The Evolution of Crypto Venture Funds | Roundup

Transcript

the one that won the most were like the massive major buyout uh you low interest rate private Equity firms like there is sort of a dominant asset class to investor analogy and and and um I guess what I'm saying is like I I think there's some model here that's like a hybrid of both trading and Venture that probably is the is the dominant but we haven't seen yet the like Paul tur Jones style being being able to make it across Market Cycles make it across decades um but my hypothesis that it's going to be somewhere between Venture and trading hey everyone wanted to give a quick shout out to the Wormhole Foundation if you're a bell curve listener you know that transferring across chains can be a massive pain I certainly do I complain

about it on this program all the time that's why we are super pumped to have partnered with the Wormhole Foundation the stewards of the Wormhole protocol the Wormhole protocol connects over 30 blockchains and six different run times including salana sooie ethereum layer 2os and more and the coolest part about this particular partnership is that they have made custom bell curve nfts which you can get and mint for free you can claim that by just going down into the show notes and clicking on the link all right guys on with the show hey everyone wanted to give a quick shout out to this episode sponsor flood protocol the optimal deck aggregator now if you are a listener of bell curve you know that me is a massive problem which is why we are so pumped to partner up with flood on this season flood is the only gasless

and me free aggregator that not only gets you the best execution but also gives you back all the extra Surplus that you create every single time you swap now this is relevant for both swappers and developers but you're going to be hearing all about them later in the program so for now thank you flood and back to the show hey everyone this episode is brought to you by Unis swap delivering the best unchain trading experience in crypto period Bar None one thing I want to call out is the Unis swap extension so say goodbye these days of these annoying as our popup wallet extensions you lose your place trading you have to open it back up Unis swop now has a nice Sleek sidebar that persists no matter where you are in the web it's much easier to use if you click the link at the bottom of this episode

you can join the waiting list and I'll see what I can do to get you moved up that waiting list but definitely go click the link check it out all right everyone welcome back to another episode of bell curve before we jump in quick disclaimer the views expressed by my co-host today are their personal views and they do not represent the views of any organization with which the co-hosts are associated with nothing in the episode is construed or relied upon as finan Cal technical tax legal or other advice you know the deal now let's jump into the episode all right everyone welcome back to another bell curve Roundup you got Michael and Vance today and maybe uh Michael one or two will join us yeah we'll see late he's late we're starting

yeah um and we can just jump right into it actually and I want to get your take on we're just chatting a little bit before before we hopped on here about this maybe brood drama a little bit in between a and maker so uh earlier this week you know we saw Mark Zeller who's an extremely important delegate or a stakeholder generally to the a protocol you know he was tweeting about you know what he viewed as you know quote Reckless Behavior from maker so they've got this partnership with um with Athena which also launched this week pretty successful launch I would say and uh their their sort of loaning out died to be farmed on the protocol and the mark Zeller take was hey this is basically a

non non-battle tested protocol um weak oracles asset hyper sensible to market conditions I'm just reading some of the quotes of his his tweet uh and initially they were talking about uh proposing an ltp reduction in um D in a today but then I saw uh even potential talks like stonnie retweeted about maybe not like seriously limiting die on the a protocol in general and I think maybe to editorialize a little bit or give some context is you know there were kind of these three protocols that I would have called like the hall marks of D5 1.0 I mean Unis swap but Unis swap is in sort of its own sort of little corner where I would say like curve uh maker and a each sort of had their thing there was a stable coin

uh stable Swap and borrow lend and a little while ago it seemed like each of these protocols started to infringe on each other's territory a little bit right so a launched go uh curve launched CRV USD uh maker is expanding its own remit a little bit and you know what started is kind of this very neat narrative about money Legos where H you know they each like a and and maker I would say were you know key components in each one of like the a adoption of D was a big component in die adoption in the early days but now it's starting to look like they're a little bit competitive with one another and it kind of raises this question of okay a is this really are you putting your risk

mitigation hat on here or are you putting your strategy hat on and you're trying to limit die in some way shape or form so I'd be curious what hey Michael what's going on buddy um I'd be curious what your guys read on this whole situation was so let me let me give you a little bit of backstory before we get into it um so this kind of like Kur fuffle has been brewing for probably a year um spark is a for A3 there's a revenue share there there's still some like chippiness about you know it's open source but like only if if we use it on the obvious side and like I don't think that's exactly the right take obviously when you see something like spark grow

to it's probably at like three or four no I think it's higher than that it's probably like five billion you know tvl in the protocol um that's share that frankly was stolen from or not stolen but just gained from a and go um obviously Al laun go which is the other part of this they have competing stable coins um but I think the Crux of the issue is like there's kind of this this like there's two sides of the lending Marketplace at least in eth def5 it's like the a Centric lending style and then there's like the Athena Moro maker spark camp and the two camps are obviously separated by number one the the stable coin that's the base unit of

account and like the the ecosystem of Athena spark maker um you know they're just growing die Supply the other kind of Crux of the differences are like what does the future of lending what is the best construction of a lending Market going forward for eth so um or for really any defi so like if you think about what happened last year in a when when curv was pretty close to getting liquidated and and they you a lot of people's eyes were pretty responsible with just like how they were setting governance and there's all these like back room Communications trying to like situation that's one Camp the other Camp is Moro which is like isolated Landing markets kind of looks like Rari from

last cycle where you have people underwriting specific markets that are individually collateralized and like the risk or the benefit there is like if it blows up it only blows up that one market whereas whereas with a like they were looking at significant negative debt that would have been probably a haircut across all depositors if curve ended up blowing up um so I think like the specific concerns are mostly like a a massaging of the information to make makeer look bad um and I think this is in the face of a them losing a lot of share to the other ecosystem and B frankly like the I I I don't think the a model is the feature

