporting contributes to investor mistrust, as they struggle to interpret available information without context. Ippolito emphasizes that improved information access could mitigate many issues faced in the past four years, comparing the crypto space unfavorably to public companies, which benefit from regular reporting and management presentations.

To address these challenges, Blockworks IR offers a three-part solution: enhancing data accessibility, providing services like quarterly reports and earnings calls, and creating a comprehensive IR platform for managing investor relations workflows. The platform aims to present information effectively to investors, reduce redundant diligence, and improve market transparency. It will feature a front-facing website similar to public company investor relations pages and provide engagement analytics to help protocols understand investor behavior.

The conversation highlights the significant challenges faced by public companies, noting that the number of such companies in the U.S. has halved over the past two decades, with auditing and compliance expenses averaging $2.2 million annually. The potential of crypto and on-chain solutions is emphasized, aiming to enhance existing public market structures rather than merely replicate them. Current investor relations practices are criticized for being outdated, often featuring unengaging presentations and basic data. On-chain data offers transparent access to 90% of a company's operating and financial history, effectively narrating a company's story and attracting new capital with lower overhead.

Vlad Tenev's critique of traditional investor presentations underscores that if the presenter is bored, the audience likely is too. Traditional investor relations are described as defensive and compliance-focused, lacking necessary engagement. The vision for the future includes a shift towards more proactive and engaging experiences, aiming to increase the number of investors and token holders through real-time data, live events, and social media.

Predictions for the evolution of investor relations suggest a move away from traditional quarterly reporting, with companies expected to host events and utilize personalities to share their narratives. The transformative potential of crypto is acknowledged, as it has already altered market operations, creating a 24/7 environment that challenges traditional finance norms. The resilience of the crypto industry, which has survived significant market fluctuations, showcases its strength and innovative vision for the future.