The Case for Permanent Capital Vehicles: Anagram

"LPs make you dumb." That's the provocative opening statement from Joe Eagan, co-founder of Anagram, as he delivered the longest talk at Breakpoint 2025 with a bold thesis: traditional fund structures are fundamentally broken for crypto investing, and permanent capital vehicles represent the future of intelligent capital allocation in the ecosystem.

Summary

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Joe Eagan's presentation challenges the conventional wisdom of how capital should be deployed in the cryptocurrency industry. Anagram, a permanent capital crypto holding company, operates without the constraints of limited partners (LPs), allowing it to build products, incubate new projects, and invest directly from its balance sheet with complete freedom over timing and strategy.

The core argument centers on how traditional fund structures—whether venture capital or hedge funds—artificially constrain investment managers. LP demands typically limit fund managers to investing in areas that LPs understand best, which ironically removes the most alpha-generating opportunities from consideration. Additionally, fixed fund terms and redemption windows force portfolio managers to sell assets at inopportune times, such as during market crashes when they should be buying.

Eagan argues that crypto is uniquely poorly served by traditional capital structures because of its interoperable, composable, and open-source nature. In crypto, building and investing should work hand-in-hand—if you've built something on Solana, you should also invest in the ecosystem projects that will increase your own value. This mutual reinforcement is impossible when capital is siloed into separate building (corporate) and investing (fund) vehicles.

Anagram's model demonstrates this thesis in practice. By selling equity in their business rather than raising from LPs, they maintain complete control over capital deployment across venture investments, liquid positions, entrepreneur-in-residence programs, and internal product development—all working together to compound value for themselves and the broader ecosystem.

Key Points:

The Four Ways LPs Limit Investment Potential

Traditional fund structures suffer from four key limitations that reduce investment returns. First, investment program restrictions narrow the opportunity set to what LPs understand, excluding the most complex and potentially profitable strategies. Second, time constraints—whether 10-year fund terms or monthly redemption windows—force managers into suboptimal buying and selling decisions. Third, the fee structure (typically "two and twenty") incentivizes asset growth over returns, meaning managers make more money with larger, lower-returning funds than smaller, higher-returning ones. Fourth, capital allocation silos separate financial capital from human capital, preventing the synergies that come from building and investing together.

Eagan illustrated the fee misalignment with a striking example: a $100 million fund generating 100% returns produces identical carry ($20 million) to a $1 million fund generating 10,000% returns—but the larger fund generates 100 times more management fees. This creates perverse incentives where portfolio managers are rewarded for asset gathering rather than performance.

Why Crypto Exacerbates Traditional Fund Problems

The unique characteristics of cryptocurrency markets magnify every limitation of traditional fund structures. Fewer people understand the technical underpinnings of crypto, leading LPs to constrict investment programs even more severely. Tokenization creates visible liquidity that makes LPs demand faster capital returns, pushing managers toward premature selling. As crypto funds have grown, so have valuations, compressing long-term ROI potential even further.

The timing issue is particularly acute in volatile crypto markets. Eagan pointed to the FTX collapse as a prime example—when fear gripped the market and investors rushed to redeem capital, fund managers became forced sellers at precisely the moment when buying Solana would have produced the greatest returns of the past five years. Permanent capital vehicles face no such pressure and can act opportunistically when others must flee.

Anagram's Integrated Building and Investing Model

Anagram operates as a permanent capital holding company with an integrated approach to capital deployment. They run venture investments, liquid token positions, an entrepreneur-in-residence program, and an internal build program with engineers developing new products. This structure allows every decision to benefit multiple areas simultaneously.

The company's Solana validator exemplifies this philosophy. Starting with a substantial Solana balance sheet position, Anagram launched its own staking services rather than paying external commissions. They then led the pre-seed investment in RockerEye, an efficient scheduler, and became their first customer. This partnership resulted in Anagram consistently running the most performant validator in the Solana ecosystem. The validator benefits RockerEye by providing a flagship customer, benefits Anagram through superior staking returns, and benefits the broader Solana ecosystem through more efficient block space utilization.

Product Spin-offs and Ecosystem Development

Anagram's build-and-invest model has spawned multiple new projects that interconnect with each other and the broader ecosystem. Glider, a portfolio management tool using AI to create fully chain-abstracted trading and lending experiences, began as an internal project. When Glider couldn't incorporate Solana due to inadequate wallet infrastructure, Anagram built SWIG—a wallet infrastructure project featuring roles, permissions, and Paymaster functionality for Solana.

SWIG became its own company, solving a broader ecosystem problem while enabling Glider to finally abstract Solana into its technology. This cascading value creation—where one project's needs generate another project that serves the entire ecosystem—is only possible when building and investing operate under unified, unconstrained capital.