of lending I think it has to be these isolated markets because that's the only way that you're going to be able to scale to like the longtail lrts all the collateral that people want to use today in a safe way so I think it's like kind of sour sour grapes a little bit a little bit of cat side I don't know if Michael if you had anything to add but I'm I'm curious to get and just for folks when you talk about the the more isolated markets like moro's model to be honest I'm not an expert but I understand that sort of a PTP model like layer that sits on top of a and actually directly matches people and the advantage would be it's more Capital efficient because on the obious side of things you obviously have to over collateralize the the the the loan

so there's some amount of uh just idle Capital that's sitting there and in a PTP matching sort of environment you don't have to plan for that type of thing is that roughly right or could you say a little bit more about like the your P2P vision of the future events you you can do other stuff like if I'm an underwriter of one pool I can choose to automatically underwrite other pools with either similar collateral or people that you know I know and trust who have underwritten them and so you do have like the cross collateralization of markets um I think a lot of it what it comes down to is also just governance like are you voting on are you getting the whole Community to vote on every single change to every single interest

rate curve and new type of that wants to be accepted because like that increases the vector for politics and like you know self-dealing to happen um and like the curve scenario was like totally like if we want to talk about risk managing like that was the closest the defi has gotten to a serious body blow in the past couple of years um but like if you have these individualized markets like it constrains the the risk but also the governance surface area which is like generally the area that we should be moving towards like less human intervention in these markets and less room for like political attacks from like one competitor to the other like that's that's just like I I don't think has a place in

crypto not to say that I agree with this but to straw man the other side I will say you know to your point on um Athena in particular there is a lot of human intervention at this point I think Athena will be able to drisk a lot of this as they move towards decentralized per and I know that that's the plan the plan is to eventually have you know Athena run off of something like a synthetics per or or any other options that live on chain but right now they can't get enough of the funding rate uh to be able to find to to be able to farm that just with with centralized um so I think that there's a move where a lot of this consternation a lot of the sour grapes gets deris as things like Athena or any other qualms that may come up

eventually on the on the individual lending side um get get squashed over time um but I think that that move right now it's kind of an easy target and you know it's moving in the direction of decentralization but just calling that out is something that it's not it's not a non-zero risk um given the construction that they have right now um but I think they're moving in the right direction the the the ultimate risk for Athena that has like you know 15 or 20% of open interest on these exchanges is like somehow the money is lost uh and they use custodians that are industry standards don't want to like put them here but like we use some of these same custodians um they have insurance they

have all this type of stuff and also has an Insurance Fund in anything were to happen but I think like what could happen is basically like these centralized exchanges um effectively like try to hunt Athena in some way like something happens or there's some slippage they try to close out a position and and the exchange just says you know what like you've got a couple billion on this maybe maybe I'll just clip a 100 million from you and see if I mean or or there account gets locked like or there's you know the the uh you know yeah totally but if it to Michael's point if it happens on decentralized pers that removes most of the ability but then you that's the direction that

they're moving right you do introduce smart contract risk but like if that's the ultimate criticism we all have Smart contract risk so I'm not quite sure where where that is from I've got a question for you guy here's another I haven't heard anyone articulate this so maybe it's just a stupid idea but one other risk that I I see with Athena and by the way I'm I'm in the camp a lot of these risks are sort of overblown like you see all these people comparing Athena to Luna and that's just I just think that's totally different ballp Park I don't know where you guys said on that but doesn't seem like the same thing at all to me it's not the same thing yeah not the same thing but you know what one of the I mean basically what they're doing right is they're democratizing access to the basis trade

um and I think it's really smart because uh we had um this interview will Air next week but uh Nick from Dr uh drw um I chatted with him earlier this week that was a great intro thanks Vance and you know we were talking about Athena and what he mentioned was like part of the reason why this basis trade still exists is there's just an imbalance of uh you know supply and demand of capital to actually like that's willing to close this bread down uh I guess the question from from me to the Athena team is what happens when you fix that Supply demand imbalance right there's like a V1 of this which is really easy which is just like keep all your assets in like stake deth right and then you either do like some mix of centralized or decentralized

exchanges to go short the per but then what happens once that Revenue kind of Goes Down Like You the Athena team is going to have a choice to just shrink the protocol right and assets are going to leave um or you're going to look for more risky collateral potentially than Ste or some other way to like keep the growth engine going and like that to me like once they've maxed out the natural amount of yield that comes from that basis trade like that's going to be a really pivotal strategic question for Athena the protocol like that's one of the risks that I see actually I mean we're we're in a structural bull market right now which means that and and there is always sort of a natural bias towards the funding rate leaning more towards the positive skew either way but right

now the positive skew is much higher just given that there's much more demand to go long than there is to go short the thing that we won't have ever tested it's kind of like what we said used to say back in like 2020 or 2019 like we haven't seen crypto exist when we had interest rates above zero like we haven't seen Athena exist when we've had a a negative bias uh for a long period of time it's happened in short periods of time over the last you know couple weeks months as it's been live and scaled but to your point Mike if you get to tens of billions of float and that 10 15% of uh funding actually gets to be like 50 60 80% uh there is a big question question as to whether or not

you know the yield is going to be worth the risk um and that's where we'll find sort of an even middle ground but at that point it's still pretty massive I mean they when when funding goes Negative they they basically turn off the short position and then they just get the staking yield which is like considerably less but it's also denominated in eth so like you know maybe you're getting 3% in a bare Market but you think that 3% will will go to 12% you know if it quadruples um like that's kind of what you're playing for at that point but the closing out of the short is is the interesting part um like just a scaled down example like say you were trading like a t coin or a gaming coin and you were you know 12% of the open interest or more and you tried to

close that out like that that would be very hard to do you might incur significant amounts of slippage um which would eat into the yield that you're giving people um and you wouldn't know until you tried to withdraw right or or until they tried to to fix the issue and close out the short so like there are risks for sure um but I also think like the just to get back to the original a point like the maker model is taking more risk now that's the point like we're in a bull market like the yields are extremely high like this is the time where you have to do that but like to say it's like an existential risk or like in totally like I don't

