Podcast Summary

Podcast: Bankless
Episode Title: Investing Trends for 2026: DeFi, Tokenization, Capital Formation, Speculation & AI
Guests: Ben Lakoff (General Partner, Bankless Ventures), Arnav Pagadiala (Investment Partner, Bankless Ventures)
Hosts: David Hoffman, Ryan Sean Adams
Date: December 29, 2025

Overview

This episode of Bankless features an in-depth discussion on the major investing themes shaping crypto and decentralized finance (DeFi) for 2026 and beyond. The hosts are joined by Ben Lakoff and Arnav Pagadiala from Bankless Ventures to walk listeners through their core investment focuses for the next wave: DeFi, tokenization, capital formation, speculation markets, and the emerging influence of AI. The episode blends historical perspective, recent catalysts, and bold predictions.

Key Discussion Points and Insights

1. Crypto’s Maturation and Wall Street Acceptance

• Institutional legitimization: Crypto is no longer a contrarian bet; Wall Street has not just accepted it but is actively participating.
  • Notable quote:

    "This is the first time I would say that crypto is no longer a contrarian thesis...it's a very consensus insight." – Arnav (00:00, 19:28)

• ETF and tokenization milestones: BlackRock’s Bitcoin ETF is their highest-grossing product; Hyperliquid DEX surpasses Nasdaq in net income.
• Regulatory clarity accelerates adoption: Notable advances like the CFTC’s advanced frameworks and the anticipated Clarity Act support mainstream integration.

2. Wave Theory: The Four-Year Crypto Cycle

• Explanation of waves: Each four-year wave is characterized by innovation, euphoria, bubbles, and “forest fire”-like culling during bear phases, leaving room for new robust growth.
  • Metaphor: Healthy forests require periodic fires; similarly, bear markets clear out weak projects.
• Key themes persistent through all waves: DeFi, tokenization, capital formation, speculation.
• The job for investors: Forecasting 2028-2029 and backing the founders/sectors building that future. (09:01–11:55)

3. DeFi: From Foundations to the “Neobank Era”

A. Retrospective: DeFi’s Building Blocks

• Began with the ERC20 token and rudimentary infrastructure (EtherDelta, 0x, MakerDAO).
• Wave 2 (2021): Rise of collateralized lending and borrowing (Maker, Aave, Compound), automated market makers (Uniswap).
• Wave 3 (2024–2025): Refinement: Restaking, modularization (Morpho, Pendle), introduction of decentralized perps, and the emergence of on-chain risk management.
  • Memorable moment:

    “Uniswap barely worked...oh my god it sucked. But it did work." – Ryan (12:55)

B. 2026 and Beyond: Investment Focuses

Arnav identifies four key DeFi trends:

1. On-Chain Lending Expansion (18:11–21:23)

   • Movement towards “TradFi-like” unsecured/fixed-rate lending, expanded asset types, and lending against long-tail assets and RWAs (Real World Assets).
   • Startups like 3 Jane, Wildcat, and Morpho v2 pushing these boundaries.

2. Equity Perpetuals (Perps)

   • Perps on traditional equities: 15–20x bigger TAM than crypto markets.
   • TradFi traders are paying attention after the success of Hyperliquid, with retail interest likely to lead adoption. (22:11–24:49)

3. DeFi Neobanks—Fintech Layer for Emerging Markets

   • Crypto-powered neobanks, especially in emerging markets, to offer access to USD, treasuries, and advanced DeFi products to the underserved.
   • Huge addressable markets; example: Coinbase integrates Morpholend for >5% APY; EtherFi neobank as an early example. (24:49–26:55)
   • Quote:

     "DeFi neobanks are going to grow the DeFi mullet by like 100x..." – Arnav (29:06)

4. Specialized Exchanges (Spot and Perps)

   • Exchanges tailored to specific asset types (e.g., RWAs, FX, long-tail assets, on-chain KYC).
   • The 'perpification' trend: easier experimentation, more design space, and new frontiers for programmable leveraged trading. (31:34–32:55)
   • Perpetual and options markets both have massive untapped on-chain potential.

