How We're Positioning for The Next Crypto Cycle | Roundup

Transcript

all right everyone so on Empire you obviously know that we talk a lot about the institutions coming into crypto and that is why we are super excited to share that we are hosting the digital assets Summit we've hosted this since 2019 it's coming up in London March 18th to 20th don't miss your chance to get ahead of the curve you can get 20% off with code Empire 20 we'll see you in London this episode is brought to you by the chronicle protocol a cost-efficient transparent and decentralized Oracle Chronicle has developed veled a Next Generation Oracle primitive called scribe which reduces Oracle gas fees on l1s and l2s by over 60% you'll hear more about Chronicle later in the show this

episode is brought to you by North stake the secure and compliant staking platform for institutional investors North Stakes e staking service lets institutions earn staking rewards while maintaining maximum flexibility on all of their Capital you can learn more about North stak's institutional staking service by clicking the link in the show notes or that QR code that is on your screen right now if you're on YouTube now let's get into the show this good content this is this good content well I'm I'm almost died last 15 days you go by Jacob huh I go by Jacob on Starbucks like Starbucks is no business in well I now I will change it of course because you know I don't

know but you are so paranoid about being doxed no man I mean look everyone's docs I think the reality is do you want to realize it or not but you know it's good to go by different names do you ever think of like what if your name was I don't know Andrew Well people call me it's funny because people call me Yano but my name is Jason like all my friends everyone on crypto Twitter even even some of our employees call me Yano but uh but my real name is Jason so yeah yeah yeah I guess so anyways dude we had a big it was uh well first off you ran the marathon people haven't heard about that so you ran the marathon and you had uh influenza it turns out while you ran the marathon so that's pretty ridiculous

I was feeling pretty bad a couple days before flying in and right before I started running the marathon I never cramp up but you know when you feel like your muscles are pretty they're like twitching and they're ready to get cramped I'm like I haven't even started running and I'm feeling my legs like they want to cramp up so it was like I was pacing a good friend of mine from back home so I kind of that you were one of the guys with the signs you know the guys with the sign like I mean I was I wasn't one of the guys with the signs because I wasn't doing for everyone else I was just doing it for a good friend of mine who's actually a Prof used to be a professional cyclist so guy can run he wanted to break sub three and I was on a

mission so we both clocked sub three I gotta say it's probably probably the hardest New York's always hard but this was I went to a deep dark spot to finish it I was struggling the last couple just just pumping a vichi oh yeah no I I even stopped the music I was like I don't want to yeah it was just uh it was difficult but we finished so so it's funny everyone started around the same time like I was tracking probably six or seven people and everyone started around the same time except you started way ahead of everyone else so I was like in my apartment just you know kind of eating some food and then I was like oh I wonder when like I'll pull up the map of everyone and everyone hadn't started yet except you were probably half mile out from my apartment and I was like oh

[ __ ] I had a feeling you were uh you were there by the way Brooklyn is probably my favorite used to be Manhattan when you cross the bridge and hit fifth uh sorry first there's so many people but Brooklyn is just so narrow and everyone's in the streets Manhattan's gotten because I watched at around eight miles and 25 and a half mile marks and it Brooklyn's just more um it's like more Grassroots Community rooting people on Manhattan feels very touristy now yeah because now they have barricades and stuff and so yeah anyways fantastic I love doing this nice work sub three with influenza we'll take it 257 yeah I'll take it man that's what

six 6:30 minute or 6:35 635 yeah wow what'd your buddy get uh 259 so he just made it by under a minute wow nice nice but who's counting who's counting yeah um all right so we have uh we have D coming up March 18th to 20th you're speaking got some big names uh lined up um really cool so last two weeks ago we lined up a bunch of the big institutions um Goldman Black Rock folks like that this past week we lined up a bunch of the big LPS so we've got a bunch of big LPS that we're announcing uh unfortunately so we have a competition internally that we're running Santi each podcast basically gets a discount code so right now on the margin Mike's show has driven 10 tickets

for das with the on the margin code we have driven zero now I will say I got a I I didn't actually record our ads until about a couple days ago so they they just started going live the D ads in in inside of these podcasts but I will just say we're getting rocked so people got to go use those Empire 20 codes oh yeah no doubt um also I'm coming to London um I'm I'll be in London December 4th we Host this thing called blockworks beers I'm bringing blockworks beers to London so December 4th if you're in London uh holler first 50 beers on me that's great should be really exciting and last bit of housekeeping I passed you on Twitter oh now you're counting like pass

two on Twitter you still haven't even shaved your head so like you have no right to make that a housekeeping item uh and but sure fine like okay higher for longer bald for longer baby no more I was going to shave all my beard in as a good friend that I am be like all right if you shave your head I'll shave my beard but I mean sounds like a deal of a century to me you got you got rocked um all right congrats you deserve it you've been tweeting some really good takes I have not so you know was funny I tweeted this thing about Jupiter this is actually kind of nuts I I so I us Jupiter um for for the first time and I've been hearing amazing things about

Jupiter for a while and so I was like I I actually got to start playing around in Salon of defi so I used some stuff and I played with uh with had this like really really phenomenal experience um first starting with the Phantom wallet like it was a really easy integration with Phantom with this with this place where I hold my assets and then um and then Phantom into Jupiter trade was seamless took like a second to settle so anyways I posted it this on Twitter and the response initially was like all of these salana folks getting really excited the Tweet got like a thousand likes it you know was very exciting and then what happened is by the end of the day my inbox was flooded and actually people were like screenshotting it and publicly posting

being like this is what's wrong with crypto undisclosed paid schillers um I was like wow that's like I think there's two communities it was one was the eth community who I think maybe is feeling a little upset that the price hasn't gone up but then it was a lot of like the kind of like shitty l1s from the 2017 era who I think got burned a lot by the YouTube the like YouTube influencer crowd and um probably got dumped on a lot by those folks so it's just interesting to see that happen well first of all look we had one of our best episodes this week with Joe mccan uh I've been following him look he can be loud on Twitter the guy's has an

interesting take U interesting thesis on salana he's just acknowledges you know no JS and like you know when you unpack when you first hear him he approaches it from a trading perspective and then he when we asked him hey look can you just go deeper on your thesis and look there's there's fundamental um behind his thesis there's fundamentals behind his thesis that I just think is perhaps not as appreciated yeah um and look when you and I were talking about like so what should we talk about in this episode I think this is a kind of environment where a lot of people and I can talk about all my conversations over the last 10 days been with a lot of allocators a lot of fund managers and they're all asking the same question it's like what's everyone doing I feel underexposed and am I late to the trade

basically like can should I enter now or should I wait that's the question everyone wants should I enter now or should I wait not only absolutely right and it it's not just retail it is every other fund manager what I want to impress on people is fund managers are humans they have an emotional Whirlwind as well and and everyone kind of goes through this right uh people going get through like in the public markets too like am I underexposed to Nvidia or Ai and you look at the latest 13fs and like it's obvious that look managing your emotions is the most important thing especially in crypto where stuff is so volatile and uh anyways I think this could be a good episode because it's you know we're not necessar going to cover

the news but I think it could be a good one where we can just go deep maybe we can start there s I'd be curious to we've talked a lot in the last probably nine months about like how we've both positioned our portfolios headed into what I think we thought was going to be uh starting to be an up market and I would just be curious to get your take on how you think about if you don't think your portfolio is perfectly allocated right now and you see um there's a new investment let's say that you want to allocate to but that has run up from let's say a dollar to $3 are you waiting for that pullback are you just entering like how do you think about timing entries on uh Investments that you think you want to allocate to but you you might have been late