think that's true at all that's where I said too I just the people have to remember the Luna model the whole stable coin was collateralized by equity in the protocol which is to say it's not collateralized by anything at all right like so there there was apparently a billion dollars of Bitcoin though that was backstopping it what happened to that the Luna Foundation guard whatever happened to those guys I I think they're on trial right now they broke they didn't make it yeah damn uh I want to give a a shout out actually to I guess this has been a little bit of an

open Seeker for a while but it's like semi uh I've I've seen him tweeting about it so I guess we could talk about it which is Kobe's new thing which is Echo um doxyz which U I think some of our analysts are like early beta users of it but from what I what I understand they're trying Kobe's trying to create a platform which is going to democratize access to like seed stage or very early stage deal flow in crypto so I guess the idea is that in addition to raising from like the Frameworks of the world or whoever like Blue Chip investors and Angels Etc you would also have kind of a community portion and maybe the in the most charitable way like the benefit is that okay you still have like the cap table that you want like the Frameworks or the paradigms or whatever and angels

for all the Strategic sort of investor helping stuff but it's actually nice to engage a portion of the community as well and have like the community on your side so maybe you have some kind of allocation to them um and maybe that's the way that you also avoid some of the adverse selection problem that uh crowdfunding platforms like Kickstarter typically has right because like from the founder perspective you don't want your entire cap table to be like 10,000 random degens on the internet right like that's not a good idea either so it'd be a cool idea if it worked like I'm rooting for it for sure yeah what do you guys think um well Le let's just say this um I think that there's a pretty common practice right now um where you have um a a a known person influencer around uh

of individuals um you know later in the process kind of close to launch and I think that that you know what that does is it builds a group of people that are able to be knowledgeable be invested and be able to talk about it you know right before um you know the product or service whatever it is launches I think that there is a room for that I think doing it in a in a like really transparent way um it'll just be interesting this stuff has been tested before you know the there were syndicates that were put together in 2017 there were um I mean we we've invested alongside you know groups of people that have pulled Capital together and um I think a lot of that does work I think it's hard to have a really um like Angels play a distinct role in any of

these you know investing ecosystems and opportunities I think it's hard for angels to necessarily it's hard for pro projects to find a massive group of angels that are going to be really bought in specific to that specific to that product or service um and so that's where I think being able to discern like who are going to be the right fit for whatever it is that I'm building who are going to be the ones that can represent this who are going to be the ones that can talk about this the right way um that I think will be an interesting test to see if echko can cover all the bases um versus just like be a generalist Angel platform um but I mean I think that we are in the world of financial Innovation and if this becomes a new model for Capital fundraising and

getting it into a into a hands of a bunch of people that are going to use it and talk about it that's a great thing yeah I mean we like Kobe support support him um I think also you know maybe this cures some of like the we only do projects if they're like these totally ironic meme coin Vibes because like I'm assuming you'll have to have a real project if you're iping iing whatever on this platform um and yeah if you can figure it out you know regulatory wise I think it's cool and I think icos did bring something to to the whole game uh it was more so like you read the white paper there was like at least like some veneer of like trying

to accomplish something so maybe this helps that I think it's cool um I also hope that it's not the same influencers getting the allocations I don't think it will be um but we've just we've seen so many of these like influencer rounds not that this is related to eeko specifically but like it feels like there's the VC rounds the influencer rounds and then public so there's like room in there for something else um yeah like we like coinless too we think we think getting tokens into the hands of real people is is important yeah I think there's a why this has been a challenged model in the past is like from the founder perspective uh I mean even those like those two groups that you mened like VCS

um add value like good VCS I I think that's another part of this conversation is like like i' be curious from your guys perspective like what percentage of crypto VC's today do you think are like good value ad VCS versus like slightly less so may maybe maybe a slightly smaller portion than the total stock of Crypt BCS that exist but uh there's like but generally if you get good VCS they're they're super super helpful right and like angels for the most part are helpful like I don't know I I think people tend to look at this from the perspective of like what what is fair right and like it feels like retail should get access to the same opportunities but from like at least my perspective it's like a builder you know Buck Works doesn't have a token but there's like keeping your cap table

simple and small is beautiful um and I would prefer to optimize towards that than almost anything else to be honest um and so that is I think the challenge that you run into at least from the from the Builder standpoint um but I don't know it's a lot of communications with investors if you have you go from 10 to a thousand yeah yeah yeah different regulations too I'm CU how this is being done I mean if there's like an interesting structure here maybe that enables just more people to to take part in it which is cool Kobe if you're listening man come on the show uh I because I I know there are these things like channels apparently um and you can I guess maybe there's I'm really

speaking I don't know if this is the case but my my assumption would be that maybe you could like copy invest you know once you're on the platform you can kind of set up a channel and if you're like oh like Vance like has really good taste like I want to get access to the stuff that he's investing in early like maybe you could do some of that um but I don't know we should get Kobe on the show to talk about it I'm with it I like it hey everyone wanted to give a quick shout out to the title sponsor of this season of bellur The Wormhole Foundation now if you are an onchain user which I bet you are if you're listening to bve you know that the cross chain experience in crypto still sucks let's just call it spade a spade we talk about it in this

program all the time interop is still a big problem which is why we specifically wanted to team up with the Wormhole Foundation they are a decentralized interop platform that powers multi-chain applications and bridges so that could be anything from defi to nfts governance oracles and more so if you are a developer and you're building uh cross chain assets apps or data or anything like that I highly recommend that you click the link at the bottom of this episode and go check out to see what you can build on Wormhole and Wormhole first of all this is a fun team they did something really cool with us you can actually go and click the link at the bottom of the screen which is going to send you to a landing page where you can claim your own unique Wormhole nft so we're doing this with me and we're doing

this with Jason my co-founder so help a brother out it's a super cool nft I promise go click the link at the bottom of this episode and fill out your PO app get your free nft and if you're a dead head over to Wormhole and check out to see what cool cross chain stuff you can build hey everyone want to give a quick shout out to this episode sponsor flood protocol the optimal decks aggregator now flood is the perfect partner for this episode on the multi-chain future because flood is solving so many of the issues that we're going to be talking about this season and this is relevant for both Traders and devs so if you are a Trader you should definitely head over to flood Swap and start trading because they solve three massive problems one gasless trading no more pesky trading fees two you don't have to worry about

getting front run me free and then three they have excellent order routing so that you know that you are getting the best price so head over to flood Swap and click the link in the bottom of the show notes we're going to send you right there for the devs out there you can leverage floods flexible hooks allowing you to make swapping a first class primitive by adding custom order types like t- wops or if you're a wallet Builder or something like that you can actually build your own orderflow auction in and start recapturing a bunch of that me if you want to reach out to them go to devs flood. bid or just jump right in the Discord all right guys thanks very much appreciate you flood hey everyone this episode is brought to you by Unis swap delivering the best onchain trading experience period Bar

