Why institutions need privacy to move onchain

Transcript

the activity and like, you know, all of the asset issuance is still on Ethereum. I think if I had to like sort of pick one, I mean, I think all of them will matter. The question is which one ends up being the default? Ethereum probably does have a structural lead. Can they defend it? We'll see. The Clarity Act seems like it is on track to finally become a law. Venture capital is pouring back into crypto in size for the first time in a while, but where is it going and what should investors know about this? Hello and welcome to the Milk Road Show, the podcast that knows that when your wallet gets too hot, it's time to vent your capital. I'm your host John Gillan. Today is Thursday, May 21st and today we are joined by Min Teo. Min is the co-founder and managing partner of

Ethereal Ventures, a crypto startup focused venture capital firm, which she launched in 2021 with Ethereum co-founder Joe Lubin. Min previously led investments at ConsenSys and she has been making some big moves in crypto lately. She's going to give us an inside look at all the alpha you need to know about where VCs are finding opportunities in crypto today. So, if that sounds good to you, make sure you like and subscribe. Share this episode with somebody who's going to enjoy it. Today's episode is brought to you by Cape, the privacy-first mobile carrier, which I think we'll talk about privacy a lot in this episode. Um Pharo's, the layer one built for real fi. Nexo, earn interest, borrow, and trade crypto. And without further ado, welcome to the Milk Road Show. Min, how are you? Thank you, John. I appreciate you having me on.

I'm really glad to talk to you today. I think there's a lot of cool things you guys are working on. Uh but Min, before we get into Ethereal Ventures, I I thought it would be a good place to start with you just telling us a bit about yourself and about Ethereal Ventures um and what you all focus on in terms of venture capital investing in the digital asset space. Absolutely. So, I'm originally Singaporean. Um you know, grew up in Canada, have sort of lived in the US and in UK for a lot of my life. I started my career in 2008, so in the heart of the last financial crisis, which was a very interesting time to be doing investments.

Um I learned a lot about, you know, um how things can go wrong and how not to catch a falling knife. I did private equity and private credit for 7 years and then built a, you know, helped build a fintech business in the UK that was focused at the intersection of payments and loyalty. And that was actually my come to crypto moment. You know, a lot of people talk about when they first bought Bitcoin or Ethereum. You know, I bought it early but sold it too early. So, it wasn't really meaningful to me aside from a lot of FOMO. But, you know, when I was actually working with our engineers to reduce the cost of payments, you know, I had this moment where I thought it's crazy that, you know, trying to work on new payments for your consumers, we can't actually

deliver payments with a positive gross margin at the time. Now, that's definitely changed because of all the amazing regulatory capital that has been placed over the last decade. But, at the time it which is was impossible because, you know, all the banks at the end of the day want to protect their business. The back end is antiquated. They know that the value chain is getting squeezed but they're not going anywhere. And my aha moment was, wow, we put all payments on, you know, you know, after reading Bitcoin Ethereum white paper, we put all payments on blockchain rails like users get instant settlement, global by design, 24/7. That's what the consumer wants.

And that's what really, you know, inspired me to move to the crypto space full time. I was fortunate enough to meet my now co-founder, Joe Lubin, and was leading strategic acquisitions and investments for him. Eventually helped to sort of institutionalize the investment arm at ConsenSys. And one of the companies that ConsenSys incubated early in the the day was MetaMask. And as MetaMask, you know, grew to beyond our wildest dreams when we incubated it, it became very clear that ConsenSys also needed a proper corporate VC because every time I was talking to companies, they thought they would get a MetaMask integration which was problematic.

