Where Crypto Markets Are Headed: Everywhere
We’re back on Substack! We have a lot in motion. Let’s start with the thesis.
Jesse’s new piece, Everything Is Market, sets the direction. We’ve put an excerpt below. Just read it.
We’re also getting you up to speed on three really interesting recent posts we’ve done on markets:
Elijah explains why institutions aren’t getting onboarded onto derivatives exchanges despite the obvious financial upside.
Daniel outlines what does and (probably) doesn’t count as insider trading in prediction markets.
Salah & Elijah explore three legal and regulatory battles that will determine prediction markets’ futures.
Plus: new investments, open roles, and where to connect with our team.
Enjoy!
Everything Is Market
There has been a lot of debate about whether crypto is for finance, or more than that.
My view is that, yes, crypto is for finance.
But also, finance is becoming much more expansive than is commonly understood.
There are three fundamental drivers. First, mass accessibility and participation in markets means that finance is increasingly intertwined with, and influenced by, culture. Second, that dynamic is enabled and accelerated by permissionless markets, which act as change agents, enabling a global user base to express new behaviors, and, in the process, pull regulators and institutions forward. Third, financial markets are evolving from discrete venues into programmable endpoints; they are becoming APIs with embedded economic data that produce real-time information that no other system can generate, is costly to fake, and can be used seamlessly by intelligent agents.
Mass participation changes who uses markets; permissionless innovation changes which markets exist; and the programmability of new markets opens up new design space for how we (and our agents) will use them.
Taken together, as all the world’s value becomes software, finance is undergoing a radical transformation that demands a much more expansive view of its end state.
More Recent Reads
Ideas and perspectives from the team
We Are Not Onboarding Institutions (for Now)
Elijah Fox
Crypto traders love leverage. So derivatives exchanges heap it on. 10x. 20x. 100x. As they do, they increase the chances of auto-deleveraging — and keep institutional players on the sidelines. Elijah looks at traditional finance to see how crypto can design derivatives markets that attract institutions.
Thoughts on the Law of Insider Trading and Prediction Markets
Daniel Barabander
Seemingly every time a big bet pays off on Polymarket or Kalshi, people wonder, “Was that insider trading?” Our resident lawyer (though not your lawyer, and this isn’t legal advice) explains what insider trading actually is and where he thinks prediction markets fall in the legal definition.
Prediction Markets Meet Derivatives Law
Salah Ghazzal & Elijah Fox
Nearly 150 years ago, “bucket shops” let people bet on commodity prices without going to an exchange, leading to the development of modern derivatives law. Now, with prediction markets ticking up in popularity, there are some unresolved legal and regulatory questions founders will have to consider before building. Salah and Elijah explore.
Firm Announcements
Highlights and important info
Variant invested in Derive, an onchain crypto options exchange that takes over where perps leave off.
Variant invested in Levl, a stablecoin infra startup.
Variant is hiring for two killer roles: AI lead and deputy general counsel. Come work with us!
We have a few spots open for founders for a private dinner with Blueyard. Sign up if you’ll be in NYC on March 11.
Thinking in Public
Recent posts from Variant’s policy team
Jesse stops by The Bell Curve:
Daniel sees a path for agent monetization:
Caleb is looking for meme market forecasters:
Alana wants a word:
Disclaimer: All information contained herein is for general information purposes only. It does not constitute investment advice or a recommendation or solicitation to buy or sell any investment and should not be used in the evaluation of the merits of making any investment decision. It should not be relied upon for accounting, legal or tax advice or investment recommendations. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment. None of the opinions or positions provided herein are intended to be treated as legal advice or to create an attorney-client relationship. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by Variant. While taken from sources believed to be reliable, Variant has not independently verified such information. Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by Variant, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Variant (excluding investments for which the issuer has not provided permission for Variant to disclose publicly as well as unannounced investments in publicly traded digital assets) is available at https://variant.fund/portfolio. Variant makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. This post reflects the current opinions of the authors and is not made on behalf of Variant or its Clients and does not necessarily reflect the opinions of Variant, its General Partners, its affiliates, advisors or individuals associated with Variant. The opinions reflected herein are subject to change without being updated. All liability with respect to actions taken or not taken based on the contents of the information contained herein are hereby expressly disclaimed. The content of this post is provided “as is;” no representations are made that the content is error-free.