The Breakdown - Venice Is Now a Crypto-AI Unicorn — But Its Token Tanked 50%

Episode Date: July 6, 2026

VVV is down 50% on news that should be good for Venice. David unpacks why — covering the token vs. equity distinction, Dragonfly's reasoning, and what the onchain data says about how many people are actually using Venice's paid features right now. FOLLOW THE SHOW › David — https://x.com/dcanellis › The Breakdown — https://x.com/TheBreakdownBW › The Breakdown Newsletter — https://blockworks.com/newsletter/the-breakdown DISCLAIMER As always, remember this podcast is for informational purposes only, and any views expressed by anyone on the show are solely their opinions, not financial advice.

Welcome back to the breakdown, everybody. I'm your host, David Canales, as always. Today, we're going to be talking about tokens and equity because of all this stuff with Venice, the permissionless privacy-focused AI terminal, is, yeah, been under fire because it raised $65 million and valuing the company behind the VVV token at $1 billion. Well, at the same time, there's this VVVT token floating around, and the market has kind of rejected the token post-equity raise. and it's raised some questions over why do we need this token at all? Why can't equity and tokens be the same thing?

And also a bunch of growth numbers surrounding Venice that I thought might warrant a closer look. So without further ado, this is the topic for today. Let's get to it. This is the breakdown. Nothing said on the breakdown is a recommendation to buy yourself securities or tokens. This podcast is for informational purposes only and any views expressed by anyone on the show are opinions, not financial advice. Host and guests may hold positions in the company's funds or projects discussed. Okay, so we're going to keep this quite focus because there's been quite a lot spoken about this already. And if you want a decent conversation about all of this, it's worth tuning into the Empire podcast, the most recent episode with BlockWurst co-founder Jason and Rob Haddock,

partner at Dragonfly Capital, who has led this raise. And they kind of go into the nitty gritty over some of the decisions made and really the state of play of the situation of tokens and equity. But to give you a broad overview, if you're not familiar with Venice, I mean, I have it up. on my screen here. It's essentially a terminal, it's essentially an AI router for you. So you don't have to buy the VVVT token to use the platform. You have a certain number of free credits, the same as chat chipitia and so on. But what you can do is purchase VVV and state it. What that allows you to do is essentially lock in the price of your compute. So if you purchased 1% of the VVVVS supply right now, state it, you will receive in perpetuity 1% of the total Venice

compute. So it's a way of hedging your future compute costs by getting in early. And there's some other things as well that you did access to. You did access to a pro, a pro account and all that kind of things. So there's perks and everything like that as well. But that is the primary utility of VVV. It's worth jumping onto the platform and playing around and seeing how it works. Now, the company itself, it's not like it's a fully decentralized company. It's a centralized company. And it's also a centralized service. It's not like Venice runs. on a blockchain or anything like that. It's just purely the token that is really the intersection of Venice and crypto.

And it does interact with the near blockchain as well. But it's not like the whole protocol is a decentralized protocol that's launched on blockchain rails or anything like that. So it's important to get that out of the way. VVV is not a governance token for a Dow or anything like that. That is purely a utility token as a way to access. compute, and if the cost of compute is destined to go up as many people think it will, then the primary utility for you as a user is to essentially get a discount on future compute costs if you outlay it right now. That's kind of the idea. The token itself launched over a year

ago in January 2025 via an airdrop to early users, but you can see on my screen there was an immediate dumping and there was a lot of controversy at the time for Venice Inslee. and market makers that were connected to the initial launch that initially sold a lot of their tokens and kind of made a killing on the way down. Since then, we've had a long period of price discovery. And up until the point last week that we have this reveal from founder Eric Voorhe's a bit long-time Bitcoin entrepreneur from ShapeShift. He has come out with this raise on July the first. So here on my screen, you can see that on July 1st, the market essentially peaked. There was a little bit of a rally upwards following the equity raise. And then once the market

kind of figured out that token holders were not going to immediately benefit or there was no real benefit for token holders from the equity raise and it became clear that, you know, there is this dichotomy between venture capital investors, equity, the company itself and then token holders who are kind of left holding the bag in the meantime, we've seen the market reject VVV somewhat. So it peaked to 2082, two days after the raise, and since then it has dropped basically almost 50%. From 2082, all the way down to a current price of around 1158,

