The Evolution of Crypto Incentives

Transcript

welcome back to the rollup whenever I get a chance to speak to somebody in the space that I've been following for a long time it makes me happy I get excited about it and today was no different I sat down with Jordy Alexander a man of many hats poker chess mantle fund manager high frequency trading Game Theory and more and discussed a lot of things we talked about the current ier meta the nft airdrop meta mants me bet and also an interesting meme coin with a lot of game theory tied in wasn't a super technical conversation like I know that we sometimes do on the roll but it was fun it was a look into the mind and the mental models somebody who's been in the space for a long time I really hope that you guys enjoy this video and let's Jump

Right In after a word from our lovely sponsors cartey is your home for app specific rollups at the Forefront of developing new tools and platforms that enhance the capabilities of blockchain Technology ctei enables applications that are flexible and built to scale build on a full Linux environment and use traditional software libraries but in blockchain development go to cars.io that's cy. to learn more about building your own app chain today welcome back to the roll up guys we are recording have the pleasure to

speak with Jordy Alexander a man of many hats um I've been following you for some time in the space man so it's definitely good to have you on and um kind of get to pick your brain a little bit about some of the stuff that you guys are are building on mle uh as well as some of your investment experience so welcome in Jordy um I know a lot of our audience is also big fans of the uh of the crypto Market wiiz pod as well no uh it's good to be here I'm sure'll be a fun convo and yeah let's get into it for sure so you like I said you're a man of multiple hats currently H as by your Twitter bio there's several things and I know that you do quite a few things so maybe just

give us a quick uh speedrun on kind of like what it is that you are doing on a day-to-day in space yeah unfortunately I have no life so my my my life is the space it has consumed me uh completely so everything from uh running selini so Selen is a firm I founded about three years ago we started mainly doing trading so like high frequency trading and defi um like onchain farming and and sort of onchain trading uh by the this point you know the firm has grown a lot or like 40 to 50 people and we do a lot of like Venture Capital um still do the market making and and the trading we're very active one of the largest uh trading firms but

we're also getting involved on like more advisory onchain actually like the actual building I guess which is kind of leading me into part two which is you know I spend a lot of my time um with mantle and strategizing on what a great sort of ecosystem looks like in terms of you know innovating and also creating like a great user experience I would say you know mantle is much more focused on the end user and the product rather than you know just some deep cryptography that you know we figured out in 10 years how to use awesome so quite a bit going on in the space right now and I think it's kind of funny that you started uh doing like yield farming stuff that

that's kind of where we got our start as well that was kind of the Wild Wild West and fast forward to now we have igen ler which is like the yield farming of this cycle and igen points and so we're kind of getting to this like points meta IG layer and we saw ethery went live they launched at extremely high valuation Renzo is going live they're predicted to launch on two three Bill people are meing igen layer to be 30 billion um before we get into some of the EM stuff I guess what's been your experience with reaking with farming points have you been actively participating with the fund yourself do you have any strategies or alpha or kind of thoughts that you

can share with us like we participate to some extent but I feel like we missed some of the crazy stuff I would say the the yts on uh you know ethery and ntina and some of these things ended up just being incredibly good um and we did didn't really capture that as much uh uh you know as some other people I know so def5 mro for example I think on the mantle team he he crushed some of Thea white Teese the reality is these these tokens launched very healthy valuations on the FTV side so like a 5% airdrop ended up being you know multiples of what people thought and if you were just betting on in Ence like the pre-market

of the token it's sort of what you're betting on um you did extremely well so it means that we have been in a bull market I think the people who are like when's the bull market coming uh they didn't realize it been it's been happening for a while so they got to wake up quickly because they don't you know they're going to wake up in the beer market and and and not know what's going on so yeah like these things have been doing well either F obviously like very healthy launch we we are investors on slamy side and ether f um and uh it's been good to see that one you know very healthy Renzo I think like you said also will will do quite well um I think igen layer will have a hard time figuring out exactly how to do the

distribution and and the airdrop and it's a lot harder than it looks from the outside to be like the one with the the massive you know CSV file spreadsheet and have to go down and figure out what are you doing how are you giving people stuff the main decision is around like linear nonlinear um you know if you do nonlinear like jeto did you can give a lot of people a good chunk and and that can create good Community we saw that on on kickstarting the salana cycle uh conversely you kind of have a lot of pressure to do a linear air drop so linear just for the listeners that don't know basically means like if you're getting a certain

