[Wintermute Ventures: In 2026, encryption will gradually become the clearing layer of the Internet economy] Author: Wintermute Ventures Compiled by: Deep Tide TechFlow Deep Tide Guide: For decades, the Internet has allowed information to flow freely across borders, platforms and systems. But the value lags behind. Money, assets, and financial agreements still flow through fragmented infrastructure built on traditional tracks, national borders, and intermediaries that extract rent at every node. Wintermute Ventures believes that this gap is narrowing at an unprecedented speed, and encryption is becoming the clearing and settlement layer that the Internet economy has always needed. The report focuses on five main themes: Everything is tradable (market prediction, tokenization), stablecoin interoperability, token economics returning to fundamentals, DeFi and TradFi integration, and privacy becoming a regulatory driving force. The maturity of infrastructure is the common thread of this transformation. The full text is as follows: For decades, the Internet has allowed information to flow freely across borders, platforms and systems. But the value lags behind. Money, assets, and financial agreements still flow through fragmented infrastructure built on traditional tracks, national borders, and intermediaries that extract rent at every node. This gap is narrowing at an unprecedented rate. This creates opportunities for infrastructure companies to directly replace traditional clearing, settlement, and custody functions. The infrastructure that enables value to flow freely like information is no longer theoretical. It is being built, deployed, and widely used. For many years, encryption has existed on the chain but is disconnected from the real economy. This is changing. Encryption is becoming the clearing and settlement layer that the Internet economy has always needed; A layer that operates continuously, transparently, and does not require permission from a centralized gatekeeper. The following themes represent the direction we believe digital assets will develop in 2026 and are also areas where Wintermute Ventures actively supports founders. 1. Everything is tradable. More and more assets and real-world outcomes are becoming tradable through new financial primitives, including predictive markets, tokenization, and derivatives. This transformation provides a liquidity layer for fields that have never had a market in history. Tokenization and synthetic assets bring liquidity to known assets. Predicting the market further, pricing things that could not be priced before, and transforming raw information into tradable tools. Predicting the continued expansion of the market, both as a consumer product and as a new financial tool, to achieve hedging, outcome linked transactions, and insights into fine-grained events. They have also begun to replace some traditional financial infrastructure. Insurance is a striking example: outcome based markets can provide cheaper and more flexible hedging than traditional insurance or reinsurance by directly pricing specific risks rather than bundling them into a wide range of products. Users can hedge against specific wind speeds in specific locations and during specific time periods, rather than purchasing hurricane insurance that covers a certain area. Over a longer time span, these special risks can be manually selected and bundled into individuals' unique needs through proxy workflows. With the scaling up of predictive market infrastructure, new categories of data products have emerged around topics that have never been priced before. We anticipate the emergence of a market aimed at trading and quantifying objective perceptions, emotions, and collective opinions. These emerging markets are a natural extension of decentralized finance, unlocking new ways of pricing and exchanging information itself. When everything becomes tradable, providing liquidity, enabling price discovery, and ensuring settlement infrastructure become crucial. This structural shift will concentrate value on the infrastructure layer, which directly affects how we allocate capital. We actively support the construction of core market and settlement infrastructure, data layers for verification and proof, and teams that support new data products for financialization of previously non tradable results. We also focus on novel abstract models that make these markets programmable and composable, enabling them to be embedded into real-world workflows and replace some traditional financial and insurance infrastructure. 2. Stablecoins have become a layer of trust, while banks lack strong settlement banks and clearing house equivalents for handling intermediate settlement digital assets, which lubricate the wheels of traditional finance. Stablecoins achieve open access and programmable value, but without settlement infrastructure, fragmentation can cause friction that limits adoption. As stablecoin issuers proliferate with different collateral models in different ecosystems, the demand for interoperability layers that can reliably combine these assets is growing. In order to scale this system, encryption requires an infrastructure that can achieve net settlement, conversion, and settlement across stablecoins and chains without introducing additional credit risk, liquidity risk, or operational expenses. The missing abstraction is to transfer conversion and credit risk to stablecoin issuers through interoperability based on balance sheets, rather than forcing end-users to manage forex, routing, or counterparty risk when trading across stablecoins. We consider it as the equivalent of the corresponding bank on the chain, settled in seconds, open to application builders, and expect to see more companies positioning themselves as coordination layers between issuers and applications. 