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the link at the bottom Unis swap extension is in Alpha right now and we'll see what you can do about getting you moved up that list thank you very much junis Swap all right maybe we should talk a little bit about uh I don't know if you guys saw this story that the the United States which is one of the largest holders of Bitcoin generally maybe maybe sold a little bit of Bitcoin this week this was I do feel uh this this was telegraphed from a long time ago actually uh they filed to sell like $130 Million worth of bitcoin um for at least like three or four months ago so I don't think it should be a wild surprise but maybe that has a little bit a little bit to do with the recent price action that we've seen seen or or frankly maybe it just this is one of

those things that happens in Bull markets and we were always going to sell off a little bit in range because it can't be up only forever but what do you guys make of this news I mean the government's got to find a way to replenish that spr any of the other that they correctly Finance to uh dead dead pirate Roberts uh dread P pirate Roberts funding funding uh the government I know I mean uh do we know like I I didn't track it other than the movement to coinbase I guess and that was sort of I think that was 2000 Bitcoin um is it like for sure that it was sold I I never really kind of followed the end of the trail not really no it's uh honestly I I kind of

have a I feel like by the there's I think there are Supply like Supply in the market matters an enormous amount but I sort of feel like by the time that it there there's it also is you know every once in a while you'll hear remember about a year ago there was all this like oh the you know Mount gaau claims are finally you know going to make their way to Market and there were a couple Twitter accounts that were like this is super bearish and y y and it's like I feel like by the time the supply fud reaches like this like when you're hearing about it on a podcast like you probably don't have to worry about it that much the other thing too is I feel like people are still living in the like 2018 2019 days of uh liquidity and markets where like the market structure

is fundamentally changed I mean we have black rock F ETFs we're about to get options on them there's about to be more ETFs in the next couple of months um I don't know like the structure of this industry has fundamentally changed we're selling two billion dollars of Bitcoin in some way shape or form maybe it's a forward contract maybe they they bought options to hedge the price like who knows how they're doing this but I they also have a duty to make sure that they get the best execution and they're not they're not dumb they're going to be talking with you know maybe the galaxies of the world who are going to help facilitate this type of trans trans action like this stuff I think is actually a lot more easily absorbed by the market and we should stop thinking like A2 billion sale of Bitcoin Market

sale on on coinbase is going to kill the entire industry it feels a little bit hyperbolic I mean BTC traded 30 billion over the past 24 hours precisely like come on I mean there is like the signaling of more Supply in the market but I remember when these things used to drop the market like 20% and it would like stay there for a few months this didn't drop below 65 and it's like you know it's 60 68 almost today I think it just underscores the persistent bid that you have from a variety of sources one one of which is the ETFs it's just a larger more mature Market than it used to be you know like

it's just I agree it's just totally different structure you know is a good have you guys ever read this book uh Market Wizards oh yeah of course so I just saw that it was for free on I guess Spotify now has audiobooks and they're giving some amount out for free and I saw there was a free audio book so I just just kind of listened to some of the old interviews dude I some so some of these guys have totally blown up I don't know if you've looked it's I've like looked up like what happened to these guys post Market Wizards and mo the majority of them like blew their blew their whole stack but Paul T Jones is in there section is with an accent too with the southern ACC yeah yeah it's dude it's there's some Timeless wisdom there and I do think there's there's an analogy like

if you hear these guys they're talking about trading soybean Futures contracts in like the 70s but there's a lot of analogies to what it sounds like trading crypto today um so I don't know just Timeless stuff about like like what you were saying Vance like you can't get out at the top because there's no liquidity at the top so like basically just if you're trading in size get out while you can there's some great as they'd say lessons in there you know oh yeah but like I think the other the converse side of that is like all of these experiences happened once yeah like Paul T joins was trading like soybeans and cotton and then like currencies and like that's where he came from like we're definitely in a different branch of Finance if people want good books I think the the three or four best ones that I know on

trading are Market Wizards Soros on Soros uh more money than God by spash and malib um but to your point most of these guys have blown up some of them have systematized ized uh Paul T Jones is interesting because they like literally like tried to document what he did and like reverse engineer a programmatic strategy to trade like Paul tuner Jones and they couldn't do it it's just like it's like all feel and his whole thing is like I only trade like the inflection points and I trade it with a lot of Leverage and if I'm like down 10% I cut so all these guys kind of have different strategies but I think um more money than God is probably the best like

multicycle view on on you know the best people and to your point most of them have blown up tiger was revered for its strategy at the time of writing of that book and you know now the jury's kind of out also a great dock on uh I can't remember the name of it but there's a great dock on Paul tutor Jones where he he like goes down to his house in Virginia and he's like trading over the phone that's connected to the wall and he's like waking up at five o'clock in the morning east coast so they he can trade Asia hours he's a legend dud and like the the the role of technology and where information sharing happens now is so much different than it was before like yeah to Michael's Point like the Soros on Soros book he's like reading a newspaper in a gondola in Switzerland

while he's skiing and he gets like an idea from it you know these people are reading newspapers like there there's no 247 realtime information flow it's a different game all those guys would trade crypto if their career started today but they would be way different I agree there's actually a guy in that book Richard Dennis I don't know if that name rings a bell but he was one of The Inspirations like early Inspirations to uh ptj and he actually to prove a point with a friend that you could teach Traders uh brought these like 20 or 30 analysts on that he called the turtles and he gave them like simple Trend following strategy and it all worked and it was like it's just funny because he he and it it proved at the time of this

