Crypto Needs to Solve the Stablecoin Problem

Demo Day Alert

Before we get to the crypto markets, we wanted to alert you to a really cool demo day opportunity. One of the things I love the most about being a startup investor is meeting founders and having them demonstrate their products to me. It’s a chance for me to kick the tires on a potential investment and better understand the problems founders faced in building the product — and the challenges they’ll face in commercializing it.

In fact, I’m writing this note from Atlantic City where I spent the week speaking with founders and watching their product demos.

On Thursday, May 26, Wefunder and Stonks are hosting a demo day that gives online investors like you the rare opportunity to see some products in action. Labdoor, Goodr, Here, Kinly and Bee are participating in the demo day. And all five startups plan on raising capital in the near future.

Wefunder and Stonks have also lined up an all-star panel of experts to share their knowledge. Replit founder and CEO Amjad Masad will be there to share his thoughts. So will a16z General Partner Sriram Krishnan and Lux Capital Partner Deena Shakir.

If you want to attend, the online demo day takes place on May 26 from 1 to 2 p.m. ET (10 to 11 a.m. PT). Make sure you RSVP today to reserve your spot. 

Crypto Market Musings

• As I write this, bitcoin is trading around $30,000. About a week ago, it was trading closer to $31,000. And in between, it dipped below $29,000. This will probably be bitcoin’s range until the next round of bad economic numbers comes out.
• Right now, the stock and crypto markets are pretty closely correlated. So if the equity markets get spooked, so will the crypto markets.
• The crypto bear market will likely continue for at least a few months, if not longer. So make sure your portfolio is set up for the long run. Focus exclusively on good projects. Avoid speculative plays. Never invest money you can’t afford to lose. And look for good spots to buy into long-term positions.

What Vin Is Thinking About

Stablecoins have had a rough few weeks. Terra, which was supposed to maintain parity with the dollar, is practically worthless now. (I wrote about why this happened last week). DEI lost its peg with the dollar last week and is now trading around $0.59. Even tether, crypto’s most popular stablecoin, briefly lost its peg last week when it traded around $0.97. It’s back to trading at about $1.

Stablecoins are critical parts of the crypto ecosystem. They’re important settlement tools for both decentralized finance and smart contracts. And they’re utilized far more than people realize. But they’re also clearly vulnerable.

Stablecoins are a necessity right now because the crypto markets are so volatile and the protocols for transferring assets/value between different crypto ecosystems/networks are just being developed. As the crypto markets mature, the need for and reliance on stablecoins will change. But until then, the crypto community needs to come together and figure out how to best stabilize the system. Stablecoins losing their pegs might help a handful of traders and prompt giggles. But in the long run, it’s damaging to the ecosystem. It’s an issue that needs solving.

And Finally…

The Chinese government doesn’t like bitcoin mining. It tried banning it last year. The initial ban was successful. But bitcoin mining in China is back. Bitcoin’s resilience is remarkable. It’s one of the strengths of cryptocurrencies. Hopefully, other governments will take notice and start implementing more reasonable regulatory regimes.