Don't let the agency get away! "Defected" AI was bombarded, what happened to this former encryption head VC?

As a crypto-native VC who grew up from the Crypto dividend, Paradigm's shift is tantamount to "betrayal" in the eyes of many crypto-Maxists.

Written by: Terry

On May 27, Reflexer Finance, a decentralized stablecoin project that completed Paradigm's $1.68 million seed round of financing led by Paradigm in August 2020, tweeted to bombard Paradigm. The encryption industry has caused harm, but now it says that it will no longer focus on Crypto**, and appeals "Please Paradigm destroy all FLX positions, we don't want to work for Paradigm anymore."

Translation: Hey @paradigm, remember that time you gave SBF $270M in FTX? Then FTX became 0, which became the scar of our entire encryption industry? Now you change your name to stay away from the crypto industry? Then please burn all your FLX first. We don't want to work for you anymore.

This stems from Paradigm’s official announcement a few days ago to expand its focus to areas including artificial intelligence, calling itself a “research-driven technology investment company” rather than investing exclusively in “disruptive encryption/Web3 companies and protocols.” company.

**So, what kind of venture capital institution is Paradigm, a VC that has been bombarded for "chaos and abandonment" of Crypto? **

Paradigm, the fast-rising Crypto VC giant

In November 2021, an old article published in February 2017 titled "VR is a Killer App for Blockchains" (VR will be a killer app for blockchains) was picked up again on the back of the "Metaverse" craze come out.

**This is a divine article that looks almost cross-perspective in 2021, 4 years later, accurately predicting the rise and integration of the current metaverse, blockchain, Crypto, and VR, and directly pointing out that the blockchain will be the metaverse The base layer of the universe. **

原文: VR Is Blockchain’s Killer App

I spent a weekend talking to 10 executives working on VR at some large companies to discuss how to better create a "metaverse". The idea is actually quite simple: if people start lying in VR, its rules and systems will be as important as the "real" world.

The author of the article is Fred Ehrsam, the co-founder who just left Coinbase. He studied at the School of Computer Science and Economics at Duke University and has two years of experience as a Goldman Sachs trader. Long-time angel investor and co-founder of Coinbase.

Then this article was read by Matt Huang (Huang Gongyu), who was still at Sequoia Capital at the time. Huang Gongyu has a bachelor's degree in mathematics from the Massachusetts Institute of Technology. He is a technology and Internet entrepreneur and investor. He once founded An analytics company called Hotspots (backed by YCombinator and acquired by Twitter).

**Huang Gongyu was attracted by Fred Ehrsam's thinking and sent an email to him. The two sides discussed whether a decentralized computing platform could be established to provide power for the virtual reality metaverse. **While the idea never came to fruition, the two later exchanged dozens of emails brainstorming potential crypto-related business ideas, and finally decided to join forces to form a venture capital firm:

In June 2018, Fred Ehrsam and Huang Gongyu co-founded Paradigm. At that time, they were both 29 years old and in their prime (the subsequent new partner Charles Noyes was only 21 years old when he joined Paradigm. I have to say that the encryption industry is youth industry).

The drama of heroes cherishing heroes is also staged. Interestingly, when Fred Ehrsam was still at Coinbase and Matt Huang was still at Sequoia Capital, Fred Ehrsam applied for financing to Sequoia Capital twice on behalf of Coinbase, but both were rejected.

Closer to home, Paradigm was established in 2018, when the encryption market was gloomy, but Paradigm persuaded many top institutional investors to participate in the encryption field.

In October of that year, Harvard, Stanford and Yale, the three most notable university endowment funds, teamed up with Sequoia to inject capital into this emerging VC institution. ** This is the first time that the three university funds have supported a large-scale investment focused on the encryption field. Fund** (University funds in the United States have always been active in the VC field. When Zhang Lei founded Hillhouse in 2005, the Yale Endowment Fund injected 20 million US dollars and became one of the early key supporters of Hillhouse).

**Then Paradigm boldly invested all of its initial capital raising of 400 million US dollars into Bitcoin. At that time, the market was at a low point, and the price of Bitcoin was less than 4,000 US dollars. A legendary experience in the encryption world. **

Just three years later, on November 15, 2021, Paradigm announced that it would launch a $2.5 billion crypto venture fund, the largest crypto asset venture fund ever, surpassing the one raised by Andreessen Horowitz (a16z) in June 2021 $2.2 billion fund.