So, you know, I think this was also coming on the back of many of our founders telling us that, hey, you guys should actually do this as a proper fund, as a proper team. Like, we really like working with you. You are very differentiated investors. Um, we also wanted to invest, you know, more cross-chain. Um, you know, consensus was very Ethereum uh focused at the time. And, you know, this gave us an opportunity to actually work with, you know, a broader group of founders, um, broader group of investors, and really, you know, fill a gap where we saw um, crypto VC wasn't really delivering to founders. So, in 2021, we launched Ethereal Ventures. So, most of the team have been working together since 2018 doing exactly, like, you know, what

we're doing today, which is working with technical founders, uh, being day one partners to them, um, meeting them where they are, wherever they are in the world, you know, our team is also remote, so we do have we do cover a lot of ground, um, and acting as co-builders to them, not just passive capital, um, in their earliest uh, inception, um, and helping them scale their businesses. So, that's a bit about Ethereal, you know, we are generalists. Uh, we are very thesis-driven, so, um, you know, we try to sort of switch up our thesis every six months or so. We just published our thesis document on our Twitter, um, last week if anyone would like to see it. Um, and that has led us, you know, to invest in companies such as, um, EigenLayer, Aztec Protocol, USDAI, and many other

great DeFi protocols. If you're not seeing this, you're trading blind right now. There are real moves happening behind the scenes that most people don't see until it's way too late. Inside MilkRoad Pro, you can track exactly what our analysts are buying, selling, and what's on their watch list before it moves. You can try it out for just a dollar for 7 days. The link is in the description. >> Okay, thank you so much, Men, for that context. I think you guys have been very active in investing in digital assets, but some people may not know you, so I just wanted to give that context before we go further here. Um, and I you know, I saw an interview you'd done in four uh Fortune uh magazine recently where you talked about how you guys have been outperforming a lot of other VC shops.

And I'm curious about what you look for in terms of finding opportunities for these outsize returns um and lessons learned over five years of doing VC in crypto, which have been, you know, that's a long five years in crypto. Um, and just yeah, how you go about finding this outperformance at a time when so many other VC peers have been sort of struggling in this space. Yeah, I think crypto has been a roller coaster over the last decade. And you know, our team having worked together for um mostly like the last eight years, I think we've seen sort of bull markets, bear markets. We've learned a lot of valuable lessons along the way and try to integrate them as much into our process as quickly as we can. You know, I think our performance has really come from having high conviction backed in people, um underwriting theses for

invest each investment, being early, also being patient, and being willing to look stupid for a long period of time often. Um, you know, I I I I truly believe that the key to success in crypto um and more broadly in VC is about picking the right founders inside the narratives that will compound. Um, the thing that we try to avoid at Theory O is uh to fall in love with a thesis or idea. And when you're at the early stage you you do have to daydream about what the sci-fi what the future can look like. Um, however, if you fall too attached to a certain idea, you sacrifice founder quality in order to have exposure to it.

And building a successful company from the ground up is an odds-defying feat. Um, a founder has to be somewhat maniacal to pull it off. Um, they're also the best arbiters of their time um because that's the opportunity cost that hits them the most. So, if you back smart people, you know, you kind of got to follow what they have conviction in and you know, support what they're building. Um, on the flip side, if you have like a really interesting idea, but the founder isn't able to execute on it, the the best you can do is get a middling outcome. And that's not the business we're in. We're really looking for venture style outcomes where, you know, we can sort of return the portfolio with a single investment. So, I think staying founder-first has really helped keep us out of trouble because crypto in particular has a reflexivity

that is very dangerous. It makes a narrative chasing look like alpha for a short period of time, and then you see a sharp mean reversion that's very, very brutal. Um and you know, I think many of us have learned that the hard way in the early days, and we try to avoid it. Um you know, specifically on outperformance, I think a lot of it, as I mentioned, is being early in a handful of names that we had general technical conviction and sizing up appropriately. Um you know, Marc Andreessen has famously said that as VCs, the failure mode is not um a failure of commission, but a failure of omission. So, we've had We've been fortunate to have had good exposure to our winners such as EigenLayer and USD AI. These were long-term bets that compounded over time, and they weren't really driven by

