What DeFi founders could learn from stablecoin success

This is a segment from the Empire newsletter. To read full editions, subscribe . We’ve talked a lot about where venture capital stands in crypto right now. I had the chance to catch up with Dragonfly’s Rob Hadick and pick his brain about the industry, VCs and, of course, stablecoins. Hadick believes that the backdrop for crypto right now “is as good as it’s been” now that the US is mulling regulation and has been overall friendlier to the industry. Add in Hadick’s optimistic stance on things like stablecoins, and bam! He says he’s “never been more bullish for crypto in the US.” However, he noted that valuations across crypto are still “very high.” Dragonfly is slowing down a bit in order to properly pick and choose its spots, he told me. But that makes sense, given that it focuses on Series A and B rounds rather than pre-seed or seed stages (which is a rare find in the industry, though not abnormal given the relative youth of crypto). “We frankly haven’t done a lot. In fact, Q1 was maybe our slowest quarter ever in terms of new term sheets out, new term sheets signed,” he said. But that’s not necessarily because of the overall macro situation, he was careful to add. It’s partially due to Dragonfly balancing itself out because it was “very aggressive last year.” It’s also because Dragonfly’s “really sensitive” to the fact that valuations have taken off. “And to us, [that means] just changing the way we’ve invested over the last few years. We do less deals, but we do larger check sizes and take more ownership,” he noted, so that they can partner more with their portfolio companies. So far, the firm’s been very busy as the second quarter gets underway. “We did one term sheet out of all of Q1, and the first two weeks of Q2, we’ve actually had [a few] term sheets out already at the seed stage,” he said. One thing I was curious about, admittedly, was Hadick’s thoughts about stablecoins. He told me there’s a lesson buried in the success of stablecoins for the crypto native folks. Despite the volatility we’ve seen across DeFi and crypto, stablecoins have managed an upward trajectory — and yes, there’s still a slight correlation between stablecoins and crypto. But the difference is that they’ve managed to hit the nail on the head when it comes to solving real-world issues. For DeFi projects looking to succeed in crypto right now, Hadick advises founders to “solve the problems” that folks in the real world are experiencing. “Let’s continue to make DeFi rails better than traditional rails,” he said, but it’s about usability at the end of the day and “bringing a better experience for the mass market.” Now go out there and build. Get the news in your inbox. Explore Blockworks newsletters: Blockworks Daily : Unpacking crypto and the markets. Empire : Crypto news and analysis to start your day. Forward Guidance : The intersection of crypto, macro and policy. 0xResearch : Alpha directly in your inbox. Lightspeed : All things Solana. The Drop : Apps, games, memes and more. Supply Shock : Bitcoin, bitcoin, bitcoin.

Source: Blockworks