so almost a 50% drop. On the back of news that should be good news for people who are interested in gaining financial exposure to the growth of. the Venice platform. So what is the raise? I mean, why, why raise it all? Why why sell equity in the company instead of just issuing the token? And well, Eric Voorhees goes into some detail in this thread here that I have up on my screen. The general idea is that, as he said here, as of Q1, Venice achieved profitability. So why raise it all for scale? We are making Venice

a mass market consumer app and open an unrestricted AI platform for at least a few hundred, a few million people and several billion AI agents doing so requires capital. Some of the capital will be used to vertically integrate compute. We've begun a data center build out and will be the first time Venice has owned its own compute. This ensures capacity in the coming resource squeeze and increases gross margins making larger VVV burns feasible. The rest of the capital will be used to grow customers, enter new markets, acquire additive businesses and hire killer talent. So they're building a data center. Effectively, they need money to do that. And they were faced with two choices, either dilute current token holders by selling some of its tokens or maybe even creating new tokens and sell that to venture capital in order to get the cash to do the data center build out.

But rather than do that, they've opted to instead sell equity in the underlying company of the Venice platform and use that cash to build the data center in. instead. That is the reasoning. And on some level, I do see the logic there, but you are also effectively diluting token holders by selling the equity, because you have now created two things that are valuable to investors rather than one. Now, there is an argument against that that the VVVVT token itself should not be considered as equity in the protocol. because Venice is not a protocol. It should also not be considered equity in the business either. What the VVV token is is strictly a voucher for compute.

And if token holders want to speculate on compute, on tokenized compute effectively, then that is separate from investing in Venice, the company. And if you've been in the token market for quite some time, you know how wishy-washy this whole thing can be. Now, this whole debate has, it treated Dragonfly Partners into action. because, of course, they led the round. I'm going to play a clip from Haseeb Qureshi, partner at Draddenfly Capital, who has some more context here about how they view the split between Venice equity

and the VVVV token. I'm going to play it here now. Now, we led a $65 million investment into Venice at a $1 billion company valuation in which we bought equity, as well as exposure to VVV, which is Venice's primary token. Now, this round has struck up a conversation. about tokens versus equity and whether it's wise for a company to have both equity holders

and token holders. The argument goes that this is messy because the incentives between the equity holders and the token holders will eventually diverge. Now, I'm no stranger to this conversation. I have been a very vocal critic myself

of the protocols that have gone down this road. And I've said this in the past and I will say it again. When a token represents the ownership of an underlying network, it should have one clear ownership structure. So when Uniswap, very famously, had a divergence between its token holders and its labs entity, you know, they did this fundraise where they sold tokens, and then eventually they

raised money for their labs. When the labs were supposed to be subservient to the protocol, I was very publicly critical of that. And I've reflected that exact same viewpoint to many of our protocols who've contemplated going down the same road. Now, here's what's important to understand about Venice. Venice is nothing like Uniswap. Venice is not a Dow. Venice is not a Dow. Venice is not a protocol. Venice is not an on-chain product. VVV is not a governance token. It's not an ownership token.

It has never been that. And this has been very extensively explained and documented by the team. So what is VVV then? VVV is a compute capital asset. Okay, what does that mean? That means by holding and staking VV, you get access to compute perpetually on Venice.

You get other stuff too. So there's staking Yale, there's access to Venice Pro. But the main thing is that you're effectively pre-buying compute on the platform. So you can sort of view this as analogous to pre-buying TSM capacity or pre-buying data center capacity or GPUs or whatever. It's a fulfillment guarantee of the core product of Venice. And if you know anything about compute, you know that this is really valuable. And it's becoming only more valuable over time.

It's not just valuable because compute is valuable, but it's even more valuable because Venice is growing like crazy. And therefore, the market is valuing a share of its product more and more highly as the company grows. So I think this is incredibly interesting. Now, Venice is buying back and burning VVV using its own revenue from subscriptions. This is going to make VVV net deflationary. Now, why would they do that? Are they stupid?

Are they running a charity? Is it because VVVV is secretly equity? Wink, wink. No, okay? No, none of the above. VVV is a commitment that the team makes. made to allow people to use inference for free in perpetuity. That means VVV is a liability of the company.

