Crypto Event Summary - Avalanche House

Jul 18, 2022 • 5 Min Read

Over Friday and Saturday last week, Avalanche Labs put on their second edition of ‘Avalanche House’ in Brooklyn (with the first one in Berlin). The team attended Friday afternoon’s session as outlined below and shared the following notes and perspectives from the panelists.

Figure: Avalanche House Panelist Session

Crypto Event Summary - Avalanche House
  1. Strategic Fundraising During a Bear Market
    Lydia Chiu (Ava Labs), Tom Schmidt (Dragonfly Capital), Nina Bambysheva (Forbes), Travis Scher (North Island Ventures)
  • The funding environment has tightened considerably, allowing VCs to do due diligence on deals. This is in contrast to bull markets where VCs had days or sometimes hours to issue term sheets.
  • Advice to founders: ‘Heads down and build, cut unnecessary expenses.’
    • Focus on a particular vector for growth and lean in. Projects that have a product should go to market with marketing spend. Startups that don’t have a full-fledged product should hire essential developers and stay lean. Those who attempt to do both will fail.
  • Recipe for success: ‘Build features, iterate, test.’ 
    • Tom draws from his product experience from 0x of shipping and iterating through features and products during bear markets.
    • This focus on what features added the most value to crypto-native users throughout the ‘18 to ‘19 bear markets positioned 0x as one of the surviving DEXes.
  • Bear markets can take longer than we expect (12 – 24 months) to recover.
    • Historic bear markets have taken 18 – 30 months to reverse. Six months into the bear market, it is unclear why this time will be any different, especially in a tightening macro environment.
  • Fluff has been and will be flushed out – just because something is built on a blockchain doesn’t mean it will succeed.
    • Business models that are not sustainable will not become more so just because it has a token.
  • Interesting upcoming theses: 
    • Web2 to Web3 use cases via tokenization.
    • Infrastructure across DeFi, Gaming, and NFTs.
  1. The Opportunities and Pitfalls of Staking
    Viktor Bunin (Coinbase Cloud), Gregory Gopman (Ankr), Parker Feierbach (Figment), Anna Vladi (METL), Stacy Elliott (Decrypt)
  • The current state of staking requires much more development to meet institutional demand.
  • Staking is segmented by (i) retail and (ii) institutional and spans across liquid and illiquid staking services.
  • Infrastructure providers such as Coinbase Cloud, Ankr, METL, and Figment enable growth in the staking space.
    • Ankr: Staking infrastructure service provider across 16 chains
    • Figment: Staking infrastructure service provider allowing access to 17 chains
    • Coinbase Cloud: multi-product service provider allowing builders access to Coinbase APIs and white-labeled products.
    • METL: Fiat on-ramp to digital assets and Web3
  • A key focus in the staking space is attracting quality validators to support the network, emphasizing decentralization, node uptime, and active governance.
  • In order to attract a broad validator base, the Layer 1 needs to be thoughtful about decentralization and transparency for validator operations.
  1. Institutional Use Cases on Avalanche
    John Wu (Ava Labs), Daniel Roberts (Decrypt)
  • Institutional interest in digital assets has only increased, despite prices declining. Trading volumes, Onyx by J.P. Morgan, and the SocGen-MakerDAO partnership support this
  • Pain from May originated from CeFi’s (‘Web2.5’) irresponsible leverage, untransparent, unsecured loans. This is a result of human nature and not necessarily anything to do with crypto itself. 
  • DeFi protocols worked fine throughout the whole deleveraging episode (referring to apps like Aave, Maker, and Compound).
  • Gaming publishers are in talks with Avax and other L1s to store gaming items on-chain.
    • Not feasible to run the whole game on-chain, just listing online goods
  • Blockchains thrive in the use case of simultaneous transfer of value and information.
    • Avax subnets will allow institutions to experiment with this technology in the confines of customized regulatory sandboxes.
  • Interesting use case in tokenization: separation of business and value, only using tokens to facilitate value transfer while running the entities facilitating this value transfer off-chain.

Crypto Projects that Attended Avalanche House

  1. Pangolin Exchange
  • Pangolin is an Ava Labs-incubated DEX that currently holds $44m in TVL, ranked 12th in the Avalanche ecosystem.
    • Focus on interoperability: the team announced a planned expansion to four new chains, including a NEAR-native DEX. They have ecosystem grants to build on three other Layer 1 networks
    • Implementing Sunshine and Rainbows (SAR), a staking algorithm that enables DAO-to-DAO liquidity mining and aims to diversify protocol-owned liquidity of project treasuries
    • They are launching Dex-as-a-Service, a white-labeled product for other ecosystem stakeholders to launch a DEX within their community. This represents an additional income stream for the budding DEX
    • The value proposition is to be a cross-chain DEX with operational and financial synergies.
  1. Okra Finance
  • Okra Finance is a permissioned DeFi composable index and execution platform. Okra Finance:
    • Utilizes blockchain technology to permit non-custodial transactions
    • It is fit for institutions: it has enterprise-grade solutions ready to comply with local and internal compliance and business guidelines.
    • Allows participants to set customized KYC and AML standards at their discretion (Permissioned DeFi)
    • Has proprietary adapters that allow fund managers to directly access a wide range of DeFi strategies
    • Includes a drag & drop interface that allows financial advisors to create multiple DeFi strategies within a single smart contract transaction
  • Target clients are RIAs, fund managers, custodians, family offices, and custodians.
  • Target Launch: Q3-Q4 2022
  1. Shift Markets
  • Shift Markets offers white-label technology solutions across digital exchanges, crypto payment gateways, liquidity services, and Web3.0 solutions.
  • Crypto product suite includes:
    • White-labeled vault features customizable API access for deposits/withdrawals and interest accruals, across multi-currency and cryptocurrencies
    • Institutional-grade exchange technology with associated front back-end integrations with customizable broker configurations
    • Tokenization of securities with associated KYC/AML toolkits
    • White-glove service to help clients get compliant with the relevant jurisdictions and licenses
  • Shift is directing its focus towards institutions with its impending Enterprise Crypto Solutions product and Web3.0 infrastructure for NFT Marketplaces, yield farming platforms, DAO tools, and more.

Closing Thoughts

The event drew a respectable crowd even in the bear markets, discernibly from both retail and institutional demographics. It is quite evident by now that while liquidity is tightening, builders are pushing through with product features to adapt to these environments. For those paying attention, the entities who prove to be pillars of the ecosystem and dApps that can deliver real value may prove to be attractive buying opportunities soon.

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