Santiago Roel Santos: Blockchain is the Internet's Next Settlement Layer

The Inevitable Adoption of Blockchain

• 🚀 Every business will adopt blockchain technology within the next 25 years, akin to the internet's integration into commerce.
• 💡 The core value proposition lies in reducing friction and costs within financial systems, enhancing transparency, and transforming money movement.
• 🎯 This secular trend is not just about "crypto winning" but about the evolution of financial infrastructure.

Inversion Capital's Strategy

• 🏦 Inversion Capital, a private equity fund, acquires traditional businesses to retrofit them with blockchain technology, improving efficiency and unit economics.
• 💰 The strategy involves tokenization and stablecoins, with a unique approach of owning both the "cars" (portfolio companies) and the "highway" (their own blockchain infrastructure).
• 📈 This model aims to turn tech stacks from cost centers (L) into profit centers (P) by capturing transaction flow.

Blockchain's Impact on Financial Services

• 🌐 Blockchain technology can collapse the cost of serving financial products to end-users, enabling services like transparent collateral inspection and reducing counterparty risk.
• 🔗 It offers solutions for businesses with legacy systems, such as improving payment processing, reducing chargebacks, and optimizing cash conversion.
• 💡 Examples include lowering the cost of capital by issuing debt on-chain for companies lacking access to traditional capital markets and creating digital wallets and stablecoin payment options.

Infrastructure and Value Capture

• 🛣️ The choice of Avalanche as the blockchain infrastructure is driven by its reliability, speed, and out-of-the-box capabilities for building a "highway."
• 🚗 While block space (supply) is becoming commoditized, the focus is shifting to driving demand by bringing real-world businesses and their transactions onto these networks.
• 💰 Value capture is increasingly moving towards user aggregators and those who control the "cars" (businesses) that utilize the "highway" (blockchain infrastructure).

Decentralization and Pragmatism

• ⚖️ Decentralization is viewed as a spectrum, not a binary state, with a pragmatic approach focusing on providing sufficient guarantees for safety and reliability.
• ⚠️ Compliance with existing regulations, such as KYC/AML, is crucial, balancing efficiency with the need for security and preventing misuse of the technology.
• 📈 The industry is becoming increasingly commoditized, pushing value towards applications and services that offer incremental utility and a better user experience, rather than solely focusing on the base layer.

The Future of Finance and Investment

• 📈 The market is showing a disconnect, with Layer 1s commanding high valuations but capturing less revenue compared to DeFi and applications.
• 💡 The long-term thesis is that markets will eventually value cash flow and revenue, leading to a correction in valuations.
• 🚀 The industry is at a powerful inflection point, similar to 2001 for the internet, with large companies beginning to leverage blockchain for significant cost savings and operational improvements.