Executive Summary

• Crypto is Maturing: 2024 marks the year of Bitcoin and Ethereum ETF launches in the US, the Bitcoin Reserve Bill being officially introduced, and Crypto gaining political relevance in a US presidential election. Institutions are increasing exposure to digital assets, tokenizing billions in real-world assets, and leveraging blockchain to enhance business operations.

• A Financial System Ruled by Code:  Public blockchains offer permissionless, programmable environments built on distributed infrastructure. These enable efficient, transparent financial systems built on composable on-chain code. Technological advances and new blockchain and app designs take DeFi closer to the scalability needed for mass adoption.

• The Confluence of Crypto and AI: Blockchains provide the programmable, economic infrastructure that is necessary for autonomous AI agents to thrive. Agents will engage in economic activities on-chain, utilizing trustless DeFi protocols and unlocking significant value through automation of business processes with crypto providing the digital payment rails. AI-driven automation and simplification is also the endgame of UX in a chain-abstracted multichain world of scalable, public blockchains.

• Aurum's Vision: Aurum is expanding into the crypto space with a firm belief in the transformative potential of blockchains to support an open, verifiable internet and a more efficient, code-driven financial system. Amid market maturation and technological advances in both crypto and AI, Aurum anticipates compelling investment opportunities to arise across various industry verticals.

Crypto Markets are Maturing

2024 is a historic year for crypto markets, with the $BTC and $ETH ETFs going live in the United States and the Bitcoin Reserve Bill being officially introduced following the first-ever appearance of a US presidential candidate at the Bitcoin Conference in July.

It’s generally safe to say that never before has crypto been such an important election topic in the world’s largest democracy.

So, is crypto more than just a scam after all?

At Aurum, we firmly believe it is. Not only due to its new-found political relevance though.

Bitcoin has proven its power to “stick around” and while very volatile and strongly cyclical in the past with regards to its price action, the market is definitely maturing. In an increasingly digital world, the “digital gold” narrative is strong.

New players are entering the space and with ETFs and co, the market becomes more accessible to investors globally. This ushers a new wave of demand and pending macro-economic improvements, could mark the beginning of a new bull market.

A similar narrative surrounds $ETH, the native coin of the Ethereum blockchain. Ethereum differs from Bitcoin as it is not just “digital gold”, but rather a programmable, decentralized base layer for developers to build on.

Now, with the Federal Reserve in the US cutting the interest rates to boost a cooling economy, and with the markets initially bullish perception of these events, Q4 is shaping up to be interesting, especially considering how much is happening in the industry and looking at some macro trends that definitely paint an interesting case for crypto.

The Institutions are (finally) Coming

Institutional adoption is also on the rise, not only in terms of adopting BTC as a portfolio asset, but rather in adopting blockchain technology to optimize processes and organizational structures. Building permissioned blockchains and rollups will become an increasingly hot topic, especially amid financial institutions that might leverage this infrastructure for interbank settlement purposes or simply to take the digitalization of their customer offerings to the next level. With a potential ban of CBDCs in the US, stablecoins have to be a sector for banks to look at.

This brings us to the most prominent use case in the institutional vertical, which is certainly real-world asset (RWA) tokenization (see visual above). A trillion dollar market opportunity, it bears enormous potential to democratize access to financial markets and provide a more digital, more cost-efficient and most importantly, fully trustless alternative to legacy financial market infrastructure. Billions of dollars in real world assets have already moved on-chain with the most prominent tokenization examples being USD-based stablecoins such as USDT and USDC, tokenized private debt on Provenance, or BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL).

A Financial System Ruled by Code

Public blockchains provide execution environments on top of verifiable databases built on distributed infrastructure. This enables a new paradigm of programmable financial lego blocks built in the form of code that is deployed on-chain. These primitives are permissionlessly composable among each other and enable an unprecedented degree of open, collaborative innovation. Powered by public blockchains that provide the underlying, decentralized trust layer.

While many still primarily think about payments when they hear crypto, the space of decentralized finance (DeFi) has long evolved into a multi-billion dollar industry that consists of decentralized exchanges, lending protocols and derivatives platforms, etc.