3. The market will reward long-term income rather than short-term incentives. Token driven growth without sustainable business models is losing its effectiveness. Companies that rely on subsidizing users or liquidity providers while operating structurally fragile revenue models will find it more difficult to compete. Valuation will be more closely anchored to sustainable returns and forward-looking forecasts, converging towards a cash flow based framework. Annualizing short-term, fluctuating monthly expense peaks is no longer a reliable way to price a company, as the quality of returns and consistency of incentives have become the core of valuation. Tokens without a credible value capture pathway will have difficulty maintaining demand outside of the speculative phase. Therefore, fewer companies will issue tokens upon establishment. Many will default to an equity first structure, primarily using blockchain as a backend infrastructure that is largely invisible to users and investors. When using tokens, issuance will increasingly only occur after the product market fit is clear, revenue, unit economy, and distribution have been proven, and stakeholder incentives are consistent. We believe that this transformation is beneficial and necessary for the health of the entire ecosystem. Founders can focus on building sustainable businesses instead of prioritizing token incentives and demand too early. Investors can evaluate companies using familiar financial frameworks. Users receive products designed for long-term value. The future of finance is not DeFi or TradFi: it is the fusion of the two. The dual track architecture allows fintech applications to dynamically route transactions based on cost, speed, and yield. Breakthrough consumer applications will look like traditional fintech products, with wallets, bridges, and chains completely abstracted. Capital efficiency, returns, settlement speed, and transparent execution define the next generation of financial products. Despite the integration of user experience and fintech, the industry continues to rapidly expand behind the scenes. The tokenization and highly combinable financial primitives drive this growth, achieving deeper liquidity and more complex financial products. Distribution will be more important than having an interface. The winning team will build a backend first infrastructure, integrating it into existing platforms and channels, rather than competing as an independent application. Personalization and automation (increasingly enhanced by AI) will improve pricing, routing, and revenue in the background. Users will not consciously choose DeFi. They will choose products that are more user-friendly. 5. Privacy has become a regulatory driving force. Privacy is becoming the foundation for institutional adoption, shifting from regulatory responsibility to regulatory driving force. Selective disclosure using zero knowledge proofs and multi-party computation allows participants to demonstrate compliance without exposing raw data. In practice, this enables banks to assess credit worthiness without accessing transaction history, employers to verify employment without exposing wages, and institutions to demonstrate reserves without disclosing positions. The practical extension of this vision is a world where businesses no longer need to store large amounts of data, thereby freeing themselves from expensive and burdensome data privacy regulations. New primitives such as private shared state, zkTLS, and MPC unlock unsecured loans, layering, and new on chain risk products, transferring the entire category of structured finance onto the chain, which was previously unfeasible. 6. Regulations have shifted from compliance barriers to distribution advantages, and regulatory clarity has shifted from adversarial barriers to standardized distribution channels. Although the "permissionless" nature of early DeFi remains an important engine for innovation, the arrival of operational frameworks such as the GENIUS Act in the United States, MiCA in Europe, and the stablecoin system in Hong Kong has provided greater clarity for traditional institutions. In 2026, the story is no longer about whether institutions can use blockchain, but about how they can use these guidelines to replace traditional pipelines and achieve high-speed on chain orbit. These standards will facilitate a larger wave of compliant on chain products, regulated deposit and withdrawal channels, and institutional level infrastructure without the need for mandatory full centralization, thereby increasing institutional participation. Regions that combine clear rules with rapid approval will increasingly attract capital, talent, and experimentation, accelerating the normalization of on chain value distribution in native cryptocurrencies and hybrid financial products, while slower systems will fall behind. The maturity of the Internet economic infrastructure on encryption is the common thread of this transformation. Encryption is becoming the clearing and settlement layer of the Internet economy, enabling value to flow freely like information. The protocols, primitives, and applications that are being built today are unlocking new forms of real economic activity and expanding the range of possible implementations on the Internet. At Wintermute Ventures, we support the founders of building this infrastructure. We are looking for a team that combines deep technical understanding with strong product thinking. A team that releases solutions that people truly want to use. A team that can operate within the regulatory framework while promoting the core principles of decentralized systems. A team designed to build a business for long-term impact. 2026 will mark a turning point. The encryption infrastructure will increasingly fade into the background for users and become the foundation of the global financial system. The best infrastructure quietly empowers people without attracting attention. If you are building in any of these fields, please contact our team. You can also fill out the form on our website: https://www. (wintermute.com)/contact/ventures