AI Agents and On-Chain Credit: A Conversation with Legendary Investor Santiago Santos

Author: The Rollup; Compilation: Blockchain in Plain Language

In the wilderness of cryptocurrency, some are busy chasing hundredfold myths while others are quietly changing the rules. When former angel investors take off their suits and state that “most tokens are no longer investable,” is this a sign of paranoid arrogance or a deep analysis of the industry’s reality?

This is a deep dive into the latest interview with legendary investor Santiago. He reveals not only why AI is “raiding” the genius minds of cryptocurrency but also discloses for the first time his ambitious “reverse investment” plan: instead of developing projects from scratch, he aims to acquire traditional telecom and financial groups to transform millions of real users with stablecoins and DeFi. From the booming tokenization of commodities to on-the-ground research in the streets of Latin America, this is a storm of ideas about “dimensionality reduction” and “value return.” If you want to see the true baseline of institutional entry, this 4,000-word piece is definitely not to be missed.

I. Role Growth: From Angel Investor to Crypto “Chameleon”

[Host]: Today we have an old friend of the show, a legendary figure in crypto investment. To be honest, we feel very honored every time we get to have him here.

[Host]: Yes, he is Santiago. Santiago, long time no see, how have you been lately?

[Santi]: I’m still alive. Have you all not grown tired of this old face yet?

[Host]: Of course not. But today our marketing team has prepared a very shocking title for you—“Is Santiago not the biggest crypto bear on Earth?” It’s heard that you haven’t written a single angel investment check this year and even said that the performance of the first generation will not be as good as stocks. Look at you now, you don’t even have your signature clothes on. What exactly has happened?

[Santi]: I’d prefer to think of myself as an invisible dragon. In the financial markets, you must continuously build yourself up so that others can’t easily label you. I’ve lived long enough to witness several cycles, but I’m not a “super bear.” I still affirm crypto technology; I just believe that the tokens we are close to are also in a state of “non-investability.”

But that doesn’t mean the industry is consumed. On the contrary, adoption rates are skyrocketing. When I arrived at the venue yesterday morning, the line of people reminded me of the TSA security check at the airport. More importantly, the growth of institutions is tangible. Look at the people in this room; how many do you think are attending a cryptocurrency conference for the first time?

[Host]: Indeed, a lot.

[Santi]: That’s a signal of the times. Many are here not to inquire about which junk coin to buy or to chase a hundredfold explosion. They are here because their CEOs are mandating from the bottom: “Guys, you must figure this out, or we will be left behind.”

We just listened to the CEO of Western Union’s speech. You know my past views on them—they are a traditional company with a strong value-protecting ethos. But I asked him: “How serious is Western Union about stablecoins?” If you carefully listen to his tone on stage, you’ll find that this is completely different from the previous “symbolic disagreements.” I predict they will reflect the future power of stablecoins in their profit and loss statements within a year.

Through stablecoin payments, they might save billions of dollars a year in float. This is just insane because just a few quarters ago, this CEO openly stated he did not believe in stablecoins.

[Host]: What made him turn so quickly?

[Santi]: Competitive pressure and institutional FOMO (fear of missing out). He saw Visa jumping in, saw Mastercard completing significant related acquisitions, and BlackRock’s entry. One of my analyses at the time: observing publicly traded companies that mentioned cryptocurrency in earnings calls and truly implemented strategies, most are companies founded by relevant founders, and the performance of this basket of stocks has significantly outperformed the S&P 500. This is the power of reality.

II. 24/7 Trading Narrative: Hyperliquid and the Future of Commodities Tokenization

[Host]: Speaking of well-performing assets, the S&P 500 has shown reliability recently, but there’s a very interesting consolidation case in the crypto market—Hyperliquid. This seems to be a project you’ve been thinking about that isn’t in the “bear market basket.” What do you think about the growth of 24/7 tokenized trading?

[Santi]: I mentioned before when chatting with you in Brooklyn that I am essentially a “long volatility” person. I still hold that view. The trading desire of the younger generation is ingrained in their DNA; they want to trade anytime, anywhere.