So there are obvious reasons why they want to buy it back. Retiring VVVV frees up their GPU capacity that they can then sell for cash instead of giving it to a VVV holder. Basically, they can recoup the cost if they're selling that compute to an actual customer paying in cash as opposed to a VVVV holder. So, okay, that might make sense. we wanted exposure to VVV. We, Dragonfly, built our position

through the direct exposure that we structured, as well as the enormous amount of VVV that the company holds in the balance sheet. We are aligned with VVVV holders. We didn't do this because we're confused about VV. We did this because we understand exactly what VVVV is and why we believe it will accrue value over time. If we believe that the token was worthless

and that the equity was the true value of the business, then we wouldn't be buying exposure to VVVVVVVVVE is. We just buy equity, but we didn't do that. In fact, we demanded it during the fundraising process. And we had to make concessions in order to get it. Okay. So I'm just trying to leave it there. So, I mean, if you really look into the details of what he is saying,

there is two separate things that are valuable here. There is the value accrual promises from Venice that is trying to buy back the tokens and all that sort of stuff. And then there is the equity. in the company. And these are two very separate things. Until this moment, there has been not so much clarity over that because of just years and years and years of debt from the crypto space in considering tokens as pseudo equity, because that's all that regular people have had access to. If you can only buy the Salana token, you can't invest in Salana Labs, then of course you're going to

consider Solana as a soul as a proxy for growth in that protocol. And so this is really kind of reshaped even just subconsciously how the crypto market views tokens. And this whole debate is a product of that. And it's unfortunate that Venice has had to go through this. When in itself, I mean, if you go back and watch the Empire episode, you're going to see that a lot of this comes down to is that there's no regulatory clarity over how to actually structure a token as equity. So it would be nice if Venice equity and the VVVT token were exactly the same thing. But there's no real way through that right now. And it's very messy because the VVV token has already launched. So even if there was, say, clarity action tomorrow, it's not like

it would be very difficult. It would be somewhat of a headache to Venice go and retroactively package VVVV as a new regulated tokenized security because it's already done the fundraise and it's already launched the token. It's already generated revenue from selling the token and so on. So it's quite difficult to undo that after the fact. But it's also, I mean, the reality of the situation is that Venice right now is promising

that it is going to use the money that it has raised, the $65 million series A, the money it has raised it is going to go and build a data center is going to go on scale and expand. And eventually those efforts will filter down into the VVVT token via the fact that it's going to be able to have more compute, is going to be able to service more users. And if more users subscribe to the platform, then it will eventually buy back the VVT token. And all those users have to buy VVV and state it in order to access the platform as well.

So all of this is going to be accreditive to the VVVV. asset, but it's all this trickle-down stuff that is so separate from the value of the equity. It's that the company insiders have benefited from the new unicorn valuation. But it's not like that flows directly to token holders. It might, it might in a year, maybe two years, maybe three years. Maybe that's when all of this cool stuff that's making a lot of these founders and insiders quite wealthy on paper. This is the frustration that many people are feeling.

But as we can see, the token is down 40 or 50% on the back of that good news for people who are exposed to the equity. And it's this, I mean, you can debate the details of it all you like. And a lot of the objections might be legitimate. All over the defenses are also legitimate. You know, you're kind of damned if you do and you're damned if you don't in terms of this capital raising structure because of the regulatory environment that we are in. still in with clarity not looking less likely to pass by the day.

But we know that frustration is not all the time completely logical. It is the emotional response that is most difficult. What I want to pick apart, and I'm not trying to be too nitpicking because, I mean, Eric Voorhe gets it better than most. And I know that a lot of stuff happen with the ShapeShift Dow. And I mean, if you look at the ShapeShift token, it's also basically down only. and obviously he's trying to write some of those wrongs. And Eric Voorhe gets it better than most over why this whole thing exists,

what the innovations of tokens can be to capital formation and internet capital markets and everything like that. I get all that. What Haseeb is doing though is he is front-loading a lot of this conversation. I didn't play it in the beginning, but let's now play the start of this video. Just to see, I mean, the whole thing about the, this equity raise is it is an implicit promise that Venice is going to grow. The platform is going

to grow is going to be able to service more users, which eventually should flow down into the VVV asset. Let's just see how Haseeb frames all this call. Data. They have three and a half million active users. They've got 12 million monthly visitors and they serve over two million API calls a day. Okay, so this is a big business. It's got a 70 million revenue run rate, and it's growing something like 15% month over month. So it's growing very fast. Now, we led a 65%.