number of points um if I have 10 times as many points I should get 10 times as many tokens like there should be some linear one to one tox conversion but what some protocols have done nonlinear is they'll say look if you're within 1 to 10,000 then you get 10 if you're between 10,000 50,000 you get 20 so it's it's sort of like hurts the whales and they can try to Target like whales let's say like Justin sun right like he's being the number one leaderboard everywhere the project might say like I don't want to give him you know X % of my token Supply and try to do these like non nonlinear things uh the problem is all these economies are like Pendle and everything

they're based around the fact that these to these points are are fungible and if you start making them nonf fungible the whole thing breaks and I think Ian ler has to uh figure out you know do they want to break the system and get all the Pendle users pissed off or do they want to get the little fish pissed off cuz they're not going to get enough I had this tweet that was like aird drops are incredibly polarizing you either get the community so excited and so happy that they'll scream from the hills that that you guys are the best project or within 30 seconds they're literally screaming that they they're the worst project ever and that it's a scam and that it's only for the rich and only in crypto do you get free money and kind of get upset

about it yeah not not even for the rich I mean we've had some weird ones I would say starware was the weirdest and probably of the worst in terms of just arbitrary random like oh if you did something on on GitHub then like here is like a 100 million do and if you were actually trying to farm but then you took out the eth then you get zero like stuff like this it's hard to do it so you know I have to say it's not easy to do this stuff um there's a lot of lessons being learned in live and um you know if anyone's doing a large air drop they should try try to consult I think people that have done done them um you know my my DMs are open if if any project is is

going to do a big one uh we have been doing some air drops so it's something I've been thinking about yeah same in the modular realm we we've been kind of helping out here and there with teams because there there's there's this nft meta with like py penguins and the sloth and mad Lads and then there's like Tia staking dim steak there's always little things going on so teams are kind of thinking about that but what I do think that's good that's evolved is like there's like there's Community Support where like team a b and c can can collaborate to to incentivize each other's communities to almost form like these like clicks in the market in a way um which I think is probably for the better um and before we dive too deep into uh ad eath because I do want to talk about this bold mission that you

guys are on to get good yield for your users you made a really good point about this bull cycle where people are like oh when bull market um and I mean our Port my portfolio is looking quite good but not as crazy as it and easy as it was last year where anything that I bought was just going up you know this time I've been I've been outperformed by salana meme corn Traders no doubt I've been holding some pudgy Penguins those have done well but like you wouldn't look at at the Returns on on other stuff aird drops you know the question kind of is how is this Market that much different and is it has it become sophisticated enough to where outside of Bitcoin the selection of

crypto assets which you're buying is directly determining your uh outperformance more so than ever before yeah I mean people that are maybe saying when bull market are the ones you know holding cardano and xrp and and Litecoin and whatever like the dino coins let's call them and there's shinier stuff and just expecting the market beta I think you know Bitcoin is finally outperformed a lot of these coins right like if you look at last year especially on a risk reward basis because you know Bitcoin is is the least risky one there's always going to probably be a bid as long as the technology works so um look I don't

think that anyone can catch everything and yeah like a lot of Sal coins you know unless you're uh you're focused on it and if you are then you're missing some of the other things uh going on maybe like an i layer ethereum side so uh you can't catch everything I think um people should gravitate towards what they find naturally interesting and appealing and just try to get good at understanding that space um on the nft side I mean I I love the meta of airdropping to projects it's something that I think will continue and makes a lot of sense because ultimately you want to direct airdrops to like real people and real like Community that's loud and passionate and like native instead of

just like being sibl and yeah you know some people might have 50 Pudgies instead of one pudgy so you get a little bit of like that um effect where they can still Farm um and I think trying to do it where like you say okay if there's more than one pudgy and if there's 10 on the wallet we're still only going to give one eardrop that works the first time but then people learn their lesson and then the next time they've just distributed them more wallets so yeah gbus has like 30 jbus has like 30 and he's like hm I'm now being incentivized after this Omni airdrop to split all my Penguins into individual wallets then he tweeted like two days he was like all right my penguin distribution is complete yeah you have to do it it's