to um it's a great question uh one I don't think there's a perfect allocation ever um and and two I'll go back and make like I'll make a general statement like you at some point need to just understand what your time Horizon is and what you want to get out of it um and that really dictates a lot of things that you do from there um and so for instance during the a pod with Joe I had I had an idea and I asked him a question do you think Bon out perform Soul because to me it was absolutely yes if you longa then to me feels like Bon I performs it's just higher beta now of course it could be super volatile and

so one of the things that I've learned from and I've heard it from like multiple really good Traders St Dr Miller for instance good great investor he says look we don't make a ton of T if I like an idea I'll put in a trade and then we start doing way more work but you have to put in a small amount to justify putting in the work and I think and psychologically it it really helps because even if it had a huge run up well it warrant's doing way more uh you know spending more time analyzing that like why did it run up how how how far can it go and one of the things I've been very wrong in crypto and I just it is my operating assumption is I will have very little understanding in how

quickly or slow my thesis manifests itself like my price Target and and having targets of of when it's of what happens once it reaches that so you know for instance like Bon know I buy a small amount um thinking that if I want to allocate 100 I will buy 10 or 20 uh or 30 and then and then do more work try to talk to the team try to monitor the position and and from there it's just easier because psychologically for me the worst is having a great idea not doing anything and and and thinking that you can do more work um and at some point it's like well how much how much work is enough to to put in opposition

and so for me if I if I have an idea of have a hunch and intuition I'll just buy some and then do more work um with towards the goal of allocating more over time so you won't really look to enter let me let me take um I don't know what's let's use a real example here let me pull up a chart of something oh look salana look publicly I said in this pod salana hits eight I think it's a good buy um did I buy my entire amount that I wanted to it's a difficult like so salana hits eight you buy maybe a little bit you buy maybe some more at like 10 15 then but then it goes on a crazy run right so now it's sitting at like 50 or 60 bucks today I think 60 bucks but you're like well I

want more exposure to salana but there's this psychological blocker because you're like [ __ ] I could have got it at you know 10 15 bucks so then are you how do you like maybe this is a real example here I don't know if you're currently considering allocating more but like how do how do you play that well there's two things one and do options come into this at all cu doesn't Happ great question uh because we did talk a lot about options in Joe's uh episode so um I think in the case of salana it's a difficult question to say how did you allocate all you wanted to because over a as the price goes up or as fundamentals improve the desire to allocate more may increase and so when

you ask the question today once that has happened well naturally you have a skew towards saying I wish I allocated more but at the time it just felt like a good allocation as a percentage of my portfolio as a percentage of what I wanted to be liquid versus carving out for other stuff so it felt right at the time because I don't think you ever want to put position yourself in a really really uncomfortable spot right and so I think um I SI just I sized it what I felt appropriate at the time with a goal towards allocating more um the question around okay it's it's it's had a huge runup right I mean if you look at a price chart I mean it looks exponential gravity at some point you know has its

toll and these things you know even Joe mentioned in the episode you know they took some profit so there's naturally people that take profit um that to me feels like a game of trying to play like near-term um you know uh kind of like trying to be cute on the price the real question for me that I'm asking is can Sana hit 500 bucks can it hit 400 Can it can it as a percentage of eth market cap um now let me ask you a series of question like probabilistically and I asked Joe the same it's like a Solana sitting at 6050 now do you see it having a greater probability of hitting 100 or back to 20 and so I asked a series of these questions okay like because there is this idea of reflexivity and also as

more price you know the price action is important like this idea of reflexivity as prices increase it's sort of a self-fulfilling pracy where the fundamentals improve more developers everyone wants the price to follow onchain activity but really onchain activity tends to follow price so so let me ask you then this hypothetical which is let's say you believe something like um you you believe Salon is gonna run we'll keep with this example Salon is gonna hit $500 in this market um and it's at 60 bucks today are you trying to time that and come in at a are you looking at things like funding rates and volumes and open interest and you're trying to time maybe an entry at like 40 or 50 bucks you like look I think it's going 500 I'm just going to enter the market

now it depends I mean I pay attention to funding rate like in this environment like when I just see a very quick runup what I've learned and observed every time I think I'm not going to see a price again there's probably the time where I'm going to see it um like uh you know there there's that Meme where Traders or people in Twitter say this is the last time you see Bitcoin below 30k or 30 and it just uh when I see that type of like exuberance uh I just I'm cautious of of of of like building a position I like to buy when when days where stuff is down uh just C you know like just when

there's a a pretty big deviation in price like you know down 5% down 4% down 10% th those are the days where I come out and and like to just you know chip at it a little bit more yeah um it is I appreciate trying to play cute a bit uh you know rationally speaking you might say hey if you think it's 500 on the margin doesn't matter if you buy it at 55 or 60 it does on the Marg like just marginally um but um but it just there's something psychological about just buying on on days when the Market's down yeah I think people forget too on on I remember the road from three I think it was the road from 3 to 20K for for Bitcoin or maybe it was 1 to 20K for Bitcoin there were six different

pullbacks of over 30% right so that six different times you had the ability to enter the market at a 30% pullback so yeah I I have a slightly different take on that actually I um I think it's nuts to try to time I think it's there's timing the market and then there's trading the market too by the way which are two so I have a lot of friends right now who are basically trying to trade their way to hire to to a bigger stack and to me that that's always seemed like a crazy A crazy strategy and I think the helpful framing for this in my mind is actually to remove yourself from crypto right now because it's too in the day-to-day of the moment let me let me frame it like this and I first actually heard Michael sailor talk about it like

this and I liked it 2007 Apple launches the iPhone by 2009 Apple gets the Apple uh the app stores and if you understood anything about software back then you would start to understand that iOS would become this new ecosystem that was maybe going to be as important as the web and over the last you know know that was 2009 over the last 14 years the mobile wave is now responsible for creating let's call it5 to1 trillion dollar of wealth and it seems nuts to me to look back and say could you imagine someone saying I get how big the mobile Revolution is going to be but I'm trying to time my entry into Apple stock in 2011 right I'm buying and I'm I'm

basically like you know Apple's trading at like 20 bucks I'm basically trying to time this entry into at at $18 or can you imagine Trading Facebook shares when did they go public 2014 I want to say or 13 absolutely trading I I was a JP Morgan when I was at JP Morgan that IPO happened no one understood very few people understood how they made money like social media I did this with Facebook stock actually I remember um because I was on Facebook all the time back then that was like the dominant social platform and I was like I want to buy some Facebook stock and I was I i' like was very new to the investing world and I think they ipoed for like either 12 or 20 or something somewhere around then around there but I remember saying oh I'll wait for it to

pull back so I can enter like are you an idiot like do you not under did like did I I don't and and and so then I miss that right and then you AB every time it goes up more you you psychologically are like well I saw it at it it will hurt more absolutely now look I want to impress I definitely agree with the strategy you know that time would have been better served back then pick pick your stock Facebook Nvidia Solana to spend more time understanding the long-term value fundamental drivers of of that you know instead of trying to you know cute your way like buy your way Nvidia between 400 and 500 well is this

thing going to actually be a 2,000 then understand capex understand their chipped understand go and listen to the acquir Pod where they do like four five six episodes of like understanding Nvidia same with Facebook right so I definitely agree with you um you know in terms of if you're gonna as a percentage of your time 80% of my time is spent on understanding for instance salana okay well how many developers are actually building like what are the problems with this like one of the things that we didn't spend enough time on the on the Pod with Joe was what are the problems with Sol like it is unrealistic to assume that the network doesn't have any problems and I understand fire dancer and I understand you know reliability is improved that maybe Justified the move

