Bear Market: Stage 3 is upon us | Roundup

Transcript

[Applause] foreign everyone happy Friday welcome back to another weekly Roundup you got Santi you got me uh I'm coming at you guys a little a little sick today so far you hear you you uh hear some sniffles I apologize in advance Santi how you doing I think it was I thought the samples were something related to like crypto existential you know disillusionment and really just bottoming out uh do you think I was crying or did you think I was like doing a lot of drugs what what what's uh because both are kind of like disillusionment with crypto that's a great question I I think you're just like you know really disillusioned with the space but then all of a sudden the market rips and we're up like you know 2x on some things and everyone's seems to you know be be really happy and

all this so no I I can't complain I'm doing great you know uh you know really excited for this Roundup uh we skipped last week but there's some really interesting developments and yeah why don't we kick it off yeah yeah sorry we skipped last week guys we uh blockworks had our company off site last week we went to uh spooky Savannah Georgia uh learned down there that it's the most haunted city in the whole world so we did a ghost tour um aside from that it's a pretty I mean but Jason it's pretty ironic like what could possibly scare you after the entire like last 12 months in crypto I guess like you lose you become numb dude that's funny we did we did a ghost tour so we did a ghost tour of Savannah and uh you know the guy's like giving us a

tour it's like kind of a history tour meets like a ghost tour and he's like so what do you all do I heard you're here for like a conference or something we're like no it's our company off site it's like oh nice what kind of company do you do I always say like I was like we're it's a financial media brand like I usually don't get into crypto stuff and he's like oh like what kind of finance and it's like oh it's a crypto company and he's like oh crypto he goes I love nfts he goes I'm staking my nfts have you heard of it and he starts you know going off on like have you heard about this nft collection this D5 platform I hadn't heard of any of them but I was like oh man Mass adoption baby when you're uh Savannah tour got

his uh is into nfts okay let me ask you a question do you still struggle and when you go to a random get asked what do you do do you avoid telling people that you're in crypto still I still if I'm at like a I think it actually probably depends I mean it definitely depends on the group but if I'm at you know I was I was back home I was at a my cousin's wedding back home and San Francisco and hanging out with a little you know an age group of I'd say like 50 to 70 and if people who I don't know in that group ask me what I do say I run a financial media brand and New York yeah and if they say if they dig further and

they're like oh so I mean tell me about it or like like tell me a little more I'm like ah like you know like Wall Street Journal or Bloomberg we've basically created something similar for crypto that's my like one-line Spiel for folks who know nothing about crypto yeah yeah I I the only time I like I don't feel ashamed obviously but I do sometimes look back and say it was kind of unnecessary because it becomes like the central topic of a conversation in a ripping bull market everyone's you're the most popular guy in the party all of a sudden everyone surrounds it's like which entity should I buy where should I stake my tokens like and and obviously you know it's so and then in a true like bear market like we're in now everyone's like oh wow like you know are you doing okay like do

you want to drink and I was like no like I'm okay like that's um do you want to drink or like oh wow like yeah it's a scam and like they they all of a sudden start like berating you of like what's the point of crypto and you're like I just came here to talk and just like talk about non-crypto like my 99 of my time is spent on crypto Twitter like can I just you know but yeah no it's yeah it's interesting all right so today we're talking about stage through the bear Market apathy some uh had some tough conversations with companies I invested in this week and just want to I mean I'll anonymize them but want to share some of those stories and just I think share some of the way uh share some of the feelings

that I think uh folks are going through right now uh because I think a lot of people are going uh having a bit of a tough time right now I want to talk about that maybe we can touch on Aptos Aptos is like the only thing ripping right now um I also want to talk on uh talk about cctp uh circles cross chain transfer portal and then uh Doodles announcement moving over to flow so I I think maybe a good place to start oh you know what first thing is permissionless I saw in our slack Channel I don't know if this has gone out on Twitter yet but new speakers I was looking through the new speakers because we have a marketing and an events Channel we got Justin Justin Drake we've got Christine Moy who leads crypto to Apollo we've got Vance and Michael from framework sure enough I see

santi's face pop up so Santi we're excited to have you at permissionless sir yes sir I I I'm very excited to to be invited back given that last year I was unable to to make it it was very much weather related but uh yeah no I'm very excited for that and Austin's a great City so it's in Austin right mm-hmm yeah yeah I'm really excited about that get your tickets if you guys are listening on Friday you just missed the ticket for the last again every two weeks we increased the price of the tickets there were 312 bucks now the 352 bucks they're gonna go up to 400 bucks and then they go to 500 and then they go to 600. I forget what the actual price increase I think we increased the prices like five or seven and a half or ten percent every two weeks so get your

tickets all right so uh let's let's talk about uh ciao so Chow had this tweet um and he said for crypto professionals the second year of the bear Market tends to be the most painful one it's the year of apathy there seems to be no light at the end of the tunnel but simply being aware of this gives you a massive Edge year three things will get much better this is the year you start to question your assumptions you ask yourself why you're in this space in the first place your co-workers are leaving your friends and the media don't care about you anymore your growth metrics seems stuck no matter how hard you try power through and um so we have this off-site in Savannah and

at all of our offsides Mike and I kick off the offsite and we have this like I don't know how long the the presentation was probably like 90 minute presentation to kick off the offsite and one of the sections was about where are we in the cycle and like how are we feeling about things it's kind of a big state of the union state of the nation presentation and we kind of we walked the company through these four phases of the bear Market phase number one and I'll lay out how how we see it I'm curious if you see it the same way phase one is the blow up so this was November of last year we topped out of November of 2021 we top out December January from November to uh to mid-January we we cranked down from like 68k Bitcoin 68k to like maybe Bitcoin

