Variant founder: Everything is a market; the ultimate goal of finance is "invisibility."

Author: Jesse Walden, Founder of Variant

Compiled by: Yuliya, PANews

Editor's Note: In an article, Variant Fund founder Jesse Walden presents the forward-thinking concept of "everything is a market," arguing that cryptocurrencies will extend the boundaries of finance into the cultural sphere, becoming a horizontal infrastructure layer. The article explores how finance is evolving into a ubiquitous infrastructure, driven by three core factors: mass participation, permissionless innovation, and market programmability. It also paints a picture of a future where finance becomes invisible after the combination of cryptography and artificial intelligence.

The full text is as follows:

There has been much debate about whether cryptocurrencies are purely for financial purposes or have a broader significance. My view is: yes, cryptocurrencies are for financial purposes. But the key point is that the meaning of finance is becoming much broader than people generally understand it.

There are three fundamental driving forces behind this transformation:

• Public participation: As market entry barriers decrease, finance is increasingly intertwined with and deeply influenced by culture.

• Permissionless markets: This dynamic acts as a driver of change, allowing global users to exhibit new behavioral patterns and, in the process, forcing regulators and traditional institutions to move forward.

• Programmable endpoints : Financial markets are evolving from discrete venues into APIs. They embed economic data, generating real-time information that is impossible for other systems to produce and extremely costly to forge, and can be seamlessly used by AI agents.

Mass participation changes who uses the market; permissionless innovation changes which markets can exist; and the programmability of new markets opens up new design space for how we (and AI agents) use the market.

In conclusion, as value in the world becomes increasingly software-based, finance is undergoing a radical transformation that requires a more expansive perspective on its endgame.

Towards a billion-dollar trader

In 2020, Variant launched with the vision of an "Ownership Economy," aiming to empower a billion users to own their identities, funds, data, and the products and services they use daily. Today, user ownership has been realized in several important but vertical software sectors, primarily focused on financial attributes: such as value stores (BTC/ETH), decentralized blockchains, and financial markets (Solana, Uniswap, Morpho, Hyperliquid)—we are fortunate to be investors in these projects.

In hindsight, the argument from 2020 was correct: people want to gain economic benefits from things they understand and care about. But I originally thought this would extend to all products users use on a daily basis, like employee stock options; instead, the opportunity has become a “stake” investment in anything you have a belief in.

Today, "transactions" have become a broader, non-physical way for users to participate in economic upswings (and downswings). Transactions have proven to provide more direct and expressive feedback than owning digital identities, money, data, or platforms.

Trading often serves as a gateway to broader markets. Many of the talented individuals I've encountered in the crypto space have followed similar career paths:

• Learn a lesson from a wildly fluctuating altcoin;

• Learn to manage risk like a trader;

• Ultimately, they become more mature long-term investors.

Even failures can be meaningful: a gambler who has lost everything becomes a trader if he decides to only bet on what he understands; a trader becomes an investor if he develops faith and extends his time horizon.

We can use Maslow's hierarchy of needs to understand this continuity of risk-taking:

• Gambling and trading satisfy lower-level needs: a sense of security (escaping financial hardship by making a fortune) or a sense of belonging (such as WallStreetBets trying to compete against Citadel, or you and your friends betting on a team).

• Investing, on the other hand, is closer to the higher levels of self-actualization and a sense of mission. Owning a home is the American Dream, and investing in a company expresses a belief in its future. But if your focus remains on basic needs, it's difficult to achieve this belief.

PANews Note: WallStreetBets (WSB) is a well-known subforum on Reddit, a hub for retail investors known for its high-risk, aggressive investing and meme stock trading. It is notorious for encouraging leveraged options trading and pursuing short-term profits, and in 2021, it caused a global financial uproar by orchestrating the Game Stations (GME) short squeeze. Citadel is a top-tier hedge fund and financial services company, renowned for its rigorous risk control and high returns, and is one of the most influential financial giants on Wall Street.