Overall, DeFi ecosystems across all major public blockchains collectively have over $137 Billion in value locked in the smart contracts of these various DeFi protocols.

Cryptographic tokens on the other hand enable the efficient funding of open-source software and provide a way of decentralizing ownership and control over decentralized protocols.

While limited in its scalability, Ethereum is still the largest DeFi ecosystem with the most mature applications and highest value secured on-chain. With recent advances in the modular blockchain space, Ethereum has also found a lot of adoption as the base layer for other decentralized networks, a.k.a. rollups, that leverage Ethereum’s consensus layer and security guarantees but scale execution by processing transactions off-chain.

With 96 rollups (L2 & L3) live on mainnet that secure a collective value of >$33 Billion, and with more than 80 upcoming protocols, the ecosystem has seen significant growth in the past years.

New blockchains continue to emerge, either specialized infrastructure networks or novel (potentially app-specific) execution layers, implemented in all sorts of architectures that run various different virtual machines and consensus algorithms.

Autonomous AI Agents are the Crypto Endgame

One vertical empowered by the improving tech that Aurum is specifically excited about beyond the infra layer, is Artificial Intelligence, or more specifically the confluence between crypto and AI.

Blockchain and AI are technologies that complement each other in a very powerful way. We are convinced that autonomous, AI-powered agents are the end game of Web3 UX and a requirement for blockchains to be competitive at global scale. However, AI also needs crypto.

Blockchains provide the programmable, economic infrastructure infrastructure for autonomous AI agents to unleash their full potential. In the permissionless and deterministic environment that public blockchains provide, AI-powered agents can engage in economic activity with each other, and through smart contract wallets, control resources to trigger on-chain actions and move assets within DeFi ecosystems.

The traditional world is not able to support such agent-centric economies. Agents don't have credit cards and they can't open a bank account. Today, they cant use AWS or Vercel, can't open a Github account, can't pay to promote your post on X or book your upcoming vacation.

Blockchains make this possible.

Even on an infrastructure level, high-performance blockchains can serve as payment layers for decentralized GPU networks that cluster compute resources from geo-distributed locations globally, in order to serve a market of AI/ML companies and other compute consumers that are outpriced from GPU access on traditional markets due to the oligopolistic market structure and a centralized GPU supply. Compute marketplaces on these blockchains can provide the highly efficient allocation mechanisms that make compute more liquid and accessible both to real-world companies as well as AI agents that act autonomously on-chain.

Especially this latter part here is important in Aurum’s vision. As LLMs become more powerful, as autonomous agents become a reality and as we get closer to creating General Artificial Intelligence (AGI), an increasing number of decisions will be made by AI-powered agents rather than humans as business processes and ultimately large parts of the economy will be fully digitized and automated.

However, as outlined before, the legacy system is not feasible for these agents to operate. It introduces friction, making it impossible for agents to engage in economic activity. Banks are too slow, and humans are too random. Deterministic code execution with verifiable, cryptographic guarantees is what agents want and need.

Ultimately, both crypto & AI both replace human world cost by code/software cost. Web3 replaces legal agreements, SLAs, payment systems, and all the human world trust elements we are used to, with the execution of a smart contract on a public blockchain. While novel and scary (to some), that's much cheaper and efficient than the legacy systems.

Similarly, AI replaces expensive & slow human effort in processes across many verticals by code. Also just a much more efficient way of doing things. That’s why the confluence of the two is so extremely powerful.

The Aurum Vision

In conclusion, Aurum’s expansion into the crypto space is driven by a firm belief in the transformative power of blockchain technology. Crypto markets mature and gain political and institutional relevance, which will accelerate the maturation process.

Especially considering the improvements on an infrastructural level, the growth potential for all the above-mentioned verticals, including decentralized finance, asset tokenization, and autonomous AI agents is significant.

Token-based investments in these emerging sectors can be an interesting opportunity for family offices and HNWI alike. That's why standing at the forefront of these innovations, Aurum aims to provide clients the research insights necessary to position themselves and capitalize on the emerging opportunities that lie in this nascent space of disruptive technology.

Stay tuned for more.

