Why Every Internet Company Must Tokenize in 2026 | Yat Siu

Not enough. Our general perspective, not just about altcoins, it's about tokenization is tokenize or die. If you don't tokenize, you will lose to the competitor who has tokenized himself. It's kind of like if you are an influencer, the guy who's on social will likely beat you because you're not on social.

Likewise. It was a pleasure to be here talking to you.

Literally, it's a lifetime ago. A lot has changed since then. I saw you in Korea. We were just talking about that. We were at a conference together speaking on stage. So, I guess maybe for our Talking Tokens audience, it's probably time for a refresher because they weren't in Korea with us, all of them. Yes. So, I guess to start, what is spiking your interest most today?

I mean, first of all, a little update on Animoca, right? We have over 628 portfolio companies at this point. So since a year ago, we've grown by another 100 or so companies in the space.

And so I think institutional support is much more critical. Bitcoin is much more affected now by what's happening with the interest rates, with the Fed, with global markets in a way that it wasn't as correlated before, right? So I guess that's one thematic. We're very focused therefore on RWAs. We have a joint venture with Providence Labs, the Figure team, and also our stablecoin joint venture, Anchor Point, which we may have discussed back then. But I would say a year plus ago, we didn't know the name of the joint venture. Now we know it's called Anchor Point. We applied for a license. And of course we continue. And this, I think, is the reason why we wanted to go public. We have this thesis that we think that altcoins are collectively going to significantly outperform Bitcoin as a collective, and there has to be a business that is able to represent that index despite the fact that a lot of people might be critical around altcoins in recent times just because pricing has been volatile. We still think that's where all the growth is happening and all the utilities happen. And that's the strategy process essentially. Where do we get that mass adoption? Where do we get all this utility that's happening in the altcoin space? And we become the index for that, and that's why we wanted to be a public company as a way to represent that. If we were going to talk a little bit about what I also think is going to happen next year, clarity is going to pass. I think it's fair to say, if there was a Polymarket bet on this one, probably...

And we think that's going to unlock a wave of tokenization, right? Because then you can launch a token with legal certainty as opposed to skating on the edge. Even though Jerry Atkins has said that the NFTs are generally not securities and so on, that's still an opinion for the time being. We need to beat this in law, and then every other nation around the world will follow suit. The thematic has definitely been the US, and of course, Trump.

So when I say altcoins, I mean all tokens outside of Bitcoin.

Which includes, of course...

It includes both. Yeah. However, our emphasis is going to be much more on protocol access, network utility type utility tokens. We're not going to focus on memecoins. But let me just clarify when we say memecoins. I think a lot of people look at memecoins as a speculative asset, which it is, but there's a history and reason behind that. Because when the SEC was very hostile in crypto, a lot of projects that were legitimate went out and launched a memecoin.

And they did so in order to avoid regulatory scrutiny. And this whole entire foundation structure is the same thing as well, right? All these foundations that were set up that don't really need to be set up, but they did so as well. These are all, the way I like to think of it now in hindsight, is legal lawyer capture. So basically, lawyers created structures that made some sense but ultimately provided no protection, right? At the end of the day, if someone wanted to go after you, the fact that you were in the BVI or in Cayman provided a certain level of obscurity.

Right. But it really wasn't protection at the end of the day, right? But you know who got paid? Lawyers got paid.

Yeah. It's a legal gray area. And I think people didn't know who has legal teams who understands it, right? And because there's no regulation and law around that, essentially a lawyer can come in and say, 'Well, we think this is the best solution.' 'Well, we think' isn't good enough here, but 'we think' is a good solution. And so you have to work with a legal opinion that's kind of skating on the edge, and you don't really know. And so I think all of that will go away. So that means, while meme coins will never disappear per se, I think the era of memecoins as a thing that will be all the rage is going away. And the reason why is because most of the projects do want utility. They want to talk about how value creation can happen on the token, why it's important, and why you should buy it. These are things you were not able to talk about. And so I think meme coins the way that we thought of them at the start of the year and most of the last few years, I think that's dead. I think what we're now moving towards is really the era of utility, institutions, RWA, actual tokens that you actually use. Which means that I expect that memecoins themselves will start talking about utility. Memecoins will transform themselves into 'well, we can use it this way.'

