The founding thesis of Variant is to invest in an internet that turns users into owners. The core premise is that ownership solves a coordination problem, incentivizing otherwise diverse participants to channel their contributions into a shared structure. Ownership makes “impossible-to-build” software possible. Crypto’s role is to make that ownership mean something online.
There is a particular type of coordination problem ownership via crypto is well-suited to solve: open software with a “resource problem.” Open software is fully public and anyone can participate in its creation or run it. The resource problem occurs when the resources required to develop the software are beyond any individual contributor’s means. That is, the individual cannot just contribute her time to build the software; she must also obtain costly external resources. Linux is an example of software without a resource problem and has been built as a successful open software project. Foundation AI models are an example of software with a resource problem. They are not currently being built as open software (LLaMa and DeepSeek have public weights that purport to be “open source,” but the public cannot help create these models).
The traditional way to build software with a resource problem is to raise capital from investors to get over the resource hump. But doing so comes with a significant tradeoff: the software can no longer be built as open software. This is because it must instead be hermetically sealed inside a corporate form to be monetizable for these investors.
Crypto’s breakthrough is to use ownership to make building software with a resource problem possible while retaining openness. It does so through two intertwined features. First, it gets over the resource hump by providing ownership directly to speculative resource providers in exchange for their resource. This is akin to how sweat equity pays for labor a startup could not otherwise afford, just applied to external resource providers instead. Second, it makes this ownership meaningful by moving the value of the software from the code itself to a distributed network owned by tokenholders. This shifts value from something that can be easily extracted in an open environment (code that can be copied) to something difficult to extract in an open environment (immutable state managed by dispersed tokenholders).
Bitcoin demonstrates how crypto solves the resource problem for open software. Bitcoin is open software because the code to run the node software is freely available to run and anyone can fork it and contribute to it. It suffers from a resource problem because the function of the software is to maintain a ledger controlled by no one, which necessitates an amount of compute beyond any individual contributor’s compute power. Bitcoin solved its resource problem by (1) providing ownership directly to compute providers in the form of a token and (2) moving the value from a node library to an immutable ledger owned by these tokenholders.
The presence of a resource problem usually indicates a massive opportunity that, if solved, can fundamentally change the world. Bitcoin demonstrates this. We are committed at Variant to investing in founders who want to use crypto ownership to solve problems of this scale. If you’re working on this kind of project, please reach out — we would love to chat.