#19 - Blockchain Investing - Olaf Carlson-Wee and Aaron Harris

Protocol Focus

Olaf Carlson-Wee emphasizes the importance of investing in blockchain protocols and infrastructure over consumer-facing applications. He explains that Polychain Capital focuses on novel concepts and technologies that are not mere forks of existing systems, like Ethereum, which was built from the ground up 1. This approach prioritizes developer tools that enable future applications, rather than immediate consumer products.

Most of what we're investing in today are protocol or infrastructure layer, things that really aren't meant to be end user applications.

--- Olaf Carlson-Wee

Aaron Harris adds that the challenge lies in predicting the future needs of developers and ensuring that investments align with long-term technological advancements 1.

   

Hedge Fund Strategy

Olaf describes Polychain Capital's unique approach as a blockchain-focused hedge fund, emphasizing long-term investments in early-stage technologies. Unlike traditional hedge funds, Polychain operates more like a venture fund, investing in projects based on detailed protocol specifications and the potential of the founding team 2. This strategy requires balancing liquidity and managing risk due to the volatile nature of cryptocurrency markets.

We invest in things at a really early stage. We form really good relationships with entrepreneurs.

--- Olaf Carlson-Wee

Aaron Harris notes that while Polychain's pace resembles a mutual fund, its hedge fund structure allows for greater flexibility in investment strategies 3.