Yeah, some of them are launching games and stuff like that, and they might not say it directly. But either way, they're moving towards that direction. So I think in a way, utility tokens are absorbing memecoins, whereas before memecoins were the ones that were absorbing the market. But that was just because of the regulatory arbitrage that existed.

So we do. However, it's a matter of the projects themselves. Whether they're big or small, we are looking ourselves for much more in liquid markets. So previously, four or five years ago, we were most known for coming in in early seed stage rounds and did very well in investing in them. We invested in Axie Infinity at like $8 million, OpenSea at 50, and we acquired The Sandbox for $4 million, right? No matter what price range you look at, it's been a great success. But now I think there are a lot more great opportunities in buying tokens that are liquid on market, right? And so I'll give you some examples of some projects that we've looked at. They're very small, and they feel like seed stage. Why should you bother? But for instance, something like gaming, which we most recently announced that we would sell to Alphon, which is a DAT. That company last year had something close to about $2 million of profit.

On I think five or six or seven million dollars in revenue, right? However, the token at the time when we looked at the project, I also relooked at it, had a $3 million market cap, right? And the reason why is because the token didn't have any real utility into the project itself because it wasn't allowed to talk about that.

Right. And so we think actually the better mechanism now is to invest in companies that already have a liquid token, that are fundamentally well-run businesses, and can now actually introduce real utility. For instance, again, that's not certain yet, but would the company consider a buyback of the token with their profit? Or can they now, instead of issuing a new token, basically buy tokens on the market and give it as a marketing campaign in the future? These are elements that you can do because a business is sustainable, right? And they've built themselves out a certain way. And so we think it's better to support something on market because frankly, at a three or $5 million market cap, that's cheaper than most seed or A rounds for actually fundamentally riskier businesses than something that's already driving some revenue and profit. And that's a small example, but that's just one of those examples. Or you have larger companies and larger projects as well that are worth hundreds of millions of dollars that we think are undervalued today because of the TVL or because of the market that they're addressing or the size of the customers that they have. So I think there's a lot of that, but that means you need institutional support. And especially after October 10, retail in crypto has been pretty much drawn out and drawn down in a big way. And just if you remember what happened at the start of this year with Trump and Melania token launch that basically ripped...

Feels like a lifetime. It was only this year. It was this year, right?

January this year. Yeah. It was at that dinner.

And I think people were like, at the dinner, I wasn't there, but it was at the dinner and it was announced and it was like...

Like you're late or you're in it already.

Yep. And it took about three to four months to recover. And I think we're in this recovery phase from October 10. So we think Q1 or early Q2 we'll see a recovery in the broad crypto markets unless Trump does something else, which of course is the wild card right now in the space.

I think it's unique to us. And I think for the time being, it's not to say that investors don't understand the utility and value. I think that a lot of them, most of the people, there are some investors that are fundamentally thinking long-term, but there are a lot of investors who basically are just traders. They're basically trading a token and what they look at is momentum. They look at, is it a hot theme? Are people interested?

Well, I mean, if you talk about a fund, for instance, yes, it's very retail oriented, but many of them are sizable in size. So I won't name them per se, but these are funds that you might consider known names in the industry. But what they would do is they would measure it based on, 'Well, is the token popular? Does it have attention? Where is it trading?' Whereas our perspective at this point is, sure you want volume, and sure it'd be great if it's listed on the biggest exchanges, but if it's already listed on reasonable exchanges, why does every project need to be a billion dollars? It doesn't need to be. If you take something like gaming that was $3 million at a time, and I think we took it up to 20, and then it might be 30 or 40 or 50, trading single-digit millions, that's a very good outcome for a small cap product. And I think what we saw in 2021-2022 was scarcity of projects, so you had concentration. So when people say altcoins are smoked, but the reality is altcoins are about $1 trillion, which is bigger than it was three years ago. So what happened was it was just more tokens, so it's more distribution. So that means that instead of thinking about having one project that could become a unicorn in and of itself, maybe it's more like 10 projects each worth $50 to $100 million as long as your entry price is there. And also, people traders think in terms of getting out. We tend to be long on our position, so we don't have to think this way. And if the project is fundamentally good, then the exchanges will come and list them anyway. But also, DEXs have become much more mature. Whether you look at Aerodrome, or you see on BNB or Solana, whether Meteora or Raydium, the volumes are incredible. So again, if you're running a $10 billion project, sure, you'll need very large ecosystems. But if you're actually running a reasonably small cap, you don't need that kind of depth of liquidity. You're fine. And again, it's healthy for the project because it's not as expensive. You might not have to give as many to the airdrop. Maybe you will give it later. It's all a matter of time. The market is maturing. But I think it's correct to say that we're one of the few companies looking at it from that lens because I think a lot of them are looking for more of the short-term trade.