around 30k so like that was the blow up and the blow up is categorized by like Euphoria rolls over the leverage blows out rapid price changes and I think the the main enemy that you're facing there is just fear is like this holy [ __ ] moment so that's phase one phase two is the Fallout and that's what we were facing this summer that's when Luna blew up three arrows blew up ever the the feeling in the industry changes to uh disenchantment um and that's when like every I think that phase can be categorized by like everyone's angry everyone's looking for someone to blame and this is when you saw people really getting riled up about like machinski and Kyle and suzu and and and doe like you're looking for like you're looking for for someone to blame

basically and that that's the Fallout phase three is what we're going into right now and I think we've entered it I think we're officially in phase three of the bear market and that's boredom um and apathy um this is categorized by like unless you're really deep into the space unless you're very crypto native I would say there's this is categorized by complete silence lack of attention Peak floor and and like overall not just prices but in attention and the enemy here for people in the industry is boredom the enemy is not disenchantment it's not fear it's boredom and I think I don't know how long this lasts but that's phase three and then phase four what I'm looking for next is is the rebirth this is like Sparks of hope you

know the price of uh Bitcoin could go from like 15 to 30k no one will even talk about it no one will mention a bear Market rally no one will even get excited about new projects all Sparks of Hope get brushed off and I think the enemy in in phase four is disbelief so that that's the way that we presented it to the company I'm curious to get your take on how you feel about that and especially your take around this phase three I think boredom that we're that we're entering into right now I think it's well established cycles of Market psychology and I've observed that that happens in his like previously in other crypto Cycles I've seen three now very much kind of they're all slightly different but very much follow the same

psychological pattern I think I do agree we're entering into this apathy phase although there are some really exciting developments and it's difficult because my perspective is you have to wonder you know your Eco chamber in Twitter there is a lot of excitement around certain developments Shanghai liquid staking derivatives there are we talk a lot about narratives in this podcast crypto has very much expanded and now covers so many different verticals that at any given moment in time like there are very exciting hot narratives they could be like shooting stars they might like burst and and go into flames and

then die off fairly quickly and so categorically like in a broad stroke I generally do think that we're in this phase of apathy if you really zoom out and say by and large relative to where we were in the peak yeah certainly like a lot of people have left a lot of people have a question why this all matters and the key there is like Xiao I think crystallizes it fairly well which is personally as someone involved in the industry when you see a lot of this Fallout in this pain and fraud you you do it's difficult I think you fundamentally question like where where are we going

even though there are really exciting developments but you're a cane said this to me um at the bottom of last bear Market this was January of 2019 he said you know you're in a bear market and I think it was hinting at the phase of the bear Market that we're in now which is apathy when any development any announcement positive one of new products that we're launching he says he said at the time the token just drops because people are reminded that they hold a bag and then they just sell whatever is left and now I'm not sure we're in that phase now because Fair like to be fair even though a lot of prices have gone down in a similar manner or less cycle we're down not 90 95 and sure enough some of

these assets have like gone up at 2X you know since about since the bottom um you know I I still think that it's going to take a while to get rid of the skepticism disillusionment um and I'll be you know I think I'd be remiss not to say like it has impacted me even though the thing that gives me the most amount of comfort is talking to Founders because I tend to think that investors are more impacted by the psychology whereas builders just keep the head her heads down and you know our are fairly more um like detach from this psychological curve but you mentioned that you talked to Founders so I'm really curious to

understand yeah how they're feeling because when you I think when you see Founders categorically be more impacted by it I think that's where you're close to the bottom right um well first off I'll share those stories in a second but it's funny like talking to you said talking to builders like gives you a little hope you also mentioned like crypto Twitter and this like Echo chamber that we're in I was trying to think back to 2018 and 2019 when Mike and I were trying to get Block Works off the ground I didn't know that we were in a cycle I didn't know that we were in a bear Market I was just like oh the prices are going down so like you just keep building you just like

that that doesn't impact how you build um and I actually think that but for you right you're gonna report I mean I I almost say sometimes no matter what we were building back then I think it was like you just especially for first-time Founders in crypto I think it's really easy for you and me to and for a lot of people who've been in the industry since 2017 uh or 2015 or 2013 to be like oh this is another cycle we got to get to the cycle there's a lot of people who came in in the 2020 really 2021 like nft bull market and 2020 D5 bull market that like they're kind of just like all right but I mean this is just what happens you

just kind of keep building um and and actually I think that crypto Twitter is your best friend in in a bear Market funny enough um I know people say that like get off crypto Twitter it's the bear Market get to building I think that crypto Twitter is your best friend in a bear market and your enemy in a in a bull market in a bull market you have an extreme at least I do an extreme amount of fomo for everything going to every day during the bull market go into crypto Twitter I invested in this but this other investment made more money we're building this but a competitor's building this and it seems like this is doing well extreme amount of fomo in a bear Market I'm like oh my God there's so much going on in the industry to be excited about super cool developments

with Mev really interesting stuff happening with Bridges that's like circles doing uh very exciting developments in the in the liquid staking develop uh liquid staking derivative space um really cool uh like like these nft projects making interesting decisions um and I just think like to me there's a ton going on if you didn't spend time on crypto Twitter like crypto's dead so I've found crypto Twitter to be a place of hope right now yeah although to be like I definitely agree with you I think the most important thing you said there is you've been through this before and there are a lot of like when you think about the adoption curve overlaid with this Market psychology curve the sheer number of people that have entered in this last

cycle is I think uh a multiple of what entered in 2017. and so every subsequent cycle I think you're going to expect just more people that are new to the space experience is pretty brutal volatility that is just inherent of early stage technology the new paradigm here is obviously that you have a greater price Discovery or attempted price Discovery through 24 7 365 markets whereas you didn't have that in the internet Because the Internet you had the the the boom and bus like of 99 but it was fairly I guess there was a lot of retail investors that got hit by that because companies were going public much faster and but in crypto you know companies go public like I guess like they want right um and and so it involves much more

