BlueYard Crypto 3: backing the ultimate capital x compute coordination machine with our latest $75m early-stage crypto fund

As we began to deploy our 3rd dedicated crypto fund, BlueYard Crypto 3* (raised last year), we took a step back to reflect on our thesis and approach behind crypto investing. What are the core belief pillars underpinning our strategy?

In the history of technology, economics and organizations — never has there been a technology and incentive system that can autonomously coordinate machines (compute, storage, etc), algorithms, data and capital at such an incredible scale, so quickly — all while providing independent, robust and trustless infrastructure for economic activity and data. Although still early in its development, crypto might be the ultimate solution to the collective action problem. Also, if one believes in a future where the autonomous coordination between compute, data and capital will play an increasing role, crypto networks could be the “under the hood” operating system for large economic networks.

Societies and economies will highly value censorship-resistant money and information flows enabled by decentralization, the ability to cut out intermediaries in many large-scale markets — thereby unlocking higher degrees of innovation and efficiency. The creation of portable internet-native assets with the ability to create mass- & user-centric ownership of traditionally centralized businesses will enable a new economic paradigm.

If large networks of coordinated machines and capital can be transformative to many industries and markets relying on computation, data and economic flows in the future — one might reasonably conclude that crypto networks, with their unique properties, have the potential to form a key backbone of such future markets — ranging from software / data / compute markets to physical infrastructure. If crypto can be the future of many markets and financial systems, today’s crypto infrastructure and applications are a call option on that future. This is what BlueYard has always believed — and is reflected in our investment hypothesis and applied strategy of investing at the earliest stages in:

• the core functionality of the capital x compute coordination machine, such as the creation of consensus and the economic and technological enhancement of chains (e.g. Protocol Labs / IPFS, Filecoin, Flashbots, Kiln, Ingonyama)
• the augmentation of core chains to make their consensus and compute useful & usable for developers and users (e.g. Privy, Tableland, Cryptio)
• an emerging application layer that leverages crypto’s unfair advantages (e.g. 3NUM, Nudge, Radicle / Drips) in web services and financial products (e.g. Centrifuge)

We further augment this by selectively investing in liquid tokens that are a match for our thesis (e.g. Render, Helium, Dimo) and some large-cap L1s for purposes of working capital (e.g. Solana, ETH, Cosmos), with a view to re-deploy the asset base into their native ecosystems.

So if you are building along our thesis or want to open our minds to something completely new — we would like to hear from you. Or if you are looking to work on some open-ended research without committing to scaling a startup, take a look at our DYOR program. BlueYard is a firm that invests in foundational technologies across compute, engineering, software and biology, offering founders a community of like-minded, ambitious and long-term oriented builders that can help each other beyond the boundaries of their respective domains.

Disclaimer: This post is for general information purposes only. It does not constitute investment advice or a recommendation or solicitation to buy or sell any investment and should not be used in the evaluation of the merits of making any investment decision. It should not be relied upon for accounting, legal or tax advice or investment recommendations. This post reflects the current opinions of the authors and is not made on behalf of BlueYard or its affiliates and does not necessarily reflect the opinions of BlueYard, its affiliates or individuals associated with BlueYard. The opinions reflected herein are subject to change without being updated.

*If you are wondering why we are announcing BlueYard Crypto 3 when the last crypto fund we announced was BlueYard Crypto 1 (vs 2) — it is because we confusingly called our first crypto fund BY Crypto 0 (a spin-out of BY 1), whereas our first general fund generation was named BlueYard 1. We are just aligning our naming policy to be less confusing. Right now we are investing BlueYard 3 ($175m) and BlueYard Crypto 3 ($75m).