Executive Summary

• Crypto is Maturing: 2024 marks the year of Bitcoin and Ethereum ETF launches in the US, the Bitcoin Reserve Bill being officially introduced, and Crypto gaining political relevance in a US presidential election. Institutions are increasing exposure to digital assets, tokenizing billions in real-world assets, and leveraging blockchain to enhance business operations.

• A Financial System Ruled by Code:  Public blockchains offer permissionless, programmable environments built on distributed infrastructure. These enable efficient, transparent financial systems built on composable on-chain code. Technological advances and new blockchain and app designs take DeFi closer to the scalability needed for mass adoption.

• The Confluence of Crypto and AI: Blockchains provide the programmable, economic infrastructure that is necessary for autonomous AI agents to thrive. Agents will engage in economic activities on-chain, utilizing trustless DeFi protocols and unlocking significant value through automation of business processes with crypto providing the digital payment rails. AI-driven automation and simplification is also the endgame of UX in a chain-abstracted multichain world of scalable, public blockchains.

• Aurum's Vision: Aurum is expanding into the crypto space with a firm belief in the transformative potential of blockchains to support an open, verifiable internet and a more efficient, code-driven financial system. Amid market maturation and technological advances in both crypto and AI, Aurum anticipates compelling investment opportunities to arise across various industry verticals.

Crypto Markets are Maturing

2024 is a historic year for crypto markets, with the $BTC and $ETH ETFs going live in the United States and the Bitcoin Reserve Bill being officially introduced following the first-ever appearance of a US presidential candidate at the Bitcoin Conference in July.

It’s generally safe to say that never before has crypto been such an important election topic in the world’s largest democracy.

So, is crypto more than just a scam after all?

At Aurum, we firmly believe it is. Not only due to its new-found political relevance though.

Bitcoin has proven its power to “stick around” and while very volatile and strongly cyclical in the past with regards to its price action, the market is definitely maturing. In an increasingly digital world, the “digital gold” narrative is strong.

New players are entering the space and with ETFs and co, the market becomes more accessible to investors globally. This ushers a new wave of demand and pending macro-economic improvements, could mark the beginning of a new bull market.

A similar narrative surrounds $ETH, the native coin of the Ethereum blockchain. Ethereum differs from Bitcoin as it is not just “digital gold”, but rather a programmable, decentralized base layer for developers to build on.

Now, with the Federal Reserve in the US cutting the interest rates to boost a cooling economy, and with the markets initially bullish perception of these events, Q4 is shaping up to be interesting, especially considering how much is happening in the industry and looking at some macro trends that definitely paint an interesting case for crypto.

The Institutions are (finally) Coming

Institutional adoption is also on the rise, not only in terms of adopting BTC as a portfolio asset, but rather in adopting blockchain technology to optimize processes and organizational structures. Building permissioned blockchains and rollups will become an increasingly hot topic, especially amid financial institutions that might leverage this infrastructure for interbank settlement purposes or simply to take the digitalization of their customer offerings to the next level. With a potential ban of CBDCs in the US, stablecoins have to be a sector for banks to look at.

This brings us to the most prominent use case in the institutional vertical, which is certainly real-world asset (RWA) tokenization (see visual above). A trillion dollar market opportunity, it bears enormous potential to democratize access to financial markets and provide a more digital, more cost-efficient and most importantly, fully trustless alternative to legacy financial market infrastructure. Billions of dollars in real world assets have already moved on-chain with the most prominent tokenization examples being USD-based stablecoins such as USDT and USDC, tokenized private debt on Provenance, or BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL).

A Financial System Ruled by Code

Public blockchains provide execution environments on top of verifiable databases built on distributed infrastructure. This enables a new paradigm of programmable financial lego blocks built in the form of code that is deployed on-chain. These primitives are permissionlessly composable among each other and enable an unprecedented degree of open, collaborative innovation. Powered by public blockchains that provide the underlying, decentralized trust layer.

While many still primarily think about payments when they hear crypto, the space of decentralized finance (DeFi) has long evolved into a multi-billion dollar industry that consists of decentralized exchanges, lending protocols and derivatives platforms, etc.