like unfortunately which is why I'm not a fan of trying to anti-il in these ways because they're one-offs like we might as well just say okay for every pudgy gets something um I don't know I know that puggies is pretty active on keeping a list of their the active Wallace that they deem to be you know air dropable and and like unique and that's pretty cool I think that nft Community should be able to quickly have a list of wallets to give out um for anyone that what's air drro to them so I talked to Luca about potentially doing something with them and yeah they just have it ready and he's and and he's very like you know easy to work with on that and very like happy to do it so I I love

that meta I think what Wormhole did is very cool so they took mad Lads and they gave them like a a drip of tokens not just like a oneoff but I think over like the next many months you just get like a little bit more a little bit more that's really cool um love to see that type of Technology being used yes and it's like okay you guys aren't sibles but you also may not have contributed that much to wormhole in the past or to our protocol in the past so we're going to give you a vesting contract and of take it or leave it and I think people although the price is slumps I think people um generally we're appreciative of the amount of the supply coming back to igen ler navigating multiple blockchains can be complex and cumbersome let's say you

want to deposit into a lending Market on polygon because they have the best rates but you only have funds on optimism so you bridge your funds to polygon only to realize that you need madic to pay for gas maybe you use a centralized exchange or you ask a friend to pay for the gas but only then can you finish your transaction in a chain abstracted future power by connects this is not the situation you can connect your wallet to any dap from any chain with all the complexities of swapping bridging and depositing all completely abstracted behind the scenes head over to connect.

network that's connect. Network to learn more about connect chain abstraction [Music] toolkit Okay so we've got all these yield calculations we we did a podcast with the calculator guys from Deep by Dojo Stephen and you know he's got all these spreadsheets and oh my God it's it's a headache but the one big question mark is like what is igen layer worth is it a 20 billion FTV is it 25 billion is it 30 billion and then how much what percent of air drop so know we've kind of touched on this but basically what you guys are proposing which I think is a bold a bold uh idea and one that that comes with risk is effectively the the

mantle treasury takes 100,000 and E uh reakes it and then offers this almost as like a native yield to its users on chain um let's talk about that and kind of how you see that working and what some of the upsides are and what you're expecting for your users Yeah so basically we didn't want them to have to go through the process of doing that themselves because there's no like good receipt token that comes out of IG right now there is you know a fragmentation of lrts um and if you want to keep meth you can you can potenti like restake get in you know something like kelp or something else that will give you a receipt token but those receipt tokens are not liquid enough to actually be used in defi so what we wanted to do was

incentivize them to keep being active on mantle and use defi but still get the points on top uh we restate the 100,000 e which is uh collecting points and we are like indexing the users that are uh deployed on mantle defi apps and that are on the L2 and we're basically you know allocating them points now as I said before if for whatever reason AER decides not to do a linear drop um we will we will have a problem because we're sort of allocating points to wallets it's not like we're like a whale trying to just get 100,000 um you know meth uh Stakes we're we're legitimately trying to give it to users like small

users like actual real users so um you know we'll have to talk to them if they try to not do it n linear drop which I hope they don't uh our plan is is just to give give out you know the rewards to uh to people holding math and and using the defi ecosystem even if they did a not linear couldn't you just make your own similar criteria categorically s like to how that you know how they did it I think we would need them to pass through the points to the users just like we are implicitly doing have like an internal dashboard where we we know like every wallet how much they're collecting out of our points we would need them to honor that basically yeah okay so one point for Ian I think they they were trading on a Wales Market I I'm not

exactly sure what they are now but people are saying like 30 billion FTV um so and I saw in your Tweet which was kind of funny was like um there you have it you can stick at meath and then get seven 7% and then also an additional 10 20% iing apy what's your thought process on those calculations or that general idea it's hard to know exactly what API is on Ian Lair I'm expecting it to be pretty healthy um like low double digits obviously some people Stak really early and they were collecting points but then they got diluted you know a lot more money came in I think the 25 to 30 billion range you mentioned for for the FTV sounds about right for like the M

