Coinbase Explores Tokenizing $COIN Stock

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Good Morning.

The market is more moody than a 16 y.o. teenager at this point. Post the strategic reserve announcement, the market reacted by selling BTC given that the US Government hadn’t signaled any willingness to acquire new crypto assets, but simply holding on to seized assets that it already owned. Hey, the news is still net positive for our space, but I guess traders were expecting something more radical.

In Today's Email:

• What Matters: Coinbase Explores Tokenizing $COIN 👀 

• Founders Highlight: Bill of Foundation Capital 👨 

• Deal Flow: DoubleZero Raises $28M 💰️ 

You read and share. We listen and improve. Send us feedback at [email protected].

TOGETHER WITH

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WHAT MATTERS

Coinbase Explores Tokenizing Its $COIN Stock

State of play: Coinbase is renewing its efforts to introduce tokenized securities in the US as regulatory sentiment shifts under the Trump administration.

• With the SEC’s crypto task force in place and past lawsuits dismissed, Coinbase sees an opportunity to revive security token plans first outlined in the firm's 2020 S-1 filing.

• This could enable US investors to acquire on-chain securities and international crypto products.

• Coinbase’s CFO Alesia Haas noted that Coinbase previously attempted to tokenize its COIN stock but faced regulatory hurdles.

• Now, with acting SEC Chair Mark Uyeda promoting innovation, the firm sees a chance to reintroduce the concept.

• Brian Armstrong has also highlighted 24/7 tokenized securities trading as a way to enhance liquidity and efficiency.

Salman (@0xSalmanNaseer) of Polynomial views Coinbase’s move as a turning point in finance.

• He argues that IPOs are costly, M&A exits face regulatory blocks, and Security Token Offerings (STOs) are now the best alternative.

• He argues that given Coinbase’s SEC approval, TradFi credibility, and crypto infrastructure, it is well-positioned to lead this shift.

• Salman predicts tokenized securities will surpass $1T in market cap within five years, becoming the preferred fundraising model within a decade.

What’s next: It’s unlikely that Coinbase will ever launch $BASE token for its Base L2, so this tokenized approach of $COIN makes a lot more sense.

For builders and investors: It’s further proof that no matter what product you’re building in crypto, there needs to be an element of “expanding or creating” new markets tied to it.

BUILDER-INVESTOR HIGHLIGHT

Bill Elmore of Foundation Capital

Intro: Bill Elmore is the Founder and former General Partner of Foundation Capital, a 30-year-old VC who was one of Netflix’s original investors and the first institutional investor of Solana.

• Now emeritus at Foundation Capital, Elmore continues investing in early-stage tech through his firm, Handshake Ventures.

Previous background: Bill earned his B.S. and M.S. in electrical engineering from Purdue University, where he remains engaged through the Purdue Research Foundation board and past service on the College of Engineering’s Advisory Council.

• After completing his MBA at Stanford, he held executive and VC roles in Silicon Valley before co-founding Foundation Capital in 1995.

The big idea: Bill founded Foundation Capital to help entrepreneurs build strong, sustainable companies by aligning market or tech insights with the right leadership team.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our list of 500 crypto VC individuals 👇

INSIGHTS

Unichain New Incentive Proposal

Credits to Ignas for the original tweets.

State of play: Following an underwhelming launch, the Uniswap Foundation has proposed a $165.5M funding package to boost Uni v4 and Unichain adoption. More than a month in, Uni v4’s TVL is only $85M, while Unichain has just $8.2M.

Despite passing the TEMP CHECK, the proposal has faced pushback:

• $UNI token holders lack value accrual, while Uniswap Labs earned $171M in front-end fees over two years.

• Aave and Maker align incentives better with token buybacks, while Uniswap has no fee switch.

• High salaries for the core team, Gauntlet’s control over liquidity incentives, and the centralized DAO legal structure (DUNA) raise concerns.

DeFi researcher Ignas points out that the $21M incentive (result from the DAO votes) could pull liquidity from Ethereum and L2s, reducing Uniswap's market dominance and strengthening competitors.

• He argues that Uniswap Labs should have consulted the DAO before launching Unichain, as it may worsen liquidity fragmentation.

• A Uniswap delegate who voted YES on funding raised concerns about UNI holders’ future and urged the DAO to focus on value accrual next.

DEAL FLOWS

DoubleZero Raises $28M at $400M Valuation

Deal flows soared this week - we saw $380M in deals 💼 

DoubleZero Foundation, a startup developing a "new internet" for blockchains, has secured $28M at a $400M valuation, with Dragonfly and Multicoin Capital leading the round.

• The company is now seeking strategic partners for additional funding at a $600M valuation.

• DoubleZero aims to enhance blockchain performance by creating a private fiber optic network, reducing latency and increasing bandwidth.

• The project has strong backing from the Solana community, aligning with Solana’s goal of reaching 1M transactions per second.

DoubleZero’s permissioned testnet is opening to Solana validators and RPCs, with future expansion planned for other blockchains. Its infra is built on private fiber lines operated by Jump Crypto, RockawayX, Distributed Global, Latitude, and Teraswitch.

• Notably, Jump Crypto’s Firedancer validators at Solana’s Breakpoint conference were running on DoubleZero infrastructure.

Deal flows in the past week:

• Coral Finance, $3M Angel Round

• Lantern Finance, $1M Pre-Seed Round

• Finisterra Labs, $3.75M Seed Round

• Orochi Network, $12M Seed Round

• Infrared, $14M Series A

• Flowdesk, $52M Series B

• FanTV, $3M Strategic Round

• FanTV, $5.5M Strategic Round

• iAgent Protocol, $3M Unknown Round

• Acki Nacki, $6M Unknown Round

• FastLane Labs, $6M Unknown Round

• Seismic, $7M Unknown Round

• ACID Labs, $8M Unknown Round

• Prime Intellect, $15M Unknown Round

• Across Protocol, $41M Unknown Round

• Figure, $200M Unknown Round

QUICK BITES

• Coinbase eyes tokenized securities.

• Mt. Gox moves over $1B worth of BTC.

• Ethos launches crypto reputation score.

• Japan’s ruling party proposes capping the crypto tax rate at 20%.

• Coinbase exec says SBR could remove ~$18B of BTC sell pressure.

• Analysts say Trump’s Bitcoin reserve is less bullish than anticipated.

• Solana validators to vote on a key proposal affecting network inflation.

• Jito contributor proposes new JTO tokenomics, including potential buybacks.

NOTEWORTHY READS

• Multicoin Capital’s read on Jito’s potential.

• Decentralised’s read on death to stagnation.

• Lily Liu’s read on Solana 228 proposal impact.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.