By Pzai, Foresight News
On January 16, crypto wallet Phantom announced that it had completed a $150 million Series C financing round at a valuation of $3 billion, led by Sequoia Capital and Paradigm, with participation from a16z crypto and Variant. The funds raised will be used to continue developing its applications. This should be the biggest financing news in the crypto field recently.
As the leader in the Solana wallet field, Phantom has quickly become one of the preferred tools for crypto users with its simple user interface, multi-chain support, and self-custodial security. At the same time, Phantom's financing has also triggered market speculation about its future development path. Although many crypto projects choose to raise funds and incentivize users by issuing tokens, Phantom's founder has repeatedly emphasized that it focuses on products and user experience rather than token economy. In a recent response, Phantom also stated that "there is no plan to issue coins for the time being." This article will discuss in depth from multiple perspectives whether Phantom will enter the token economy era next.
Strong cash flow
Brandon Millman, CEO of Phantom, made it clear in an interview in 2022 that Phantom's core goal is to provide a first-class user experience rather than to make profits through the issuance of coins. He emphasized that Phantom is positioned as a "consumer financial platform" rather than a pure encryption project. Phantom prefers to achieve long-term development through traditional financial models rather than relying on the token economy. Half a month ago, Phantom tweeted that "there are no plans to launch tokens."
From the user's perspective, it is true that the wallet is a very simple entry point, and its coin issuance will create certain value for users, including granting governance rights, income rights, etc., and enhancing user stickiness to achieve a positive flywheel. However, the volatility of the crypto market itself also creates certain uncertainties for the project, resulting in certain fluctuations in project development.
Judging from the investment style of VCs, Sequoia Capital and Paradigm, the lead investors in this round of financing, tend to support projects with clear business models and long-term growth potential, especially in terms of infrastructure. Invested projects such as OpenSea and Zora have expressed doubts about the token economy to varying degrees.
As an old player in the venture capital field, Sequoia Capital is extremely cautious about investing in the crypto field. In the context of compliance, exiting investments through IPOs is more in line with the habits of traditional giants such as Sequoia Capital, which adds a layer of suspicion to Phantom's ICO expectations.
In terms of usage scale, Phantom currently has 15 million monthly active users, $25 billion in self-custodial assets, and has processed 85 billion on-chain transactions. In terms of revenue distribution, its revenue mainly comes from transaction fees, and during the peak trading period of Solana, weekly transaction revenue can reach more than $5 million, and annual revenue is estimated to be around $80 million. It is a leader in the crypto market, and this stable cash flow and large user base make it very consistent with the requirements of traditional IPOs.
Against the backdrop of Trump's crypto compliance push, the liquidity of US crypto stocks is being more widely recognized by the market. The precedents of outstanding crypto companies including MicroStrategy and Coinbase seem to have provided a successful demonstration for Phantom, paving the way for its IPO.
Experience of our competitors
In fact, there are many projects that embrace the token economy in the wallet market. Trust Wallet, Safe, Bitget Wallet (BWB has now merged into BGB), etc. have all issued their own tokens in different ways, and the ecological niche of wallets in the entire crypto field is released through the value of tokens, which may include:
- Governance rights: distribute trading income to (staking) users through tokens. For example, Tokenlon DEX under imToken distributes and repurchases trading income through LON tokens.
- Ecosystem project airdrops: In the ecosystem associated with the wallet, the project provides services to users while providing ecological incentives to users through close cooperation with the wallet. This requires close cooperation between the wallet and partners within the ecosystem, and usually has a distinct ecological endorsement, such as Trust Wallet and BSC, Phantom and Solana, Safe to the EVM ecosystem, etc.
- Payment: Simplify the user experience by reducing payment fees, etc.
In summary, Phantom’s sky-high financing represents the capital market’s optimism about it, and is another example of a crypto project being favored by traditional VCs. However, for blockchain enthusiasts who are used to being airdrop hunters, whether they can share in Phantom’s growth dividend has become uncertain.