share that that project has we're seeing obviously like the subcomponents like ethery and Omni all trading you know in in the low billions so it makes sense that the the bigger Marketplace is is trading higher right um so that range sounds sounds reasonable ultimately the initial air drop should be pretty big because they've been doing it for a really long time that they it's not like they just announced points recently yeah like 8 to 12% probably is is is like the range so decent air drop size there should be you know a good enough API hopefully they get the criteria right it's very hard to do these things to to do it properly the thing I'm generally leaning towards as

being the GTO the the optimal Game Theory strategy on these is you have to do linear and then maybe do a floor um at some point that you don't announce so you like an unannounced floor price where the siers might miss out because they might just get below the floor price so they lose it all but um most normal users that are just trying to use it will will still get like a nice floor that they're happy yeah Renzo um did that and then they got so much push back from the community that they lowered it significantly I'm pretty sure I think it was like 300 300,000 Renzo points now I think 350 they said 350 points which was maybe like the equivalent of like one one one State game for I don't know like

0. one e or something like that don't remember exactly yeah um yeah but it's often sometimes the smallest fish are the loudest and you can't really please everybody so I think that FL makes you know it makes sense yeah yeah whenever you have an investors is like you know the guy who's writing you like a $20 million check never calls you and the guys gave you like 5K like every day like pinging you like hey what's going on so like this thing this seems to be a consistent theme yeah it definitely is cool all right so we're pretty bullish on IG L I agree um what I am curious last thing on the deposit side is when Matel goes to deposit this 100,000 em into IG layer that he can then go and be used to secure operators as well to uh

provide security for abss but you don't have any say in how they use your specific eth in a sense where it's like pulled and then distributed to operators and they get to kind of choose yeah I I I guess I'm I'm I'm pretty sure that that's it but I just want some clarification yeah I mean depending on how you you restake there's different options you know you can run igen pods like you can do it natively with eth where they stake it and and they do it or you can try to uh use these like stake deeps and I think Ian ler has come around to being more supportive and accepting the stake Deeds like Ami for example and and steth instead of just like uh pure e that that gets like natively restake I think they're coming

around to it as being you know maybe like the right sustainable uh structure uh to to be using so ultimately if you're running um you know uh if if we if for example with emth we're going to run our own uh reaking like ethery you can you know choose abss and you can determine where to allocate actually uh you can also make sure that they're willing to accept the collateral that you have so they might not like meth because they want pure eth for example uh and you know they might not like coinbase eth because it's centralized whatever so the abss can determine what they're willing to accept and ultimately you know kind of have

some contract where they're they're paying for the security um and then you know it's very early days for abs demand I think there's no slashing right now there's no like real activity happening yet and we're probably going to see like a good 12 months of just meta of like abss dropping their tokens and people just want more tokens all the time so there's going to be some of that going on we'll see kind of like longterm what what everything looks like uh it'll be interesting you know once the dust settles and and all the tokens and all the points I think the points thing is probably at it at its peak and yeah I just got a pitch deck for a of a Google Slides basic like background maybe it works but like the most basic deck of

like a points trading Marketplace and it was like talking about all the recent success and I was think to myself like yeah about like what's next yeah yeah I think like we're kind of cooked I I think there has to be uh Evolution and if you talk to the protocols that are further Advanced like ether they're clearly trying to like create products now like credit cards so you can use it and um you know vaults for you know D5 farming and aggregation stuff like that so at some point the points run out and and you got to do something real which is probably for the best I think the the next meta that that you touched on is going to be stake igen tokens to earn ABS aird drops yeah uh we're seeing a

lot of that already um Celestia Pi um pretty sure ho will probably do something similar yeah for monad maybe fuel achieves Higher throughput by utilizing a novel utxo based approach that allows for parallelized execution this design significantly accelerates transaction processing which enables fuel to handle vastly more transactions than nonp parallelized systems thanks to advancements introduced by Fuel ethereum rollups are set to be more powerful than ever before and fuel is not not just enhancing ethereum rollups it's redefining them making them faster more scalable and more adaptable to meet the

needs of modern applications and developers go to fuel. network that's fuel. Network to learn how to build on the rollup OS moving out of igen layer we have there's a lot going on there I I think it's quite a bit of a mess from in terms of like the uh internal stuff not a diss on them but I think they have a lot figure out ABS is airdrop token all this stuff like there's a lot going on there what's much less technical is mem coins and I actually think that like the mecoin meta is uh is re is reaching some of the peaks in terms of its its dominance in in the Zeitgeist but I think there's still a