reading that you can teach someone to be a traitor and then like a year after this he had to close all his funds uh just lost it and none of those Turtles ended up being successful they made like $200 million in a couple years and then it just none of it worked ever again so here's a question here's a question um and I don't even know the answer to it but I'm still thinking about it um why is it that there aren't any people in crypto if this is you know it let's let's put this to like the electronification of the of the stock exchange or like trading commodity Futures in the 80s and the early late 70s um why isn't there like a Paul tutor Jones of crypto from a trading perspective someone who is who someone

who has systematically beaten the market consistently hasn't blown up yet um I mean in every cycle you have like you would have said three arrows maybe but like it turns out they actually didn't know what they were doing the the whole thing or or didn't do risk management properly but you know I don't know just a hypothetical like why isn't there someone who you can point to and be like oh that's the stepen AO and the Paul tutor Jones the blah blah blah of this cycle of this asset I think we're getting there but Paul tutor Jones was like a multi-decade phenomenon yeah same same with most of these guys I mean sure but he he he's ptj started in like 83 884 and kind of like you know I guess he started trading

a little bit earlier than that but like he built his firm in the 80s um and you know surviv crashes everything I I I'm I'm just saying because I think you know my hypothesis is that it's a totally different Market structure again and trading in the same way that they did is maybe not the best system or the best strategy for participating in these markets it may be a short-term way to participate but I think a a liquid strategy or a trading strategy you know may not be the the thing that works just in the same way that Paul tutor Jones is is a venture investor I mean Michael maybe maybe there are Paul Tor Joneses you just don't know them yet because like even at

the time of this like ' 89 I think was when Market Wizards was was all those interviews happened uh I think the net worth of most of these guys was anywhere from like 80 million to like yeah hundreds of millions right they're not it's not like the billionaire um you know that Paul D Jones was today there are probably like frankly like these some of these like an non accounts right who just like maybe you know they Twitter maybe they're not on Twitter but they probably just like kind of quietly traded their way to like you know mid to low nine figure stacks and like maybe one of those guys or gals just ends up like making it for the next 30 Years right and then you'll know who they are uh the Obi-Wan wallet yeah like I don't know I mean you you could see these things on chain like we

can track them on chain like there hasn't been someone who has been able to consistently make it across Market Cycles the the one of the more meta points is like if you added up all the crypto that all the big funds own you know how much do you think they would own relative to the total market cap so to call the total market cap two trillion um of crypto assets how much do all the crypto funds own 30 billion it's like not that much it's like 1% 2% may maybe 3% I think probably one or two um I mean there's a trillion of that is Bitcoin and you assume 20 to 25% of that is lost and yeah totally like you you can definitely haircut it but none

of the funds are big enough yet to be the Paul tutor Joneses of the world like the the the super brief summation of uh more money than God is like tigers trading equities in like the 80s po Jones is trading like Commodities in the 80s they kind of like do this like relative value trading of each those markets get constrained then they all move to trade macro and that's kind of like when Paul tutor Jones really kills it tiger like does really well but like less on the currency side that's like when George Doros really comes on the scene as like the king of the macr Traders but these are huge markets and I think it like you know the peak tiger was I mean 50 60 billion AUM in hundreds the I mean in 2021 they were

hundreds 60 billion probably in the 90s but like relative to today's value of the dollar that's probably like a 100 billion and they were just levered so these ones are huge and I think until we get there it's going to be hard to see the Paul Joneses I agree with that there's there's another angle that you could take on this as well which is like there's a hedge fund sort of trading component to this which looks like some of those like Paul tutor Jones guys currencies Commodities Etc but then there's like a venture there's like a venture uh thing and like one framework that's stuck with me is uh there's a guy Ron Cho who writes biographies of famous people and he did one on uh John D Rockefeller it's called Titan and John D dude probably one of the cooler business

stories of all time but if you go back to this was like like 1800s when he was building Standard Oil but at that time like also a lot of parallels to crypto industry it was like oil was like the new sexy thing there was like super super cyclical because they'd find like a new geyser of Supply oil prices would crash you know there were like towns popping up overnight millionaires all that stuff that then lost all their money tons of similarities and everyone had a really short-term mindset on it but he just took a super long-term mindset set and his strategy basically was like he was great at operations that type of thing but he had really good relationships with banks so when the industry would like blow up he would go get credit from the banks buy up all his competitors and then wait for like the

tide to come back make a ton of money wait for people to blow up acquire them and like they're probably gonna be a couple power law winners like that in this this this is this is kind of what I was getting at which is I think for each asset class for each period of time as well there is a dominant like investment thesis investment strategy that takes advantage like if you were going to be the best investor from just like a taking a step back who's the one that who are the ones that won the most at a period of time you know you you've got the Tigers in the 80s maybe the early 90s uh you've got maybe like the the Paul tutor Jones on the same time scale with like some of the macro trading as well but in the late 90s the people that

won the most were were like the Silicon Valley venture capitalists in the 2000s the one that won the most were like the mass mive major buyout uh you low interest rate private Equity firms like there is sort of a dominant asset class to investor analogy and and and um I guess what I'm saying is like I I think there's some model here that's like a hybrid of both trading and Venture that probably is the is the dominant but we haven't seen yet the like Paul tur Jones style being being able to make it across Market Cycles make it across decades um but my hypothesis that it's going to be somewhere between Venture and trading yeah I mean just like

interesting facts and like Benchmark is way more like like compare Benchmark to like Brevin Howard like and they're like they've roughly been alive for the same amount of years um Benchmark obviously has like you know crazy multiples on its fund brevan Howard is more kind of like year in year out 10 20% but it's liquid and you can withdraw and all that good stuff about hedge funds but you know I think Benchmark has generated somewhere in the neighborhood of like 30 billion total profits and brevan Howard since Inception has generated like 28 billion and so like the aggregate profits are the same one is just way more Capital efficient and and frankly like if you're more Capital efficient that's more performance for for the people who run