people like to think about this ethereum is a piece of technology it's created the most amount of millionaires and billionaires I think by far like and so it's just this virtue that people can invest in that in a lot of these projects and they go through that pain and you know when you think about like something like FDX there's a million people that were affected and a lot of them has been their only experience with crypto and so or Terra you know and I think that's what is quite different um we've talked about this before I think this the bar is much higher for those people that perhaps have left the space and in order for them to come back this idea of like how adoption curves happen it's like this viral

coefficient so you learn about crypto then you tell five people those five people tell other five people or three people and so it's just it's factorial right it's like exponential it goes both ways right it can be very positive and very negative right uh like positive and negative like uh and so you know I think still the what's still fairly been although we're in apathy phase I'm very surprised though that there are nft projects new mints that are getting a lot of attention and the nft pocket of crypto is sort of I don't want to say fair totally insulated but behaving you know somewhat like unrelated um kind of just doing its own thing um and and so new people are coming to

the space they might not be interested in you know l2s and D5 or whatever but there's still a fair amount of activity in the nft land that wasn't the case yeah last cycle all right so I got I've got the I've got a couple stories from these Founders yeah so I have three calls with Founders this week I'm gonna anonymize all them um just a ridiculous amount of respect for for these guys um one of them uh trying to figure out how much how much to share so so one of them basically one of them is pivoting I'll just go really high level here one of them is completely pivoting the company um and is like really excited about the pivot but it's like completely pivoting the company and I think that's symbolic of things that happen in Bear Market is

like these full-blown pivots because in a bull market everything's working in a bear Market you're like if I don't pivot I could I could be done um completely pivoting trying to raise another round seems to be going well so that's one company the other one and and they're feeling super excited the other one is incredibly dejected because they are in their minds operating better than they've ever operated but every single number that they track volume users everything is tanking and I think that's super symbolic of a bear Market where like you can be you can be running 100 miles per hour you can be running through a brick wall and like the numbers just don't really move and one thing that we told block works at the offside is like in a bull

market one unit of output will get seen as like or one one you you input one unit and you get one one output the next day for example like you do you do something productive and you'll see the output the next day or the next week in a bear Market oftentimes you you do something productive and you don't see the output for like 12 to 18 months and that can be really discouraging so I think the second Founder's feeling really dejected and I and I really understand that and empathize with that and and the third the third one unfortunately uh had a big founder dispute there at this point in the business where like they had this founder dispute one wants to go one way the other wants to go another way they

couldn't come to an agreement and they've decided to shut down so and that's just a real yeah um and these like I just really feel for them and I just think these are things that happen in in Bear markets and it's tough and I just like I think a lot of folks are going through this but like you don't see that on on Twitter you don't see people sharing those stories so it's very interesting I've had actually three calls too in the last week and a half and very similar pattern one of them um the two co-founders one of them wants to exit crypto doesn't believe in it anymore and the other one does but they have these disputes around ownership of course and they're going through that the other one company is questioning like it hasn't hasn't found product

Market fit and have limited resources and are saying look we have X amount of Runway it's decent it's over a year but we just want to Pivot and do something else um and and the other one is actually doing fairly well and they want to double down and raise more capital and the exist it's largely going to be existing investors that are going to give that um and so I was talking to a few other folks that invest and I think what is one you know we always talk about like product well I think in Bear Market in Bull markets product Market fit um is can be disguised and you can punt that to some extent you have more margin

whereas you know the bear Market's more brutal right it will tell you to your point if things are not working and you're just you're just throwing stuff that you think is really cool and Innovative but no one's there no one cares and it's really difficult to iterate and and understand if you're navigating and streaming the right course um and this goes back to the theory of if I look back to like some of the more successful D5 projects they kind of grind it through this I'm thinking about I'm a compound synthetics maker synthetics for example started as a stablecoin project called haven it was actually the largest Ico race and the fastest and it sort of ticked up the absolute top of the Ico craziness and

then they went through this kind of transition where they said stable points are not going to work bases shut down they had to Pivot and they set a synthetic stable coin well you can express that and pivot it to a generalized synthetic like synthetic platform and seeing that pivot even though they're fairly well capitalized was difficult and they were building what is still a fairly complicated difficult thing to understand what saved them I think it did very well was surround themselves with a very small but vocal and engaged community in their Discord like the synthetic Discord channel to this day is just various what are they call them the Spartans or something the Spartans yeah and so I think that was it goes to this theory of

you'd rather have like 10 or 100 Die Hard fans than a million you know kind of not so engaged um you know users if you will because those are the guys that are going to give you a really good product feedback and I think for any founder listening here I think you know if you have a Discord identify those people that are really active in the community because they're going to be the ones that are going to help you navigate when nothing you seems to be working yeah um um and then when that spark phase of the of the market you know we're entering into that spark phase um you know that's where I think you'll be rewarded but it could take who knows right timing is really difficult in so so let me let me share a trend that I

see um that I saw companies do that I see companies doing right now stock companies doing 2018 2019 including block works I'll share a really embarrassing story that blockworks did uh and then that I saw even happen in the past or that I heard happened in the past bear Market I wasn't in the space but I I heard happened so in a lot of the talks with Founders I think a lot of the disputes are for example in this there's this one company I've invested in one founder wants to go one way another founder wants to go the other way one of the founder wants to what I'd say Chase short-term cash really scared about cash flow the other one wants to like build what is it it will be a very successful thing and I'm I'm sure of it it's just going to take another 12 months

