FTX implosion was a ‘clear market opportunity’ for Solana, says Monegro

His X profile bio says “Your doubt is my alpha.”

The motto rings true in Joel Monegro’s approach to investment in the crypto industry. During Ethereum’s struggles in 2018 and 2019, for example, the partner at Placeholder played the contrarian game and invested heavily in the ecosystem.

“It’s hard to imagine that Ethereum would be an outcast today because now it has this sort of dominant position,” he says, “but Ethereum went through a really tough time in ‘18 and ‘19.”

The venture capital firm “doubled down” on the struggling network — and it paid off. Monegro says that some of the firm’s best investments were made “at the bottom in 2019.”

On the Lightspeed podcast (Spotify/Apple), Monegro says that the FTX implosion was a similar “time of opportunity” for the venture capital firm. Having witnessed the flight of investors from Ethereum DeFi and apps, Monegro says the firm saw a very similar pattern playing out with Solana’s storyline.

“We got really active, following that,” he says. Monegro explains that the firm had been “watching Solana for some time” but had concerns about the ill-fated exchange’s involvement.

“The way those investments were being put together didn’t sit right with us.” Monegro adds, “it felt like FTX had a lot of power over the community and the ecosystem.”

“That was a big part of the reason why we kept some distance from Solana during that time,” he says.

A clear market opportunity

Despite the doubts, Monegro explains that the firm began researching and meeting with a number of entrepreneurs building on Solana. After the market began to “unravel” in 2022, Monegro says a “clear market opportunity” emerged.

“We started slowly investing and then accelerated our pace post-FTX because in our minds, it took care of our biggest problem with the network.” Monegro says the network “decentralized quite a bit” following the FTX collapse, making it a much more attractive investment.

One of the biggest selling points that Monegro sees in Solana today is the ecosystem’s “strong product sense” and “maniacal focus on the end user.” Whereas the Ethereum ecosystem tends to focus more on the decentralization and counter-cultural ethos, Solana has “bridged the gap” between Web2 and Web3 in a way that he says is “more approachable to users.”

Not only that, but Ethereum venture deals tend to be “two or three times more expensive than Solana deals,” Monegro says, “because other investors aren’t willing to invest as much in this ecosystem.”

“For us,” he says, “that just means more opportunity.”

The industry has moved beyond the stage of “exploration and discovery,” Monegro says, during which time the focus was on “inventing the infrastructure.”

Now, the innovative activity is moving to the application of the technology “and things that really hit the end user,” he says.

“Entrepreneurs who wanted to reach end consumers were bumping into the fact that the infrastructure wasn’t ready,” he says. “It wasn’t fast enough. It wasn’t cheap enough. People didn’t have enough wallets. There weren’t enough fiat on-ramps and so on and so forth.”

The new generation of entrepreneurs can shift their focus to building applications without having to invest in building the infrastructure itself, Monegro says, adding “the most consumer-friendly applications are more likely to emerge on Solana than they are in Ethereum.”

Solana has a “competitive edge,” Monegro says, in attracting the next wave of crypto users. “The wallet experience and speed and cost is going to be a huge factor.”

Monegro sees early success in the growth of venture portfolio apps like Drip Haus and Tensor, he says. “We see it in how they’ve been able to build really high quality products with very minimal resources, on just their seed round. They’ve been able to reach audiences and user bases that are unmatched” on Ethereum, he says.

“Ethereum companies actually have to raise more money to build a similar quality experience than Solana companies,” he says. “Over time, company by company and cycle by cycle, those differences are going to start to show up.”

Updated Oct. 26 at 11:37 am ET: Modified for additional context.

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