Overall, DeFi ecosystems across all major public blockchains collectively have over $137 Billion in value locked in the smart contracts of these various DeFi protocols.

Cryptographic tokens on the other hand enable the efficient funding of open-source software and provide a way of decentralizing ownership and control over decentralized protocols.

While limited in its scalability, Ethereum is still the largest DeFi ecosystem with the most mature applications and highest value secured on-chain. With recent advances in the modular blockchain space, Ethereum has also found a lot of adoption as the base layer for other decentralized networks, a.k.a. rollups, that leverage Ethereum’s consensus layer and security guarantees but scale execution by processing transactions off-chain.

With 96 rollups (L2 & L3) live on mainnet that secure a collective value of >$33 Billion, and with more than 80 upcoming protocols, the ecosystem has seen significant growth in the past years.

New blockchains continue to emerge, either specialized infrastructure networks or novel (potentially app-specific) execution layers, implemented in all sorts of architectures that run various different virtual machines and consensus algorithms.

Autonomous AI Agents are the Crypto Endgame

One vertical empowered by the improving tech that Aurum is specifically excited about beyond the infra layer, is Artificial Intelligence, or more specifically the confluence between crypto and AI.

Blockchain and AI are technologies that complement each other in a very powerful way. We are convinced that autonomous, AI-powered agents are the end game of Web3 UX and a requirement for blockchains to be competitive at global scale. However, AI also needs crypto.

Blockchains provide the programmable, economic infrastructure infrastructure for autonomous AI agents to unleash their full potential. In the permissionless and deterministic environment that public blockchains provide, AI-powered agents can engage in economic activity with each other, and through smart contract wallets, control resources to trigger on-chain actions and move assets within DeFi ecosystems.

The traditional world is not able to support such agent-centric economies. Agents don't have credit cards and they can't open a bank account. Today, they cant use AWS or Vercel, can't open a Github account, can't pay to promote your post on X or book your upcoming vacation.

Blockchains make this possible.

Even on an infrastructure level, high-performance blockchains can serve as payment layers for decentralized GPU networks that cluster compute resources from geo-distributed locations globally, in order to serve a market of AI/ML companies and other compute consumers that are outpriced from GPU access on traditional markets due to the oligopolistic market structure and a centralized GPU supply. Compute marketplaces on these blockchains can provide the highly efficient allocation mechanisms that make compute more liquid and accessible both to real-world companies as well as AI agents that act autonomously on-chain.

Especially this latter part here is important in Aurum’s vision. As LLMs become more powerful, as autonomous agents become a reality and as we get closer to creating General Artificial Intelligence (AGI), an increasing number of decisions will be made by AI-powered agents rather than humans as business processes and ultimately large parts of the economy will be fully digitized and automated.

However, as outlined before, the legacy system is not feasible for these agents to operate. It introduces friction, making it impossible for agents to engage in economic activity. Banks are too slow, and humans are too random. Deterministic code execution with verifiable, cryptographic guarantees is what agents want and need.

Ultimately, both crypto & AI both replace human world cost by code/software cost. Web3 replaces legal agreements, SLAs, payment systems, and all the human world trust elements we are used to, with the execution of a smart contract on a public blockchain. While novel and scary (to some), that's much cheaper and efficient than the legacy systems.

Similarly, AI replaces expensive & slow human effort in processes across many verticals by code. Also just a much more efficient way of doing things. That’s why the confluence of the two is so extremely powerful.

The Aurum Vision

In conclusion, Aurum’s expansion into the crypto space is driven by a firm belief in the transformative power of blockchain technology. Crypto markets mature and gain political and institutional relevance, which will accelerate the maturation process.

Especially considering the improvements on an infrastructural level, the growth potential for all the above-mentioned verticals, including decentralized finance, asset tokenization, and autonomous AI agents is significant.

Token-based investments in these emerging sectors can be an interesting opportunity for family offices and HNWI alike. That's why standing at the forefront of these innovations, Aurum aims to provide clients the research insights necessary to position themselves and capitalize on the emerging opportunities that lie in this nascent space of disruptive technology.

Stay tuned for more.