um and and the like immediate cash flow is not really there um I think there's a tendency to get really scared about cash flow and in one in in a bear market and on one hand it's um you should you should be scared of cash flow and there's this great book Andy Grove like only the paranoid survive and you should like opt you should cut your burn and you should get to cash flow positive if even possible um some of these companies are too too early to do that but I actually think optimizing for cash flow can hurt companies and can be a really uh can be a fault if you try to do it too early and I have two two stories to share here one is um one is actually coinbase

for people who are at coinbase in 2015 you should fact check this story but uh we would love to hear from you guys but the story that I've heard about coinbase is do you remember the Enterprise blockchain remember Enterprise blockchain and like it started to get kind of pushed in 2016 by 2017 it was like all the rage those are the commercials on TV is like Walmart's moving their supply chain onto the blockchain thanks to IBM's blockchain platform you can now hyperledger remember you remember like mangoes it used to take like 48 days to track a mango and now you can track it yeah we're gonna we're gonna reinvent Supply chains and you know like Pharmaceuticals and Providence and all this is going to get solved yeah yeah this hair hair uh Walmart and blockchain first off they

spelled blockchain wait let me let me read you this this is this is amazing November 2017 Walmart and blockchain first off blockchain is two words block space chain it takes two to Mango this was Walmart's uh this is Walmart's push is that they're gonna oh man this is amazing to read uh basically it took a long time to track a mango the supply chain of a mango and a blockchain would solve that anyways didn't Enterprise blockchain didn't make sense at all coinbase though coinbase launched um I forget when like 2013 or something and didn't have much success and then like all all of a sudden it went really parabolic because they helped people buy crypto and and hold their crypto then the bear Market hit and everything fell apart like their user numbers tanked

user numbers tank like 98 Revenue also tanked like 95 to 98 the board of coinbase was really pushing Brian Armstrong to get into Enterprise blockchain and to go sell software for Enterprise block for like Banks to help Banks get into and adopt Enterprise blockchain and Brian and you know their their argument was probably what a lot of VCS are doing today which is like hey cash flow we need to make money you're thinking about this esoteric thing in the future crypto markets we're thinking about the money today and Brian to his credit at least from what I've heard was like we're not doing it Enterprise blockchain I'm just we're not doing that and other folks did go do that and they chased that and it didn't work

um and it's I just love that story because it so that was the 2015 bear market for a block works I was reminded the other day I went to a message I pulled up my DMs with Kyle samani and the last DM I had with him on Twitter was from mid-2019 I said hey man good said so we hosted the blockworks hosted The multi-coin Summit in 2019. I said hey Kyle good meeting at the multi-coin summit a bunch of our clients have been asking for influencer campaigns and your name was brought up would you be ever be open to paid influencer deals with companies like blockfi and Gemini to Kyle's credit he said no I said cool good good talk right uh but it reminded

me block works in the heart of the bear Market in 2019 we were needed money so badly and we're this bootstrap company we started spinning up influencer marketing deals for Brands as basically just an agent an influencer agency now the good is that that helped us survive the bad is that like we quickly realized that's not a good business like not a business we want to be in but you know there are some things that um it's a lad Gill who's a very well-known investor yeah angel investor has a great book I think it's a growth Manifesto or something and he talks about a certain anecdotes some yes the growth handbook hi great book high growth handbook is really good

yeah very practical um good resource one of the more interesting things is sometimes you do things that don't scale to survive Airbnb sold cereal boxes during the presidential campaigns to like and that hustle of both the founders impressed Paul I think it was a y combinator that then they got in last minute and that grit and this is a point that I want to bring up because I just read a book uh by Anne uh Drucker and and Duke any Duke she first wrote a great book called grid uh yes thinking in bets and then she just wrote a new book called quit which

talks about fairly interesting concept which is most of the time we're really bad at quitting because this Collective idea that you need to persevere and you know you grind through it and the harder you work the luckier you get and I think it's sometimes a thing that we don't talk about enough in this conversation with these Founders I've had had to like ask myself well maybe the best choice here is to return Capital versus to go through another cycle with your founder or if you haven't found product Market fit if you're not if there's no like viable product just return capital and I think it's something that who doesn't get talked about enough but sometimes it's the right thing to do and I've seen now two companies return capital

uh one that was building a terror ecosystem that had to shut down and was like going through this motion and kind of had a existential crisis and I was like look you're great founders I think a great founder will probably probabilistically get his existing investor base to invest in the next thing he does if they return capital and they show that maturity and you know it's it's a very difficult thing to do but this the general concept of this book is most of the time when you look back when you think you've quit at the right time it's too late and and so it's just an interesting concept because in crypto we talk about huddle culture grinding it through believing in long-term Vision but

sometimes the idea might not work it's too early and it's okay to just survive and take time to observe and you know it was just a really interesting perspective because I don't know what you think about that and if you felt that at times in the early days of block works like did you ever have this existential crisis did you ever think about quitting did you ever have this kind of discussion with Mike not really we couldn't we couldn't our whole rep our whole it was all it was I mean no not really honestly like what no we didn't I mean I remember like we I remember one day when we had beers in 2019 and like our members specifically

the conversation of like what would you go do if we weren't doing block works or like maybe it was like what industry would you work in if you weren't I mean I think those were two questions that we asked what would you do if you weren't doing block works and what industry would you work in if it wasn't crypto today I would never there's nothing else I would do I don't know I'd work in crypto still and like I would I don't know I couldn't see another option outside of blockworks but like that was definitely maybe in the back of our mind but no I don't think we ever thought about crypto probably because our whole reputation relied on block works we were like we were the first ones of anyone we knew to go do crypto full-time and like the amount of [ __ ] that we got I mean it was like

you're gonna go do what host crypto currency events for that blockchain thing you're going to do it full time you're going to quit your good jobs that you got like uh oh okay I mean I think everyone was basically waiting for us to like come back to the real world and like come back to our our real jobs you know so yeah yeah I don't have good answers I I do practice quitting when I run like there's sometimes the race is where I just you know it's not your day that's it it's easier to practice it then and there I think as an investor where I like whenever I make an investment I'd like to think about scenarios where I would quit where I would exit and have

