It’s getting chilly outside (at least where I live in New Jersey) and it’s actually snowing as I write this newsletter! Winter is coming (or it’s here already!) and the holidays are around the corner.

Here’s the latest in the world of Deep Ventures:

• Portfolio company highlights from Yanez, Numbers Protocol, and Degen Legends / Down Bad

• Market Update - Are institutions taking a step back? And is privacy making a comeback?

• Lots of travel, IRL events, and speaking opportunities

• And more!

Let’s go!

Portfolio Highlights

Yanez Compliance (fund portco)

Yanez Compliance is an AI-powered platform for detecting and correcting exposure, weaknesses, and configuration flaws of financial crime prevention systems. We invested in their Bittensor subnet for synthetic identity data, the Yanez Multimodal Inorganic Identities (MIID) subnet.

The team integrated the synthetic ID data created by their subnet into their main product for the first time. This is a huge milestone! Their SaaS product now supports risk location use cases, all thanks to their subnet outputs.

The Yanez team is also seeing high demand for their synthetic ID data sets from other companies, with two large opportunities in the identity verification and onboarding markets, which could lead to a big bump in revenue.

In order to capitalize on this market opportunity, they have expanded the team, welcoming three new members with strong development backgrounds in crypto applications and protocols.

Check out their latest interview with Ventura Labs. Co-founders Jose and Asem go deep into the network incentive mechanics and the applicability of synthetic identities in financial crime prevention.

It’s exciting to see lots of early traction for Yanez’s products!

Numbers Protocol (syndicate portco)

Numbers Protocol is blockchain infrastructure focused on creating verifiable and authentic digital provenance for media, assets, and content created by both humans and AI.

They recently released ProofSnap, where users can take pictures with one tap and auto-capture a timestamp, author metadata, on-chain hash, geolocation, and a shareable verification link, all in real time.

They’ve surpassed 100,000 digital files which were timestamped and stored securely on IPFS in their partnership with Filecoin.

And they are exploring a partnership with World (aka WorldCoin), where they would build a NUM bridge to World Chain and designing a mini-app inside World App, which already reaches more than 22 million verified users.

With AI-generated content being so prevalent, Numbers’ provenance technology is becoming increasingly important.

Degen Legends / Down Bad Gaming (syndicate portco)

Degen Legends started as a community where gaming enthusiasts connect, compete, and collaborate through esports tournaments built on blockchain infrastructure.

They’ve recently pivoted to a DeFi gaming ecosystem called Down Bad.

To kick off the new campaign, they launched 1) a perpetuals DEX and 2) the $DOWNBAD token with some cool tokenomics to fuel the entire ecosystem!

It’s early days for Down Bad but this is a super cool direction they’re headed!

Interested in investing with us? We’ve launched Deep Ventures Fund 1 and we’d love for you to be involved. Please take a look at our deck, ping me at [email protected], and schedule a chat!

Industry Insights

Are institutions taking a step back?

Spot Bitcoin ETFs in the US have experienced record weekly outflows in November, totaling over $1.2 billion.

The digital asset treasury (DAT) sector is also contracting, with inflows dropping from $5.5B in July to only $259M so far this month.

This marks a critical shift in sentiment among large asset managers, who are recalibrating risk as crypto market volatility rises.

IMO this is a good development for early-stage startups building in the crypto space.

So much of the attention has been on institutional activity, with builders falling to the wayside.

As institutions take a step back, the attention may shift back to how crypto builders are transforming industries with new products and protocols.

Is privacy making a comeback?

As of November 3, the market cap of privacy tokens has increased more than 67% in the past week while other categories have decreased by double digits.

This growth has been driven by Zcash’s astounding price performance - a 187% increase in the last month and 1035% increase this year.

What’s fueling this renewed interest in privacy?

The first was the launch of Grayscale’s Zcash Trust, which allows accredited investors to gain exposure without directly holding the tokens. The trust structure significantly increased access and institutional demand for $ZEC.

Next, crypto influencers Arthur Hayes and Mert have been promoting Zcash often. Hayes has (probably facetiously) stated that Zcash will hit $10,000 per coin.

Finally, market analysts point to historical patterns showing privacy coins often rally during mature bull market phases, when investors seek alternative opportunities beyond leading cryptocurrencies.

Privacy is one of the most important and controversial aspects of crypto. The market seems to be waking up to this importance, and let’s see if this momentum continues. We have invested in privacy protocols Panther Protocol and Enclave via our syndicate and continue to closely monitor the space for our fund.

New Content and Community

DC Area LP Meetup - Oct 21

We hosted a Happy Hour with Fund 1 LPs from the Washington DC area on October 21.

It was super cool to catch up with LPs Josh Folk, Kurt Grela, Joe Miscione, and Jane Wang.

We talked about the hottest crypto narratives and came up with great ideas about what needs to happen for BTC to go to $440K!

When do you think we’ll hit that mark?

RWA Panel at DC Tech and Startup Week - Oct 22

I spoke at a panel titled “Wall Street to Onchain: The Future of Internet Capital Markets” at DC Tech and Startup Week!

We had a super fun conversation about the adoption of RWAs, the role that regulators and institutions are playing in crypto, what needs to drive mass adoption of onchain RWAs, and much more!

London Meetup - Oct 27

We hosted a Happy Hour in London on October 27!

We’ve had many video chats with people across the pond, and it was great to finally put real faces to names.

We discussed progress on our fund, the state of Digital Asset Treasuries (DATs), updates on syndicate portfolio company OrdinalsBot (Co-Founder Toby Lewis attended the event), and much more.

Good times!

Crypto x AI Panel at Global Blockchain Congress in Dubai - Oct 31

I traveled to Dubai for the Global Blockchain Congress and spoke on a panel titled “Unlocking the Power of AI & Blockchain: A New Era of Decentralized Innovation”.

We spoke about how agents are executing onchain transactions, the growth of Coinbase’s x402 standard, how blockchain can help make AI more transparent, and much more!

After the panel, an attendee came up to me and said “Mike, great panel! I never learn anything from panels and I actually learned something from you!” 😂

I’ve traveled a lot recently but it’s been well worth it! I’ve met people all across the world and expanded my network to help grow the fund. But it’s nice to be able to sleep in my own bed now!

Mik and Mike Crypto Cast

We’ve taken a break from recording new episodes but here are a couple of recent clips for your viewing pleasure!

Will Stablecore bring millions of new users to crypto?

Aster vs. Hyperliquid - fight!

Let us know what you think of these episodes!

Conclusion

We hope you enjoyed this edition of the DV monthly newsletter!

Hit me up at [email protected] or @mikewchan on Telegram with your thoughts about the newsletter, what’s happening in crypto, or anything else!

Talk soon!