Those numbers are crazy. I mean, I just got to say, what did he say? He said three and a half million active users. They've got 12 million, 12 million monthly visitors. And they serve over 2.5 million API calls per day or something. I mean, that's, that's a little bit crazy. I just want to find out if that's true. So, okay, so let's have a look. Okay, so I mean, all we can really do in terms of its

monthly visitors is to really have a look at something like similar web. And yeah, in May it had 12 million visitors to venice.a.i. So yeah, 12 million visitors to venice.a. which is essentially like, I guess you can think of it as like duck, duck go for chat, Gpti or grok or whatever. here you can see the free calls that you can make through the venus.AI platform to Kimi, Grok and to Claude so let's just have a look at venice.aI

because venice.org is getting 12 million visitors per month if I just try and prompt this without a thing I effectively just get request to update my account but here in chat classic I can I can prompt it. So this Duck Duck Go style wrapper for Venice is receiving 12 million visitors per month. But this is not being monetized.

So it's kind of up to you how you would frame the utility of those 12 million visitors. It's not like those users are being monetized. Now, notice that Hasib doesn't say paying customers or anything like that. So how do we figure out how many users Venice has? I mean, we could look at the Venice token itself. So VVV token currently has 138,500 holders on base. And that doesn't count obviously people who are holding the token on crypto exchanges and so on. That's just the number of addresses that have the VVV token.

And, okay, so there's that. The other thing that we can check, I mean, so of course, you don't have to, it's not like only users of the Venice platform are holding VVV. So we know 135,000, 138,000 addresses are holding Venice. Now, there is also a second token, DM, that you receive in return for staking your Venice. And DM is actually the tokenized compute vouchers, I guess, is a way of looking at it. On base scan, there is about 4,500, 4,600 holders of the DM tokens. So that essentially points to how many users, how many paying users there are on Venice.

And perhaps I'm screwing up some of these details. And if you're more well versed in the tokenomics and the dynamics between these two tokens, and please reach out to me and correct me. But what I'm looking at is about 4,600 holders of DM, which means that that is the people who are holding tokenized computer actively using the platform every day. at least the upper limit, you would say. So for those 12 million active visitors or 12 million monthly visitors via similar web to venus. I, about 4,600 or so are taking full advantage of their tokenized compute credits.

And there are some dashboards as well. I'm going to print up a couple of dashboards as well that show the dynamic of the supply. So we can get a real sense of what the growth actually is for Venice right now. We have this Venice dashboard from June up here by Max de Salle. Hopefully I'm pronouncing that correctly. I'm sure I'm butchering it. But this shows you the growth in the amount of VVV that has been staked. And of course, state VVV is also not directly comparable to pure users

because people might just be one speculating on the price of the VVVV asset and then staking it in return for yield. I think it's about 8% yield that Venice is paying right now just for that. but we can see that about 28 and a half percent, nearly 29 percent of the total VV supply is currently staked. There is a corresponding addresses to that. The number of unique VVV stators is about 14,400 unique staking addresses. And of course, those don't have to be all individual users.

That can also be one user, say, controlling a thousand addresses, perhaps. Perhaps in promise of future air drops or something like that that may or may not happen, We know that these numbers can be gameed, but let's just treat it at face value that perhaps we do have about 14.5,000 people stating VV, while we also have 4.5,000 holders of DM, which is essentially the tokenized compute. So for all those millions of monthly visitors, a very tiny, tiny fraction are actively using the tokens for what they are for. What does that tell me? I mean, we can also see the historic stake VV supply. And having to look at the official, Venice has an official token dashboard, and these numbers are combining both state and locked tokens.

But effectively, I would say they are quite similar. We can see that there has not been significant growth in the amount of VVV state for at least two months. We saw a big drive up throughout 2025 as the token launched, as the platform. began to gain notoriety in steam. And it is effectively topped out as of April. And since then, we've actually seen a slow decline in the amount of VVV that has been staked. So, okay, like on one, what Haseeb is painting is this, is this picture of immense growth for the Venice platform.

And we did see that last year. And the idea is that we can go out and Venice can go out and raise a bunch of money and scale this more and attract more users over time and that will flow down into VVV. But right now we're not really seeing that growth sustain itself. Perhaps we will. Perhaps we will. Perhaps anything is possible. But what is Siby's painting is this picture of a rapidly growing Venice platform, you know, to the minute.