Desire manifests in several forms. First, there are prediction markets like Polymarket. Secondly, there’s trading of more macro assets. The reality is that not everyone is interested in your new generation currency, but they want to trade commodities. When macro investor Stan Druckenmiller says to go long on copper or geopolitical tensions cause oil to surge, traders need an outlet.

Hyperliquid capitalized on that. Although I haven’t seen the final audit numbers, I can say that its open interest in commodities may grow tenfold or even a hundredfold after breaking a certain threshold within a year. Last weekend, during heightened tensions in the Middle East, I sat with a group of hedge fund managers, the smartest microprocessors worrying about how Monday’s opening would go. I directly pulled out my phone to show them Hyperliquid’s real-time charts; oil and related indices were already fluctuating. Their eyes were about to pop out, exclaiming, “What the hell is this?”

It feels like I only experienced that six years ago when stablecoins were just born. Without the term DeFi, I told potential investors: if you try to invest in such stablecoins, you’ll see the dawn of finance. Now, Hyperliquid is showing people the dawn of trading.

[Host]: We see that the SEC and CFTC have recently started collaborating on guidance regarding tokenized securities and commodities. Do you think the future of token economics will modify stock structures? For example, will we see “growth tokens” and “dividend tokens”? If regulations allow for paying dividends to token holders through on-chain income, is that a correct way to capture value?

[Santi]: I’m not a regulatory expert and cannot predict every detail of legal compliance. But I believe the narrative of Hyperliquid has a strong timeline because it is very pure and easy to understand.

The human brain can only grasp one core concept at a time. If a token has overly complex logic, people often shy away. What did Hyperliquid do? They have real trading volumes, they use the revenue for redemption, and their compensation fees—it is currently the token that resembles “stocks” the most. It hides those esoteric narratives, directly tied to global commodities’ contentious discussions.

And you need to note that commodity volatility lasts longer than individual stocks and is influenced by geopolitical factors. When this demand combines with 24/7 on-chain infrastructure, its explosive power is astonishing.

III. Investment Void: When Geniuses Flee to AI

[Host]: You mentioned that you are almost not investing in the angel round anymore, but your previous company ParaFi just raised $450 million. If given several hundred million to deploy in the current environment, where would you invest? In market predictions, AI, or pure crypto infrastructure?

[Santi]: This is indeed a difficult question. Sometimes I want to directly say, “There’s nothing to invest in right now.”

While projects like Polymarket, Kalshi, or crypto credit card project Rain are still raising large amounts of funding, these are all upgraded projects that have already been proven. During my most active early stages—when I was issuing the first and second checks—high-quality projects have indeed become rarer.

I reflect on whether I’ve become too bearish, causing entrepreneurs not to seek me out anymore? Or has my reputation tarnished? But when I asked other top VCs, the answer was the same: high-quality deal flow (project flow) is indeed shrinking. I believe my core opportunity will appear at the intersection of fintech (traditional fintech) and DeFi.

[Host]: Is that boundary disappearing?

[Santi]: Yes, they are merging into one. Look at the institutions investing in Rain; besides traditional fintech VCs, there are also crypto-native VCs. In the future, if you do not understand fintech compliance, issuance, and account systems, you will find it hard to survive in the crypto investment space.

Another key reason is the vacuum effect of AI. The smartest people in our industry have now been drawn away by AI. We didn’t have this level of competition in previous cycles.

I am very fascinated by AI. As an investor, I once suffered from severe “imposter syndrome,” feeling that without a technical background, newspaper companies must first find a CTO. But now with AI tools, if you see my tweet about wanting to hire today, I might not write “need CTO” or “chief employee” anymore. AI has significantly lowered the cost of building.

However, the downside is that now many crypto projects are just “patching things up,” making them appear innovative at first glance. Many teams are just making adjustments on existing L1/L2s. Although agentic commerce—or AI agents using stablecoins for automated trading—is an inevitable trend, it is still very early, and many projects seem to be fleeting.