from 8 to 60 um but you know I I I think uh it just gives you way more Comfort if you have a long-term understanding of if salana doesn't have a fair shot of of being anything close to what eth is or more and if it does then you're absolutely right does it really matter if you bought it at 40 or 50 or even eth right you think you think eth is going to be this generational Global State Network Global State computer and you're trying to get it at 18 00 instead of 2,000 like it's not matter it's it's a blip in the chart if you you zoom out so yeah you know I remind myself and I was talking to my I'm in New York I'm talking to a lot of my friends that are

not in crypto are Venture and and the question really is like categorically I continue to believe that this is the best investment that you will be able to make like crypto as a whole if you were to bet on the crypto market cap expanding I think it's the best bet that you can make um over the next 10 years like average crypto average Venture top tier I was talking to like Vance uh has delivered like 2X or so at most 3x like if you delivered 3x in Venture you would have been like the best performing Venture fund now that's like 2017 or 2015 cohort forget about the most recent cohorts to raise way more

money and in Venture like in crypto I just think that like it's at least least a 10x from here in terms of market cap over the next 5 10 years and I don't see any opportunity and I've dabbled in other asset classes I don't see as clean of a trade to do that um and so if you think about it that way like just allocate and and go about living your normal life and do research and read like B too that comes from Trading it's like you could use all of that energy on on something else so let me ask you this I don't I don't know how comfortable you're sharing um or how transparent you want to be here but what what does your portfolio look like right now positioned into kind of the end of the year uh very long

um you know within crypto or just uh within crypto within crypto uh well a lot of my portfolio is in early stage stuff doesn't have a token you know stuff like scroll for instance um and I was I I am and continue to be really AC in investing in in privates um have you adjusted have you adjusted that strategy at all I've been thinking about you have to also think about okay once that there's a token attached to a project how you think about kind of the long-term prospects of it so yeah like naturally there's a big part of the portfolio like

probably 50% of it that is liquid and that is concentrated in eth and salana and projects that have had a token at launch like blur for instance and others um Aptos and you know there's projects that you know none of is financial advice but you know these are projects that I've invested in have a token right arbitrum um and so you know arbitrum as an example is an interesting one because you know I'm still locked up uh I invested when I was a Pari then I invested personally in two rounds uh I know the team very well and the question is do I what do I do with that do I rotate back to ethereum do I buy

something like salana um and it's always that relative kind of trade that that I'm thinking and my calculus is okay if I've already clocked in a certain return what is the probability of it doing another 5x from here because I can always take that money and invest in an early stage project at a $10 million valuation the probability of that doing a 10x is greater than perhaps a much later stage project to do a 10x within a you know five year window and so it's always that relative calculation and always thinking in probabilities like I just love framing it that way because it has given me much much more clarity in saying do you think eth is you know hits

three before it goes back to one like what like what's a skew um and do you think you know what's the probability of eth on a relative basis doing a 10x versus Lana doing a 10x like what do you need to believe for that to be true well you know and there's some there's some trades that or some in I'm going to use trades and Investments here interchangeably I know I shouldn't be so if I do please apologize I'm more taking this from a perspective of an investor first because to your point trading is just extremely hard I don't I've never met anyone that has systematically been good at trading in crypto it's a hard and so I approach it from an investing standpoint I think your mental CL

there's more clarity when you start expanding your time frame towards at least a year or two like there was a portfolio manager that called me and said in the next 10 days what would you buy I'm like I don't know like throw a dart to the board and see if it sticks like it's just impossible I think um but um on the like thinking of it in in probabilities has helped me rotate from private liquids um and also just thinking about the duration of my Capital like do I want to skew more liquid am I comfortable you know skewing more towards you know IL liquidity and longer duration and so General things but I'm happy to go through examples but that's

so so I mean when's yeah let's go keep going down that rabbit hole so when you start allocating more to liquid right now like how do you start to think about that so here here's some Frameworks that you could think about okay salana has gone up a lot um other l1s should maybe there's so there's this big bare Market trade big bare Market L2 trade right optimism arbitrum kind of had their time in the sun um during during the bare Market you could say okay maybe that was a bare Market trade all right bull market trade Sal Lana's gone up all right maybe there's gonna be a new rotation into back into the l1s actually uh okay so what are the best l1s at there all well then does it happen in like Aptos and soie and like manad and some of these folks or is it maybe in

the kind of older is it the Avalanches and folks like that like is that the way that you think about these things or or or am I framing it differently um I I heard it from Kobe actually which is a I think one of the best investors in crypto has been and he's been around for a while and I heard him him he said look my best returning Investments were ones where I missed the first wave and then I identified the second or third best so for instance you miss Bitcoin I think he did huge Litecoin position um and and so oh he's not saying the second he's not saying the next wave up he's not saying I miss no for inance for yeah and so at the time

for instance I'd missed axi I had an allocation it was small for the fund and so we didn't do it but you look at that's where I paid a lot of attention into okay like there is something here that is touching a nerve like gaming this play to earn whether you believe it now today or not I think we can talk about things that are hugely overlooked in this market like gaming um but then at the time I was like I missed axi and and and and I I paid a lot of attention into that and said okay what do I do now and then that led me to invest in lovian first check in alium after k um and and then do a number of other gaming deals um was it premature

TBD right these things Tak a long time but there are but that's what I'm trying to say for instance so now let's bring it back to salana a lot of people I said oh miss salana it hit eight I'm so stupid like I should have realized like there's fundamental like how many times have we had on a here like you know we've talked about this we we we constantly like Revisited the thesis publicly here in this pod um and so the the real question is I think it's just a bunch of noise to to look at something that has gone from first of all it didn't die second of all there's been a lot of headwinds like you know the FDX estate and you know how much hasn't been confirmed but you know there's sell pressure of Estates and it's like well now maybe the best you

know if something didn't die and survived and it's done this price action like then I think it warrs a closer look actually um because of all the benefits like e was eth because it made a lot of money for developers like that's the best way to build community and so salana is in that position now a lot of the developers got an A Bonk airdrop that's not worth you know half a million bucks like do you think that doesn't like if that's not Computing into your thesis of of the network effects that that will have in attracting more developers and funding more projects and the rotation of wealth that has been created within the ecosystem um towards other projects then I think you're missing the

point uh so so yeah you almost want to pay more attention when when projects had this kind of breakout moment and Solana's having that breakout moment um and that's hugely positive because it computes every you got to believe that every other project out there is thinking why am I not deployed in salana um and every fund manager is certainly reaching out to more funds that are more salana focused and saying I feel grossly underexposed what do I do what do I buy yeah and and that's just the nature I think of the State we're in right now so Joe talked about event driven Investments versus fundamental driven

