Dragonfly’s Haseeb Qureshi Is Still Optimistic in the Crypto Bear Market

Crypto’s most successful projects have historically been built during downcycles, he says.

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Updated May 11, 2023 at 4:25 p.m. UTC
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AUSTIN, Texas — There are “five unsolved problems of cryptocurrency,” according to Haseeb Qureshi, a managing partner at Dragonfly Capital. That is: identity, scalability, privacy, interoperability and user experience, or UX.

Qureshi is among the smartest of the “smart money” set in the digital asset industry. His firm’s financial backing is an imprimatur, a way to legitimize the likely successful and impactful in a sea of volatile tokens.

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He spoke today at CoinDesk’s Consensus conference, the world’s largest cryptocurrency event, and was joined on stage by other so-called gigabrains including Kanav Kariya, the president of Jump Crypto, and Dawn Song, founder of Oasis Protocol, a privacy-focused blockchain lauded for its technical features.

Almost all crypto projects that are successful in the long term solved one of these perennial problems, Qureshi said. His definition of “success” here is untethered from financial wins, and instead means a blockchain project that is finding real use.

Moreover, almost all today’s successful projects were founded in a bear market, Qureshi said. That might signal optimism for today’s markets, where bitcoin is well off its all-time high and a looming recession might spell death for the riskiest assets – like cryptos.

As it gathers to party and work at Consensus, the crypto industry – like the global economy – stares down a period of anomalous inflation and market uncertainty. It’s unknown whether crypto can weather the storm and what it will look like on the other side, and whether we’re approaching mass adoption or extinction.

“The question of whether these things have utility is very different from the question of their financial success,” Qureshi said in an interview. CoinDesk caught up with him after the “What’s next for DeFi and Web 3” fireside chat. (DeFi stands for centralized finance.) “Innovation happens when tackling new and important problems,” he said.

Qureshi mentioned the unicorns (or private companies with at least a $1 billion valuation) Uniswap and OpenSea. Coinbase (COIN), also name-dropped, was a former unicorn that successfully went public. All have become product leaders in such sectors as decentralized trading, non-fungible tokens (NFT) and retail onboarding, respectively, having found solutions to hard problems.

And all were founded during bear markets, he said. Popular opinion in crypto says that bear markets clear out the speculators so the most committed players can build. Hype does not always spell conviction.

But the current bear market is structurally different from any other that the digital asset industry has endured. Climbing interest rates pull capital out from the farthest end of the risk curve, and it’s still unknown how that will ultimately affect digital assets. There are fewer people speculating, and there's less demand for the risky leverage, yield or upside crypto provides.

Qureshi, however, is optimistic. “The 2018 bear market was exogenous,” he said, explaining how he was “shocked” when it happened because the pullback began and ended within the crypto industry. That may have meant crypto was a dead end, but it wasn’t.

“The reason crypto went down [in 2018] was that people lost confidence,” he said. “The bear market today is because of macro.”

On stage, Kariya made a similar point: DeFi is down, equities are down, global markets are down. “[This is] not particular to crypto. Leverage unwind [is occurring simultaneously] in a bunch of different buckets,” he said.

This may “all be happening at once,” but it’s responding to a “single lever” of rising interest rates as the Federal Reserve increases the costs of borrowing capital to quell inflation. What’s unusual is that you might expect interest rates in DeFi to increase alongside the discount rate – but that isn’t happening, necessarily.

Seated, from left to right: Cointelegraph's Rachel Wolfson, Oasis Protocol's Dawn Song, Jump Crypto's Kanav Kariya and Dragonfly Capital's Haseeb Qureshi at Consensus 2022. (Daniel Kuhn for CoinDesk)
Seated, from left to right: Cointelegraph's Rachel Wolfson, Oasis Protocol's Dawn Song, Jump Crypto's Kanav Kariya and Dragonfly Capital's Haseeb Qureshi at Consensus 2022. (Daniel Kuhn for CoinDesk)

“DeFi is not a story about today – it's a story about the future,” Qureshi said. “Most protocols today make no money.” Uniswap, for instance, earns fees and pays returns to UNI token holders but doesn’t have revenues, Qureshi said.

Many crypto projects are in a similar position of building services, finding users and delaying the question of how to earn revenues. But that doesn’t mean profitability is an impossibility, and crypto does take a fundamentally different approach to “customer-company” relationships.

The “DeFi Summer” of 2020 was largely driven by yield farming, or the token incentives protocols paid to users of crypto software. Qureshi referred to this as a “user acquisition strategy,” a way of getting “dollars” into their systems.

Yield farming has largely come and gone and is the type of expensive user incentive program that might only be possible in a period of cheap money. The good news for Qureshi is that yield farming was “not useful” and onboarded “cavalier users.”

Further, in bull markets, there’s a tendency in crypto for projects to barely “iterate” on their competitors' products – for example, by adding a native token to a crypto exchange – rather than properly innovate. After a time, these strategies exhaust themselves.

The industry now, facing a bear market, might see “iteration toward more intelligent ways of capturing users,” Qureshi said. Because it’s sink or swim, now. But there are still “five unsolved problems” to tackle.


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CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Daniel Kuhn

Daniel Kuhn is a deputy managing editor for Consensus Magazine. He owns minor amounts of BTC and ETH.

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