No, yeah. I mean, gaming is a great example. When you think about onchain usage in gaming, it's probably number one. But when you think about token performance, it's probably one of the weakest ones compared to narratives like AI or DePIN and other areas that have done much better. But this comes to the, and I think we may have said this in Korea, I'm not sure if it was with you, but I was basically saying that the problem with many gaming and entertainment projects is that they're very good at building the product itself. When you look at some of the games, they're good games. I mean, you go to Telegram and you play gaming games, they're quality games. Or you look across the ages or even the Sandbox experiences that people are building, or in our portfolio of companies like Off the Grid with Gunzilla, very high quality products that exist, right? However, they're not good at investor relations often, right? And that's because they don't think that's their job initially. And you think about it, when you're launching a token, you are not only building a product in public, you're also essentially doing active IR the whole time in some form or fashion. And in a way, before, you kind of got away with saying you didn't have to do it. Also, you were kind of hiding behind the foundation. 'It's a foundation doing this.' And we see this slight complexity when you think about Ethereum. When Ethereum Foundation was being a little bit too academic and everyone on the commercial side was like, 'What the hell are you guys doing?' Like, literally tweet, do something. Be commercial about this. And that kind of exemplified a little bit of that culture. Whereas today, I think many of the successful projects are very market savvy. But the combination of finding a team that can be both market and IR savvy and product builders is actually harder to find. And so what we try to do, and I guess what you're also doing in a different way perhaps, is how can we help match those skills either within the portfolio or ourselves to help drive those right outcomes. And it's not that different when you run a public company as well. You could have a great company. There are lots of great companies with good PEs and good multiples of revenues that have terrible market cap because the founders or the people running it are just not either willing or able to do the hustle and do the marketing and do investor relations. You would have a high quality company. Just because you're high quality doesn't mean you can be found, right? So I think there's a lot to be said about that, and I think gaming tokens have been part of that. Most gaming projects don't have people who understand the IR nature and the financial velocity of what a token can do both in the positive and the negative, right? Because if the token does badly, then it has a negative flywheel effect too.

Or a publicly traded DAT.

Because I think the DAT actually, to run a DAT, you need to understand financial leverage.

And so it's a fairly new concept.

But I think the challenge, I think even Saylor may not have predicted that the rise of DATs may actually have affected him in a negative way because a lot of people are buying Bitcoin but don't actually understand what they're doing with this after. And of course the risk that the market is now pricing in is, 'Are they going to sell their Bitcoin? Is there risk around that?' Our prediction on this is there's going to be much more consolidation of the hundreds that are out there. Basically, if you want to buy Bitcoin at a discount, you buy a DAT, actually. Or any kind of crypto asset at a discount. And then you own the asset and you can do other things. So I actually think there's going to be a lot more takeovers. I think the risk of the DATs themselves selling tokens, I think is less so. I think it's much more a consolidation play for companies that are out there that want to create a better type of scale and mass. Because if you want to buy Bitcoin at a discount, nobody's going to sell you GBTC. Your miner is not going to give it to you at some kind of discount. However, if you buy it at the DAT, possibly you could if you take them over. And I think we're going to hit a period where next year there'll be a bunch of DATs that are going to throw in the towel. Not in the sense that they're going to sell everything, but more like someone else should run this, or someone else needs to run because we also think that DATs have to become operational. And so one of the DATs that we're working closely with is Alphon. It's a TON DAT. We did the gaming DAT transaction with them, and they're very much moving towards becoming an operational business with cash flow and profits and revenues, which I think is how the market can value you. And then you happen to have a very good asset. But it makes sense that most of these assets will probably be traded at a discount rather than at a premium, which is unusual unless it's something specifically like Bitcoin and what Saylor is doing. But even he is struggling given the fact that if I'm an investor now, and this is the other thing about multiple DATs, okay, I want Bitcoin. Wouldn't it be even better for me to buy Bitcoin at another DAT that has a 20% or 10% discount?

