YWR GP: Chain Street Pt. 1
Chain Street (Part 1) - The Opportunity
Part one of a three part guest post from
.Part 1. Lays the foundation and explores the opportunity of Chain Street.
Part 2. Explores the nuances, business models and challenges of investing in the DeFi protocols that make up Chain Street.
Part 3. Explores maturing and emerging ideas on Chain Street.
Chain Street is the financial centre of cyberspace. Unlike its physical counterparts, Chain Street has no fixed address. It thrives wherever code executes, on laptops in Lagos or servers in Seoul. Chain Street is already transforming finance, delivering unprecedented transparency, efficiency, and accessibility to services once shrouded in opacity and gatekept by intermediaries.
Chain Street is a collection of Decentralised Finance (DeFi) protocols.
I am Bullish on The DeFi Protocols of Chain Street.
I like DeFi for the same reasons investors love software companies.
Software collapsed the cost of information, communication and services. The success of software businesses, in my view, comes down to one quality: low marginal cost. Unlike their meatspace or hardware-based competitors, they could achieve almost 100% profit margins on new sales and recycle those profits into product innovation and improvement.
Every time someone downloads Excel, it costs Microsoft nothing. Every time someone listens to a song, it costs Spotify nothing. Every time someone requests a taxi, it costs Uber nothing.
Low marginal cost is the secret behind the engines of infinite growth in software businesses. This same dynamic exists with DeFi protocols on Chain Street.
DeFi protocols are software, more accurately, they are smart contracts that run on platforms like Ethereum and Solana. Beyond the upfront gas fee for deployment, along with minimal ongoing expenses like oracle data feeds and occasional upgrade costs, there are virtually no additional operating overheads to maintain their functionality. If implemented properly, no single person or organisation can unilaterally halt their operation.
Ethereum, for instance, will continue running this code at negligible cost to its creators as long as the network persists on distributed computers worldwide.
But surely the same is true for FinTech businesses like Revolut, Tyme Bank, and Monzo?
No. And let me explain the key difference.
The difference 99% of investors miss.
Why crypto is a $9 trillion opportunity.
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