This further helped Paradigm establish a leading position alongside a16z and others.

Scholars are full of research, once "the most satisfied VC in the circle"

Paradigm’s star projects abound, from StarkWare, Mina, Uniswap, Compound, MakerDAO, Yield to Optimism, Amber, Fireblocks, Synthetix, Opyn, TaxBit, BlockFi, Chainalysis, Gitcoin, Lido, dYdX, FTX etc.

On July 17, 2021, someone launched a public anonymous statistics poll to investigate the VC rankings in everyone's minds. The results showed that the top ten VC institutions were Paradigm, 3AC, Delphi Digital, Framework, Multicoin, eGirl Cap, Defiance, Parafi, CMS Holdings, Polychain, Paradigm ranked first.

It is not accidental that Paradigm has become the VC institution with the highest satisfaction in all aspects in the eyes of everyone. Unlike other venture capital, Paradigm not only relies on various resources to support it sincerely, but also has something to do with the founder's temperament, and Paradigm's own research team is very strong.

**So for its own investment projects, Paradigm often participates deeply and personally helps to complete the economic model design. Among them, there are many well-known industry-leading projects, thanks to its top researchers (the papers are often swiped and forwarded) And top computer experts (some members have received millions of dollars in bounties for bugs). **

The Paradigm research team is undoubtedly the most well-known design of the new automatic market maker (AMM) scheme of Uniswap V3, which has been publicly praised by the founder of Uniswap.

Other research results are also full of academic atmosphere, and full of dry goods:

• Paradigm helped dYdX design the economic model and fully decentralized scheme;
• The Opyn team and the Paradigm research team jointly released the "perpetual option" product Squeeth, which has been audited by ToB, Akira and Sherlock;
• Paradigm research partners proposed NFT-based primitive Martingale Shares, which can be fragmented or develop derivatives;
• Paradigm research partners proposed Floor Perps, an NFT derivatives solution, which can lock NFTs to mint synthetic NFTs that track project floor prices;

In addition, there is a new market-making model TWAMM designed in cooperation with the founder of Uniswap and so on.

Display of some program research results

The Cycle Turn of "Crypto VC"

Paradigm is not the first venture capital firm to adjust its investment strategy in the encryption field. Especially in the crypto bull-bear cycle since 2020, venture capitalists who shined in the traditional Internet era first ran into the market and made high-profile investments, but gradually returned to rationality as the market turned bleak. **

The most typical example is the red shirts who frequently send out high-profile All in Crypto and Web3 signals:

On December 8, 2021, Sequoia Capital once changed its Twitter profile to "Mainnet faucet. We help the daring buidl legendary DAOs from idea to token airdrops. LFG" (We help courageous people create legendary DAOs, from ideas to Token airdrop), ** participated in multiple high-profile crypto projects (including FTX, which lost $150 million later), but then quietly changed back. **

Not long ago, Temasek, Singapore’s national investment fund, which suffered heavy losses in the FTX incident, also cut the salaries of senior managers and the investment team in charge of investing in FTX (Temasek invested about US$275 million in FTX and FTX US, and all write down).

**So in terms of business, Paradigm’s decision to switch from Crypto to the current hot AI and other new technology fields is understandable. After all, as a venture capital institution, it is also responsible for LP, and in the current gloomy market environment, hands Paradigm, which holds billions of funds, may not be able to find enough high-quality projects in the encrypted world to spend the money. **

Under the meme wave, Aptos, Sui and other large-scale financing "kingdom-level projects" are increasingly unpopular in the market. The huge risk of a single high-valued investment such as FTX is not far away. There are indeed not many paths to choose from. Breaking the circle outside the encryption field has become an almost inevitable option.

**It’s just that as a crypto-native VC who grew up from the Crypto dividend, Paradigm’s shift is tantamount to “betrayal” in the eyes of many crypto-Maxists. **

Since 2020, we have successively experienced the optimism of cheering the traditional VC running into the field, accusing many projects of forming different factions and camps due to capital support, and now the dissatisfaction with the "betrayal" of the native VC in the circle, which exactly corresponds to A complete market cycle phase**. **

** Going around and going around is actually just the cycle of the market. At this point, it seems that the arrival of the next cycle will not be far away. **