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Investing in Daler Trading

As an early-stage VC, our investments mainly fall into one of two categories: (1) critical infrastructure for improved and scaling of decentralized networks, and (2) novel apps and experiences that drive more mainstream adoption that are only possible with tokens and blockchains. I spend most of my time focused on diligencing the business and technical details of projects well before there is any firm token economic plan in place, as these details typically emerge a bit later, after a product is in place and some sort of market fit has been established. We trust that smart founders, with the right guidance and connections from experienced investors and advisors, will get their token design and launch planning right when the time comes.

However, the harsh reality is that if they don't get this next step right, it's quite possible that none of the other work they've done will matter at all. A successful token requires sufficient liquidity and trading volume (and low spreads, and low price volatility, and so forth), and misunderstanding market dynamics can crush even the most promising project.

In most cases, token liquidity is actively managed by market makers who are engaged by the project. Choosing the right market maker is an important step, and market maker oversight remains challenging. Market making in crypto is quite nuanced, and markets can be remarkably inefficient. Automated market makers provide a partial solution to the liquidity dilemna, but are far from ubiquitous or a panacea, and they still require LP management, which many conventional market makers still refuse to offer as a service. In an ideal world, a project engages with market makers that can provide a truly holistic approach, supporting their DEX efforts as well as their need for more traditional CEX listings, and give them a complete view of their token liquidity.

Daler Trading is the kind of crypto-native market maker that we wish most of our early-stage projects would talk to first, and we're excited to partner with them to help create more liquid and efficient markets for early stage token projects.

Despite launching only a few months ago, Daler has already managed to establish themselves as a trusted market maker, supporting over 25 customers through connections to more than 30 exchanges. More importantly, the founding team has known each other for decades, and has a long reputable history in both traditional and DeFi markets. They have deep experience as TradFi traders but have also worked in a variety of token projects, managing their treasury and overseeing their own market makers. Perhaps more importantly, they have also been product company founders themsleves, so they understand the motivations and needs of clients in this space from a founder pov. They are, in a nutshell, the ideal team to help early-stage projects, and we feel fortunate to have them on our bench.

In addition to supporting DeFi and CeFi spot markets, the team is particularly well-suited to derivatives markets, and we expect this to be a major theme of the next cycle as the market matures and becomes more institutionalized. Daler has several strategic advantages here including bespoke options software and a number of key partnerships already in place with exchanges, which we expect to be realized as early as September.

Market making in crypto continues to be very nuanced, and can be remarkably inefficient. We believe that Daler has the right team and platform under development to be a major player, and we'll be excited to see them providing a trusted market maker option both for our portfolio companies and for others. Every protocol founder launching a token in this market ultimately needs ample liqudity and volume on major exchanges (both CEX and DEX) to be successful, and having a market making partner who can take a truly holistic approach that grows with them is obviously advantageous. Though no market maker will ever eliminate the need for founders to properly understand markets and liquidity -- this is something that simply cannot be outsourced -- Daler is positioning themselves to be a key resource to support founders in this part of their journey.