Investments I'd be curious about how you there's two ways to think about that right dydx moving you know launching dydx chain uh Unis swap turning on the fee switch for everything like there are these like events that happen moments in time that you can trade around there fundamentals saying uh like if you take that yeah yeah so well okay impossible to do event driven trading I think in a systematic manner because it's it's like doing merger Arbitrage yeah how much are that's priced in like a lot of people understand the habing as an example you know when it's going to happen but the fundamental question is how much of that is priced in and no one

really knows for sure uh right dydx the unlock like unlocking events um and and other things that you're looking on chain everyone kind of understands there's a great website by the way it shows like all the different unlocks and when they're happening like it's programmed like you you can inspect to but they do a great job yeah and so token unlocks are one of those things where the data is all over the place there have been bullish unlocks they've been bearish unlocks they've been muted unlocks um and so for me it's it's it's I think it's important to understand what the sell pressure is what the token inflation is like how many more tokens are going to come online who's going to actually buy them who's a marginal buyer uh why would they buy but it's very

difficult for me to make a uh to make an investment solely or just around these type of catalysts now I think you can you can perhaps more interestingly look at that Catalyst and say okay how how did this you know maker for instance was one where we talked about publicly here in the SP and said okay we knew that the long-term holders like e6c and Paradigm were selling what do they know that I don't like they've been holding this for years and I think you can you can take event you can take these discret Catalyst or events to inform your fundamental long-term view on a position like have they lost conviction on maker or why are they

selling versus who's actually buying these tokens and so those are things that are pretty interesting because you can understand on chain why these things are happening in the similar manner that you can inspect 13 fs and saying okay what what does Stan driller know about Nvidia or why are all these hedge funds selling oil and gas stuff and and take that and ask yourself these type of questions because the the the question I think the the biggest I'll say this the biggest problem when someone comes into investing is not focusing nearly enough on price you know and to take your example of Facebook or you know back then and today you could have said God I used

this thing all day long I mean it should be worth a ton but what is a ton like what is that price right or similarly someone might say God Amazon's everywhere like it must be hugely I'm just going to buy Amazon stock it's like well it's like when you go buy like how marks like about this when you go buy a car like first thing you ask is what's it like how much how much am I paying for this and you don't people don't nearly do enough of an analysis of saying what is this what should this thing be worth now crypto is really really difficult because I don't there's not a consensus of how you should value these things on cash flow or anything it will take a long time but it's hard right like like how do you value Bon how do you value salana well I think

salana is easier to understand on a relative basis to ethereum I think that's the comp and do you do you believe that it can actually hit what ethereum is or even be better than ethereum then I think that's how you take a look at it and then of course the question is well should ethereum be worth that much and it's a difficult exercise but I think it's one where you fundamentally just have to have a view on relative valuation I think that's probably the thing that is most useful in crypto right now like one starting on what is the aggregate like should crypto be worth at least a trillion or a trillion four you start kind of asking questions well what's it worth to be able to

seamlessly move money around the world for a lot of people like on te Capital markets uh what are the use is stable coin use case enough to justify all this activity how many users do we have like what's it worth okay is it worth at least 10 trillion like well digital gold eight value of you know seamlessly transacting on the internet feels like it should be worth way more than 10 trillion um what's a value capture and then just like if you fun if if you if you have a lot of convic that crypto will be at least 10 trillion market cap I think that's a good like plant your flag and have a discussion around that and we can have it here I I

fundamentally believe that it it will be it will be worth more than 10 trillion in 10 years and so if you believe that it's a 10x there will be things that may do 100x or a THX and it's really understanding what are those things that are going to do that maybe they don't exist today um but um I think that's that's how I would start like and then like invert from there uh and then saying okay what is bitcoin is perhaps more narrow but something like salana being able to power nfts and gaming and payments and you start seeing stuff like Circle and and stable coin activity there and

certain use cases that are not possible in ethereum L1 or L2 today like something like drip and then you start I think for me then you start building a conviction around okay salana could be a leader in this 10 trillion plus asset clause and it's worth today I don't know how much yeah let's take a look well does that make sense it it does make sense do you frame when you think about your liquid portfolio Santi do you have is it one bucket or two and what I mean by that is the way sometimes I think about my portfolio I'd love to hear if you think this is the right way or the wrong way is almost two buckets one is one are assets that I have a price Target on basically so let's say there's a token trading at 20 bucks um

maybe I'm going to trim half the position at 50 and let the rest ride for the bull market and maybe the rest of rest of it I'll start trimming at like a 100 or something like that or or 300 or whatever it may be then their assets like Bitcoin if you come came out of the 2017 cycle was really just Bitcoin for me coming out of the last cycle was Bitcoin and eth where I just I could never bring myself to hit this hit sell on bitcoin and eth um and I kind of feel like I have these two why why not because you just don't want to exit crypto I just don't yeah I just don't want to I believe that Bitcoin and eth will be two of the most fundamental networks to the for for the for the next hundred years and to me selling those

I'm like I'm gonna hold I'm gonna hold those two assets for the next 50 years at least so why am I how much how much should taxes Computing you're thinking there a a decent B bit they have to they have to compute in that in that calculation right because do do they I mean if let's say let's say you bought eth at 2,000 let's say someone's entering today and you're selling it at and you you buy one eth and you're selling it at 10,000 that's an $8,000 capital gain you're paying you know if you depends how long you hold it for but you know 15 20% on that that's a that's got a factor and no some might say you just have to think about what is a relative opportunity

well actually I mean it's it's not a tax decision though it is a I know that I want to hold these assets for the next 50 years of my life so why am I trying to basically trade in and out and trying to what I'm doing by selling is I'm trying to time the market um sure so that's but I but it sounds like you you think that's not the right strategy and that every asset no matter how generational it is should should have a price Target on it yes yes I think so yeah like I I I have more of and I came in invest in crypto from a pure Venture perspective like I'm going to buy ethereum because I was investing in open source at the time and I felt that it was ethereum was a huge unlock for open source development with a token

as a smart contract like and and then I wake up three months later and and the prices went from 75 cents to 18 bucks and then Metallica is selling I'm like oh what like crypto just forces you to have more discipline in Risk in Risk Frameworks in management uh you know Joe talked about and and you know that once a position hits a certain percentage of the portfolio you you kind of have to take some profit and manage that um and I think uh where one of the things where I have to focus more of my attention is is this risk management um I think you have to uh because not paying enough attention to that is going to force you to in position you to probably do dumb

[ __ ] when a position becomes more than 30 40 50% 90% of your net worth like you have like look I I commend and respect people that have never sold a single e like I've known these like they participate in the io they just still hold the bag I'm not one of them um maybe I'm more stupid maybe I'm more less disciplined I don't know but this is where everyone's just very unique and their in their if your time Horizon is forever you're Michael saor okay fine but I still think that you need to pay more attention to to risk management um and and protect your Capital um like I and so I I when you're making like when you're making an

assessment of going into a position I think you need to have some sort of view around when when and where like at what price would I sell this and one of the things that I constantly remind myself is I continue to make a 10x I'll become the best and richest investor of all time am I going to do that problemistic no I don't think I'm that person and so once I do 100x one position I start looking very closely into I know the ODS are going to be way stagged against me you know what I mean like once you start making and and and this was a bull environment that we were like in last cycle once everything goes up like it's not you it's it's the market like you're not that smart and and I think it's

important to constantly remind yourself of that um and but but you would say why would I sell my Bitcoin ease to take the other position and say and invest in what real estate stocks maybe I don't know bonds interesting today maybe not so much down the road um my best advice and I don't want to give advice because everyone's different is insulate your lifestyle get to a point where you feel really comfortable allocating whatever money you have a pocket of money that it's not going to compute because then but the problem then becomes it always computes because even

if you threw in a th punted 25,000 bucks in eth of the Ico for I gotta say almost everyone that became life-changing money so what do you do from there it's hard it's really hard crypto does like I think we should feel incredibly incredibly fortunate to be investing in a market that and I tell this to my normal like former boss he was a KKR first Analyst at KKR like killed it and said I probably have lived through more Cycles in if you've been in crypto for a while I think you've lived through more Market Cycles than most professional investors that are in in

their 80s like you just seen a lot and that is a great education but I don't think anything really prepares you for the type of wild prices that you see in crypto with liquidity yeah all right everyone so we talk a lot about the institutions coming into crypto on Empire Santi and I are both headed out to London March 18th to 20th for blockworks his 8th ever digital asset Summit Das this is an Institutional buttoned up conference that we've hosted since 2019 I like to joke that it is probably the last remaining kind of suit and tie event in crypto people are still wearing suit and tie it's pretty funny you'll actually hear from a lot of the largest institutions in the world coming from