Facts + Figures

• Anagram runs what they claim is the most performant validator in the Solana ecosystem on any given day
• Anagram operates one of the largest validators in the Solana network
• The traditional fund fee structure of "two and twenty" (2% management fee, 20% carried interest) incentivizes asset growth over returns
• A $100 million fund with 100% returns generates the same $20 million carry as a $1 million fund with 10,000% returns
• The FTX collapse represented what Eagan calls "the best opportunity for investment in the liquid markets in crypto over the past five years"
• Typical hedge fund redemption windows of one to three months create forced selling pressure
• Traditional venture funds operate on 10-year terms
• Anagram led the pre-seed investment round for RockerEye
• Anagram has spun out multiple companies including Glider, SWIG, and Breeze, with more in development
• The company runs an EIR (Entrepreneur in Residence) program lasting 12 months
• Eagan delivered what was described as the longest talk at Breakpoint 2025

Top Quotes

"LPs make you dumb."

"By eliminating that LP, you're growing it, but you're also growing it to the area that you understand, and therefore where you can generate the most alpha."

"By having LPs that are capable of taking capital back when they want it, as opposed to when you think it should be returned to them, you are also limiting your ability to make excess returns in those moments of pure opportunity."

"Crypto is really the first unique asset class in the past, I don't even know, probably since equities."

"If you have built Solana, you should also invest in Drift or Jupiter or any of the millions of projects that are here that all warrant investment."

"The more you invest into the space, the more value you create for the things that you have built, and the more that you build in the space, the investments that you make can interoperate with the underlying assets on your balance sheet."

"We have permanent capital to deploy to you, whether you are a founder, an engineer, a CEO, whoever you might be in the ecosystem."

"In 2017, when we were allocating capital into the liquid crypto markets, most investors told us that they would not invest with us because crypto did not have custody solutions... LPs didn't invest with us and missed what I believe to be probably the greatest investment returns of our lifetime."

Questions Answered

What is a permanent capital vehicle and how does it differ from a traditional fund?

A permanent capital vehicle is an investment structure where investors buy equity in the operating company rather than contributing to a fund with a fixed term and redemption rights. Unlike traditional venture funds (typically 10-year terms) or hedge funds (with monthly or quarterly redemption windows), permanent capital has no predetermined end date or liquidity requirements. This means the investment team can hold assets indefinitely, make buying or selling decisions based purely on opportunity rather than LP demands, and combine building products with making investments under one roof. Anagram sold equity in their business to investors, giving them complete freedom over how, when, and where they deploy capital.

Why does Eagan argue that LP-backed funds miss the best investment opportunities?

Eagan contends that LP demands systematically exclude the highest-returning investment opportunities. LPs tend to invest in strategies they understand, which by definition excludes the most complex and technical strategies where alpha potential is highest. Since LPs don't understand those areas, they restrict fund managers from pursuing them—ironically paying fees for expertise they then prevent managers from fully utilizing. The FTX collapse exemplifies this dynamic: when the market crashed, LP redemptions forced fund managers to sell at exactly the moment when buying would have generated the best returns. Permanent capital vehicles face no such pressure and can act counter-cyclically.

How does Anagram's validator business demonstrate the benefits of integrated building and investing?

Anagram's validator illustrates their thesis of compounding value through integrated operations. They started with a significant Solana balance sheet position and decided to validate themselves rather than pay external commissions. This led them to invest in and become the first customer of RockerEye, an efficient block scheduler. Using RockerEye's technology, Anagram now runs what they claim is the most performant validator in Solana. The investment benefited RockerEye (their first major customer), benefited Anagram (superior validator performance), and benefits Solana broadly (more efficient block space). This triple benefit across investment, product, and ecosystem would be impossible in a structure that separates investing from building.

What products has Anagram built and spun out?

Anagram has developed multiple products through their internal build program. Glider is a portfolio management tool that uses AI to create fully chain-abstracted experiences for creating portfolios, trading, and lending across different blockchains. SWIG is wallet infrastructure for Solana featuring roles, permissions, and Paymaster functionality—developed specifically to solve problems Glider encountered when trying to incorporate Solana. Breeze is another project they mentioned, with additional products in development. They also operate Anagram Staking Services, their Solana validator business. The company maintains an ongoing engineering team dedicated to building new projects that serve both their portfolio and the broader ecosystem.

Why is the traditional fund fee structure problematic for investors?

The standard "two and twenty" fee structure—2% annual management fee on assets plus 20% of profits—creates misaligned incentives between fund managers and their investors. Because fees scale with assets under management, portfolio managers earn more money running larger funds with mediocre returns than smaller funds with exceptional returns. Eagan's example shows that a $100 million fund earning 100% returns generates $2 million in management fees, while a $1 million fund earning 10,000% returns (the same absolute profit) generates only $20,000 in management fees. This incentivizes asset gathering over performance optimization, ultimately hurting investor returns while enriching fund managers.

How can founders and entrepreneurs work with Anagram?

Anagram welcomes outreach from founders, engineers, and entrepreneurs anywhere in the world. They operate multiple programs for deploying their permanent capital: direct venture investments into crypto projects and portfolio companies, liquid token investments, an entrepreneur-in-residence program where individuals work with Anagram for 12 months developing their ideas, and a build program that hires engineers to construct new projects internally. The company positions itself as seeking partners across the entire spectrum of building and investing in crypto, with the flexibility to structure relationships in whatever way makes sense given their permanent capital structure.