But that's actually not quite the case. There's been about two months of sideways action and now a slow decline in the amount of people who are staking VVV in order to either receive yield or the DM compute tokens. And so one thing I will say is that there does appear to be some positive correlation between the price of VV and the amount of people actively using the platform with its paid features, let's say that. So that might tell you something, I suppose, that it is possible that holding the VVV token does give you some exposure to the growth of the platform. But that's also not what is being communicated.

What is being communicated is that buying the VVV token is a way to hedge your future compute costs to make them cheaper. But that is what is happening. What seems to be happening is that the value of the VVVT token seems to be correlated to the amount of users who are staking VVVVV. which makes some sense. But there is some disconnect here with what would be the best case scenario, what is the neatest way through all of this for equity holders, for token holders, and for the platform itself, and the reality of just the speculative nature of crypto markets. So what I worry that this is just going to become frustration that will build over time,

and unfortunately for Venice itself, this will be a recurring thing. That when the token price goes down, people will be watching. Is the platform growing? How are these things connected? And another thing that is also just being hammed up a lot is the amount of VV that Venice is buying back and burning.

That is going to be so value generating for token holders. But as we can see on my screen, the amount of VVV that has been bought back and burned is decreasing effectively every month. We saw a lot of VVV burned in December, 57,000 tokens. In January, it was 45,000. February 30, nearly 38,000, in March 22,000 or just under, in April, 16.5,000. In May, only 11,400 Venice was burned. and in June it was less than 10,000.

It was 9,000 VVV that was burned. So I'm not too sure that all of this counteracts the impact on sending a clear message to venture capital investors out there. That if you want exposure to the thing that is growing the most, and that appears to be the company itself in terms of valuation, then you should probably hold the equity. That is a separate thing from whether or not the compute vouchers in the form of VVV are going to increase in value over time. Right now, we are seeing that my read on it is that most of the value of the VVV token

is speculation. It is not actually the cost of the actual compute. And so this is all going to come to ahead, at least over the next year or two. while the vendor's build out happens and while it gets its own compute and its own data center and it can scale and build more users, we're going to have a big disconnect where token holders are waiting for that value to accrue while the company itself seems to be doing fantastic. And all power to them, founders should be able to do fantastic. Companies should be able to grow and scale and people should be able to benefit from the fruits

of their efforts, but token holders eventually will have to get something for it or else they're just going to leave and we're going to see value and price drain from VVV over time because it's not exactly mapping one to one and there's going to be this big delay. The billion dollar question is then how patient can token holders be with waiting for that flywheel to start? And, you know, I mean, as fickle as crypto markets can be, I worry that this is going to be something that will hang over Venice for quite some time. I'm very happy to be wrong. You know that I've ranted about AI privacy and so on and Venice is obviously presenting a solution to that. And it is just unfortunate that we can't have true and complete innovation at the token level in terms of really

giving the widest net of people exposure to what should be a very powerful platform and a very important platform for us all moving forward. But let's just say, I mean, it was always the devil is in the details. And let's just see if some of those things can be ironed out over the next few years. I am very closely watching the price of VVV over the coming months. What is going to be telling is that as Venice gives updates to these buildouts and as we see, you know, perhaps growth return to the paying customers and everything like that for VVV, as we see that growth return, I would be very interested to see if the next announcement over something to do with the health of the company or the status of these buildouts, whether

that actually moves token prices. If it doesn't, then I would have to say that a lot of the investing confidence has been drained from VVV, at least for the time being. We might need to see, you know, new capital bases, new investor bases come into VVV in order to make any of this makes sense once again. But very interesting times indeed. This is about all I'm looking at for today. Please reach out to me.

Let me know if I've missed anything in terms of, you know, in terms of how to judge these two separate but somewhat intertwined systems of the company itself and its equity and the VVV token and also DM because this has been something that is missing from the AI boom in general is actual tokenized compute and VVVVV is not exactly that but it is it's it's like a it's like a promise it's like a it's like a coupon for computer it's not essentially tokenized compute but it is, I guess we're almost there. You know, we call them tokens, but why aren't the actual tokens that trade on a chain? We kind of have that right now with VVV, but I would love to see a little bit more pure play

version of that. Perhaps this is a very early step in that direction. We will see that finally. But that's enough out of me. Let me know what you think. And as always, look after yourselves. We'll see you next time.