EV3 Ventures — Investor Letter (Q2’24)

Crypto ended the quarter around ~$2.4T in market cap, down roughly -15% QoQ amid slowing spot Bitcoin ETF inflows and profit-taking on vested insider token allocations. DePIN closed the quarter near ~$55B, about 9% of altcoins by market cap. Developer activity accelerated: we’re tracking 1,350+ active projects, 450+ open jobs, and 30+ DePIN side-events at EthCC, with most metrics growing 30–50% QoQ.

As private-market exuberance increases, expected returns compress. We slowed our pace of venture investing in Q2 versus Q1 and remained disciplined on entry valuations, favoring teams with clear paths to defensibility.

Market Update

Dispersion best describes crypto today—of capital, talent, and attention. A quarter of tradable onchain assets and active DePIN projects were created in the last six months. Projects are rolling their own chains to re-rate to “infrastructure” multiples, while the implicit costs of reaching critical mass (liquidity, listings, compliance) have risen materially.

Our view: after dispersion comes consolidation. As the market internalizes fully-loaded costs, the dominant strategy shifts from speed (“launch now”) to defensibility (“launch at critical mass”). We expect M&A and partnerships to refocus resources around category-leading networks with emerging moats.

Portfolio Update

Private. New/core investments this quarter include:

• Raad — Decentralized weather data collection for institutional buyers, built with partners experienced in scaling demand for high-fidelity datasets.
• Prophetic — Non-invasive neuromodulation to induce lucid dreams; long-range plan layers communications and collaboration across states of consciousness.
• Spot — Exchange for long-tail assets, starting with celebrity memecoins; abstracts onchain complexity for non-crypto-native audiences.

Liquid. Built a new core position in MOBILE following shifts in Helium’s value accrual dynamics, alongside positions in BTC, ETH, and SOL intended to recycle over 2024–2025.

Firm Update

We welcomed Brandon Leppke (Head of Operations) and Vinayak Kurup (Research). We’re rolling out a new version of DePIN.Ninja with crypto incentives for high-quality project submissions, and we launched EV3 Research to formalize institutional-grade research outputs and bootstrap early developer ecosystems.

Predictions

1. Platform Positioning: Mid-cap DePINs reframe around networks-of-networks to seek platform-like multiples.
2. Race for Medallions: $250M+ staked TVL and $100M+ liquid staking TVL across medallion-based networks.
3. zkTLS Everywhere: Targeted incentives for long-term users/suppliers catalyze a zkTLS infra raise at $500M+ private valuation.
4. Sora Summer: Video-gen demand drives decentralized GPU revenues; open-source competitors proliferate.
5. Energy Emergence: Energy grows from <5% to >10% of DePIN projects and market cap; >1 energy DePIN reaches $1B+ FDV.

Disclaimers

This letter is for informational purposes, reflects EV3’s views as of its date, may change without notice, and is not an offer or solicitation. Certain statements may be forward-looking and involve risks and uncertainties.

— Your partners,
Sal & Mahesh