The Twighlight Zone: On the Cryptoeconomy in 2026 & Beyond
Ryan Watkins • 363K views
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3 months ago by Evan Fisher
Like the internet in 2001, blockchain protocols are entering the commercialization phase.
“Every important digital technology over the past [70] years has seen an initial explosion of entrepreneurial activity, followed by a 90%-plus shakeout […] Over the subsequent two decades, the industry itself typically grows 100 times bigger[…] If history holds true, the Net will be a $20 trillion industry by 2020.” – Forbes on the Internet, 2001
If history holds true, blockchain will follow the same arc – producing $50-100T of market cap over the next two decades.
Blockchain protocols are:
Disrupting the second largest market in the world…
…With proven value props…
…And scalable, profitable business models
Two things are true simultaneously. Much of historical returns have been driven by speculation, and the industry will create trillions of dollars of fundamental value over the coming decades.
Don’t miss Amazon because you’re appalled by Pets.com.
Technology creates value in one of two ways:
Integrating into existing markets to reduce costs or improve outcomes
Creating new markets
Finance is a $20T+ market cap industry built on systems designed in the 1970s. Blockchains are disrupting this by reducing costs, increasing speeds, and enabling new products.
The scale of the opportunity in finance alone feels borderline heretical to claim until you look at the revenue pools.
Here are some of the categories that are most addressable, with sizing per McKinsey research.
Banking: Retail, corporate, and commercial banking are a $4T revenue pool. Blockchains are doing to banking what the app store did to software – lowering barriers to entry, automating operations, and letting new entrants compete on product rather than infrastructure.
**Payments: **$2 quadrillion in value flows creating a $2.5T revenue pool. Blockchains replace layers of intermediaries to unlock instant global settlement at near-zero fees.
Capital Markets: Asset management, trading, and financial data infrastructure are a $1.5T revenue pool. Blockchains collapse the settlement stack – custodians, transfer agents, clearinghouses are replaced with automation. Everything runs 24/7 with programmable logic.
As with the internet, many of the most exciting opportunities are not about market disruption but market creation. Amazon didn’t just disrupt an existing market – it created an entirely new one.
Here are a few that we’re excited about:
New financial products: Perpetual derivatives didn’t exist before crypto – now they’re a multi-trillion-dollar annual volume market. Prediction markets, on-chain yield strategies, and new derivatives create financial primitives that traditional rails couldn’t support.
Internet capital markets: Data, social credentials, and attention are undeniably valuable in the internet age. Blockchains financialize these intangible digital assets to make them tradeable.
Latent capital markets: Assets that were previously illiquid or inaccessible are being tokenized and traded globally. Bid spot Uranium, fund private aircraft leases, buy fractional ownership in a private credit fund.
There are more categories we’re excited about. The machine-to-machine economy will need the digital payment rails blockchains offer. Blockchains will incentivize real world actions to create new types of marketplaces and commerce. Self-custodied data, credibly neutral networks, immutable identity records.
Blockchains have 4 demonstrable value propositions.
Our best investments map to at least one of these. The winners going forward will also capitalize on these.
Asset Creation: Low barriers to asset issuance. Global distribution without intermediaries. Day-one liquidity.
Internet Analogy: Building a website is easier than building a storefront.
Example: @uraniumdigital_ aunching tokenized spot Uranium products.
Value Transfer: Instant, global settlement. Low cost. 24/7. Programmable.
Internet Analogy: Email vs. postal mail.
Example: @utexocom provides private, instant, low-cost payment infrastructure to PSPs.
**Capital Efficiency: **Open-source money. Composability unlocks capital utilization that siloed systems can’t match.
Internet Analogy: APIs letting one service power many applications.
Example: Buy a tokenized private credit fund on @plumenetwork and use it as collateral on another application.
Operational Efficiency: No brokers, clearinghouses, or custodians. Everything is automated. Markets settle instantly. Reduction in counterparty risk.
Internet Analogy: Intuit’s automation vs. CPAs doing accounting by hand.
Example: @aave has $30B+ in assets. It would be a top 75 US bank by AUM despite having an order of magnitude fewer employees than banks of equivalent size.
**Ownership Alignment: **Third-party builders share in the upside, not just revenue.
Internet Analogy: YouTube creators earn a share of ad revenue.
Example: @solana distributes token upside to third-party developers building ecosystem applications.
**Behavioral Change: **Token rewards bootstrap networks faster and more capital efficiently than traditional capex and customer acquisition strategies.
Internet Analogy: Uber built demand with free rides using balance sheet capital.
Example: @helium incentivized >300K TelCo hotspot deployments without needing a cash-heavy balance sheet.
**Privacy: Share information without exposing it.
**Internet Analogy: Prove your age to a bartender without sharing your ID.
Example: @worldcoin lets you prove you are a human without revealing who you are.
Verifiable Data: Immutable records for transactions and credentials. Publicly verified.
Internet Analogy: Tracking a package where every scan is timestamped and posted to UPS.
Example: @transcrypts_ lets people share and independently verify employment or income records without a centralized background-check company.
**Self-Custody: **Hold assets directly without banks or custodians. Cryptographic guarantees replace institutional trust.
Internet Analogy: A password manager on your computer vs. Google passwords.
Example: Hold USDC and send it globally without a bank or intermediary.
The best businesses generate revenue through one of three proven models:
Take Rates (Hyperliquid)
Transaction Fees (Solana)
% of AUM (Ethena)
There are of course exceptions – but that’s true of Google and Robinhood too. They don’t fit neatly into traditional buckets either.
The point is: these businesses have real income statements.
But protocol businesses shouldn’t be thought of as just financial services or FinTech. They’re better. They scale faster and have superior cost structures.
**Scale Faster: **Software companies broke records on speed to $100M revenue. Protocols are doing the same.
Superior Cost Structure: As the app store and AWS streamlined the software business model, blockchains streamline the business model for financial companies. Small teams can build massive outcomes. Uniswap v01 was built by one developer and a $60K grant.
Why protocols scale faster and more profitably:
**Global distribution: **Products are available anywhere in the world on day 1
Zero marginal distribution costs: When PMF emerges, there is no friction from sales, onboarding, or integrations
Open-source liquidity: Existing on-chain capital replaces the need for large balance sheets
**Composability: **Low-friction third-party integrations enhance product and distribution
Automated infrastructure: Financial backends are automated, no need for heavy headcount
Compare today’s blockchain industry to 2017, when the investment thesis was “buy tokens and hope to sell the top.” Today you can underwrite blockchain investments the same way you’d underwrite most technologies: market size, product differentiation, and future cash flows.
Yes, a lot of value has historically been driven by speculation and many assets are still priced above fair value. We’re realists – narratives will continue to drive right tail volatility across asset classes. But the future will not be built on narratives alone. There’s just not enough capital willing to underwrite speculation indefinitely. The future will be built on fundamentals.
So, why now? What’s different?
The years after a bubble burst are often the best time to invest.
LinkedIn and Atlassian were founded in 2002. Palantir, ServiceNow, and Splunk in 2003. Facebook, Roblox, Unity in 2004. Palo Alto Networks, Workday, Reddit, YouTube, Etsy in 2005. The list goes on…
The tourists have left. Blockchain venture funding is down over 90% from its 2022 peak.
Regulatory clarity is improving. The infrastructure is ready for scale. Institutional adoption is here.
There are of course risks: incumbency risk, regulatory risk, governance risk.
But, four years into starting Portal Ventures, the thesis is playing out. Blockchains are disrupting large markets with clear value props and proven business models. Some of the best blockchain investing years are ahead of us, not behind us.
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