a framework in mind thinking in probability saying if I do a 5X then then I take chips off the table like systematically and thinking about that probability thinking like Bayesian Theory I think was really helpful to then say like what is the probability if something has gone up X for it to go up another X or am I better off allocating my Capital elsewhere and I think it's ultimately it's really difficult to give like these broad-based like generalized advice because my what I like to think is everyone has a very unique perspective journey and position and so when you look at crypto Twitter when you look at people like giving this advice it's like well it really depends on your

time Horizon your your liquidity position the most important thing that I think and you mentioned it is you know just position yourself to be patient and to have the opportunity to take more time uh because the biggest mistakes I've done are feeling rushed into a decision either because I'm under some sort of stress like I you didn't have cash flow in the last cycle and you had to sell some tokens at the very bottom or near the bottom had so many people see that and like go through that phase uh and so you know I think those were my biggest learnings from from the past Cycles it's kind of it's kind of a Fool's errand to start thinking about like have we is

this a bear trap or a you know have we really bottomed it's uh I think the the other thing that I I do definitely agree with what you just said is I think the more time you spend in this space it's fairly difficult to say that you know this is going to die and you know it sounds like you open a door you see the future it's hard to imagine the next like crypto not being a fundamental piece of fabric of like how we do things in the next maybe 10 years now how we get there is the most difficult thing and so you just assume the journey is going to be very difficult and you then do everything in your power to have enough

resources fuel water granola whatever it is in this hike to be able to grind it through because you know it's still going to be is this still a running analogy like sports sports analyzes are the best because I think it's or when you're hiking like I just I just got it's very relatable so anyways yeah that's that's all I'll say I also have the feeling of quitting when I run but the difference is I usually have that feeling at like a quarter of a mile I think you can you can usually go go longer than I do there so yeah I actually think one I mean one thing that I think um one thing that I think influences your decision on to quit or not to quit was how much time you put

into the decision yeah of what to do of to do it or not do it like I have a friend he's always starting new things you know every four months he's starting a new thing every quarter he's got a new thing he's got a new like d2c one one quarter at the d2c pop-up website selling like you know this little massage tool the next quarter it's like he's like he he hacked the system for how to create like a best-selling book the next the next quarter it's like a newsletter and um and then and then and then he quits them and the reason I think that that's okay to quit those things is because those ideas were created on like a spark of excitement there wasn't much a thought that went into them

um I've seen other companies in crypto do it too uh I think one exercise to do is like a really good exercise to do is that I don't think many first-time Founders do is like what's the end state of this look like because one thing that you'll notice if you look at a lot of crypto companies from this last cycle is like they all a lot of them kind of converge to be the same thing so back in 2017 and 2018 a lot of infrastructure companies were raising uh we're raising money to be like you know to help with crypto as crypto became institutionalized and like the infrastructure needed for that so you had custodians being created you had lend and borrow platforms being created I was like block fi and Celsius and nexo and those folks yeah the custodians

being created like Anchorage and bitco and and fire blocks you had um the trading platforms being created eventually after like three or four or five years they all converged to be the same thing those are all they're all creating one version of either a prime broker or a crypto bank and in media it's the same thing some people start with newsletters some start with conferences some people start with news some start with data some start with research I can assure you everyone will end up competing on the same thing which is like full stack median information platforms that combine news with like opinion stuff like newsletters and podcasts with data with research all ends in the same space so I think one thing to think

about before you jump into it is like what what's your end State here okay you're gonna nail eth custody like cool you're gonna do that better than anyone else all right what happens next you're gonna have to introduce a way to make money because custody custody's not a money-making business so yeah on this um on this point I've been thinking a lot about I think a big theme this year is going to be some regulatory clarity I may be wrong but I think it's closer than ever and I push back yeah well well let's just assume we're going to get it in the next 12 24 months I think it has been difficult as a project I'm not talking about a crypto service

provider I'm talking about a native crypto native project has a token thinking about token design has been fairly constrained in the sense that we've been thinking about governance tokens and monetization has been something that has been on the back seat because because of like the Securities laws and you know you don't want to confer like a promise of profit and relying on the effort of others and the Howie test basically and you know I think like I have an open question here I'd like to have another regulatory podcast where we talk about okay imagine a world where if these things are deemed Securities some is that a would be existential for like

a lot of these projects in meaning what it creates a very burdensome like would it create like would it make it impossible for them overly expensive to like comply and I I do think of a scenario where it's really not I mean a lot of this data is on chain a lot of the smart contracts are deployed everything is readable for everyone you think about Edgar SCC the thing that of course needs to be emphasized is these disclosures that happen on Discord channels but maybe you just post and there's an API that reads the stuff on a website that is like you know the Edgar SCC of crypto or you know the fda's version I don't know but I think like you know a lawyer

will give you his perspective and I've heard this numerous times which is like it would be impossible for a token issue to like operate it's so expensive think about like companies going public it's a very expensive thing costs millions of dollars but is it really and is it really that bad if things something that's deemed to security it's just an open question because I think if if it is and I don't have an opinion here I'm just saying if it is then we will go back to the drawing board and say all right well let's actually design the uni token to be the most profitable exchange that the world has ever seen and one of the more like I've always felt that crypto companies are highly efficient like Labs crypto like companies that develop

a piece a protocol and deploy it and then have some sort of like are able to monetize that you're talking about like comparing coinbase you've we've all seen these comparisons we can link them up I did it once which is compare a game Studio like axi to a normal game developer like Sony and Activision Blizzard compare uniswap to coinbase a normal centralized exchange these pieces of technology and protocols once deployed are self-maintaining and on the margin like they just the unit economics of that I think are the best of anything I've ever seen and I was a soft like I was investing in Enterprise software before really going full time into crypto and all you look at is unit economics

