> - discounted and preferential liquidity?

Private Equity (PE) investors, of which Venture Capital (VC) firms are a subset, typically buy stakes in organizations that are different and better than what anyone else is able to own. Founders and employees in startups typically get common stock, VC firms typically get preferred stock, a completely separate class of shares that has more privileges than common stock. Even investors in the public markets after a stock market listing only get access to common stock. Not only do PE/VC get preferred stock, they often wind up with this exposure (whether it is via preferred stock or another instrument) at a price much lower than the current agreed upon or price derived valuation. Preferred stock further mitigate almost all risk by having covenants (contractual conditions) such "liquidity preferences", meaning that there are many events where a preferred stock holder gets paid first, meeting the amount of their initial investment or several multiples of their initial investment.

Even if exposure via preferred stock is not initially arranged, similar outcomes are entered into via convertible notes. This is a form of lending to an organization, giving them capital with no initial change to the cap table or share structure, which then converts at a later date to shares at almost any price. This is a way to circumvent buying in at market price as the convertible note acts like an options contract negotiated sometimes years in advance.

Analogous to a loan shark, almost any arrangement can be pledged and it can be very lucrative such that the loan shark almost never loses.

Now, these same concepts translate into the crypto market. The speculators are taking up all the spotlight but are playing a very different game, just like in the equities and bond markets the speculators are only providing liquidity for the funds to dump on them. And occasionally complaining the few times they notice, such as when a founder sells. The founder takes all the heat, while the VC/PE and Hedge funds get none and only profits. (None of them should get any heat or attention, or it should be evenly applied or the speculators should have considered the possibility of that and chosen not to trade that asset)

> - perpetual block [rewards]?

This is a concept somewhat unique to crypto currencies. Although it exists in currencies and equities under different names. It mostly means perpetual issuance, where more of the asset is created and this is exchangeable for cash as long as the market continues to post liquidity - or as long as the market keeps putting up cash to buy more of the asset.

But for a concrete example lets look at Helium. Google Ventures invested in crypto asset project Helium. Their private equity deal gives them the right to the block reward.

Like the Bitcoin network, the Helium network is a blockchain that appends new blocks to the chain, not dissimilar to additional nodes in a linked list. Like, Bitcoin, new Helium network uses the addition of blocks to also distribute new Helium tokens to the people that helped validate the existence of the new block. This is called the block reward. Like Bitcoin, Helium network participants are competing for the block reward and this competitive process decreases how much of the block reward any single participant receives.

Unlike Bitcoin, the block reward is also split with the private equity investors. The organization needed capital after pivoting several times before creating the Helium blockchain network, and nobody else would give them the time of day. So there are two portions of the block reward, one that people compete for and split amongst themselves, and a separate portion that is simply given to the private equity investors who maintain the same split forever (well till the year 2070 in this specific case), as there are no more private equity investors. Deals like this exist across the entire space.

> - the entire last sentence?

This was hard for me to articulate. But let's say you run across a VC / PE firm pitch deck, it might say "we've returned 500% in capital over X years" with a nice line chart showing how it beats the S&P500 and even Bitcoin price over the same time period. This might be their only way of showing broad relative accounting across the whole fund, but any particular investor in the fund actually might have much higher returns. 8,000% perhaps? This is due to the nature of the accounting. If a fund invested in Facebook in 2010, and you knew their IPO was going to happen in 2012 and make the fund billions of dollars, there is no way for you to invest into the fund in 2011 and earn that appreciation. If you invested in 2011 you would only get exposure to things the fund invested into after 2011, you wouldn't have exposure to the 2010 positions. The fund itself will have your capital and report a greater amount of assets under management (AUM), and by 2013, after the Facebook IPO, this greater AUM reduces what the whole fund can report as "performance". So you really need to understand the nature of the deal flow to determine if it is a good place to park your capital. You are more so hiring people to make deals, which is very different than hoping for some "trading genius" to analyze publicly traded markets full time. In a liquid fund, all the money is pooled into the same strategy that is ultimately priced at the whim of the market, so in those kinds of funds the performance is more easily seen in a pitch deck.