The New Economics of Crypto Tokens | Austin Barack

David Hoffman (0:03)

Bankless Station, I'm here with Austin Barack. He is the founder and managing partner over at Relayer Capital. Austin, welcome to the show.

Austin Barack (0:09)

Hey, David, glad to be here.

David Hoffman (0:11)

Austin, we're going to talk about tokens today. You and I share a lot of the same ideas about a lot of the same tokens. We're going to talk about Venice, we're going to talk about pump, we're going to talk about hyperliquid and EtherFi, maybe a few others if we get enough time. But I first want to talk about your lens for investing in crypto. Talk to me about Relayer Capital and the strategy that you guys have over there when you guys look at investing in crypto assets.

Austin Barack (0:38)

So it's an interesting question because crypto markets have changed so much over time. So you're forced to evolve, otherwise you end up in a stagnant strategy. What worked in 2017 or what worked in 2021 or two or 2024 doesn't necessarily continue to work. But there's certain themes that I think have found replicatable success. And those are being at the intersection of growth and value. And what I mean by that is no one comes to crypto because they're looking to find a company that's growing 10% a year and trading at a 4x multiple. That's not interesting. They can buy like a power utility. Well, actually power utility is getting a little more extend interesting with AI data centers, but you kind of get what I mean. So when I say growth and value, investors are looking for companies and tokens and projects that are growing most quickly, but also you have the most margin for opportunity when they're also valued very reasonably. And because capital in crypto has these very cyclical patterns where at times things are very overbid and at times things are very oversold, you get these moments in time that often persist where there's actually growth and value, which is something you typically don't see. So that's kind of the overriding theme in terms of what I look for when I look for an asset. However, taking a step back, I found a Relayer Capital about two and a half years ago. Before that, I was a partner at CoinFund. At Relayer, we do liquid and venture.

But I'm leaning quite a bit more to liquid recently, because I think that's where there's more opportunities. And the two segments of the market that I found most interesting are the intersection of crypto and AI, and 24-7 trading slash tokenization. And those have been the two core themes of what I've been looking at, especially this year. So that includes many of the assets that you mentioned at the beginning, whether it's Venice or Pump or Hyperliquid or EtherFi or others.

But yeah, that's the general lens through which I look at the market and try and find opportunities.

David Hoffman (2:52)

How do you think about the typical VC strategy of very early stage, like speculative bets, all or nothing? Is that how you lead the VC side of Relayer? Or does it kind of stick with the public token side of things, at the intersection of growth and value, as you said? Do those things match?

Austin Barack (3:14)

Yeah, so that's a good question. And I guess a good distinction, because that's really on the liquid side. In venture, I'm a firm believer that it's very rare that the best deals are also priced cheaply. So if you want to get into what you consider to be the most interesting opportunity, you're usually going to have to pay up for it. However, if you can get in early enough, that means, at least on an absolute valuation basis, you can get in at an attractive level. So on the venture side, I still am looking at those major categories, whether it's like Neo Brokerage, On-Chain DeFi, Tokenization 24-7 Trading, AI and whatnot.

But really, the focus there is getting in at the pre-seed or seed level, where the valuations are most compelling. And ultimately, when you're a venture investor, you're making a bet on the team, the market opportunity, and as an extension of the team, their ability to execute. So that's where I like to get in at that stage.

David Hoffman (4:17)

Between the two sides of Relayer, between the liquid public token and the private VC side of things, which side has been capturing your attention more? Which side has been winning in the tug of war, if you will?

Austin Barack (4:31)

Yeah, so I would say maybe like the first three quarters of the year of 2024, when I was live with the fund, I would say it was pretty 50-50. Now, it's 95% liquid.