So how should a builder in today's climate proceed? Well first, let’s discuss the tradeoffs as I see them.

Growing high-quality revenue requires a sustainable, profitable, and defensible income stream that contributes to the long-term health and stability of your business. Growing high-velocity revenue can be just as, if not more challenging. However, you generally give up long-term revenue foresight in exchange for greater upside in boom cycles. High-velocity revenue is subject to a trend, so you're incentivized to focus on short-term wins vs long-term defensibility. Crypto is unique because it allows companies to grow revenue faster than ever before. Blockchains and tokens collapse the cost of coordination and introduce new business models that align attention and resources in ways we've never seen. There are countless examples of DeFi and NFT projects generating revenue figures in weeks that would take traditional companies years. Quality or not, crypto revenue generation has defied the laws of physics.

In the same way, many investors from last cycle paid a premium for annualized NFT revenues, I am seeing current investors pay a premium on annualized meme coin revenue. In my opinion, both examples of high-velocity revenue, still in search of defensible product market fit.

"But Jon, look at the volume figures, look at the next generation of college kids paying their rent on sports betting? NFT’s and Meme coins will be synonymous with any speculative activity." I agree. I am incredibly excited about meme coins and NFTs as new forms of value creation. I write from the perspective of someone investing through cycles, booms, and unfortunately, busts. Why? Because what gravity is to physics, product market fit is to business success. Gravity (pmf) is not visible, but its effects are undeniable. It's seen in metrics like customer growth, retention and engagement. If your product/service requires the end user to be fundamentally bullish on an underlying asset, that uncertainty should be reflected in your valuation.

So do what feels natural, take advantage of high revenue velocity moments because they don't last forever. Just remember, few, if any companies can have their cake and eat it too. Like trust, high-quality revenue is built with time but can be destroyed in minutes. We all know projects that prematurely launched a token or NFT to build a war chest in hopes of delivering long-term value, but lost their users in the process. The crypto market in particular will exploit every flaw in the mind, the volatility and return profile of the asset class ensure of it. So make sure your cap table is not just outcome-aligned, but values-aligned. Iterate quickly and remember technology changes, but humans don't.

Last year TCG Crypto sat down and thought about the killer use case for consumer crypto. At the top of our list was international payments with stablecoins. Over $5 Trillion dollars of international payments are processed every day, but in many countries, it’s incredibly difficult to send and receive money without losing significant value to fees and middlemen. Crypto offers a different vision for international payments: replacing extractive intermediaries and volatile currencies with open ledgers and digital dollars. The stage is set for disruptive innovation in payments and I’m thrilled to share our co-lead investment in Arnold & the remarkable team at Sphere Labs. We believe Sphere is paving the way for cost-effective and secure cross-border transactions for consumers and merchants alike.

Sphere’s goal is to build an end-to-end payments platform that is globally accessible, regulatory compliant, and free. In pursuit of this goal, Sphere provides fiat on and off-ramps, multi-chain transactions, cards, and bank wires. Sphere believes payment rails will eventually become commoditized and they avoid short term rent extraction to monetize further up the stack with modern features like merchant analytics, invoicing, subscriptions, and a suite of additional products.

In 2022, co-founders Arnold and Luigi were hacking on side projects after college and kept running into the same problem— it’s very challenging accepting payments from users around the world who don’t have access to traditional methods like Stripe. The two bonded over their shared experience navigating financial systems in volatile environments and set out to bring the robust and intuitive payment experience of web2 to crypto rails. In this instance, crypto allows sellers to maintain one-to-one connectivity with end users regardless of their geographic location.

After winning the Solana global hackathon for the payments track in 2022, Sphere began partnering with leading crypto projects like Helium, Latitude.sh, Squads, DRiP, and Helius. New product launches can accelerate interest from both crypto-native and traditional companies seeking to leverage crypto and stablecoins for accessible money movement.

Digital dollars (like UDSC and Tether) just clicked. They’re a product Arnold and Luigi would’ve benefited from immensely if they had access earlier in life. Arnold grew up with parents from South Korea’s Third Republic dictatorship, immigrating after the Vietnam War. At the same time, Luigi’s family fled Guyana, which experienced hyperinflation and authoritarianism in the 1980s. As family and friends around the world learned more about crypto, many reached out to the Sphere team, fascinated by stablecoins as a new tool to circumvent capital controls and participate in global commerce with a renewed sense of equity.

Stablecoins mirror the value of conventional currencies (most often USD) and offer stability amidst volatile markets. In just 6 years, stablecoins have surged from virtually no transaction volume to rivaling established giants like Visa. Despite only composing ~7% of the total cryptocurrency market cap, stablecoins account for over 70% of crypto transactions.

Most global merchants are often too small or niche for existing payment providers. In the Bahamas, there are currently 6 merchants that are licensed to use Stripe. This is a sad reality for businesses across the globe as the cost of onboarding is often not worth the legal and operational headache. If merchants then want to use blockchains, they have to contend with additional regulatory and compliance challenges, which can be expensive and difficult to navigate. Regardless of personal effort, many global merchants have found themselves excluded from the benefits of the modern banking system.

In emerging markets, blockchains offer digital infrastructure in areas where physical infrastructure falls short. In regions where roads or transportation networks are inadequate, blockchains provide an alternative that you can reach 24/7 with just an internet connection. When trust in local financial institutions is low and fraud and corruption are prevalent, blockchain participants can take advantage of cryptographic encryption and security features. If political instability shifts monetary policy over night, blockchains provide access to financial services like savings accounts and store of value assets.

Situations like the above have catalyzed blockchain adoption. In the last few years, we’ve seen stablecoins grow to now have 10x the velocity of US dollars. Despite this expansion and growing need, the industry is still searching for a modern digital payment platform where anyone can accept blockchain payments in just a few lines of code.

At TCG Crypto, we believe Sphere is building that modern payment platform. Their self-serve widget allows merchants to use stablecoins as a way to participate in cross-border trade without the standard headaches of SWIFT transactions and the correspondent banking system. Sphere is focused on providing high-quality features and a deeply empathetic payment experience that is not overly reliant on rent extraction, but instead leverages blockchain for faster, cheaper, and more secure transactions.

Outside of web3, Sphere is currently integrating with several clients, including a silverware company out of Chile, an advertising company based in Israel, a fintech business in the Bahamas, and a commodities exchange in Brazil. They recently achieved a million-dollar volume day and saw over 1,000% MoM volume growth as of this January.

We are thrilled to share that TCG has co-lead the Seed round for Sphere. We’re excited to work closely with Arnold and Luigi, our co-investors, and ecosystem partners. The team is hiring across sales and engineering and looking to expand strategic contacts in LatAm, so feel free to reach out. While global merchants and consumers remain stonewalled by legacy payment solutions, we’re grateful to support a team working diligently to bring prosperity to excluded economies and we can’t wait to see how they accelerate the push for stablecoin adoption and financial inclusivity.

TCG is an investor in Sphere. None of the information discussed herein is intended to be, or should be construed as financial advice, or an offer to sell or a solicitation of an offer to buy an interest in any security. The information herein is provided as of the posting date of this announcement and will not be updated or revised to reflect information that subsequently becomes available. Certain information set forth herein has been obtained or derived from sources believed by the author to be reliable and has been provided solely for informational purposes. Nevertheless, the author does not make any representation or warranty, express or implied, as to the information’s accuracy or completeness.