The New Economics of Crypto Tokens | Austin Barack

Austin Barak discusses the evolving landscape of crypto markets, emphasizing the need for investors to adapt their strategies to identify rapidly growing companies and tokens that are reasonably valued. He highlights two primary themes of interest for Relayer Capital: the intersection of crypto and AI, and the continuous trading and tokenization of assets.

Barak focuses predominantly on liquid tokens, directing 95% of his attention away from venture investments. He observes a clear separation among tokens in the current market cycle, with only a select few achieving product-market fit and experiencing rapid growth. He predicts that assets like Athena and Pendulous will benefit significantly once on-chain yields increase.

He assesses Venice's token as materially underpriced at a $1 billion fully diluted valuation, noting that Venice monetizes primarily through subscriptions and credit purchases for AI access. Barak appreciates Venice's balanced approach to integrating token and equity in its business model, suggesting that most companies will require an equity component to support complex fully on-chain operations.

As of August, Venice is running at an estimated annualized revenue of $107 million, with $8.3 million in annualized burns. Barak projects that by 2027, revenue could scale to $336 million, with $70 million in burns, although he acknowledges that the assumption of $30 million in burns from the mines product may be overly optimistic since it is not yet live. He reports that credit purchases, which generated $60 million in annual revenue despite being a new product, enhance existing AI offerings by improving accessibility.

Barak emphasizes Venice's unique direct relationship with users, which sets it apart from generalized model aggregators. He predicts that Venice's stock could see a significant re-rating if it successfully transitions into an open developer platform. Venice is also engaging in stock buybacks and burning VVV tokens, a strategy that is atypical for a young startup. He notes that the token's value may remain uncertain until there is regulatory clarity, such as the Clarity Act.

Barak mentions that Venice has raised $65 million to prioritize the token while continuing to reinvest in its operations. He believes that the use of diffusion models for image and video generation is still in its early stages, indicating potential for products like Mines. He acknowledges a tension between value and growth strategies in Venice's revenue allocation approach.

He concludes that Venice's growth has surpassed his expectations since he began tracking it in early 2025, noting that it is one of the few crypto products to achieve mainstream consumer crossover and product-market fit. Barak cites OpenRouter's valuation increase as validation for Venice's growth potential and valuation analysis, while clarifying that VVV has no exposure to Bitcoin's price movements.

Barak discusses the performance dynamics of crypto tokens, noting that some are partially coupled and partially decoupled from macro growth in the crypto industry. He expresses concern that the decoupling trend is not positive, although certain tokens have outperformed expectations and undergone a re-rating due to being previously undervalued. He predicts that the non-correlated nature of specific crypto tokens will continue to thrive as business fundamentals improve.

On-chain activity and meme coin trading are anticipated to see significant growth, potentially doubling or tripling revenues. Hyper Liquid's revenue growth has been constrained by its growth phase, despite a recent spike in market volume, generating about five million dollars in fees in one day, a substantial increase from just under a million dollars a week prior.

Barak highlights that Venice is experiencing a positive impact from AI adoption, which benefits the broader market, even if it lacks full reflexivity with on-chain trading. He notes that Pump is currently trading at a 5x earnings multiple, which is undervalued compared to its potential, with a reasonable prediction that it could reach a 10x multiple.

Euthify's credit card product volume has surged from $300,000 a day to three to four million a day, indicating a 10x year-over-year growth. Despite a decline in valuation due to waning excitement in liquid staking, Euthify's token price could exceed one dollar based on projected buybacks and market multiples. The perception of revenue durability in crypto is evolving, suggesting that it is becoming more stable.

Looking ahead, it is predicted that by the end of 2026 and into 2027, the majority of crypto revenue will stem from applications rather than execution layers. The future of crypto is expected to emphasize applications, usage, and money, with enduring tokens emerging from this focus.