Standard Charter FIS JP Morgan framework folks coming out winter mute vanc Goldman Sachs there are a couple big themes of this conference one Bitcoin Catalyst the having and the spot ETF two A View From the buy side three rw's tokenization and stable coins four Global regulatory Frameworks five institutional infrastructure including Banking and payments and six the macro case for crypto if you have anything to do with the institutional side of crypto you have to be there there Santi and I got you back we hooked you up with a 20% off code it is Empire 20 there is a little competition running internally a blockworks to see who can drive the most number of tickets so help Santi and I out register with our code and you get

20% off that is Empire 20 today's episode is brought to you by North stake the secure and compliant staking platform for institutional investors North stake is purpose-built for institutions that want to enable the ability to move in and out of staked e seamlessly while controlling all aspects of their fund management North Stakes tokenized eth staking service offers institutions easy lowrisk crypto yield opportunities complies with both AML and MAA regulations making it possible for institutions to tap into ethereum's growth and earn staking rewards even through these pretty turbulent regulatory times in crypto if you are an Institutional Investor seeking compliant crypto exposure and yield North stake

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immense you can learn more about Chronicle at Chronicle labs. org that is Chronicle labs. org so do you have a price Target on eth where you're exiting some of your position yeah yeah yeah I think so you know and you know eth at three to four now I have a a view that eth probabilistically can hit a 10,000 um um I think you know and I can unpack that you know in terms of I'm of the mind that l2s are very positive uh and then they will flow back to like L2 activity will flow back to L1 I

understand that some people believe that like Joe for instance we had this conversation um I think you know you have to believe that more users come that the use cases are there like all that factors into the thinking of why I could reach 10K um and but but yeah I think at that level like and and along that way I think the relative attractiveness of investing in something that could that could at that point do a cleaner 10x versus ethereum is how I would think of rotating capital from E into privates and it's really just that relative I'm not necessarily leaving the system I'm just

thinking there's better Investments that I can make that I think I can 10x my capital or 5x my Capital um I wouldn't sell all of it but I would sell chunks to fund the private portfolio what's your equivalent 10K so 10K for eth what's your equivalent number for Bitcoin how do you think about that oh bitcoin's really hard again in commodity it's base supply and demand and uh it is it is a bit harder for me to like what do you need to believe for Bitcoin to go from 35 to 100K 500k or 350k uh in terms of flows of capital it's much much more just a more

mature asset and so you start saying what do I need to believe for that to be true well I think you probably need to see a lot of a lot of hedge funds traditional allocators come into the asset class you definitely need probably sovereigns to start buying this um what does the world look like in that state of the world and the thing that I have historically struggled with Bitcoin is that I I think it's an interesting non-sovereign store of value at the time for a long time it was really the only one game in town down so if you wanted to you know take your money and and and move it it was really useful but now you have stable coins now you have other assets where you can do that and so I struggled to to believe like um one

proof of work one in the secur and two in the security budget of Bitcoin and three in the false starts of of developer interest and activity on bitcoin um I think it's really challenged and if the developer Community is tough then are they going to figure out the security budget and and I worry about that uh and so I've started paying like I I perk up when I see developers talk about these things but it's not enough for me to like I feel much more comfortable holding someone like Ethan even salana or stable coins uh because the use case is much much more narrow you know I mean like like8 trillion like historically the thesis for Bitcoin has been gold is 8 trillion or so that we know of like 80 what is it 94% of all gold has been mind

you know existence like we know the kind of the reserves but you know it's a hard asset you know Austrian economics y y y you know gold can get eight trillion great that becomes really interesting it's a 8X 10x from here so um but I just maybe it's because I'm more like in terms of a te like technologist I believe you start building a case as to why something like ethereum or salana can be far far larger than that if they power a number of different applications like a settlement layer for the internet like what's that worth now the the value capture is the the TBD because we just don't know how much value will be captured out of those

use cases but this is where're going back to example of Facebook the learning that I had back then was I haven't seen a Network that has had wild like that has had very strong demand and usage and not acrew a ton of value and this is the mistake that so many people did with Facebook back then and other social networks like if a network really has this amount of traction and demand it will it's easier for it to figure out value acral and capture but if you don't have that then you really you're in a very tight spot and that's what I see with Bitcoin I don't see that problem with some like ethereum salana you know because they're just powering so many different payments and you know e-commerce and all of these things will

come on chain I believe yeah and the probabilistically what do you think is that going to be Bitcoin or is that going to that flow is going to go to Solano or ethereum that's a smart Contracting platform and that use case is is like that fundamental use case and demand driver is very powerful I think yeah will continue to grow far far more than the demand for Bitcoin and I just have way more conviction on that and predicating my investment on that versus buying digital gold yeah what about the other bucket which are which are the apps like when you think about the liquid a liquid strategy like I'd be curious how much of your liquid crypto

portfolio is allocated to something like Unis swap dydx a roll bit GMX kind of these not the not the network State not the layer but the but the applications on top of them well I invest a lot in that layer on the private side and and like like like blur for instance You could argue is an app layer um you know sits on top of ethereum uh it's a Marketplace for nfts something like that was a big position of mine you know on the private side now has a token right um the question I think you're making is would I want to hold blur or would I rotate

back to to owning something like ethereum or an L2 or salana I think it it it depends um there are a couple things that compute in my thinking one it's just been a thing where most investors have favored investing in infrastructure uh now you could say that the marketplace is infrastructure but I think it the market cap of let's let's just put it this way the market cap of l2s and l1s has been far is far larger than apps right you look at defi combined is is minuscule relative to all the l1s and and L2 uh the market just understands and likes

these type of things um I say that because it is important to Compu in my thinking of okay well it's it's sort of the Family Feud way of of investing which is it's not so much what the what you believe to be the right answer it's like what others also believe um you know at the end of the day these are all you know investing is the price reflects a consensus um and so look I think blue is really interesting I think defi is very interesting right you start talking about things that are overl overlooked um like defi is is overlooked yeah um the value capture the problem is of course these are General statements because the value capture is has been difficult for some apps um you know you

could argue that the biggest value capture if a network gets a lot of demand like the simplistic thesis for something like salana is you don't have to be right about defi or nfts or gaming to really take off you just assume okay if there is growing demand like either through me or others like fee like acral for validation like that network is going to benefit from all that and it's easier to make just one bet that bet um like me capture like you know you would have done far better investing in ethereum and and l2s than investing in defi over the last two years because you could argue that most of that value just has gone through me to