it I mean what do you guys what do you guys think like I I I sort of see what it feels like the most sophisticated funds are structured kind of like yeah like a a framework or Paradigm or something like that where it's like there's a there's a more traditional VC portion of the book which is just direct Equity investments in companies but then there's kind of like a liquid portion of the book as well and I actually don't know how you guys structure but I know some funds are like this is our and they have like different teams right where it's like hey this is our team that only does venture this is our team that only does liquid and the liquid guys kind of look more traditionally like hedge fund guys and then the more traditional Venture are Venture guys um and I think

tiger actually today in its modern instantiation Chase Coleman right there's a is I can't remember if he's the Public Public Market guy Public public guy since Scott Scott left oh really interesting he's he's the he's in charge yeah well I guess uh Scott had a little tough tough tough run of it so but Scott was the private The Venture investor and and Chase historically was the the public um I I think I mean you know the the way the framework is structured maybe slightly different from how other funds are structured uh our view is that over a period of time crypto moves so fast that you have to be able to take advantage of

whatever it is that's happening at that point in time uh you know the way we say it is like you have to be able to play the game on the field and if you are doing multiple funds doing multiple strategies have multiple teams it's hard to course correct because invariably you're going to have you know some group of people at the firm who are like well wait I can't do any liquid stuff because this stuff's way too overpriced or like wait I can't do any Venture stuff because you know nothing is working so I think you kind of have to morph and and kind of change uh to be able to adjust with the times um and I think a lot of the funds also have like the hedge fund structure and the Venture fund sidecar it's really tough um frankly from like an LP perspective to do that um so you

know our our take is to have one fund at a period of time yeah and we're we're like a Founder driven been fund like we do all this stuff and I don't think I mean it's weird maybe it does work for some people but it's weird to think about like I got my long short guy I got my guy who only does like this one section Adventure I got like you know this guy who's like like it it smaller is better in in a market like crypto where you can kind of keep it all in your head at once um as long as you're frankly on the ball 247 and some some of the best def Investments have been uh buying tokens of protocols that have launched at low

valuations some of the other best defi Investments have been buying you know an equity with a token warrant before they've launched it's all Defi and it just the mechanism in and of itself I think is the question and and that's where you see opportunities and you know if you're someone who wants to cover defi you should be able to do both it's not like you need to be able to do one and you can only do that one I I'll also say coming from a retail background Trading coins on exchanges and flipping icos way back in the day and all that stuff like that's where all of our instincts come from um and obviously we have the Venture background but like we also know how to trade and like if you've never make if you've never made money in crypto before and you're coming

at it from a pure Venture perspective It's probably hard to imagine like what being on binance actually feels like um and that's just background that you need I've I've got a question for you guys on the founder side of things uh what do you think like if you looked at the the like dynastic Founders right of the early internet era was like there were some common some common factors there was like guys that look more like uh like Jeff Bezos and um I don't know like we've talked about this before but one of the challenges that I think is maybe there's a lot of analogy to like a lot of comparisons to May between like early to mid 90s internet and crypto now because there's kind of this like separation between like kind of young

more inexperienced Founders but they get it they're like crypto natives uh versus like but they don't have some of the operational chops to like grow and manage like you know at some point thousand thousand person teams or whatever you know thousands of employees um versus some of the I don't know some like some of the web 2 Founders I meet they're like so polished but I'm like it doesn't feel like they're close to the metal on their like product or anything you know what I mean so let me ask you this what's the most um what's the most successful example that we have let's say Amazon maybe one of the most successful from 1993 when they started what's one of the what's the most successful example that we have in crypto you mean in modern in or

yeah like in in in crypto like what's the most successful I mean the just to to speedrun I I would say ethereum and probably something like salana and maybe something you know like the base alt layer ones that are doing really well um that have a lot of attention a lot of activity but but look at the look at the model of ethereum if Jeff Bezos is the is the canonical example from the 9s vitalic is the example for this era it's a totally different construct where you're building a protocol you're not building a company like eventually you want to be able to hand over the keys to the decentralized community and have it run by itself and like you get to be someone who you know writes thought pieces and helps you know Steer thought

and Direction um like that that I think is is kind of I think if you're a web 3 founder what you need to be aiming for now if you're building a product or if you're building something that's built on top of protocol like that's a totally different equation but I think if if you're you know you're targeting something you're you're kind of targeting that yeah I would say more more International for sure more risk on from a regulatory perspective I would say some of the D5 Founders are on the cusp of it it's just like the market caps I think you need to kind of get to be like 10 billion market cap to be like the and frankly some of these were there last cycle and it looks

like they're they're could be going back um so I think like there will be a time for for a different type of founder archetype to emerge but the web 2 Founders in in like San Francisco I don't know they they just don't seem built for for crypto uh and like the strangeness of it um and and frankly like it's a weird time in Tech in general like what what are the things that are working in like a traditional Venture funds portfolio definitely not fintech the last real consumer Tech hit that we had was Bal but that has effectively been subsumed by the the larger networks you've kind of got AI but that's like you're hunting elephants you know these are like 10 billion dollar seed rounds

or you know a billion dollar seed round or something like it's it's definitely like there isn't as much opportunity and Technology as there once was or it's like very changed into a different form of being like crypto Ai and then maybe like hard tech I say you know people are building defense companies and that like pmer lucky is the archetype like it's really stratifying the types of Founders that that make it here's something else that maybe is a little bit unique to crypto is like if you just look at the last 15 years of tech or something it's been a pretty steady grind upwards um right there haven't been like it's like

a little cyclical startup life is always super hard but like it is it's just something that I've noticed with um Founders that come from Tech a little bit more is there's like the strategy is kind of like you just want to load up with as many like engineering sort of resources possible uh raise a bunch of money and then like the assumption is like there's going to be some variability in your Revenue but not a ton whereas like the crypto Founders that make it cycle over cycle it's like you have to deal with like I don't know anywhere from 50 to 90% draw Downs in your Revenue like multiple times and then you have to bring your entire team along with you and there are there are uh there are other businesses out there like that are extremely procyclical like construction or gold mining and

