Multicoin Says AI Is Eroding Ethereum and Solana’s Edge
Multicoin argues that cheaper AI-built software shifts DeFi’s competitive advantage toward customer relationships, capital and proprietary risk data.
Key Notes
- Multicoin identifies customers, capital and proprietary risk data as durable advantages in DeFi.
- Hyperliquid’s framework shares about 90% of cost-adjusted reserve yield with the protocol.
- The essay forecasts onchain growth while questioning which businesses will capture the returns.
AI is weakening Ethereum and Solana’s traditional advantages, Multicoin Capital argues, as cheaper software shifts returns toward businesses controlling customers, capital and proprietary information.
Spencer Applebaum’s November 10 research essay argues that AI commoditizes financial software while customer relationships and financing remain scarce.
Three Advantages Software Cannot Supply
The framework identifies distribution, meaning control over customers and order flow, capital that finances activity or absorbs losses, and private data combined with underwriting expertise. Multicoin expects these resources to determine which businesses retain pricing power.
Its argument extends to blockchains: easier transfers reduce dependence on any single ecosystem’s liquidity, while AI-assisted application porting weakens established developer advantages. The fund still sees value in execution, settlement and other roles for network tokens.
Hyperliquid’s Stablecoin Economics Provide an Example
Coinbase’s May partnership announcement confirms that it became the treasury deployer for USDC under Hyperliquid’s Aligned Quote Asset framework. Coinbase described the arrangement as a way to concentrate stablecoin liquidity across onchain markets and connect it with existing conversion infrastructure.
Hyperliquid’s current AQA documentation specifies that deployers share approximately 90% of cost-adjusted reserve-yield revenue on their Hyperliquid supply with the protocol. The updated design accommodates stablecoins used beyond Hyperliquid and separates treasury responsibilities from technical deployment.
The documentation says revenue accrues over 30-day intervals and is automatically sent to the Assistance Fund eight days after each interval ends. Treasury deployers must stake HYPE, with penalties possible when insufficient balances prevent revenue deductions.
The framework also requires technical deployers to maintain minting, redemption and cross-chain transfer infrastructure. Technical and treasury roles carry separate staking obligations.
Multicoin estimates that the USDC arrangement represents roughly $185 million in annual revenue directed toward HYPE purchases. That is an estimate at prevailing balances and yields, rather than a fixed payment or realized annual profit.
CoinScreamer’s earlier buyback coverage examined the wider revenue streams funding HYPE acquisitions, including trading activity. Reserve income is one component of that business, so the annual estimate should be distinguished from cumulative repurchase totals.
Capital Matters When Markets Suffer Losses
Aave’s Umbrella documentation illustrates how financial backing differs from software. Participants stake supported assets and receive rewards while accepting the risk that their holdings will be reduced to cover protocol deficits.
Coverage is tied to the relevant asset and network. Automated contracts can apply the loss-sharing mechanism, but its capacity depends on the funds committed to it. Reproducing those contracts would not reproduce the deposited assets.
Meanwhile, infrastructure continues expanding across networks. Ondo’s recent verification expansion added Fidelity’s FCAT as a required bridge verifier, demonstrating the operational checks involved in moving tokenized assets between chains.
Multicoin forecasts trillions in financial activity moving onchain over the next decade, with returns flowing to businesses controlling scarce resources through equity, tokens or both.
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