FOMO. Um at the time, you know, they weren't very popular um bets that other VCs wanted to take. Um I think another like differentiator is we really embrace liquidity as a feature, not a bug in crypto. Um the ability to harvest returns through tokens, the ability to recycle capital into token positions. This allows us to return capital to LPs without waiting for traditional M&A or IPO windows. I think crypto-native fund construction really gives you flexibility to structure around liquidity, so you aren't subject to death knowledge, just being stuck with high markups that you ultimately can't realize. Um and finally, I we avoid investing heavily in categories where we don't have a firm thesis. This has helped us avoiding passing narratives

such as, you know, play-to-earn and some of the gaming NFT things that sort of pervaded 2021, and also some of the larger crypto blow-ups like, you know, Terra and FTX. Um I think like, you know, crypto really rewards being early, but also rewards being right on timeline. So, I It's not to say a lot of these ideas won't work out on the long term, but I do have to assess whether or not it will work out within the fund life sky cycle life cycle, which is um kept at 10 years. Gotcha. Okay, so you're focused on fundamentals, you're focused on things that have uh a broad uh thesis behind them and not just pump chasing, narrative chasing, as you're saying, which is I think something all of us struggle with a bit in crypto. Um

you said you just uh published an updated thesis for Ethereal Ventures. Could you tell us just a little bit about what is in that updated thesis and and sort of like what sectors you guys are focused on right now in this market in crypto? Yeah, we do have a lot of great ideas for founders in, you know, that we kind of group in three categories, new markets, TAM overhauls, and blue ocean categories. It's quite dense document. I recommend people go check it out, but I do think we, you know, we see a few sort of shifts happening, you know, from user behavior really optimizing for convenience and usability, sometimes sacrificing decentralization as part of it. We see a lot of institutional adoption coming to the

fore. And we also see like, you know, AI um and just generally changing how we see the world and um overhauling like, you know, entire TAMs. For example, with Claude's release of Mythos, I think a lot of people in crypto are quite scared from a security perspective and thinking about like how they can actually uh shore up defenses on that. Um so, you know, I think uh our thesis document will span um you know, lots of different markets like the uh intersection of on-chain credit with um TradFi, which is something that, you know, is close to my heart as a former credit investor. We also talk a lot about new markets. I see new compute markets on chain that will allow people to transact for scarce resources in a

decentralized manner. Um there's also a lot on agentic commerce, agentic payments. I do encourage people uh to take a look at that. >> Got you. Okay, so there's a lot in there. Um Min, I I wanted to ask you specifically about uh something that's gotten a lot of attention here, a narrative that's really taking off, which is privacy. Um and I know you guys have some portfolio companies that are focused on this, but I just want to kind of start with your high-level outlook on this. Zcash has seen this enormous pump. It's running up towards $700. Um but we've also seen a lot of capital raises from other VC funds going into things like Circle's Arc and Canto Network and Tempo, the Midnight sidechain. It just seems like there's a lot of privacy solutions coming to market right now. Um why has privacy become so important for

crypto at this moment? And just what's your outlook on this landscape of privacy solutions that are coming to the market? >> Yeah, as you mentioned, you know, it's uh been a while, right, for Zcash, uh more than a thousand percent year on year. And I think, you know, Arc, Tempo, Canto raised more than a billion dollars, which is a lot of money. There are three reasons for this. Um one is structural, one is technological, and one is philosophical. You know, I think privacy is really getting its time in the sun because institutional adoption is real. Banks are no longer just doing POCs, they're actually, you know, really figuring out um how to build this out as soon as possible because the cost savings for them are real. The what the competitors are doing is also real. So, there is a race to deploy. And however,

uh institutional build-out is somewhat incompatible with full transparency. That's something that institutions cannot accept. So, you know, a salary that's being paid on Solana is public. A hedge fund position on Ethereum can be front run. Uh corporate treasury, like, you know, can be moving funds that's a visible for everyone to see. So, until you fix that, you can't really get banks, asset managers, Fortune 500 treasuries fully on chain. Like, they'll maybe dabble a little bit, but until they actually get um the privacy that they require, be it like, you know, confidentiality, the full shielding of all the details, I think it really varies by institution and by use case.

