$XTZ
Cooling DownSnapshot Window: 2026-07-07 12:00 UTC · ← Back to Crypto Overview
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The reasoning around "Venice is not a DAO" and therefore not equity, is just bad. If it had a DAO then the token holders would have some kind of say over its economic governance. The token is a compute capital asset fine, yes, my argument is that the token is a viable standalone [Spoken audio]: Hey guys. So there's been a lot of discussion flying around about Venice and what its token represents. So I wanted to try to address all of it in one swoop. So for context, I'm the lead on the Venice investment, and I'm speaking from the subjective perspective of Dragonfly. I don't speak for Venice, I don't speak for VVV, and this is not investment advice or financial advice or a recommendation to buy anything. Okay, so first, for people who are just joining the conversation, Venice is a platform for private and unrestricted AI. They allow you to access open and close models with effective anonymity and full control over your own data. They have three and a half million active users, they've got 12 million monthly visitors, and they serve over 2 million API calls a day. This is a big business, it's got a 70 million revenue run rate, and it's growing something like 15% month over month, so it's growing very fast. We led a $65 million investment into Venice at a $1 billion company valuation in which we bought equity, as well as exposure to VVV, which is Venice's primary token. Now, this round has struck up a conversation about tokens versus equity, and whether it's wise for a company to have both equity holders and token holders. The argument goes that this is messy, because the incentives between the equity holders and the token holders will eventually diverge. Now, I'm no stranger to this conversation. I have been a very vocal critic myself of the protocols that have gone down this road. And I've said this in the past and I will say it again. When a token represents the ownership of an underlying network, it should have one clear ownership structure. So when Uniswap very famously had a divergence between its token holders and its labs entity, they did this fundraise where they sold tokens and then eventually they raised money for their labs, when the labs were supposed to be subservient to the protocol, I was very publicly critical of that. And I reflected that exact same viewpoint to many of our protocols who've contemplated going down the same road. Now here's what's important to understand about Venice. Venice is nothing like Uniswap. Venice is not a DAO. Venice is not a protocol. Venice is not an on-chain product. VVV is not a governance token. It's not an ownership token. It has never been that. And this has been very extensively explained and documented by the team. So what is VVV then? VVV is a compute capital asset. Okay, what does that mean? That means by holding and staking VVV, you get access to compute perpetually on Venice. You get other stuff too, so there's staking yield, there's access to Venice Pro, but the main thing is that you are effectively pre-buying compute on the platform. So you can sort of view this as analogous to pre-buying TSMC capacity, or pre-buying data center capacity, or GPUs, or whatever. It's a fulfillment guarantee of the core product of Venice. And if you know anything about compute, you know that this is really valuable. And it's becoming only more valuable over time. It's not just valuable because compute is valuable, but it's even more valuable because Venice is growing like crazy. And therefore, the market is valuing a share of its product more and more highly as the company grows. So I think this is incredibly interesting. Now, Venice is buying back and burning VVV using its own revenue from subscriptions. This is going to make VVV net deflationary. Now, why would they do that? Are they stupid? Are they running a charity? Is it because VVV is secretly equity wink wink? No. Okay. No. None of the above. VVV is a commitment that the team made to allow people to use inference for free in perpetuity. That means VVV is a liability of the company. So there are obvious reasons why they want to buy it back. Retiring VVV frees up their GPU capacity that they can then sell for cash instead of giving it to a VVV holder. It basically, they can recoup the cost if they're selling that compute to an actual customer paying in cash as opposed to a VVV holder. So, okay, that might make sense. We wanted exposure to VVV. We, Dragonfly, built our position through the direct exposure that we structured, as well as the enormous amount of VVV that the company holds on the balance sheet. We are aligned with VVV holders. Now we didn't do this because we're confused about VVV. We did this because we understand exactly what VVV is and why we believe it will accrue value over time. If we believe that the token was worthless and that the equity was the true value of the business, then we wouldn't be buying exposure to VVV. We just buy equity, but we didn't do that. In fact, we demanded it during the fundraising process and we had to make concessions in order to get it. The idea that VVV is some throwaway asset is absurd on its face, okay? So, oh yes, VVV is valuable. If you're still confused, go ask your AI what VVV is. It will explain it to you very clearly. But it's not equity. It's never been equity. It's not a governance token. It is nothing of the sort. It's not a secret. It's not a wink, hush, hush kind of thing. People are knee-jerk comparing VVV to something like uni or hype and saying, oh my God, how can this token have two masters? Token holders are gonna get shafted. There's everything wrong with the industry, blah, blah, blah. This would be true if VVV were a governance token or if it represented equity, then yes, it would be in conflict with the equity cap table. But that's not what VVV is or has ever been. If you think it is, it's because you did not actually read anything or even ask an AI to research it for you or do anything other than just react to the fact that a token exists, okay? So also note, which I think is important color to understand, VVV was airdropped for free. It was not sold to retail. It was given to people who use the Venice platform. Now, many people are pattern matching protocols where the token has purely governance value and is being manipulated or dumped on retail or whatever. The fact is, this company has been a net buyer of VVV since its inception. Now, I understand why the airdrop might drive some of this dissonance for people, because obviously a lot of blockchains airdrop their governance tokens. And they do this in order to decentralize the platform. But Venice did an airdrop for an entirely different reason. Venice airdropped their, their token because it wanted to bootstrap an early user base and give them early access to the product. And it worked. Obviously now a lot of people use Venice, but it seems like a lot of people's discomfort with the VVV is that they think every token should be a governance token or should basically be equity. If you think this, then you basically object to actual capital innovation in tokens, which is, which is kind of crazy to me. This is something that I've been calling for for a long time. You should want there to be more capital innovation in tokens. I want there to be more capital innovation in tokens. And yet, after all the railing against governance tokens, people saying governance tokens and DAOs are failures, now suddenly the objection is, why isn't this a governance token and why isn't Venice a DAO? Look, I think VVV is brilliant. I think it's incredibly interesting and it captures a lot of the value that Venice has created. That's why we structured the deal to get even more exposure to it. Okay, so to summarize, Venice is not a doubt. It's not a decentralized product. It's not on chain. It's a company that sells inference. It buys and operates GPUs. It takes Stripe payments. It signs commercial deals with companies like Anthropic and XAI. Yes, it uses near for access to confidential compute. That is true, but it's not a doubt. It's a fast growing AI startup that is using tokens as part of its capital stack. We believe, as Dragonfly, that VVV is valuable, really valuable. We're bullish on it. The company is bullish on it too, which is why it owns almost half the VVV supply and continues to buy more. That said, look, Venice is a two-year-old startup. So it's early. It's growing fast, and a lot can change. If the regulations in the space change, VVV may have to evolve alongside it. But I want to be very clear. We have no intention as investors in Venice to try to get them to divert value away from VVV. We have exposure to VVV. Venice wants its token to be valuable and we want it to be valuable too.
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