IV. Inversion Project Logic: Acquiring Traditional Mining, Injecting Crypto Soul

[Host]: Let’s talk about your new plan—Inversion. You mentioned that this is a brand-new path, not launching a crypto project from scratch, but acquiring traditional companies with distribution channels and traffic, such as telecom companies or traditional financial institutions. This sounds very much like Berkshire Hathaway’s style.

[Santi]: Exactly. One of my core principles is: I want to buy things that already have distribution rights. I’m not building distribution rights from scratch because that’s too slow and too expensive.

The whole point of inversion is “don’t do stupid things.” Buffett’s first deal was a textile factory, which was a terrible business, but later he bought an insurance company that laid the foundation for his empire. I am just as stubborn; I don’t want to buy a company that will “kill me.”

[Host]: Recently, you’ve done a lot of research in Latin America and even hired 20 interns to hit the streets?

[Santi]: Yes. If you want to become a better investor, you must do those things that “don’t exist online.” Nowadays, everyone is too reliant on AI dashboards, confusion, or data analysis tools. I know an investor who makes beautiful analytical charts, but he has never called any founder of a project.

There is only one thing AI cannot replace: sitting down, looking the other person in the eye, reading their body language, and sensing humanity.

During our research in Mexico, we discovered how young people aged 18 to 25 use bank accounts, how much data they consume monthly, and their reliance on WhatsApp transfers—these are insights you can never get sitting in an office in Silicon Valley.

But I found that the financial tech users in Latin America are valued at an average of $1,000 per user. However, I could spend less than $300 million to acquire a traditional company with 21 million users that has not yet been “fintech-ized.” If I can integrate stablecoin payments and DeFi, that value gap represents a massive profit opportunity.

V. The Endgame of On-Chain Credit: Rejecting “Tiered Leverage,” Embracing Real Assets

[Host]: The “embedded finance” you mentioned, especially in credit, is possibly the most controversial currently. DeFi’s TVL is rising, but hacking incidents are also occurring frequently. What do you think about the future of on-chain credit?

[Santi]: This is my most contrary opinion. The current DeFi lending is mainly “lending leverage”—people are cycling loans between different mining pools to earn that little reward. This leads to extremely short loan terms and is very massive.

We lack true “fixed-rate, fixed-term” on-chain credit. Why? Because no one is bringing high-quality real-world assets (RWA) onto the money chain. Currently, many RWA platforms suffer from severe “adverse selection”—those who can borrow from traditional banks won’t come to the chain to borrow high-interest loans. The result is that on-chain assets are all those high-quality garbage that can’t get credit in the real world.

[Host]: So how does Inversion solve this problem?

[Santi]: We need to underwrite ourselves and put ourselves in the “first loss piece.” Take telecom companies as an example; they have accounts receivable from smartphone financing. We can bring these assets onto many chains. When you conduct credit assessments on real smartphones and a user who pays monthly, it is much more substantial than those nebulous token hosts.

We are not inside; we are the owners. This “buy the business first, then do crypto transformation” path, I believe, is the true form of institutional adoption.

[Host]: Finally, Santi, please summarize this conference. What do you think of the current state of institutional adoption?

[Santi]: Very excited, but this excitement is calm. I recall when I left JPMorgan, dressed in a suit to buy my first Bitcoin, and how people looked at me. Now? If you don’t wear a suit, you instead become the odd one out here.

Institutional adoption will continue to grow tenfold, a hundredfold, but that doesn’t mean you can casually buy a token and double your investment. The true beneficiaries will be those entities like Robinhood, Western Union, or the Inversion we are building, which can leverage crypto technology to significantly enhance business efficiency.

For many teams, my advice is: don’t rush to issue tokens. Wait six months, wait a year, and observe the evolution of regulation. If you don’t have real users and scale, issuing tokens will accelerate your demise. We are publicly building all of this; although the road is tough, witnessing this integration happening is truly fascinating.

[Host]: Very insightful updates from an investor. Santi, thank you for your sharing today, and see you in the next cycle.

[Santi]: Thank you, and I hope to still be alive by then.