Um this is really what's stopping like, you know, institutions from deploying at the moment. The technological reason is I think thanks to a lot of great teams, um Aztec protocol included, cryptography now works at production scale. So, ZK technology is fully baked. Um the technology is on par with demand. This is, you know, with many different proving systems such as Plonks, ZK VMs, um and it actually works and it took many years of research and testing to ensure that it can work at the scale and these are very complex like systems. Um and uh you know, it did take I I I know sometimes people say like, well, why did it take so long? Like, you know, and I I think sometimes people don't understand the magnitude of like, you know, when we think about things that are actually

like transacting on chain in a very independent manner and to actually shield it properly and not leak any details, like this is not a simple feat. Like, when you actually do think about it at Visa level level scale, which is what we're really contending in. The last piece I think is um there's a lot of regulatory and geopolitical pressures that's bringing up the original libertarian purpose of crypto, which is censorship resistant internet money. And this is also like, you know, something a dream that uh brought me to crypto. I'm sure, you know, there's some part of you that came to crypto for it, too. Um and there's a lot of wealth seizures happening. There's a lot of, you know, sort of data infringement that's happening. So, I think everyone sort of wants the real Swiss bank account and I

you know, there's a multi-coin Naval Balaji uh have been positioning Zcash as like, you know, uh like how Bitcoin should have been, which is privacy-preserving. So, ultimately, I think, you know, that's really driving like, you know, Zcash being used as this um next level sort of store of value that is privacy-preserving and like, you know um in a lot of ways advantageous for like wealth present preservation. So, I think, you know, in short, the users of the technology and the capability of the technology are actually converging and it's a really exciting time for privacy.

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Got you. Okay, so there's the three pieces financial technology philosophy, they're converging for a lot of market participants at this particular moment in the market. Um, I I want to ask you about some You touched on this a bit, but I want to ask a little bit more about this. As Tech Network um is a portfolio company of yours you've been invested in, and as you said, this uses some very complic- well, not complicated, but advanced ZK uh zero knowledge technology to to bring this privacy solution to market. Could you help differentiate this for me from other privacy solutions that are on the market? Cuz there's you know like there's Monero, there's Zcash, there's so many other ones. What is unique about Aztec that got you guys interested specifically in this company and in this solution?

Yeah, absolutely. So, you know, the way to think about a lot of privacy solutions such as Zcash and Monero is they're very useful. It allows you to do private send and receive private payments. What Aztec is actual programmable privacy. So, you have private smart contracts. And you know, the differentiations are immense. I think you Aside from that, you are the Ethereum native. They're fully different decentralized and there's real differentiation between them and permission environments, you know, where I think there's like a big reason for it permission environments like Canton and you know, Tempo and other sort of like you know, bank deployed blockchains.

However, do think that's some uh issuers will also prefer something that is broadly decentralized and more censorship resistant for trusted issuance and settlement. And also composability with the broader eco the Ethereum ecosystem. Something that we hear quite frequently is a lot of institutions want to deploy on Ethereum for that reason. But there is no privacy. And Aztec delivers that privacy. And if you ask me, well, why hasn't Aztec deployed that yet? Well, they're still quite new. Um they're actually rolling out a product in um two two weeks or so, which will be called Aztec Money, which I encourage everyone to check out. Um and you know, they have they're in a lot of institutional

conversations I think will progress quite nicely over the year. Um the whole differentiation that you know, I the mental model I want people to take away with that is you do settlement on decentralized ledgers. You do execution on privacy technology. And that's really what Aztec delivers. That's truly differentiated. Okay, I'm glad you brought up the different layers and levels of this product and of these solutions because I think a lot of people are wondering, where does the value accrue, right? Because you're bringing these products to market. The idea, as I understand it, is to bring a lot of not just retail capital but institutional capital into the digital asset ecosystem and, you know, bring a lot of value, a lot of capital in for the first time. Where

