Digital Finance Fundamentals 05.26.2025 - How to invest behind AI
Coreweave is up 167% since IPO -- what are the other potential plays for AI?
Hey Fundamental Investors,
1. Fundamentals Update
A couple things have been on my mind this past week:
What’s holding back crypto fundamentals: After chatting with the the Theia folks, I’m reminded token transparency is what’s holding up fundamentals and large capital allocators from investing into digital assets. Without proper disclosures of when a team is selling tokens OTC (the equivalent of secondaries for equity businesses), who the market maker is and the type of deal (e.g are the teams and market makers just inflating the price by buying they’re own token to artificially increase price), if value accrues to token or equity, and is there a real revenue and value accrual, capital allocators are in the dark without clear understanding of risk. I’m really excited about the work Theia and folks are doing to hold token projects accountable.
AI stock Coreweave is up, how about for tokens? Coreweave is up 32% in the last week and up 167% since the stock went public.
Coreweave was founded in 2017 and 8 years later is a ~$62B enterprise value and ~$50B marketcap company trading at 22.6x revenue, 31.1x adjusted EBITDA, and with -$1B net income on a TTM basis.
Coreweave bills themselves as a AI hyperscaler and companies like Jane Street, OpenAI, Google, etc use Coreweave.
Coreweave signs contracts with large enterprises, raises debt / equity to buys GPUs, and then installs the infrastructure and offers their AI cloud to these enterprises.
Investors are clearly hungry to invest behind the trend of massive demand for GPUs as newer models like Claude 4 are released. The question then is how does one get exposure to this trend via tokens?
Currently there are different AI tokens one can invest in ranging from decentralized AI and GPU networks to memecoins.
Bittensor, a decentralized machine learning network, has been the canonical and consensus bet which is a $3.8B marketcap token. The open question is clear revenues and value capture mechanisms that allow TAO 0.00%↑ to be comparable to the centralized AI counterparts. It’s a token and community I admittedly look forward to diving into more and understanding the long term thesis.
Other potential opportunities include upcoming potential token launches in the decentralized AI space like Nous Research and Prime Intellect, the latter of which there’s an interface a LLM developer can use and self-service and find GPU clusters that one can use and then run decentralized models.
These crypto projects with upcoming tokens can be potential ways for investors to get exposure to growing demand for GPUs from AI as well as play the need for GPUs / AI in a world where hyperscalers increasingly dominate.
We look forward to covering the fundamentals for these AI projects so capital allocators can choose between token and equity to get exposure to the massive tailwind of AI adoption and proliferation.
The dominance of Hyperliquid in Perp DEXs but the rise of Axiom: I’m still reminded by Haseeb’s tweet that in crypto the first mover often isn’t the winner — Hyperliquid which launched after GMX, dYdX and the wave of Perp DEXs has continued to dominate with nearly ~89% market share on just the perp DEX trading volume side (not including spot trading volume).
What continues to encourage me are new projects like Axiom that launched and hit $100m fees in just 5 months which also reminds me that new up and coming projects will continue to come up and take share.
2. Market Update
Privacy coins were the top performer in the last 7 days +18% followed by AI coins which were up ~12%.
In particular Worldcoin is up 20.7% — notably Worldcoin launched in the US and raised $135m directly from their liquid token from A16z Crypto and Bain Capital Crypto. I was particularly surprised that over 12.6m humans have been verified with an Orb
Folks who scan with the Orb to verify themselves receive 16 WLD which is ~$22. Look forward to monitoring the adoption of Worldcoin in the US.
3. Stablecoins Update
Total Stablecoin Supply broke $240B and sits at $244B. Stablecon is happening this week in NYC and our co-founder Anthony will be speaking on Thursday at 2pm:
The biggest question investors have is how does one get exposure to growing stablecoin supply and volumes?
An unpopular opinion is the biggest winner of stablecoins as its stands are going to be the current incumbents.
1. Tron: #1 blockchain for USDT; 30% of stablecoin marketcap and take rate on gas burned to transact with USDT.
2. Tether: USDT is majority of stablecoin marketcap today at 63%. Able to monetize reserve income even if fed funds rate fall.
3. Binance: there's 40M+ active Binance Pay users which is 2x the 19.4m total daily active addresses onchain. More stablecoin payments / volume, more fees.
This could obviously change with a potential Coinbase / Circle acquisition, USDC growth from GENIUS bill, Stripe stablecoin financial accounts onboarding more merchants and facilitating more cross border commerce, banks issuing their own stablecoins, the growth of stablecoins from new or existing issuers on Ethereum, Solana, [name your L1 or L2]/.
But zooming into the present moment and looking at what chains / stablecoin issuer/ exchange has size and dominance because of stablecoins, its Tron, Tether, Binance.
The other bets people have been making are tokens like Pendle as yield bearing stablecoins will need infrastructure and distribution as well as Frax which has its own stablecoin.
Here is the performance of tokens that benefit from growing stablecoin supply / volume.
Stay tuned for more about stablecoins this week 👀
Cheers,
Jon
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