lot of room for like Innovative Community coins which are uh you know doing something a bit different you're working on puff um which quite hilarious so let's talk about the origin story of pu and then man let's take this wherever you'd like to go for our our community yeah like you said like meme coins are having their meta they're the biggest thing of this cycle you could arguably say especially like when you combine it with salana like the salana meme coin thing has really gotten the most attention it's sort of like the 100 meter dash at the Olympics you know there's other stuff going on and people training marathons and throwing javelins and stuff but the that quick like adrenaline boost of you

know who's going to be the fastest in 10 seconds and the Superstar is the one who wins that uh that's the meme coin segment so it gets an inordinate amount of tension compared to everything else being built and done just because it's exciting it's easy on the mind you know we're all busy people even the people not working in the space and if you just want to do look at some crypto look at some memes and and just relax it has that pop culture like niceness to it so it makes sense that there's the demand for the mean coins you know they have the volatility and and and that like ease of not having to understand some technical jargon it's a bit more of a Level Playing Field I guess for uh for the The

Wider funnel um you know I've been hating meme coins for other reasons though like the Insiders and the snipers and the pump and dumps and like the artificially like you know shill and and then just dump on people uh I never like that side um I'm a fan though of community building and I like what uh you know paju Penguins has done for example like I think taking taking that and like just trying to see how far you can take it into the real world and uh and do like cool stuff use the IP and and build an identity and um I like a lot of that so ultimately the goal with puff was to go like memec coin 2.0 like what's the

next uh evolution of meme coins because most of these things are going to eventually like lose money they're zero some games and zero actually they're negative some games because there's like always gas fees and trading fees and there's like things going out into the atmosphere and eventually the money runs out uh you can't really sustain you know Meme coins pumping all all over the place so um mcoin 2.0 is like what is a sustainable mem coin design and you try to make it positive some so the amount that users get in is actually like uh less than what gets out like what gets out is even higher so that's sort of like the origin of of uh of puff was how to make a positive sum meme coin that's also fair in terms of

its distribution uh and gives as many people a good time and a good experience as possible and you know you have to make it fun you got to make the memes cracker you got to like make cool videos you got to just uh you're in the business of uh attracting attention and and making people happy so uh that's the uh intention there okay so mean coins but with some some value like not she enu L2 fhe homomorphic encryption value that's like too much value but like somewhere in the middle between a mecoin and that here we we have puff for perhaps that's

that's even wrong let's talk about meth and E and puff what is the relationship there let's talk about the recent mint that you guys had and kind of how that all works yeah so meth is the is sort of you know let's call it the sugar daddy right like meth is ultimately very related to Puff uh puff is like the mascot for the meth universe so you know anything that comes out of the puff uh chapter six and and that comes out of the what whatever is gonna appear as rewards for for puff is gonna ultimately be related to to meth because it's the it's the mascot it's the cheerleader for meth right um and so you know we've always had a good Community for math it

was launched and in three months became you know third or fourth largest taking protocol in all of ethereum um so there's there's a very good Community there it's a great brand and puff is is a way to uh give that Community you know a fun experience that's also rewarding and like engaging and and continue to build on that and the idea with with em has always been having having the best yields and like the best rewards overall for uh for ethereum stakers so they're very related um you know Puffs Puff's Penthouse if you've used it it's in the meth lab uh so um you know the two are intertwined and uh um you know even Puff

the dragon is sort of like a reference to uh to to this like fun meme so like is the is the idea of adding a little bit of Game Theory here to the mem coin to make it bit more of like a a little bit more thought not like technical thought like I said not like sh new fhe technical thought but like add a little bit of like a dynamic of like who can out compete the rest instead of just who's going to buy it low and sell it high oh yeah 100% yeah yeah so U my background you know we didn't talk about this at the beginning but in a previous life before selini I I played professional poker I uh actually competed in uh under 18s internationally