and so the issue now is well what is the relationship between unisol blood and the uni token and the uni token like DJ and Spartan keeps saying well these are all worthless governance tokens and in large part you know he's right like what is actually the value okay well then we figure out like curve Wars and you have there's value in voting power because that influences certain things and but I just a part of me says let's just call these things like let's just get some clarity because that's the biggest problem I think at this point whereas you're in this like weird limbo where it's a governance token but it's a highly profitable protocol what's going on you know what I mean

so yeah all right so maybe going up maybe maybe going out that something like regulation leads to like better business models a little more like sound fundamentals and cryptos in cryptos good transition into Aptos uh which is up 400 in 30 days um I'm assuming you were a seed investor or early um what's going on here why are why are we pumping is this just like a nice little crypto Twitter bear Market pump I honestly have no idea I think uh I mean it's it's on a relative basis more uh like up more than like something like

Solana which is up like to a little bit more than 2x right it bottom to nine and but I I actually don't have any idea what uh what price range did seed investors get after set I'm not sure that's public information so I'll defer to comment like I'll let me maybe let me rephrase it then how do you think about are you can are you able to sell Aptos tokens right now no no they're locked yeah I mean is it worth 13.6 billion or something like it's an interesting question I think a lot of the a lot of the what I've observed is competing

l1s trade on a very relative basis and you know the theorem is worth 100 what is it 174 200 billion or so um yeah 200 billion uh with some like some inflation then what should a competing platform trade at and then you look at okay what is you know some of the other l1's trade out Cosmos Avalanche Solana and so I think it's it goes back to this question of how do we price crypto assets and what is the monetization model for these crypto assets and you know I think it's fairly it's going to take a lot of

time for the for the market to converge I don't think the market is sophisticated enough to look at this on a fundamental basis it's really just relative valuation that we're looking at here you do have some like arguably things to go off of to value a network like ethereum that has pretty sound like some interesting properties from a cash flow perspective uh with the ip1559 and some other components of staking and you know float and some there's like a number of ways you can kind of we'll try to compare this like to like a normal internet like company um the former analyst uh James who was at ARC did a great uh has a great uh analysis and he sort of Compares like Google to ethereum so we can link that um

and yeah the other thing I say is people should go look at uh the Electric Capital developer report this came out last week I think it's one of them uh more qualitative and quantitative because you've been doing it for a few years of tracking developer activity in some of these networks now I'm not suggesting that like you know people look at that and then they you know it has an immediate Market reaction uh or impact in the market but I think it tends to be one of the higher signals that I look at um to then indicate okay there's a lot of developers that are migrating to Aptos for instance from Solana to Aptos as an example maybe maybe not but I think that's some of the other really interesting

um kind of data points you can look at to kind of triangulate to some relative sense or fundamental sense of valuation for these things Sunday let me ask you this because when I think about you and your L1 thesis I think of you as a very eth all in on eth and like when I bring up other things like maybe Cosmos or Solana I would say you're quite interested and like open to exploring them but like your thesis is is built and is like an evm eth heavy thesis why then invest in like an Aptos what's your thesis around something like that well I'd push back and say I've been on the record for a long time saying that I believe in a multi-chain

thesis in a multi-chained world and while certainly like a lot of my portfolio is based in ethereum um I have invested in other chains and projects maybe that have been building another chains um like a built of investment D5 ecosystem in Solana um in Cosmos and near um haven't invested in avalanche um I looked at it seed ground I I've been to the conference but I have invested in projects there some projects ended up going and building an avalanche so I have some exposure to some extent um investor and optos um you know I think for me there's two ways I look at a one it could be a it's

a hedge if for there is a version of this world where ethereum is supplanted and I as an investor you cannot miss that if that happens you cannot miss that event if you missed that event you're kind of dead in the water in my opinion you're a problem you fade like and so you can't miss that and the second component is I think we're very early still and the number of use cases that are gonna develop in this in crypto be supported by you know trustless execution environments is going to be like we're just we're just seeing like as you said this concept of Chris Dixon which is great it's geomorphic Concepts which is things that exist and we have certain things in web 2 land that we're

porting over to web3 but there are so many use cases that are going to pop up I tend to think that security and we have the eigenlayer guys on which I think is interesting podcast um this idea that every different application if you believe one that there are going to be many different use cases for for crypto other than monit like sound monetary like something like Bitcoin then this internet of value supports nfts today D5 gaming there will be many other type of business models that will emerge in a similar manner that the smartphone like no one really imagined the smartphone for you to invest in the internet in 2002 where people are being critical of the internet there's great interview Bill Gates that he was being asked and like in one of those morning talk shows he's like what are you

building like this internet stuff we're coming off of the.com Crash like just go home pivot do something else and you know I think for you to invest in the internet then like it was very difficult to then you had to foresee the full extent of the internet you have to foresee some like smartphones being developed and then software as a service and then everything that came after a smartphone cellular towers and like LTE and then Tick Tock and all these other different applications and how how much that has impacted your daily life is remarkable I think something similar will happen in crypto this is why we're here and that's the reason why I'm here and I fundamentally believe that it will not

be one chain to support all of those use cases even though there will be certain standards but you can't compare how the internet developed one-to-one to how crypto will develop I think there might be shared security there might be different chains for different applications that require different security parameters and I think it is solely based on the premise that there will be many many different use cases for this technology that I am not seeing today because my imagination doesn't stretch that far I recognize that but then I inverting that that leads me to invest in other chains because I do believe that a lot of these teams will talk and there'll be different galaxies clusters that will support a lot of these different

