The Six Tokens To Own This Cycle | Yan Liberman

Yan Liberman discusses the current market dynamics, emphasizing the impact of long-term bond curve control and the market's misalignment with quantitative easing. He notes that the alternative market's reduced depth is constructive, but reaching new all-time highs will require significant time and capital, alongside skepticism and a lack of clear buyers.

Liberman identifies a favorable environment for discovering compelling alternative tokens that have not yet been fully valued. He highlights the clarity in the venture landscape for accruing value in crypto ventures, mentioning that only one of Delphi Digital's recent five venture investments is in crypto, specifically Tory Finance, which offers a tokenized carry trade with a yield of approximately 10.5% and minimal risk.

He points out that private wealth and ultra-high-net-worth individuals have advantageous relationships for executing certain crypto trades. Liberman references a trade involving a bank backed by the central bank of Turkey, which provides a durable yield independent of crypto fluctuations. He believes that liquid markets present more opportunities than private venture investments and suggests that legacy tokens may still be building value quietly.

Currently, Liberman holds six tokens but refrains from disclosing their sizes. He expresses confidence in revenue stories that are not heavily reliant on crypto activity, viewing them as more resilient. He is optimistic about the long-term value of the token for Venice and anticipates positive repricing for the token Grass as market awareness grows. He projects his business will generate 70 million in top-line revenue and 40 million in operating profit.

Liberman acknowledges challenges in data scraping due to many sites blocking data center IPs, which requires the use of residential IP networks. He expresses caution regarding the risks of trading commodities and the complexities of supply and demand. While he enjoys the volatility of the crypto market, he is adopting a more conservative investment approach and is less anchored to specific return expectations.

He predicts that a recession is imminent, which will affect investment strategies, and he disagrees with the notion of achieving a clean 10x return in the current crypto landscape. Liberman observes that the market has become more competitive, with healthy dispersion, and sees a credible chance for hype to reach a market cap of 500 billion dollars. He highlights the significant intersection of crypto assets with AI demand, anticipating that the narrative leading up to a recession will be bullish for crypto as capital flows into harder assets.

Liberman finds gaming a challenging investment vertical due to the short life cycles of games and notes that the number of investable verticals is limited, primarily to financialized applications. He expresses skepticism about the broader adoption of prediction markets and points out that Kalashia's valuation reflects regulatory arbitrage in sports betting, where traditional companies face substantial tax burdens.

He discusses Aero as a particularly interesting token, predicting significant price improvements due to its plans for dynamic emissions aligned with trading volume and revenue, which could contribute about 40% in additional revenue without emissions offsets. Liberman notes a decline in the quality of founders in the crypto space, attributing this to many talented individuals shifting focus to AI.

He emphasizes that the investment committee has increased the weight assigned to founder quality in evaluations, recognizing the subjectivity involved. The committee uses shared notes and a grading framework to assess founders, discussing their early life experiences to gauge their drive and determination. Since 2023, the firm has begun allocating to emerging managers in crypto and AI, having invested in seven or eight after evaluating around 500 candidates.

Liberman points out that successful emerging managers often possess a repeatable edge, and diligence regarding founders has increased over time. He expresses cautious optimism about Bitcoin, suggesting it could reach the high nineties, but notes that further long positions will depend on new information regarding the Federal Reserve or inflation. He reflects on the venture capital landscape, which operates under a power law distribution, acknowledging missed opportunities in high-performing companies like SpaceX and Nvidia.