5. On-Chain Options

   • Options markets are massive (US options: $3–4T notional traded daily) but underdeveloped on-chain; predicts a "Hyperliquid moment" for on-chain options in the coming year. (33:14)

Discussion on Startups vs. Incumbents:

• Debate about whether category growth benefits existing players (Aave, Morpho, Pendle) or if new startups will win by innovating at edges (RWA lending, vertical integrations).

4. Tokenization: Digitizing Real-World Assets (RWAs)

A. Waves of Tokenization

• Wave 1: Tether on Bitcoin Omnilayer
• Wave 2: Stablecoins used in DeFi (USDT, USDC, DAI)
• Wave 3: Legally compliant issuers (Securitize, Superstate), corporations and government agencies (BlackRock, US Treasury) embrace stablecoins/tokenized assets.

B. Key Problems

• Unclear investor rights: Are tokenized stocks “real” stocks? What rights do token holders have?
• Redemption and tradfi risks: The inability to redeem assets instantly/widely (Paxos Gold example: couldn’t redeem as price collapsed, exposing peg risk)—dependency on slow traditional rails.

C. 2026 Investment Focuses

1. Tokenizing Latent Markets

   • Not just treasuries, but things with real yield and consumer interest: Pokémon cards, AI data center cash flows (USD AI), receivables, solar energy.
   • Quote:

     “The tokenized assets or the RWAs that will gain a lot of traction are the ones that...bring a material amount of exogenous yield on chain and then genuine consumer interest in that area.” – Arnav (42:26)

2. Verticalized Tokenization Platforms (VTPs)

   • Platforms deeply integrated in a specific asset vertical (e.g., auto loans, solar loans, home equity) “owning” the process and driving costs to zero.
   • Composability is a huge advantage: “You can use [tokenized credit] as collateral. You can loop it, borrow against it—all of these sorts of things enabled by DeFi." – Ben (43:31)
   • VTPs combine data, origination, and on-chain cap formation for major cost/margin advantages over TradFi. (43:56–47:16)

5. Capital Formation: The Internet’s Funding Rail

A. Historical Phases

• Wave 1: Initial Coin Offerings (ICOs) – fundraising directly from the crowd (e.g., Ethereum, BAT, EOS IPO).
• Wave 2: NFTs for capital raising (Bored Apes, Decentraland), some experiments in on-chain infrastructure funding, accredited investor rounds (Coinlist).
• Wave 3: Early compliant ICOs (MetaDAO), increased transparency, emergence of on-chain token launch infrastructure.

B. 2026 Predictions and Targets

1. Compliant and Scalable ICOs

   • Real companies conducting transparent, regulated token sales (and eventually stock issuance) on-chain, opening capital formation to mid-market and small businesses—potentially even car washes raising in USDC!
   • Quote:

     “I don't think it's crazy that a small or mid-market enterprise might actually start issuing stock on chain and raising USDC...” – Arnav (54:34)

2. Full On-chain “Capital Stack”

   • Projects bypassing centralized exchanges altogether, listing and raising entirely on-chain. Hyperliquid and MetaDAO as precedents.
   • The rise of decentralized venues for discovery and liquidity formation.

6. Speculation & Market Truth Machines

A. Speculation as a Universal Theme

• Encompasses: ICOs, NFTs, meme coins, prediction markets, play-to-earn, points/XP meta.
• Speculation is a constant, now growing more professional and "useful" (e.g., prediction/polymarket, Kalshi).
• Driver: Youthful “financial nihilism” in a world of stagnant wages and rising prices, generating massive demand for venues where people (especially the young) feel they have an edge (sports betting up 25% YoY, meme coin trading, etc.) (61:09)
  • Quote:

    “The reason why I think speculation markets are going to grow like 100x in the coming years is...financial nihilism.” – Arnav (61:09)

B. Future Waves of Speculation Markets

• Zero-sum vs. value-creating: Early ICOs, NFTs, meme coins are often zero-sum; the next iteration (advanced prediction, consensus, opinion markets) may be positive-sum/value creative.