Meb um but I think going into like as I think about how I position my private book that eventually will become liquid a a lot of it is defi um I think you you you said it in in the episode with Joe like the like defi hasn't stop working um and you could argue that it will continue to work continue to ACR value some protocols better than others as more activity happens on chain they might use def5 protocols on the back end right uh like games and and like TR if if you're if you're trading in-game assets maybe that happens on a Decks

that you don't even care about or know about but that Fe acru like happens right um where I feel a bit underexposed is probably at the wallet user aggregation layer um I think wallet historically have been tough Investments but like something like metamask is hugely profitable like you know so you buy consensus Equity I guess uh full disclosure I own consensus Equity but um but like you know they're they're charging a fee swap uh and users very much not like price sensitive to these fees as as much as institutions so anyways I'm rambling a bit I don't know if there's anything specific you want to unpack but I would

say it's it's probably 20% 25% at most of my portfolio of app layer stuff yeah that can change very dramatically uh depending on how these privates like perform and if they ever have like become liquid but like let me ask you a question go under your head would you prefer to invest in salana or like Phantom wallet and say Phantom is valued at 100 million 200 million salana why uh because anybody who uses I think any activity that happen on ends up either direct directly or indirectly

flowing back to the soul token um however Phantom's probably gonna have a lot of compet I I I like Phantom a lot by the way I use Phantom but they'll probably have competition from someone like backpack and yeah backpack uh metamask will I don't know if they've already done this but I'm sure at some point they'll launch soul support if they don't already um they'll face a lot of competition so yeah um um what about like interesting though Santi is right now there are only two we're bucketing these in two different buckets there's basically the the network layer the L the L1 or the L2 and then the app layer but if you look at how SAS end SAS ended up uh evolving uh folks were kind of selling a product which I would Define

as the app layer in crypto uh and then a few and ve very few of them but but a couple of them were able to evolve into the into platform businesses so you look at Salesforce for example Salesforce is no longer a product business they're not a SAS company they are a platform company now they their business model is SAS it's software business but they are platform company instead of a product company and I think a few a few applications in crypto are going to be able to make that um are going to be able to expand into platform companies and I think the first one that will do this successfully is unis swap uh and uniswap is going to do it with their hooks I think everyone's right now kind of sleeping on hooks and I think if you actually talk to some of the developers

who are on eth and who are building Marketplace businesses and there are a lot of folks building with the with the I think it was V4 with with the with with Unis swap hooks right now and I think it'll be interesting to see a couple of these apps evolve from just apps into platform businesses yeah in the monetization there is just more activity more fece um I'm sure there's a more right right bell curve way to answer that with the monetization but yeah I think like the left bell curve way is yeah more more activity more more fees yeah because I mean you're looking at Unis swap at a fully D3 billion circulating four so a lot of the tokens have been you know in circulation like

80% of the tokens are you know 70 five six% of the tokens are in circulation um the the protocol itself generates a lot of fees that are going on the admin contract the company itself is now generating interesting fee streams so perhaps you believe that they're not going to sell the tokens and um you know so you look at the fees and say okay well yeah like I believe hooks are going to generate way more fees and it's trading at so and so you know this is a cash flow this is a p multiple um that's like a a fundamental way to of looking at it and that you could say the same for maker and like I had some point believe that that type of thinking and investing will be rewarded in crypto even though I appreciate that

also a lot of it trades on just mimetics and you know again like social consensus and people like like Bon for instance you know it's a culture coin and you can't laugh that off I think in crypto I think you crypto gives you a really deep appreciation for culture um and and yeah and how valuable it is we've just never had it I mean there there have been perhaps ways to express these views but it's very real and I think it's a challenge coming in as a professional investor like if if if you go to a conference and you and you say that the the best investment you can make is something like Bond like You' be laughed out of the room but again like as someone as CMS loves to say do you want to be do you want to

make money or do you want to be right uh and there's all these different types of investing Styles you can have in crypto fundamental for instance has perhaps not been as rewarded as momentum and some of these other strategies but uh you know I think where you can get into trouble is trying to do a lot of different things in terms of investing Styles yeah uh because of fomo because other the worst feeling for a lot of people is not being able to process that other people are making more money than you and that leads you to do really really stupid things and that's probably the state where some bitter folks or some folks become bitter because they see the success of salana and they can't

stand that because they miss the trade I think that's actually the tough the tough the that's arguably the best point in this entire podcast is bull markets end up being entirely relative right bare markets it feels like you're all in this together and bull markets you end up having a lot of fomo every day whether if you're running a company someone else is always making more money than you um launching a token whatever bli billion dollar market cap whatever it may be if you're you know investing there's always someone making more money than you um and I think that that does end up becoming the the hardest part of bull markets for a lot of people and it's also the reason a lot of people end up losing money at the end of bull markets is by the end of the bull market they've you've gotten so fed up with

that feeling that you end up Levering up a lot and using leverage to try to catch up with your peers um yeah but it remember I mean it's almost the what happens on crypto Twitter is almost what happens in real Society with with Instagram right where the only thing that people are posting on Instagram is the best prettiest pictures of themselves the only thing that people are posting on Twitter uh on crypto Twitter are their are their wins but remember that there are a lot of losses happening behind the scenes as well absolutely yeah look anxiety is very real and I think uh the the other more refreshing take I think is for a long time I Public Market investing was not interesting to me I've now had to dabble a lot in in public markets uh for a variety of reasons and

I've actually really like that I want to do more on public and liquid even in crypto the market is like a a truth machine in some capacity and you know I think it you could say well it's it's very humbling if you're wrong um and it hurts s for sure but I think you know it's actually incredibly the opportunity to kind of like refine your thesis go on this journey of hey I want to find Value I want to understand my own investing style and framework and learn from others and if if you're intellectually curious like I just don't think there's a better journey to make than invest in

public markets or even private markets like it's uh it's incredibly rewarding like you just continuously learn like and you can never stay put and idle like you you know you can you cannot do anything over 10 years but that doesn't mean you're not processing information like you could hold eth and not care about anything else but maybe throughout that Journey you probably have had to look at and process and re-evaluate your thesis constantly um or maybe not you could have just like invested and left but uh the more the more interesting thing is is once you buy something even if it's a small amount you have a vested interest to continue to learn yeah um that was my first approach to investing in crypto I

wanted to learn more about it and so I just punted money that that I had got as a bonus JP Morgan and was like I'm G to learn about this like how much is a university course cost today well maybe at the time it was 2500 now it's probably 3,000 bucks in America which which is crazy but you know that's a good sum amount of money is like am I going to learn more here than a semester of you know economics 101 I guarantee you're going to learn way more in crypto than what you're going to learn in a cookie cutter University class Psychology 101 like you're going to learn about anthropology Game Theory politics you know economics Finance everything like it is the best education that you can get so that's probably worth at least 5,000 10,000 bucks you know University cost 250,000 bucks so

you know if you can afford that like this is better education than a four-year like [ __ ] course in economics like you're going going to learn [ __ ] in college it's a Professor is pontificating about risk go and PT these meme coins and then you'll understand risk really really quickly you know what's funny about that the uh the oxymoron is that so a lot of my friends in I went to Emery in Atlanta Mike and I both went to Emery and all of our friends who went who got business degrees ended up going into you know with like like business in the in the capital B version of business right and um Mike and I were our only two friends who didn't study accounting or the markets or what what Finance or whatever it was Corporate Finance right

in the business school at Emory and I was a history major Mike was a Classics major and I think it's no surprise that the the history major and the classic major ended up falling falling into the crypto rabbit hole in the way that we did well you know like JP Morgan we used to hire a bunch of people that have studied the classics and not business because it is harder to rewire the brain of someone that has studied Finance yeah and maybe not thinking first principles versus other majors are more malleable and more open to learning yeah uh and and doing inquiry um and I think look it a lot of people Miss defi investing in some like uniswap because they fundamentally believe water book models are just Superior and didn't really appreciate the the distinction and the