does the value for the Mr. Crew is it on the L1? Is it on the L2s? Is it just, you know, businesses that are leveraging these things? How do you think about that in terms of where the value accrues and how to capture that as an investor? Yes, so for um I do think that, you know, ultimately for a lot of these application institutional applications, my personal view is that they will accrue to the application layer. And if you sort of look at like the way that a lot of um and specifically, I think like what we're talking about is tokens, right? Um a lot of these L1 and L2 platforms are measured by tokens. Um I do think tokens are going to, you know, a bit of a moment where there's a bit of a shift to uh where investors value them like

tokenized equity. Um part of the issue that you see is that um often times these have very, very high multiples um that they're trading at, right? So, um it definitely fluctuates depending on like, you know, sort of activity on the chain. But with that, like, you know, I it does make me wonder like, you know, how much further this can go. Don't get me wrong. Like, you know, Ethereum is uh you know, ultimately um hundreds of billions in terms of like, you know, value. That is massive. Um more massive than any other company, right? So, um I think you also have uh layer twos that are still like in the press, like, valuations valued at like one or two billion dollars. That is also massive for any company. But I think in the

future, like, what we are interested in seeing is, hey, all the underlying foundation is built now. Like let's create really interesting crypto like, you know, first companies on top of all these substrates that can do businesses in a very different way and capture value and unit economics in a way that, you know, the old old organizational structures are not able to replicate, particularly in this agentic world. I think it's very interesting, right? Where you can kind of create new finance platform platforms that don't have like, you know, the huge operations and customer supports teams and still deliver like fantastic, you know, products to users. I think with something like Aztec, you also have native privacy

attached to your product. This is something that doesn't really exist in a lot of applications in web 2. There's always a centralized entity that holds your data. So, I think there's like a different way that we can sort of build application-first businesses. And I also think there's, um, you know, there is a value from being application-first as you know, Hyperliquid is showing as well. You know, I think they just eclipsed Solana in terms of, um, you know, value. So, it'll be an interesting race to watch. Yes, there's going to be a lot of interesting races to watch and yes, you're right, Hyperliquid is pumping its brains out right now. It's like over 60 bucks. It just won't slow down. Um, okay, I want to ask you, you talked a little bit on the agentic economy and

this intersection of AI and crypto. I want to ask some questions about that, but before we move on from this, I want to give give the audience a sense and for myself, too, a sense of like the the, you know, the products, the services, the businesses that you talked about that are unlocked by this and what that means in like like real-world use cases for this. And is this like for individuals? Is it for businesses? Is it for governments? You know, you made a comment earlier about people paying payroll on chain. Is that something that could be happening here or just like how do you think about this in terms of businesses on chain that are going to be unlocked by this and and what that looks like?

Yeah, so interestingly, actually Aztec has had a lot of inbound from governments, which is, you know, not something I personally would have expected. I think everyone is >> [laughter] >> You know, but I do think everyone is realizing that this combined desire for like online identity and digital sovereignty requires these neutral privacy enabling platforms, which is, you know, a fantastic thing to see. Um, you know, more recently, for example, Aztec Noir was used to ship the EU's example digital app. So, I do think we'll see a lot more of this over the next few years. I think broadly speaking, like, you know, businesses are the ones that have um the most need for privacy um and you know, ultimately, they are the ones

who have the most liability from having sort of cookie crumbs on chain, which is the current state status quo today. For users, for the most part, Aztec will be in the background, you know, they will use apps which will look like traditional web apps. Sometimes these will be built by startups, sometimes by big businesses. Um, I do think there's an open question, how much do you like end users and consumers pay for privacy? Um, I think, you know, in this paradigm, this agentic paradigm, that will really be tested. But, historically, the answer is not very much. Right? So, you know, I don't think that Aztec is really banking on that to change. Um, and this is why Aztec made the choice to be fully general and also permissionless. So, serving all of these users by providing them a platform which is neutral um and

