Thesis

The fund's investment strategy involves identifying promising blockchain projects that have a strong team, clear use case, and a viable path to adoption. Token Metrics Ventures aims to support these projects through strategic investments and guidance to help them reach their full potential in the emerging blockchain ecosystem.

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The next evolution of Money

The rise of Bitcoin, a digital asset designed to operate as a medium of exchange using cryptographic technology, has led to an entirely new asset class in which a scarcity of supply is fixed to 21 million. As it’s defined by mathematical features, it cannot be devalued like fiat currency.

Bitcoin and many subsequent blockchain technologies using cryptographic technology and economic incentives have led to the rise of global, state-free (non-sovereign) money. We believe the permissionless and programmable nature of these assets will be the next step in the evolution of money. Development in money is not uncommon in a historical sense — we have seen it evolve from barter to gold to fiat, for example. Now it’s changing again.

Unprecedented global monetary policy, historically depressed low yields, the massive overhang of global debt to gross domestic product (GDP), inflation concerns, and innovative blockchain technology have accelerated the adoption of a new form of money. We believe the breadth and use cases of these new forms of money represents a significantly larger addressable market than gold ($11 trillion) and the total US money supply ($20.3 trillion), which is still underappreciated by the market.

Massive reshaping of multiple sectors within the global economy
DeFi: The new financial system

The decentralization of finance is opening pathways for the tokenization of all units of value, from legacy assets such as equities, bonds, commodities, real estate, and currencies to unique derivatives built on distributed ledgers. Such means of permissionless interaction will drive the development of numerous services and applications. We also believe decentralization of finance will further make capital markets more efficient and more accessible to everyone on the planet. The total market size of global financial service is currently $22.5 trillion and is ripe for disruption by DeFi (Decentralized Finance). Being on the right side of this change could lead to tremendous wealth creation for investors.

One of the themes we’re very excited about within DeFi is capital efficiency. We believe higher capital efficiency could lead to increased rehypothecation of assets, more efficient collateralization (and liquidations), more liquidity, growth of unsecured credit, and massive market share capture of centralized finance.

Web 3.0: A fairer and more secure internet

The decentralization of finance is opening pathways for the tokenization of all units of value, from legacy assets such as equities, bonds, commodities, real estate, and currencies to unique derivatives built on distributed ledgers. Such means of permissionless interaction will drive the development of numerous services and applications. We also believe decentralization of finance will further make capital markets more efficient and more accessible to everyone on the planet. The total market size of global financial service is currently $22.5 trillion and is ripe for disruption by DeFi (Decentralized Finance). Being on the right side of this change could lead to tremendous wealth creation for investors.

One of the themes we’re very excited about within DeFi is capital efficiency. We believe higher capital efficiency could lead to increased rehypothecation of assets, more efficient collateralization (and liquidations), more liquidity, growth of unsecured credit, and massive market share capture of centralized finance.

NFTs: Tokenizing the intangibles and the collectibles

Before the 1990s, 90% of the market value of the S&P 500 came from tangible assets (eg. cash, land, machinery), and now intangible assets (eg. intellectual property, brands) represent 90% of the S&P 500’s market value. For reference, S&P 500 market capitalization is approximately US$40 trillion. Non-fungible tokens (NFTs) allow an opportunity to turn these intangible assets into programmable assets on permissionless blockchains.

The global collectibles market (including trading cards, games, toys and art) exceeds more than $400 billion. NFTs represent an opportunity to turn these into more liquid and tradable assets, allowing fractional ownership and digital representation.

Metaverse: Investing in the digital renaissance

We consider the metaverse (virtual worlds) one of the most ambitious and fastest-growing sectors. The metaverse combines many emerging technologies, including virtual reality and crypto primitives like smart contracts, in-game currencies, and non-fungible tokens (NFTs).

As a society, we are increasingly spending time in virtual environments, whether it’s Zoom meetings, online games, or social media. We believe an alternative digital world built on blockchain will become a reality. NFTs and crypto assets will play a vital role in this alternate digital world’s economy, culture, experience, and assets.

The rise of DAO’s

Decentralized autonomous organizations (DAOs) are blockchain-based organizations that are collectively owned and operated by their members. DAOs are built on smart contracts that define the organization’s rules, perform protocol operations, and execute governance functions.

As all the rules are embedded into the software code, there is no need for a manager to play any bureaucratic or hierarchic role. We believe DAOs offer stakeholders more transparency and control over the organization than traditional corporations, as everything is recorded on a blockchain. The operations of a traditional firm are private — only the organization knows what is happening, and that further creates asymmetric risk for investors that can be avoided with DAOs.

We believe this new decentralized form of business will grow and become more prominent among commercial and non-profit enterprises. DAOs are currently used for investment, charity, fundraising, and borrowing, all without any intermediaries. We expect the use cases to grow and pose threats to traditional corporations.

The role of Token Metric Ventures (TMV)

A diversified portfolio of the themes mentioned above can help add alpha and diversification to an investor’s overall portfolio. As such, Token Metric Ventures is a sector-agnostic crypto fund focusing on digital assets that can help investors gain exposure to emerging themes via two investment strategies – quantitative trading and venture capital.

9450 SW Gemini Dr PMB 59348 Beaverton, Oregon 97008-7105 US

ventures@tokenmetrics.com
+1-888-908-6536 ext 4
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This presentation is not an offer or advertisement; it is not intended for public use or distribution. The strategies presented are currently provided through separately managed accounts.

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