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 growing demand for transparency, standardization, and professionalism in investor relations. Ippolito argues that crypto investor relations should be more transparent, data-driven, and less burdensome for on-chain businesses and investors. The challenge lies in crafting a credible narrative from real-time business data.

Blockworks IR aims to meet these challenges by offering curated analytics, branded investor portals, and advisory support. Ippolito highlights the current state of tokens, noting positive developments in the crypto market, such as stable coins and institutional interest, but also points out a disconnect between overall market growth and token performance. While the total crypto market cap appears strong, the altcoin market cap has shown less favorable trends, with the average market cap of tokens decreasing by about 50% since 2021. The average price of tokens has dropped by approximately 80%, with tokens launched in 2020, 2021, and 2022 experiencing declines in average and median prices since 2022. Bitcoin has performed relatively well despite an overall market downturn.

Trust issues in the market are a significant concern, stemming from both market and information-related problems. The excessive number of tokens has led to fragmented liquidity, making it difficult for investors to understand value accrual from active addresses and network activity. Additionally, investors often lack access to complete and reliable data, with insufficient disclosures and standardized reporting contributing to mistrust. In contrast, public companies provide tools like quarterly earnings and standardized financial reporting, which are lacking in the crypto space.

To address these trust issues, Blockworks IR will focus on data accessibility, services such as quarterly reports and integrated IR earnings calls, and a comprehensive management tool for investor relations. The platform aims to present information effectively to investors, reducing their due diligence workload. Future developments include an intelligence solution for tracking investor engagement and behavior, as well as an agent service offering insights at a lower cost than traditional IR services. The overarching goal is to enhance market transparency and data quality, collaborating with leading protocols like BNB and GEDO to improve market standards and restore investor confidence.

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 annual auditing and compliance expenses reaching approximately $2.2 million. The discussion introduces the potential of crypto and on-chain solutions, emphasizing that the aim is 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 is presented as a solution, offering transparent access to 90% of a company's operating and financial history, which can effectively narrate a company's story and attract new capital at reduced costs.

Vlad Tenev's critique of traditional investor presentations underscores the need for engagement, suggesting that if the presenter is bored, the audience will be too. Traditional investor relations are often defensive and compliance-focused, lacking the necessary engagement. The vision for the future of investor relations includes a shift towards proactive and engaging experiences, aiming to increase the number of investors and token holders through real-time data, live events, and social media. Predictions indicate that companies will move towards hosting engaging events instead of merely providing quarterly reports, adopting more dynamic and interactive methods for investor engagement. Current investor expectations lean towards vibrant software solutions that offer real-time dashboards and updates, indicating a future where investor relations are proactive, engaging, and measurable in terms of brand impact and growth of the investor base.

The transformative potential of crypto is acknowledged, noting its impact on market operations and the challenge it poses to traditional finance practices. The conversation also touches on the importance of storytelling and gaining attention as a token issuer in the crypto space, highlighting the industry's resilience through various market cycles. The speaker emphasizes the crypto industry's strength, innovation, and adaptability, concluding with a positive outlook on its future evolution.