value of having some like an amm price Discovery for tail and assets being a market maker for retail like all that is so I think it serves you well to constantly be open to learn about new different mod mod and um I think this what we try to do in this podcast like salana and etherum are different type of are the most different type of l2s like Solana is the most different type of L2 relative to eth all the other eth EVMS are just similar on the margin but salana is actually the first to be very different in their monolithic approach and and then the team's different so like if it's interesting just to pay attention I'm not asking you to to go and rotate all your e and buy Solana but

at minimum if you're holding eth you have to pay attention to something like salana you you just have to right um I think if you're if you're a professional like money manager even more um um so so yeah I think uh but the the anxiety piece is something that as we head into what I think is you know I don't know how much we're in a bull market for sure like flows is something that Joe like we all look at stable coin volume you say okay like there has been an uptick it broke the trend of just going all down right STS are flowing into the system that's very positive we'll see how that holds up like we can start talking about things we want to see for this bull market I think a lot of people are asking that question too one is have I missed a

rally you miss this rally but are we in a more sustained period of you know more Capital flow into the space maybe that's something we can just talk about like now because that's also probably Computing to a lot of people's thinking right now is is this actually for real given all the macro backdrop and everything else that's going on yeah I don't know if you have a view my I always thought the bull market was going to come like mid 2024 that was kind of my framing for it and what's happening right now uh I I'm I want to be I want to be excited about this market right now I really do but I'm a little concerned about the way about how it feels like we've all gotten a little out ahead of our skis with this market

and specifically like in my mind a healthy Market is a Bitcoin Le Market that flows into eth and and then and then and then converts into some other assets and look not all crypto bull runs are going to be the same but the the fact that ults are running so far ahead of uh what I'd call like the majors right now is a little concerning that's one bucket um the other bucket is I do just flash back to the binance io bull market at the end of 2019 and where the the thing that ran back then was really these iOS and the alts if you remember that binance launched their initial Exchange offerings two years after the Ico era and that kicked off this little like two

to three month bull run at the end of I think it was like fall 2019 and then we had the this violent crash obviously you remember in March of 2020 and then we got the very extended bull bull market so this has been super fun this this has been awesome I am cautious though about saying I I do think this is the start of a bull market but I am cautious about saying like it's up I don't think it's up only from here I I I do think we get it's a it's never up only I guess no I mean from 20 from March of 2020 to November of 2021 it was basically up only that was 18 months of up only um and it

was uh it was crazy but to be fair but during that period I mean there were days or moments or weeks where you had a lot of volatility and you know a lot of people days and week like what I think could happen is that we have either months of like months of consolidation around here or a violent pullback like I do think this is the start of something real but I don't think this is like the start of the up only period that would be my high level take on it yeah I think you're right in assessing like Bitcoin stability and in price increase is probably very indicative along with stable coin inflows yeah um because you do need more Capital to renter the space like so the question is like what has let the Sal rally I think

a lot of that is rotation into a trade um of of Mo you know I guess you could say well eth hasn't moved much Bitcoin has and that new wealth is flowing into something like Sana uh perhaps more than ethereum and so the price action on soul is much more yeah um Power you know it has been more um you know interesting than what it has been for ethereum um and the one of the things that I don't fully understand is where is this Capital coming from there is new capital coming into the space I wouldn't say it is like allocators in the US like like Pension funds it's more perhaps in other

jurisdictions like if you look at macro like China has eased from monetary perspective right and they're getting helicopter money because there's you know the government is worried about like you real estate and the economy there is not doing as well so you know other central banks are reasoning so there is new capital coming in from other places not the US um but I do think you probably have to see you know flows coming in from the US to see a like resume like actual prolonged bull market um but you know that's not to say that you can't make money I mean you can make money in any Market environment like like I think some of my best deals at the peak of the bull market last time at a like very sensible evaluations and I think some of the best teams like

appreciate that don't get caught up into oh I can raise at 100 or 200 I'm just going to go and do that I think they stay disciplined and raise uh so that's actually a really good signal um but you can do terrible deals also in this market like and and so I don't know uh I think the private Market still very much like because you know like the private Market took was the last to adjust like valuations of the private Market were the last to adjust to the to the bare Market I think now you're seeing the opposite where valuations of seed and series a series B are probably are still very much in bare Market you know these are like two and a half million five million dollar

valuations like teams are raising the bare minimum because they know they can't get it I spoke with the largest Fonda funds in crypto yesterday because I had an idea and they're like no one no one is interested in crypto right now and they skew us right yeah um so it's just interesting um you know I mean I told you we met with the argu I think probably largest financial data company in the world this week and they just cut I was think I was telling you this on telegram they just cut their entire crypto team they just they do a segment every day an hour segment every day on they wiped out their entire crypto team I and very soon

they're making some more cuts to other crypto Folks at the company and they uh it's just not they did the same thing in 2019 they they capitulated the bottom and then they ended up building back their product team their research team their data team their editorial team and now they're doing it again and it's uh it's just crazy to see them that seems highly irrational to me because crypto like crypto cranks out if it's up like the only thing that's up only in crypto is headlines like you can always there's always interesting things to report on in crypto like it's because they this is this is where so there's a fine line between looking at the data listening to your customers and having conviction on a bet and this is a an a traditional institution over optimizing on listening

to their customers instead of having a instead of having conviction on the future that's what I would say and do you read that to be a bottoming signal or a more more I mean it was a bottoming signal in 2019 when they when they basically laid off their whole crypto team in 2019 after so they so Bitcoin ripped they spent 2018 building their crypto team in 20 end of 2019 they they laid them off and that was you know marked three months away from the bottom um I don't know makes us excited it's another it's another fouryear cycle where where blockworks can can can dominate basically and and it gives us four more years four more years of a head start on them which is exciting are you putting in more money into crypto

now outside like your crypto portfolio or are you just rotating within um my personal portfolio or block works as we invest your personal portfolio um I put in more a lot more like six months ago when we were talking maybe like three or four months ago when we were talking about this um I did invest a little bit more the like about a week ago okay um as I as I started to see it starting to rip we yeah I started to really like press I would say I just had a bunch sitting in usdc because you know what kills me is uh when you have to transfer from your bank into into

whatever platform that you use whether it's coin Bo or gemini or whatever you know what binance or whatever it is that that like two or three three day window if you have it which sometimes it like transfers automatically some or instantly sometimes it doesn't for me I never really know why but that lag kills me so I just I've had a bunch sitting in usdc uh and just earning I think it earns four or five% right now on the on the platform that I use so yeah I just allocate at a bunch of that usdc that makes sense yeah yeah I've been uh dabbling more in public markets and one of those is is coinbase um I think it's again none of this is financial advice I always asked it has been an interesting question for

me when when someone's interested in crypto I always ask them what would you invest in coinbase versus Bitcoin versus the majors like do you think coinbase is gonna outperform um because there are multiple ways to to have a view and express viw on crypto right um you know maybe in a tax efficient manner maybe through options like options have been tricky because they're not very scalable like now you don't have as much market makers like you can deal with folks like Galaxy and whatnot but you know if you want to if you want to scale this up and it's it's a bit difficult uh to do um plus some like coinbase you know certainly a much more robust option market and you can do some interesting things yeah to have exposure