which people can use without thinking about counterparty risk and, you know, building tooling that's well adapted to individual use cases, some built by Aztec, some built by the developer community. I think that really demonstrates the power being open source and obsessed with developer experience. So, you can really run the full gamut of serving whatever use case you want. Okay, so there's a huge galaxy of possibilities and everyone from governments to individuals is going to have some measure of interest here. Um, yeah, we'll see how that race plays out. I do want to ask some questions about AI and crypto and, you know, we at Milk Road have been very focused on this. We have a a whole another brand at Milk Road AI, um where we try to cover that industry. But, something I've seen you say in comments is that this huge

rapid investment in AI has sort of made the investment of capital in in crypto a little bit more measured, let's say. But, this intersection between AI and crypto, I think is something that there's a lot of attention and prototyping happening in. Um and just love to hear your outlook for what this intersection looks like looks like um specifically around agents, privacy, on-chain activity, uh and just what you're seeing at that space. Yeah, I think you know, there's there's almost a few questions embedded in that one. So, um in terms of like, you know, how like sort of the advancements in AI have changed how we work. I think certainly from an underwriting perspective, we are very careful and sensitive to um any sort of, you know, defensibility that

might come from any sort of AI-induced, like, you know, sort of releases, if you will. Like, so will this actually be, you know, could Claude or like OpenAI release something that actually renders this completely useless? Um and I think that can be said for a lot of different things. Like, it really is something that founders should think about before they spend their time on it. I think it also changes how we think about moats, you know, technological moats are maybe less valuable than they were before, and it's more about distribution, business development, regulatory moats uh in today's day and age. I think specifically for um AI and crypto, you know, there's so many like possibilities there. I think, you know, you have um agentic payments. You also have

inference requiring verifiable, uh you know, compute. You also have machine-to-machine commerce that also requires stable coins. So, there's lots of intersections that we're keenly watching. You know, one of our portfolio companies, Ikon Layer, is working um at this intersection. They're releasing new products and now they're their current suite also allows for a lot of verification of inference, which I think is highly useful. Um I do think that you know, the agentic payments is one that like is a lot of people are spending time now. I would kind of like break that down into three categories, right? Which is you have agent to human to agent payments,

meaning I'm instructing my agent and you know, big question when will we give like you know, our agent our credit cards to like book stuff. You know, I have not yet, but maybe you know, that might change very quickly in the next 12 months. Then there's sort of agent to web like sort of payments ultimately, you know, if an agent is somewhat a little bit more autonomous, how do they actually like make these bookings? Would they prefer like stable coins? Would they prefer like credit cards? I think for these two categories it's going to be a mix like you know, in payments we have this concept of shared wallet and you could see like stable coins increase versus other categories for sure. But because payments just has so much like you know, regional and regulatory sort of like overlays to them, it's I think you'll really see a

huge discretion depending on like the region, the use case and it's ultimately going to be shared wallet. The real interesting prize is agent to agent payments and that's not really happening in size and we don't really know what the requirements are of that really look like. You know, I personally think it's actually like like one of the things that I've discussed with my team is how interesting would it be if like you know, agents actually create their own like payments blockchain. They're like, oh, it's so cute like you know, like humans are trying to create something for us. We can just build this ourselves and they built their own agentic block Bitcoin that requires a proof of agent to mine it. Like you know, I personally would love to see like sci-fi ideas like that even though I can't make money from it. I that's just you just opened like

an entire dystopian future where the agents lock us out of our own value, but we'll just assume that won't happen. But I So I do want to ask you about where you think the value from all this settles because the agentic economy is something a lot of people are speculating about, but as you said, we still don't really know exactly what this is going to look like, where this value settles. A lot of people think that it settles down to some version of Ethereum, and I know that you know, ethereal and you know, consensus, you work with Joe Lubin, you guys have kind of come out of the Ethereum ecosystem. How do you think about that value capture and and where that settles and do you think that that ultimately comes back to ETH in some way or or what is your outlook on that? Yeah, you know,