Could be more risky, but the point is there's a trade now.

Exactly. That's one part. But then of course, because it's public markets, you've got all the perps and futures. So basically people are shorting it here, buying it there, doing stuff there. And I don't think most of the DATs are equipped to understand all that's happening out there. So I think that's one aspect. But I do think DATs are important. I don't think the same asset in multiple formats is viable, but I think every major token does need a DAT or an ETF or ETP because that's the institutional gateway. For everything we might be critical around DATs, if it wasn't for Tom Lee, you wouldn't have institutions and family offices essentially buying Ethereum through his vehicle. And why? Because it's not just because Tom Lee said so, it's because he's accountable for it. If I'm a family office or institutional investor and I buy Ethereum in the open market, which I could, then who's responsible? The person who made the purchase. Because if there's a problem, Vitalik is not up for a phone call to say, 'Here's what you do.' You can't call Consensus to say, 'Can you do customer support here? What's going on?' All that stuff is just too risky. But you buy equity in a public market, you've got all of the securities and rails in place that essentially gives you certainty and knowledge as to how to deal with. You put the shares in custody at your broker, everything's fine. So I think that avenue is important. So I think any major token worth its salt ultimately will have to be involved in some kind of DAT. I mean, we've done a number of our own projects that essentially have public vehicles around that as well. But it's more about the institutional appeal and value accretion over time. But having said that, there have been many projects out there like Solana, and I've literally had eight or nine or ten DATs doing Solana. They're all ultimately competing with each other, and I don't know if that's necessarily the healthiest outcome. Yes, there's buying power and buying pressure, but unless Solana collectively goes up, you have competition between them. Why should I buy this DAT versus the other DAT? And instead of working together for the best outcome for Solana, you now have people competing with each other around that as well.

It depends on the size of the project though, right? So for Bitcoin, I think you can have many more because Bitcoin is a $1.8 trillion asset. But if it's something like a token that is $500 million to a billion dollars, it absolutely makes no sense for it to have more than one.

So they're relative. When it's bigger, maybe it makes sense. But the beautiful thing, of course, is that these assets are permissionless. So that means that if someone wanted to spin out a DAT, they can. But I think it's part of a coordination problem as well, how do people work together for essentially the best common outcome.

Oh yeah. Yeah, of course. I mean, a lot of them were both individually and as a company. We invested back in the time, a lot of them were in-kind, some cash as well. We backed both TON DATs. We backed some of the Solana DATs. I think we're in 12 to 13 DATs, which in the scale of DATs, it's not that big, but it's still reasonable exposure. And it was a good trade at the start of the year. So we definitely made money overall. However, it definitely went sour as a trade over the latter half of the year. But from our vantage point, the opportunity is that each one of those DATs are now actually crypto counterparties that are looking for business opportunities. So again, from our vantage point, it's not opportunity lost. There's a new opportunity to basically work with these DATs. If you're a Solana project that wants revenues and projects, well, guess what? If you are a revenue generating project on Solana, go talk to the DAT. You can see there's a partnership to be done. But I think that to me is the new opening of that market opportunity as well. And maybe DATs have replaced what foundations used to do in the crypto world, who were the ones who were supporting the ecosystem. Maybe that's the role of the DATs potentially.

Yes, exactly. Oh, my god. It's December. So that would be two months ago now.

I don't know where I am anymore. We're in December. That's where.