semiconductors or like that but it's not there's like no overlap between people with a tech background that like are used to working in procyclical businesses versus like a lot of the procyclical businesses are really like capex heavy you know kind of commod Iz businesses today that's another I don't know how you guys think about that or how you've like coached Founders around those inflection points but I me that's another one dude it's just tough I kind of disagree with that too I I was GNA say I'm not I'm not not sure I totally agree with that think about the The Arc of Amazon like there are years where they were at 90% drop from their IPO price uh and you know no Revenue not they're selling books over the Internet nobody even cared about the internet I

mean I I also I I I worked at snap uh you know before the IPO we had a great run up in the IPO it dropped you know 67% after the IPO um I happened to leave right about then uh and then you know it made went on this massive run up until 2021 and then it dropped 90% like the tech industry is kind of is known for these cyclic alties whether it's something that's brought on by like the crypto macro cycle drawing everything else or dra in everything else down or you know interest rates and and inflation getting out of hand in 2021 and covid and craziness I mean I I think if anything like the the tech industry

is probably the most callous to it sure maybe it's not a 95% drop but um I think it's pretty common for for people to experience that um it's it's much more Uncommon for people to you know be on a a Google like rocket ship where every single quarter from your IPO is just up and to the right like that that is that is not normal same thing happened in Netflix you know went down 80 90% same thing happened at Facebook where it was like you know are they going to make the mobile wave um and then even if you look at the attrition rates of startups like I would say um as a whole if you thought about all the startups that were funded in 2021 probably 90% of those are dead and

that's just like when you're in Tech or you're an entrepreneur that's the risk you take like if you don't want to take that risk like you can go sell mayonnaise at Proctor and Gamble but like everything else there's going to be some ups and downs yeah all right that's a really fair point you know Netflix was the first stock that I ever bought way back in the day wow yeah you knew yeah hold on to it actually I I sold it at like the absolute Pico top um like five years I pic top so but I rolled it into Roblox so uh does not really that was not a good choice yeah I was honestly like my my thought process there was just you know

if you listen to Young kids I have this story that my dad hates telling which was when I was in sixth grade uh he was like pick a stock and I'll put like you know a thousand or two th000 bucks that into that stock for you I picked Apple at the time which was like dude it was like 18 bucks pre all the stock splits it's probably you know 200x ago um and my dad thought it was overvalued bi to me about it being buying apple and bought like polymer Tech something or other which like was no and and my and my sister did the same with Google the company she picked is Google I was like honestly little kids kind of have a decent read on like anything that young kids are super obsessed with like can't live without a decent barometer of the future to be

honest everyone has these stories now of the thing that they didn't buy or they did buy or their friend bought that went 200x if they would have just held on to it I feel like nobody had these stories like a decade ago he's weren't that big I've got a quick story Vance knows this um my dad has a friend who played for the 49ers uh won the Super Bowl in 95 gets like a 25 $50,000 bonus check for winning the Super Bowl he was a backup tight end like didn't even play um got traded the following year takes the entire Super Bowl bonus check uh all of his teammates are like buying cars going on vacations going to Vegas he's like H I don't know I'm just going to put it into something that I know and he's like

got this Apple computer I'm just going to put it all into Apple stock well it gets traded the following year away from San Francisco and ultimately forgets about this brokerage account like they're trying to send him the paper slips his address has changed he gets called back to become the offensive coordinator at UC Berkeley and they're finally like we found you we've been holding on to this brokerage account for the last 30 years or however many it's been at that point 20 years and like what do you want to do with it it has 22 a. half million dollars worth of Apple stock in it I mean that that's literally the best investment strategy it's yeah I think there was a study that got published by Fidelity a while ago

this is gonna sound a little morbid but uh the people you know who the the cohort of people who did the best investing in Fidelity was people that died that is yeah so um I guess like last last thing um is I would love to get your guys P I don't know if you have any exposure to this at all but like the liquid reaking space so this is like obviously there's been an enormous amount of tvl that's gotten sucked into igen layer and everyone's extremely excited about whenever they end up launching but there's this new we've talked about on B Cur a number of time but there's like a liquid reaking layer so in the same way that you can get like like a liquid

voucher which represents your share of a staking pool like Lio um you're going to eventually be able to get like a sort of essentially deposit certificate of wherever you're reaking to and the Dynamics of that are are pretty different uh much more heterogeneous construction under the hood than like a liquid staking token but yeah honestly like the if you look at the valuation of something like ethery I think is the leading one I mean that's trading at like a seven or eight billion dollar valuation I I would just like be curious how you guys assess this whole Space um I'm not sure if we've ever really talked about this but like what's your read on the whole LRT space so I think like let's take a step back and talk about what an LRT is and

essentially you know maybe in the parlance of Athena what you're talking about doing is you're taking State eth as the base layer and then you're adding another layer of yield on top of it and the expectation is that other layer of yield will be worth the addition risk of you taking that asset and restating it and putting it up as like the capital asset to be the security module for you know a new whatever ABS new protocol whatever the big question is um you know I checked yesterday I layer has 4 million eth in it and the expectation is that you know you're going to be using this eth as the security layer to back

stop these new avss that are going to come about well what is the yield required from those uh avss or those new protocols such that it compensates stakers or rakers enough in addition to the state to eth rate for the additional risk that they're taking my guess is that you know 4 million eth is is probably slightly too much for there to be a nice democratized yield that is worth it and so I think what we're going to see here is and and really I think you know ethery it it's kind of a proxy right now it's it's sort of like the world coin equivalent to an ADR for Sam Alman I think ethery is kind of acting as like a