honestly, I don't spend too much time thinking about that. Like, you know, we we're cross-chain firm at the end of the day and we see a lot of advantages in multiple platforms. So, you know, I think that we have teams building on hyper liquid on Solana and there are unique reasons why they chose that platform to build their businesses on that make a lot of sense to us. Like, I think a lot of the sort of tribalism online where something settles, I think this is something that we probably like, you know, don't think about as much because we think it's less relevant in today's world. Like, ultimately, everyone is sort of like pushing to be better, faster, cheaper so that we can increase adoption and gain more relevance in the real world and I think

that's what matters. I mean, I do think that obviously there's a lot happening on Ethereum. Like, you know, we have you know, ERC 8004, we obviously have like, you know, Coinbase X 42, which is technically on base and you know, you have still 60% of stable coins on Ethereum, 33% of RWA. So, the activity and like, you know, a lot of the asset issuance is still on Ethereum. I think if I had to like, sort of pick one, I mean, I think all of them will matter. The question is which one ends up being the default.

Ethereum probably does have a structural lead. Can they defend it? We'll see. I think if a lot of teams are pushing really hard to actually capture the price. Trillions of dollars in real world assets are stuck off chain. Real estate, commodities, private credit, all locked behind outdated systems that weren't built for a global 24/7 economy. The fix, bring those assets on chain. [music] Problem is, most blockchains weren't designed for that either. Pharo's is. It's a layer one purpose built for real [music] fi, a real world financial infrastructure that lets assets be tokenized, verified, and traded at institutional [music] scale.

We're talking parallel execution for serious throughput, compliance baked in from day one, and infrastructure that actually connects on chain and off chain systems. They've got a $10 million incubator backing builders who want to make [music] real fi a reality. Join the Atlantic Ocean testnet and start building at milkroad.com/pharosnetwork. [music] Yeah, and there's like you said, there's a pretty intense intense race and competition around this. But I agree with you. I don't I don't think that needs to be a winner take all, and I think that the increasing development and expansion of all of these chains kind of helps all of them, you know, in different ways. And so it it doesn't have to be so adversarial. So I appreciate that outlook and I thanks for sharing that. I want to ask you a question about this. Regulatory clarity

has been something that digital assets have been seeking for a really long time, and you've been investing in this space for a really long time without that. But now we've seen the SEC, the CFTC collaborating on giving guidelines for this industry. The Clarity Act seems like it might finally come through and give us a market structure bill on the books. How big of a deal is this from your perspective, and what do you think this unlocks for the next age of innovation and investment in digital assets? Yeah, you know, there I think regulatory clarity has really changed where a lot of the alpha lives. Like, you know, when we think about like pre-2025, we are betting whether or not crypto would survive regulatory pressure. It wasn't too long ago that, you know, we were the industry was just trying to hide from SEC enforcements,

Operation Chokehold Point. We had a lot of founders like actually leave the US and built their businesses overseas because they were just scared to be a crypto founder in the US. And that has, you know, how rapidly that has changed since like January 2025, regardless of anyone's thoughts on the current administration, I think has really been remarkable. And as such, the game has changed. Like now the alpha is betting on what gets built because the regulatory question has largely been settled, at least in the US and increasingly in the EU. And that opens up entire categories that were very, um, uninvestable 2 years ago. I think there's like, you know, crypto now today is graduating from a very closed ecosystem of crypto-native users

to a substrate on which AI and web infrastructure um institutional finance, uh, consumer fintech apps will all build on. And it's a very exciting time. When I think about regulation, I think it kind of, I think it makes sense for us to sort of focus on like, you know, creating the aperture with in which, um, product companies with product market fit can actually build in. One thing that, you know, um, and we talked about this in like, you know, earlier, is I do think that, uh, the last few years we have been very focused on, um, pushing blockchain platforms as general computing, um, platforms. And they certainly are that, right? They they

have the ability we to serve lots of different use cases and allow, um, this fantastic uh, tapestry for developers to build on. However, if you look at a lot of, you know, other technologies such as computers, right? Computers basically start have like a more of a military background, then after that serve like, you know, the science industry, and then the business industry. And it wasn't until they really nailed those the use cases that, you know, they became, um, smaller, faster, cheaper to be put in people's houses with like microprocessors and like graphical user interfaces and then became personal computers. And I do believe that with crypto, um you know, we have to actually nail a use case really well. And right