  • “Prediction markets are phenomenal. I think the decentralized truth machine thesis is very real.” – Arnav (63:51)

• Opinion/consensus/precision markets: Next frontiers blending subjective wisdom-of-the-crowd and crypto-native market primitives—potential for the “next big meme coin” experience (67:37).
• Time-warping markets: On-chain markets start "distorting time," offering real-time or even leading indicators before headlines break.

7. AI’s Intersection with Crypto

• AI as new market participant: AI agents (“not just bots”) increasingly relevant—crypto uniquely suited for AI-native finance.
  • AI agents can hold accounts, manage risk, “work” 24/7 in global on-chain markets.
• Two investable themes:
  1. x402 (Virtual Payment Standard): Allows agents to transact with stablecoins; could be the backbone of agent-to-agent commerce.
  2. AI Agent Asset Managers: AI deploying liquidity, managing risk, and doing what humans can't in perpetual, volatile, global markets.
  • Quote:

    “Humans weren’t designed to manage risk on these 24/7 markets and AI agents can do that at scale." – Arnav (71:23)

8. Founder Quality: The X-Factor

• Themes matter – but founders matter more.
  • “Over-index on the founder, not just the idea.” – Ben (73:06)
• Winning teams blend vision with agility and grit, especially in a rapidly evolving, short-termist field.

Notable Quotes & Memorable Moments

• Arnav on 2025 as an inflection point:

  “Crypto is no longer a contrarian thesis...it’s a very consensus insight." (00:00, 19:28)

• Ryan on bear market renewals:

  “If a forest gets too dense...the new growth can't flourish. Every once in a while, a healthy forest needs a fire." (06:58)

• Arnav on DeFi’s expansion:

  “Pretty much all of lending today is predicated on some fashion of overcollateralized variable rate loans, but...in the future I absolutely believe that we're going to get into fixed rate, unsecured, undercollateralized loans..." (18:11)

• Ben on composability unlocking new realms:

  “With DeFi, you can use [tokenized credit] as collateral...the composability of DeFi enables all of these sorts of things.” (43:31)

• David on the impact of decentralized capital formation:

  “The entire capital stack is now on chain...this effectively takes away power from these centralized exchange listing committees and moves it back on chain.” (58:02)

• Arnav on speculation and nihilism:

  “The reason why I think speculation markets are going to grow like 100x in the coming years is...financial nihilism.” (61:09)

• Ryan on AI’s role:

  “It almost feels like a new player has entered the chat or is about to enter the chat...the programmable money platform that we have created is incredibly native to an AI agent.” (68:55)

Important Segment Timestamps

• Crypto’s Wall Street acceptance and 2025 inflection: 00:00, 19:28
• Crypto’s wave theory and cyclical nature: 06:56–12:19
• DeFi historical waves and future directions: 12:19–34:39
• Tokenization history and opportunity: 35:45–47:16
• Capital formation evolution (ICOs to on-chain IPOs): 49:38–58:02
• Speculation markets and next-generation games: 59:48–68:37
• AI and crypto: agents and asset management: 68:55–72:18
• Founders and execution matter most: 73:06–74:22

Tone and Takeaways

• The episode is enthusiastic, deeply analytical, and experienced, blending technical and macro perspectives with casual, witty moments (“I like doing everything the hard way, man. I’m old school…” – Ryan).
• The panel is bullish on the maturation and mainstreaming of crypto, yet clear-eyed about ongoing technical and legal risks.
• Their investment theses focus on where genuine value accrual, governance, and user demand align, seeking both disruptive net-new startups and robust incumbents.

Final Thoughts

The Bankless Ventures team sees 2026 as a moment where crypto is no longer an outsider—even Wall Street is on board. The four persistent themes are evolving, with surging institutional adoption, advanced technical primitives, and new classes of end-users (including AI). While the design space is vast and full of unknowns—especially around regulation and novel financial markets—those who back the best founders, and stay nimble, stand to capture this next wave of innovation.