proxy for what they expect uh ien layer to do based off of the points that are being assumed and getting exposure to this reaing environment um we'll see where all of this lands it it just launched so it's kind of hard to uh assess real value of something that has just launched but I think that there's a ton of other restating providers um that are going to be launching in the next couple of weeks and we're expecting that I ler is going to launch in the next couple of months um I also wouldn't be surprised if we started to see other restating platforms um that are competitive to ig pop up um and I think that um it'll be a question as to how do you keep the tvl and that question is really answered by what's going to be

the yield that that tvl can actually assume is it going to be an additional 4% 5% 6% you know instead of getting 3 or 4% you're getting 10% maybe that's something that keeps it but that means that you have to artificially limit the amount of yield that can go into it otherwise it drops the percentage yield for everybody um and so it's this fine balance of you know what's doing to be the inflection point how much value is Iden going to lose once they do their airdrop and launch you know everything and once people see that that apy a lot of open questions yeah I mean we think that there's probably at least one other approach that's going to be compelling

in articulating like what is the endgame for even like liquid staking protocols is it a smaller amount of restake eth is it you know like higher quality avss um because there's a lot of avss on I like I'm sure some will be good some will probably be okay um or is there kind of like other vectors of like economic alignment that they can offer maybe even similar to something like a cosmos where they're kind of like the original vision of Cosmos was like this like Venture kind of fund and I don't think it's like a venture fund but like something like a like you know people take mantle seriously because they've got the big Treasury and it's shared community and if you're in you're kind of part of that that sector versus something that's like

you know permissionless and and hard to kind of ascribe the alignment to um so I think there's going to be a a lot of interesting opportunities to earn yield on eth um but it's going to be like it's it's not just going to be like a unipolar it's just IG layer approach um we think there's probably going to be at least one more and yeah we've got a portfolio company announcing and hopefully the next week kind of what they're doing which will be cool I there'll be like multiple like I well here's a question there there'll probably be most likely different uh ecosystems like a I don't know like a um yeah you've already sort of got shared Security on the Hub like the cosmos Hub is that to like some degree but like maybe you'll get one in celest maybe

he'll get one in salana and the idea would be that um like even like a good example of why this might be necessary is it depends it's like a balance sheet management thing like if your liabilities are denominated in salana like a you could imagine a bridge right where like your liabilities would be denominated in salana so you would actually need salana reaking as opposed to eth so I kind of makes sense to me that there would be I don't know I know of I I guess there's one is just like sort of an Open Secret that's launching that's going to try to be all token freaking um and then I think there are a couple that are launching in specific other ecosystems but we could end the year with like five of these things I would say um like who knows which one's the Open

Secret I don't um but yeah but uh we'll let that be a secret for a little longer so yep yeah I don't know um have you guys uh listened at all to hu and John chpo on on Common Core did a really great episode on the whole e staking like targeting a certain percentage of stake debate like I don't know if you guys are yeah I'm I'm I'm not taking this seriously until it's like you know I'm glad that we have like the imuno response of people throwing up all over this I don't think they should touch the issuance curve they should just leave it alone but this is so far from even becoming like potential reality

that kind of IGN you you kind of got pick which CT debates you're going to get involved in versus not we we've kind of made our position clear but I don't think there's a big risk of this actually going through yeah it's it's an interesting intellectual like divide I see the I see the i' be on the don't touch the issuance curve either but I see where they're coming from and it's like you can debate how real the like dilution generated yield really is like the block reward type yield um so I get it like maybe there is a world where you know e Network people want you to hold more canonical eth as opposed to wrapped but I feel like that ship is already sailed so I think we're so far past that like

growing so quickly yeah that you know politically that's going to be hard to push through um I also think frankly demand matters a lot more than Supply totally like growth growth abundance mindset we'll find people to buy it up let's just make it as good as possible and and where the East Community is getting net um in the fullness of time which I think just means not touching it so like we're we're not not really concerned I've got one more question for you guys is just in general investors here like every every so I've started to see this argument pop up so we just had Wormhole that had a massive air drop and I saw these arguments around jto as well uh basically that it's a stimulus check

for a particular ecosystem right like when the jeta rare drop happened that's a ton of wealth that got sort of created overnight and theoretically people are going to some people are going to hold jto and some people are going to maybe rotate that into meme coins or something like that do you view these large airdrops as wealth creation events do you view it as maybe dilution because then I don't know how how do you just view these big aird drops or is it just are people just trying to make something out of nothing and it's just a big air drop and that's it it's a big air drop we're not doing like for the planet here you know we're airdropping coins so rough similar type of people that we've been dealing with for the past few years and the concentration of the wealth is

what makes it real and the fact that people will trade it for meme coins or other stock or other coins or other you know they'll borrow against it like it's a wealth creation effect but I'm so sick of the thought pieces about meme coins and airdrops and like guys like we don't need the the expose we get it yeah I'm with you on that I I actually Michael I loved your take on meme coins uh last last podcast that we did but dude it's like my entire feed I just I just want it to stop at this point I'm just begging these people to like just something more interesting than this it's just not that maybe Echo maybe Echo helps yeah yeah honestly because the Ico thing actually was it

did feel more fair like these ftvs I know you guys are on this page but like maybe it doesn't matter now it will matter at some point I don't know to yes also I think like the worldview of like you can only have meme coins or like more fundamentally coins going up and you can't have them at the same time it's just like so untrue just like looking at our portfolio like we're doing fine yeah like like and if if you're not invested in meme coins and you're not investing in fundamental coins like what are you invested in like I'm I'm I don't know who the upset parties are in this market it's kind of hard to tell who they are I don't know maybe people just want to chat like I I think it's people whose coins are

not going up is like the daily top performer which we've talked about don't do that I agree you'll be miserable forever yeah all right fellas should we call it here this is a good one later see you guys later hey everyone Mike here if you're a bell curve listener you know that transferring assets across chains can be a massive pain I certainly do I complain about it on this program all the time that is why we are incredibly excited to have teamed up with the Wormhole Foundation the stewards of the wormhole whole protocol and the coolest part about this particular partnership is that they have made custom bell curve nfts which you can get and mint for free click the link at the bottom of this episode take you get your free

[Music] nft