I was on a call recently with someone from a major L2, just catching up. The conversation shifted when he asked for my perspective on the changes happening across the ecosystem: the budget cuts, the changes to governance structures, and the shift in focus from expansion to efficiency.
Change is hard, I told him. Everyone is looking at achieving sustainability. Ultimately, how do you make the runway last longer or disappear altogether with revenue flows?
What followed was a conversation that evolved into a discussion about the shift happening across crypto as institutional money drives an industry built on "number go up" to confront actual business fundamentals. A concept I refer to as gravity.
It has been heavy on my mind, so I decided to write about it. Here we go.
Selling or Delivering
Coming into crypto after spending most of my career in traditional business was jarring. My experience was rooted in a simple principle I learned from a mentor long ago: you had to be either selling or delivering. If you weren't contributing to revenue or fulfilling customer promises, there wasn't a place for you.
"Before working in Web3, I never had a concept of a runway. We always had to run a profitable P&L or else."
The silence on the other end told me he knew exactly what I meant.
Entering crypto revealed an entirely different world. Organizations with dozens (sometimes hundreds) of employees operating on token treasuries, giving out millions while generating minimal revenue. Sustainability was rarely a topic of discussion.
This wasn't unique to any single organization; it was the majority of projects from the last few cycles. Projects could expand aggressively, hire large teams, build elaborate governance structures, all funded by newly minted treasuries and bullish VC inflows. Why bother with the hard work of sustainable revenue streams when gravity doesn't apply?
Many of those projects started to see gravity in down-only token prices, and now it's staffing cuts and gasps for air.
Several factors are at play that have accelerated this trend. Rampant across many DAOs and tokenized darlings of previous cycles, there is a general uncertainty about the future, despite the significant bullish progress in crypto over the past couple of years.
In my opinion, this has as much to do with the winds of change brought upon us by the entry of “the institutions” and rapid advancement of AI as much as our nonexistent business models of yesterday.
Drivers
During our conversation, we discussed how this institutional pressure intersects with something I've been writing about - the shift from operator to creator roles that AI is forcing across all industries. In the crypto world, these two changes are coinciding.
For years, crypto treated traditional business terms like ROI and revenue as four-letter words. We operated under the belief that we could create tokens forever, and that somehow the rules of gravity didn't apply to us.
The institutions didn't come to validate our world - they came to impose theirs.
The narrative we'd been led to believe was that institutional adoption would prove we were right all along. “Institutions buying our bags” would vindicate years of governance experiments and community building. Instead, institutional money arrived with uncomfortable questions: What exactly are you selling, and to whom?
I have been watching in slow motion for the last couple of years, and it has just recently become all too real for me and many others I know. The question became: were you selling or delivering? If you weren't doing one of those two things that contribute to revenue and cash flows, the math simply didn't work.
Most of these organizations were never really businesses. They were community experiments funded by speculative assets. When those assets became subject to traditional valuation methods, the experiments came to an abrupt end.
What makes this moment unique isn't just the institutional pressure - it's the timing. This reality check is occurring precisely when AI is fundamentally transforming how value is created.
Most roles created during the bull market fell into three categories: marketing (community managers, content creators, social media), operations (analysts, coordinators, partnerships), and development (devs). Each category felt essential when budgets were unlimited. However, these are precisely the functions where AI catches up to us humans with every passing day. These aren't jobs that AI might disrupt; they're jobs that are actively being replaced by it.
And here we are. Institutional flows demand efficiency, and AI provides the tools.
However, this creates an opportunity: a pendulum swing back toward creativity, where humans still maintain an edge. The key is being deeply specialized in something AI can't easily index. The ability to synthesize complex information into compelling narratives, to identify things others miss, and to communicate complex concepts with an authentic perspective.
As a personal example, my "Based Grants" analysis might be my most comprehensive post to date, but I wrote it in a fraction of the time it would have taken before AI tools. The creative insight, pattern recognition, and unique perspective - that's still human. But AI handles the operational overhead of research, fact-checking, and initial drafting.
Scale this experience across an entire industry, and you start to see the outlines of a different work structure emerging.
A Fractional Future Ahead
Our discussion also revealed something crypto had been pioneering: fractional work becoming the standard everywhere.
The future of work is becoming transactional - can you do this job better than AI can? It's becoming contract work, with less traditional employment. This has implications for healthcare systems, benefit structures, and how people build their careers. The fractional work approach, which seemed natural in a global industry, is now becoming the norm as institutions demand efficiency, and AI handles operational overhead.
This shift favors people who can work independently, manage multiple threads highly specialized to their experience and context, and deliver value without requiring extensive organizational support. It rewards deep expertise in specific domains over general management capabilities.
This shift has generational implications. I'm raising kids who will enter a fundamentally different work environment—one where traditional career paths don't exist and where the key insight is being deeply specialized in something AI can't index well.
Creativity, work ethic, the ability to synthesize complex information into unique insights - these remain (for now, at least) human advantages. The fractional economy rewards people who can deliver outcomes rather than manage processes.
Necessity
"The institutions are here. Gravity's real. We have to make money," I summarized. "Maybe that forces some fundamental rethinking on what the important things are that we should be focusing on."
The institutional money didn't bring the validation we expected. It brought something more important: necessity.
The projects that survive this transition will be stronger and more valuable than the token-speculation schemes they're replacing. The people who adapt - developing deep expertise, embracing fractional work, using AI to amplify rather than replace human creativity - will create or find opportunities that didn't exist before.
I've been living this transition personally. Building AI systems that almost work, writing analysis that reaches more people than ever before, preparing for a world where traditional operator roles don't exist, and doing all of that to remain relevant and solvent.
The institutional money forced crypto to confront business fundamentals exactly when AI started changing what "business" means. That timing isn't coincidental - it's revealing.
Time to get to work.
Peace,
Sov