environments kind of like a federation if you will like I don't want to talk about Star Wars but I love Star Wars so I'll use that Federation analogy have fun sitting on the right side of the bell curve my friend must be nice over there um yeah anyways I was gonna I was gonna pivot us into the news because I realized for 50 minutes in and we're supposed to talk with you guys here uh but here's my transition is that I just got a text okay um about a new business models uh BuzzFeed just announced that they're going to use chat gbt to create content instead of using writers and their stock is up 100 today yeah ai's new crypto man

yeah um all right so I I think we can keep this relatively short I just want to talk about two things one is circles cctp and the other is Doodles building on flow maybe we'll say floated until then and then I wanna and then I wanna and then I want to talk about one thing at the end One news piece of item so why don't you cover those two and then I'll cover one more all right uh basically I mean I think so Circle launched their cross chain transfer portal everyone's sleeping on this I think it's one of the biggest announcements I was gonna say of the year but we're only 27 days into the year one of the biggest announcements in a while like massive massive massive props to Circle they're doing two really interesting things right now they're um uh it's their own chain one is their own

chain that's like kind of semi-related to this and then the other is um is the cross chain transfer portal so just like major props to Circle for everything they're building the tldr on on this cctp is they're calling an on-chain utility really you can think of it like a bridge that basically Burns usdc on the source chain and then mints native uscc on the destination chain so the reason I think it's so cool is because bridging has been like just this colossal not failure but like Honeypot for hacks they're over two billion dollars of bridge hacks in 2022 um and and I think Bridges have like a

been this Honeypot for hacks but they've really fractured liquidity like you've got like Wormhole usdc and then like axelrusdc it's really confusing from a you from a user experience point of view so I think I think it's a pretty smart branding play by them not calling it a bridge calling it a utility for the space I think that's pretty intentional um and I think it'll unlock a lot of like liquidity across the industry and I think it's really good for D5 the The Devil's Advocate to what I'm saying is that the way I underst the way I understood it is that Circle here serves as the ultimate source of Truth they they kind of serve as the mentor the burner and the price Oracle for usdc

putting my crypto native you know want to build a permissionless future world like that doesn't seem great to me um so little torn on this but I do think it's a it's a good innovation curious what you think of it I don't have a strong opinion here um other than the last point you said is very true but I'll take the Practical approach usdc I think is a good product I'm not endorsing it I use it uh even though I know it's centralized but yeah I mean they've proven to be very capable competent long term like we've had Jeremy on it I think he's he's a serious Builder and as a serious organization behind it so of course it has risks but um you know

fairly interesting development uh and it's it's actually the interesting that they've developed and gone in this direction given everything that's happened in Bridgeland over the last year and it's maybe one of those things where it's a spark but a lot will be met with a lot of skepticism be surprised if a lot of people are highly critical of it because it's a centralized and B it's a bridge and has a whole like the Wormhole and Ronin and all these things but I think that it's worth a critical look and obviously testing but whatnot but I think they'll do the right thing in terms of auditing and having maybe a you know a a good set of like validators if you will to make this like increasingly decentralized yeah it's interesting to think about what will happen for other Bridges right

like other Bridges could I think leverage cctp to do Native cross-chain swaps yeah like cctp works for uscc because Circle happen uh happens to be both the asset issuer and the bridge operator but um it'll be yeah I'm curious to see what happens for other Bridges like I think I think Bridge volumes across the board will probably get hurt by this um likely like No No One's Gonna realistically use a bridge when you can just burn usdc on chain a mint usdc on channel B unless you're like a true decentralization Maxi or if circle is forced to kyc it then that changes things yeah assuming a lot of the bridge activity is for stable coins but the non-stable coin piece is still going to

exist and support multiple other Bridges I believe yeah there's also something else that Circle um is developing which is um oh what is uh what's it called no uh Noble um so the circle's developing so there's a chain that's like a general asset issuance chain called Noble and it leverages the cosmos hub for security through ICS um and circle I the way I understand it circle's the first company that's going to use Noble to Mint usdc into Cosmos and I think this is really important for uh for Cosmos because now you get native uscc inside the cosmos ecosystem um so good two good developments coming

from Circle yep long Circle equity I had a chance to buy that really cheap last cycle did it you did or you didn't did not again done a lot of mistakes in mind that I feel so bad for you Santi yes it feels so bad for you hey man we'll live to see another day uh okay so that so that's that um we might bring the circle team on we're talking to them about potentially coming on I really want to do an episode with both Circle and then Antonio Antonio response so Jeremy Laird the founder of circle tweeted this out and then Antonio commented saying dydx would be excited to use cctp on day one if you prioritize supporting Cosmos we'd use it for the main deposit and withdraw flow on dydx

super cool first use case there I think that's great so thinking about having them on keep you posted all right the next thing is um we're gonna cruise through this and then I don't want to share too many thoughts on this because like I have kind of negative thoughts on Doodle so Doodles one of the biggest uh nft projects um they announced that they're moving to the flow blockchain or Doodles 2 is launching on Flow uh Doodles 2 is like I think the way I understand it is going to span like millions of nfts instead of the original 10 000 avatars in the first doodle series I think the core Doodles collection remains on eath um the reason that I forget the doodle founders's name Julian maybe

um or Jordan I think it's Julian um post posted this thread on why they chose flow but a there's like frictionless conversion scalable with zero transaction fees Pro programming language enables customizations and dynamic nfts and as a reminder Flow came out of uh crypto kitties if you remember crypto kitties in the end of 2017 crypto kitties like clogged the entire ethereum blockchain they created flow as an offshoot so that one as like a as a as a L1 that really like was built for for nfts um and actually a lot of the Doodles team came from crypto kitties and from flow so like I think there's a little bit of background there but uh I don't know this does feel like I