aess and uh also like under 20s at Bridge um I've also gotten like second in like a lot of board game like mind Sports Olympiad stuff like that I'm very much in the game theory g game space and I really have always had ideas around how to make kind of sound uh games on on chain and it's something that starting to explore with puff the thing you said is exactly right ultimately instead of just buy and hold what if I start giving you puzzles that don't really have like a solution like it's not like there's a clear equation you can just do and run the math um it brings like an unstable Nash equilibrium so you do have to sort

of just make a choice and the big one is going to be the final choice at the end where you have to kind of choose which side do you want and and you I can't reveal too much there that that's sort of like a surprise coming later but even along the way so so there's six chapters for puff and now we're we're about to start chapter three um chapter one was like a minting of potions everyone got the same price you know you're just minting it was a very very fair launch where um I think the price ended up being around 8 cents for for minting uh a puff um chapter two was you stake the puff pretty straightforward you stake it for points it's kind of all used to that it's taking to get an airdrop um but we did one little tweak which was we uh we

checked the wallet to see have you been a good good Community member have you like been selling have you been buying like we kind of want to give your wallet a score um do you have like the previous nft have you been a good member of the community and if you were you got like a multiplier so you got like two times three times and if you weren't then you know you got like a 0.5 like or no potion for you um so that was fun that was a little game theory Spin and then now with the blue potion taking it up a notch now we're going to start giving people uh like a receipt token for for uh staking which is going to be called Blue Magic so the Blue Magic tokens are kind of like an amusement park token where you can go

and play different games and and see if you can win prizes so we're going to start creating U you know potentially like things like prediction markets where you can go and uh you can bet on with your blue magic token and see if you get it right maybe you get you get more puff so stuff like that um ultimately we also want to create partnership mechanisms where we can direct rewards to uh other protocols especially things building on mantle to create like a mantle Community uh exchange so we're very interested in looking at the incentive structure that you can create and because these things are just just sort of like free tokens we're giving away and and you get to bet on them um it's less of a serious you know financial decision and hopefully

more of a fun Community Building thing which still has like a prize yeah it's like a mix of like RuneScape and expected values of Poker and me coins it's it's beautiful yeah so let's have fun did you play RuneScape when you were younger I did not I did not but I have I have played from the other similar games nice that's where I learned how to be in the trenches um yeah I wish that we had talked a bit more about um some of the poker stuff I just want to end up on just one last question here I don't want to take too much but yeah like what is some of the what are the biggest expected value related qu uh lessons which you've taken from the Competitive

Gaming uh Arena whether it be poker Bridge um and chess and been able to apply them to financial markets yeah I mean financial markets is a little bit different than crypto markets um in the financial markets the the things that I guess like I found effective where um you know either just like very technical in nature because you know you're doing like algorithmic trading and you you really have to um look at the order books and and the things that helped me visualize order Brooks were probably the same things that helped me visualize chess moves like you know if I do this and he does that so you kind of think about algorithms the same way you look at the the bids and the asks and you're like okay what happens if someone

starts buying a lot like what what what is everyone going to do and like react to that so you want your model to be like good at reacting to uh to things happening and the model that's most robust ends up doing very well because you have a lot of models in financial markets that like pick up pennies and then when like the extreme event happens they just like lose it all back so you you got to like learn to avoid that um I guess like expected value is the other one where you really try to just make plus EV decisions like decisions that will get you a return and if you're always in that mindset you're always like looking for like the reason like why will something be plus EV versus versus not um in crypto that happens all

the time you can understand if if you're the farmer or if you're farming like which side are you on um are you taking risk that uh your understanding or is there levels of risk and sometimes you know even for sophisticated investors like if I'm using curve because you know curve is very robust but then you saw the what happened last year with like the the bug that ended up filtering through there's just some things you can't you can't uh predict on these so um I guess expect the unexpected and watch your tail risk yeah I mean I think when it comes to just strictly decision making always thinking about like probability and um opportunity cost will will do you well

in crypto and ultimately like okay is this too good to be true and where is the yield coming from those are the two lessons from defi summer so um yeah Jordan man it's been a pleasure uh talking about um all the all the developments in the in the igen layer space the the points some of these uh airdrop metas and the Ze guys here today as as well as just the general rise of mantle puff um and some of your insights really appreciate it man and um thank you thank you as well I hope uh hope we do this again cheers man