Because of their short timeframes and high volatility, trading can meet the more pressing needs of a wider range of people. Moreover, since permissionless markets can target virtually anything—from derivatives to memes to political outcomes—people have never had such a broad range of avenues for obtaining economic benefits.

In many such markets, life experience can be an advantage, at least for a short time. A kid who understands TikTok trends knows more about memes than Citadel; a player living in the virtual economy knows more about games than a game analyst.

The old adage "invest in what you know" is becoming increasingly viable today. As a result, market participation is no longer a professional endeavor, but a participatory culture with its own status games, memes, heroes, villains, subcultures, and languages. Due to the expressiveness and accessibility of this newfound knowledge, financial markets are increasingly intertwined with culture. And culture—from trends to political events—is increasingly being expressed through the markets.

(Photo: Balenciaga's S2023 fashion show at the New York Stock Exchange)

We are witnessing an exponential expansion of global economic access through stablecoins; at the other end of the spectrum, financial risk-taking through trading and markets is also expanding, heading toward a scale of one billion daily active traders.

The market as a driver of change

In the 1960s, the average holding period for stocks exceeded eight years. By 2020, that average had dropped to less than a year. This is precisely the world we live in today: a market with widespread participation, where trading has become the primary artery for people trying to gain economic benefits.

This world does not emerge entirely within the boundaries of the traditional financial system. New markets are primarily established externally, often intentionally and out of necessity. Utilizing new technologies and free markets to pressure regulators and institutions is one of the most reliable models for the adaptation and evolution of traditional systems.

As I wrote in my initial paper:

"The history of protocol adoption follows a pattern: First, early adopters use new protocols to do things that were impossible before the empowerment of new technologies. This new behavior often involves breaking the rules. Then, the founders' winning strategy is to build products that make these new patterns accessible to a wider audience."

A classic example is BitTorrent, invented in 2003. It enabled streaming, and at its peak, piracy via the protocol accounted for one-third of all internet traffic. Later, Spotify productized streaming by reaching a compliance agreement (in fact, it initially used BitTorrent technology at its core).

Cryptocurrencies are reshaping value permissionlessly in the same way that BitTorrent reshaped information.

• Prediction Markets: Polymarkets operated on the offshore crypto track for years when prediction markets were banned in the US. Now, thanks to new regulatory clarity, they have mobile apps in the US (though not on-chain).

• Stablecoins: Also once existed in a regulatory gray area, initially channeling liquidity on offshore exchanges. Last year, the GENIUS Act brought them into the system.

• ICOs and Fundraising: In 2017, ICOs enabled permissionless crowdfunding at a time when early-stage startup investment was restricted. The adversarial SEC subsequently cracked down on this, but this exacerbated a problem: the rewards of technological innovation and growth were being captured privately, with less and less opportunity for public participation in upward growth. However, this year, Congress is drafting market structure legislation in the CLARITY Act, explicitly allowing founders to raise funds broadly through public token sales and share ownership.

The permissionless market continues to attempt to “break the rules,” allowing people to access the economic benefits of private companies (wouldn’t you want a piece of Claude or ChatGPT?). Robinhood recently attempted to launch tokenized exposure to private companies like OpenAI and SpaceX on the European crypto track and filed with the SEC to bring private market funds to US retail investors. Startups are trying to offer synthetic exposure to private companies through novel products.

This could be a path back to the original argument of "ownership economics," where users genuinely have economic exposure to the products and services they use daily. But as we've seen in other markets, forcing regulatory change takes time and often depends on scale and proven market demand.

More directly, I anticipate seeing many entirely new net-growth markets take off, which raises the question: What is the full design space of these new markets? How do they differ from previous markets? And who, or what, is trading and consuming them?

Market as API

What sets this moment apart from previous waves of financial innovation is that two forms of expression within the software are expanding simultaneously:

• Cryptocurrencies: Providing the most powerful track for new markets—permissionless creation, programmable settlement, composable liquidity, and global access, with costs rapidly approaching zero. Now, we can tokenize and trade things that were previously illiquid, inaccessible, or simply didn't exist.