now what's been presented to us is payments and tokenization. So payments for users, tokenization for institutions. And what the regulatory clarity like, you know, stuff like the genius act, stuff like the law of like, you know, the ETFs being cleared, you know, we're all crossing our fingers for clarity. These ultimately, like, you know, even though some founders might say, "Well, I'm not building in that. How does that really impact me?" But I think it allows us to really show that now that we have, you know, the regulatory question is settled, what can we actually build? Um and I think what we actually it's really interesting to see the industry really um just aggregating around these specific use cases because we want to create that like magical aha moment um for users, for like institutions, the

same way that other technologies such as AI have. Then, I've really enjoyed this conversation. You have a wealth of experience and wisdom to share. So, I'm really glad you came on the Milk Road Show to share all this with our audience today. I want to end with one question here. I usually like to ask people near the end of the interview, what are you most bullish on? What's your price prediction for things? I'm not going to force you to give that kind of an answer. I want to ask a different one here. You have raised a lot of capital to deploy into crypto. As my understanding is your fund two is still a bit less than 25% deployed. So, you actively have capital to to send out into the market here. Where are you looking for the rest of 2026? Is it privacy? Is it payments? Is it

tokenization? Is it something else? Where's the bulk of your attention and where do you think you're going to be deploying some of the rest of this capital you've got raised here? Yeah, it's a interesting question because, you know, as much as we are thesis-driven, we um we basically have to look at what the market serves up to us. And what the market serves up to us is what our founders, like, you know, smart founders spending their time on um daydreaming about. What we've noticed is a a of people are building on AI and crypto, they're building in payments, they are building in um tokenization use cases, um you know, some of them are also building in like the supporting infrastructure of privacy, security, and identity. Um and I would say that runs the gamut and we have interest in all of

that. We have like sort of theses in terms of like what shape and of company we would you know would be excited about in each category. I I do want to mention one other piece that you know we remain to be excited about but I do think has some stuff to figure out. Like we um we still are very excited about DeFi but we do think there are some security issues that need to be figured out. I think it's so powerful where you have you know global access, um you are delivering products to people who don't have them, um you have you know global pool liquidity composability interoperability, um and it is such a shame that like there are we can't sort of figure out the like security piece yet and I think as a it is very solvable but we need to sort of rebuild that trust um for sort

of more people and more institutions to actually deposit more capital on chain. Um that is like you know one of the things that I'm thinking about a lot personally. How do we ensure that more people um you know develop more trust for DeFi um so that that category continues to grow. Uh if you are building in crypto or in digital assets, get in touch with Min cuz she's got capital to spend. Uh on that point uh Min, where can we send people to find more of you and your work online? Absolutely. So you know I'm uh my Twitter handle is underscore mint_io. Um our Ethereal's Twitter is uh Ethereal VC and our website is ethereal.xyz.

We are reachable at hello@ethereal.xyz. We read every email. Um and if you are building in any of the the categories or just building something that you're really passionate about, please reach out to us. We're always happy to chat. Like we also chat to what we call proto-founders which is people who are don't really quite have an idea yet but you know are very excited about the idea of being a founder and we spend time, you know, brainstorming with them on, you know, directions that they can actually do, you know, tunnel into to get inspiration from. So, please reach out to us. Well, man, I hope you all keep building as well. Really appreciate you coming on the show today. Thanks for being on the Milk Road Show. Thank you so much, John.

It was great chatting with you. And you, too. And thank you all for joining us. I hope you all learned something today. Until next time, as I always say, stay safe, stay educated, stay bullish, and we will see you all in the next episode of the Milk Road Show. Thanks for being here, everyone. Bye. Want insights on what's moving crypto markets and [music] how we're trading each event? Subscribe to our channel and join the Milk Road daily and pro newsletters and start investing like the top [music] 1%. This show is for educational purposes only. Nothing we say is financial advice. Investing is risky. Never invest more than you can afford to lose.