don't really know the details we'll have Doodles on to talk about this but like it does feel like there's a little I don't know that like flow kind of just went to Doodles and was like hey guys we know you from back in the day we really want you to come onto our chain Doodles is probably like I don't know like nobody uses flow no one really likes flow and then do and then flows like I mean we'll give you like a lot of money we'll pay you 10 million bucks or 20 million bucks to come onto our chain and um not that it's really a bad thing to to take that but it doesn't I don't know something about it is not really sitting right and even in the announcement that they shared I don't know if you read that but like it felt a little

apologetic and like really like were like over overly explainative on on why they were moving to flow it felt like very much like we're moving to flow but like but like don't be mad at us like here are all the reasons why it's a good idea um so I don't know I'm probably I might be reading into it too much but did want to share some of my candid thoughts there yeah yeah I don't have a strong opinion so yeah um I do want to touch on one last piece of news I think it's an important thing that I want to raise awareness to which is so Kevin Rose uh got hacked or well Kevin Rose signed a sick approved signed a signature that mass or was faking to be open open seat and then that allowed

the that allowed the the attacker if you will to drain his wallet and you know sell these nfts so it was fairly sizable I mean he was able to salvage a few of like a zombie punk wasn't affected but he lost like I think one to two million of of nfts he had in this wallet there's two things I want to touch on here one it's not a hack I think it is very important when we try to do a post-mortem of what happened because it helps everyone in the space right right that it wasn't a hack he he signed a sick he like he signed a signature that was faking it's like a phishing attack and I think it's different and the distinction might

appear like nuanced but I think it's fundamental here a hack is it could be like a zero day or something much more like that would affect other people potentially right and so I think this was as difficult as it may seem as you know it was just an emission right because it was just a phishing attack but it wasn't a hack and I think it's important to make that distinction because as a community tries to like help each other in these type of situations um you know what ended up happening here is he was you know there's this like uh he signed an octane signature created a listing for all of his open C approved assets he had previously approved where

did he sign that from though like where was he figured him to sign this so so it's this thing Seaport is what it was announced like last year and it was like marketed as a huge upgrade to what was possible both on and off open seat so kind of like allowed you more flexibility for trading assets you know and including like ball trading creative tees sweeping floors um and it you know a lot so it's it's through Seaport allows anyone in this case the attacker to create like this bundle like lit consolidating assets and offering a bunch of acetol at once and so my understanding was you know it was

he was fish he clicked this link it appeared to be open seat it was just appeared to be like a harmless signature he clicked it without looking and inspecting closely and then that triggered uh this transfer of nfts and then the attacker sold them for like two million bucks and so the thing the learning here is one be very careful on the links that you click a lot of these are coming from Discord a lot of them might appear to be new mints and so whenever you interacting with that be careful in the links that you're clicking always verify have bookmarks in place uh in your browser and if it's not a bookmark side be very careful what you're interacting and the second one

perhaps more fundamental is why did he have all his nfts in one wallet I understand you might want to showcase this in a museum type of fashion but yeah I'm with you that felt like a flex like you only do that if you're trying to flex and if you have it in an eoa just not a multi-sig be very careful if you're gonna sell one nft and you have 20 nfts transfer the single piece of nft that you want to sell to one other wallet and consider that wallet the hot wallet can interact with crazy batshit crazy contracts worst case take one you lose one not twenty yeah and so it's really really important

folks to it's really sad to see you know I I hate to see this type of stuff and but we have to learn from it and so it's just it can be avoided uh a hack not necessarily if it's zero day type of stuff it's like we're all going down like you know like you have to upgrade your browser kind of stuff you know like uh if it's like you know these password managers get hacked like that that's a hack you know that that is like will affect potentially millions of users and it requires kind of critical immediate attention to the security Community this wasn't a hack and so I think it's important to make that

distinction right yeah 100 I have you ever used revoke.cash oh yeah all the time I revoke access to everything all the time yeah so I was going to recommend go go to revoke you can go to revoke.com to basically revoke access to any open contracts and approvals that you no longer like need or or want and uh yeah would definitely recommend people revoke all the all the smart contract approvals that they don't need right now yeah please folks I will do please if there was like a banner here of like segregated when you plug yeah just segregate wallet it's like it costs nothing to have so many like create a new wallet just do it folks don't you do not want to cut Corners when it

comes to security not how early this space is like these things can largely be avoided take time to learn and if you don't know and if you have any sort of Doubt ask I've always found that the one of the nicest things about crypto is it's a very friendly collaborative Community even though there's Maxis on both ends of the Curve largely a lot of people here will want to help because we've all had that there's like this idea that if you haven't been hacked then you haven't been in crypto long enough and it's just like a good assumption to take the heart because you just kind of have to assume that you're a Target and just you have to be really aware of this stuff

yeah agreed a good place to end uh I I always recommend well I'll recommend the book quit which I reference by Annie Duke great great read love to hear what other people think about this idea of quitting particularly as we're going through this bear market and whatever market psychologies like part of the cycle that we're in also applied to that and the second I saw this Netflix documentary on tennis which was made by the same people who drive to survive it's called breakpoint pretty good actually pretty good not drive to survive but not drive to survive not as good though I'm not as good but and the third piece is drive to

survive comes out next week or the following week yeah so why don't you go watch breakpoint and if you think it's terrible it will at least kill some time to take off of Madness that's happening in crypto and then just wait if you don't like it drive just flies around the corner so it's a warm-up it's a chaser whatever you want to call it for drive to survive which we all know and love so I will I will stick with the sports content for you and uh I'm listening to a good podcast by the folks that acquired they did a three and a half hour Deep dive into the business behind the NFL oh really good podcast interesting yeah that's how you know we're in a bear market is when we all of our content is Just Tennis F1 NFL there you go bear Market baby

Santi been a pleasure we will see you guys next week yeah thanks so much for tuning in guys have a great weekend [Applause] [Music]