to that and I always pay attention to coinbase because you know there's analysts that obviously produce like research reports and I think it's a very probably one of the best like barometers for sentiment uh towards the Sasa classus um and and it it's still very uh I think it's one of those names that is very not properly understood yeah um I agree we both put on a decently sized coinbase position what three three it's my largest position probably outside of like in in the public markets yeah but same with me by far um now of course there there challenges and whatnot but I

think the market doesn't appreciate like all the different components and and and what it's doing today difference is I just bought coinbase spot you have some ridiculous you know call strad seven different names whatever whatever it means but uh yeah we are both expressed I'll tell you I'll tell you what like well this is where I I when I say it's probably the one one of the most under misunderstood names is the willingness for the market to short it and pay you an enor amount of money coupon to go to like just have a Long View on it yeah and I think the skew is overly negative on this and look it's a

very volatile name for sure um but when I compare the volatility of coinbase to other volatile names in tech and and just similarly volatile names don't pay this high of a coupon and that to me leads me to believe that the market is just more negative on some like coinbase right because if the VA is the same for crypto the is the same for two assets but the coupon is like not mark But meaningfully higher like I'm saying like a a turn or two higher like a volatile name in these instruments like Phoenix what maybe getting a High teen coupon on a one-year uh like Phoenix for instance and maybe you're getting 15 20% 25% maybe stuff like

Tesla but like for like instrument coinbase would pay like 45% and I'm like okay well like and so the the the round of all this discussion I think my thinking when I look at all this I think it's difficult to understand how much is priced into something yeah because I I think you have to focus on price absolutely like you cannot just be like a fundamental in a vacuum like you have to pay attention to your thesis what what is baked into your assumptions around anything you're touching and how much of that is already priced in and it's it's a most difficult question um because someone might lazily

say oh like I I have a 10- year view like no problem like this just continue to go up I'm like well no it's price to Perfection if everything that you believe it's going to happen in 10 years everyone also believes that then then you're you're setting yourself up for like making a terrible return because if there's no margin like Seth clar there's no margin of safety for for for that to deviate like if for instance say if for instance the the value of the price of Sal like the price of ethereum or salana right right now reflects everything that we' talked about like all the positive Catalyst that you know there's going to be massive e-commerce and payments and and and all this like value ACR back to to they all want if if that already is baked in to the price today then you

shouldn't be investing because there are there are assets out there that where you probably can find a greater margin of safety you just have to believe that in your model if you're not baking in a bare case and a bull case and that fan of returns is not interesting and and you're you're buying something that if there's a marginal deviation like for in in that not playing out then you're sure s know that that price is going to be very skewed to to underperform um and I think I think options are interesting when you go out and look at that and how they're priced I think it will it will give you a really good understanding of how the market how looks at the

name um yeah that's why the the exercise with coinbase is interesting because I think the market is sort of you know as as how marks says like the pendulum is is swinging to extremes of total Left 4 Dead like Solana was left or dead at eight it's not left for dead at 66 now it's interesting I think it's working it has a whole you know a lot of reflexivity and that's positive for fundamentals too but the margin of safety is much is different yeah so you have to pay attention to this stuff I think that's I think that's a good good pod right there yeah I mean look I think like there are other pods that just go and give wild I have some

content for you if we maybe we wrap it with some some content that you'll like so I listen to two phenomenal founder interviews this week one was with Ryan Peterson of flexport and one was with Brian chesky of Airbnb I I think that Brian chesky will end up going down as one of the the greatest entrepreneurs actually of Our Generation Um he's I'm gonna send you this it's on uh he on this guy Lenny Lenny's podcast um okay anyways I'll send it to his phenomenal uh the other one was uh Ryan Peterson on 20 minute VC and Har yeah Harry stebbings and um actually there's this one part that I really like that you'll like because I know you love thinking these Pro I know you love thinking these probabilities where Ryan Peterson

basically says uh Harry steppings goes did you feel pressure when you got that eight billion doll valuation on flexport he goes no because our valuation is not8 billion he goes when you get a valuation on a company that is a pro a combined probability of a bunch of different thing so there's a he goes there's a a probability that our valuation is 80 billion a probability that our valuation one day is a trillion dollars Valu probability that we are valued at maybe 10 million bucks because we go to and and some probability that we're valued at zero dollars so when I think about our Val like that is a moment in time a sliver that you take all of those probabilities and you put them at eight expected value yeah exactly and um now there's obviously a classical form way

to value a company yeah you take the cash flows and you discount them back but but but but even the cash flows like when you're making it that assumption on cash flows that factors in some sort of state of probalistic State in the future over years terminal value yeah look guys probabilistic thinking is the most valuable thing that you can inject yourself into your framework have you read thinking in bets yeah any duke or any yeah ABS great yeah there's there's a whole host of of of literature and just books that you can or even interviews that you can that you can read thinking that's is probably the best place to sync but it really just it really forces you to challenge everything and and when you thinking when you thinking

probabilities you appreciate that a probability is not static it's constantly changing and that forces you to constantly be pro pro to process new information to update your probabilities of that expected value whether it's eight or 80 and I think the the more interesting assets are ones where you have a what is called positive skew like positive asymmetry where the downside is fairly muted and even in the worst case scenario you get your money back but in the best case of outcomes and this is I think crypto very much reflects his his we don't really kind of know the the full extent but in inversion where everything in the internet is being settled in blockchains it is not a $1.4 trillion

doll asset class folks it just is not and so what's the probability of that and I think you constantly look at activity and you say like nfts are a generational moment like younger folks love it they're here to stay and you might look at all the volume near term and it's just noise because it's just beta users but long long term you just if you believe nfts will do X if you believe games are going to do y payments like everything just moves on chain and you support that with a number of like socioeconomic shifts and changes like yeah I think is it going to matter if you bought at plus 10 plus 20 arguably not but it's it's still

important psychologically to just manage your emotions and prepare yourself for what it will be a very wild Journey but that Journey can be really positive where you constantly learn and maybe listen to Empire or it can be extremely difficult because you constantly beat yourself up and ego gets in the way because you just you just somehow believe that you can't make mistakes and that's that's a worst form because you will always the nature of investing is you're going to make more mistakes hopefully you make less mistakes than than than winning outcomes and the net of that is a whole host of learning and and positive returns so anyways that's the Pod let's wrap it up

let's wrap it up Sir hopefully people can listen through my muted uh and sinus you got the snipples really coming out yeah I've been resisting but anyways uh thanks so much everyone for listening and if there's anything you want to listen or talk about or there or guest you want to have on the Pod let us know I think uh yeah you guys should tweeted us we see all those tweets when you tweet out guest recommendations or topics you want us to cover we we see all those so yeah I guess as a teaser we have a really good lineup coming up right we have a we'll tease out one episode we have a really good episode with Kane uh Kane Warwick on dropping on Tuesday so we wanted this to basically be like conversation on synthetics and and infinite next but it ended up just

kind of being Kane's I actually took just really took a backseat because you have such a good relationship with Kane and you've known him for so many years now it kind of just was uh Kane's musings on the market synthetics and infinex but also the purpose Market l2s Dows uh stable coins is really interesting conversation so that drops to awesome y great to see you uh well hey everyone thank you so much for watching today's episode really hope you enjoyed it we wanted to take a second to just remind you about our upcoming digital assets Summit in London March 18th to 20th Santi and I got your back seats are limited and we hooked you up with a 20% off discount code it is Empire 20 if you heard it earlier in the podcast there's a little competition

running at blockworks to see who can drive the most number of tickets so when you register for the digital asset Summit make sure you use our code Empire 20 see you in [Music] London [Music]