As I count down to the 5th anniversary of DeFiance Capital, the high-profile blow-up of a well-known liquid fund serves as a stark reminder of how challenging this business can be — and why there’s still plenty of room for improvement in our industry, both in serving clients and advancing the space overall. Not here to cast stones — I’ve had my fair share of challenges in the past to get DeFiance to current level. Just sharing my experience and takeaways. Much of the difficulty faced by liquid funds has been well-articulated by @Ray_L1D and @cmsholdings, so I’ll focus on other aspects of the issue. 1. Alignment & Skin in the Game This might be the single most important factor for any crypto fund — liquid or venture — given the nature of the industry and asset class. The best way to ensure alignment and that GPs act in LPs' best interests is through meaningful GP capital commitment. Ideally, >20% for smaller funds, >10% for larger ones. Bonus points if that capital represents the majority of the GP’s net worth (as it should be). For reference, I'm by far the largest investor in DeFiance Fund I, and a top 3 investor in our current flagship liquid fund. That means if we lose money, I stand to lose the most. That said, it’s counterproductive for GP stakes to be too large (e.g., >60% of the fund), as it effectively becomes a quasi-family office — and GPs may stop caring about external investors' concerns. 2. Professional Operations & Risk Management This is crucial in crypto and comes with its own unique challenges. It’s often where funds led by successful crypto-native investors — without prior institutional experience — fall short. To make things harder, there’s no perfect toolset for liquid crypto fund operations. Most of us have to cobble together different solutions to achieve operational excellence. But it matters — one major hack or poor exchange collateral management, leading to unintended liquidation, can take a fund to an absolutely unrecoverable state. 3. Professionalism & Integrity — Especially During a Crisis Nearly every liquid fund that has lasted more than 4 years in crypto has gone through some kind of crisis. I’ve lost count of how many we've faced in the past five years. These are the moments when investors appreciate honest communication and transparency the most. GPs may not be able to disclose everything — but hiding behind legal counsel and stonewalling investor inquiries is the fastest way to destroy trust. Remember: the lawyers aren’t the CEO. You are. And the decisions ultimately rest with you. 4. This is a 5km Run — Not a Sprint, But Not a Marathon Either You're here to achieve sustainable outperformance, not to larp about one good trade forever. So one hero trade might raise your profile and gain clout, what matters is if your strategy is repeatable and able to work as well in the future as well. One hit wonders are dime a dozen in market. Unfortunately unlike VCs, we don’t get a 5–10 year timeframe to prove ourselves either. Performance is measured quarterly, even monthly. That forces constant evaluation: Is your current strategy still working? Do you still have edge? That’s the question I ask myself regularly to ensure we remain ahead — or at least relevant — in the market. There are many other areas I can touch on but those are the most important one off the top of my head now. Hasta otra, amigo.

Some of those DAT equities are draining the life out of everything else in crypto, BMNR surging close to 4x since yest's open, liquid trade with volume. How do we think this all ends?

Some of those DAT equities are draining the life out of everything else in crypto, BMNR surging close to 4x since yest's open, liquid trade with volume. How do we think this all ends?

had to do it again: on average ~75% of supply has not even hit the market yet! from this list alone that's $15b at current fdv. not all of those are equal but the market will sort through the list

As we enter the second half of 2025, it’s worth taking a moment to reflect on what @pendle_fi has accomplished, and what lies ahead for us.