• Artificial intelligence (AI): Enables the building, modeling, and automation of things that were previously impossible to handle.

Crypto+AI creates a combined design space: every price generated by the market is the basis for AI to act, and every new thing that AI can model is an object that the market can use to price.

Intelligence can be described as the ability to predict or make informed decisions. Markets and cryptocurrencies offer the best "prediction" mechanisms we know of. AI can leverage these prices to understand and simulate the future and make decisions accordingly.

This design space is precisely why the market has evolved from "output" to "infrastructure." Over the past decade, cryptocurrencies have built the underlying infrastructure, enabling a surge in new markets. In the next decade, the market will increasingly become the infrastructure itself; the endpoint for applications and agents to consume as input.

(Photo: Mexico City Central Food Wholesale Market)

Traditional APIs return stored data. Markets, as APIs, generate real-time data through adversarial competition among participants willing to risk capital for their beliefs. This makes markets more expressive than ordinary APIs; they not only provide information, but also generate it. Moreover, because the information generated by markets is costly to produce, it is also more difficult to forge.

On-chain marketplaces are even better than traditional APIs because they are permissionless and composable (anyone can call them), global, and use standardized interfaces by default.

Integrating markets directly into products has already begun in the financial sector, a trend known as " DeFi Mulllets ": fintech products with a familiar front-end experience built on a DeFi back-end track, such as Morpho Vault. Coinbase's lending and earning products offer users dynamic interest rates, allowing them to pay or earn interest by querying Morpho's on-chain lending market. Users can enjoy these features without needing to understand the underlying lending market dynamics.

Beyond financial services, Polymarket's odds on the Globe Awards are a recent, striking example of this phenomenon. The API provides real-time prices, which are then incorporated into entertainment products (the market accurately predicted 26 of the 27 winners).

As we tokenize more value around the world and bring new markets on-chain, this model will extend beyond fintech packaging or live sports odds. While not currently on-chain, Apple's "clean energy charging" is an illustrative mainstream example. In the US, when you plug your phone in to charge, Apple uses real-time forecasts of grid carbon intensity to schedule charging times for maximum energy and cost efficiency. You never see the underlying energy market, but Apple's products are calling endpoints to get market data, using its signals as input to make decisions that optimize the product.

MetaDAO , a crowdfunding platform driven by prediction markets, takes this concept even further. When faced with governance decisions, it creates two conditional markets: one assuming the token price if the proposal passes, and another assuming the price if the proposal fails. The higher market price determines the outcome: the proposal automatically takes effect or is rejected. Instead of voting, the DAO invokes the market to make decisions, with participants betting real money on what they believe is a better future outcome. Here, the underlying market is not merely the input to the decision, but the decision-making mechanism itself.

If you assume that all finance and markets are becoming programmable, and AI is becoming increasingly powerful, then holding an expansive view of the financial endgame is both reasonable and exciting. Price signals, predicted market outcomes, on-chain fund flows, and so on will all become inputs that any application or agent can read, interpret, and act upon. If an agent can earn even a penny more by creating or participating in markets than the cost of reasoning, then doing so is rational.

When we take into account the consumption and market participation of AI agents, the "billion active traders" figure may still be a serious underestimate of the future scale.

The End of Finance

Finance is undergoing a transformation from a unique vertical industry to a horizontal foundational layer.

As marketplaces become more expressive and accessible, finance is becoming embedded in culture, and culture itself is increasingly being expressed through finance. Simultaneously, as marketplaces become permissionless software, they accelerate their role as change agents, opening up new opportunities for users to seek economic ups (and downs) in things they know and love. Furthermore, users will expect their AI agents to improve their lives by participating in marketplaces.

As markets become more programmable, finance is becoming increasingly ubiquitous as a new building block of information infrastructure. The most successful infrastructures are often invisible, and finance is on its way to becoming integrated into the fabric of everything.

That's why I'm willing to take an extremely broad and expansive view of the endgame of "finance".