Kyle Samani & Tushar Jain: Multicoin Capital – An Update From the Thesis-Driven Investment Firm #441

Transcript

welcome to epicenter the show which talks about technologies projects and people driving decentralization and the blockchain revolution i am friedrich ernst today i'm speaking with kyle simani and trisha jain who are the founders of multicoin a crypto vc firm that started out back in 2017 when there weren't so many crypto vc's yet and um it's rumored to be the most performant vc fund ever before we talk with kyle and twitter about multicoin um let me tell you about our sponsors this week paraswap is a multi-chain dex aggregator this means that um through paraswap you can easily access the liquidity of various different decentralized exchanges the protocol automatically finds the cheapest liquidity for you so you can trade knowing that you're

getting the best price it's also pretty gas efficient pair swap recently added support for avalanche polygon bsc and phantom and you can use parasol directly from your ledger in ledger life periscope is also becoming a dao so if you have psp tokens and that's something you should look into and the dao recently voted for the gas refunds program um so parasol stakers can get up to 100 gas refund on their trades on top of their auto compounding yield so join paraswap's discord to learn more at parasoc dot io epicenter and we're also sponsored by chorus one

so proof of stake offers a more performance scalable and energy efficient way of securing blockchains start earning rewards and contribute to network security by staking with course one mistaking providers securing billions in assets and on over 25 decentralized networks including solana cosmos and ethereum if you're an institution or want to run your own branded node corus one's white label node as a service offering leverages they're highly available and proven infrastructure enabling you to participate directly in decentralized networks head over to chorus.one and start your staking journey today hi trisha and hi kyle thanks for coming on it's such a pleasure to finally have you on i can't believe um you've never

been on epicenter before uh we've actually been on epicenter back in 2018. um yeah it was a great episode we had a lot of fun it's great to be back fantastic it's good to have you back i i will have to go back and listen to that now do you remember who who who did the interview interview back then uh brian crane and um fantastic that's a good team fantastic cool so i guess you've done this before so let's talk about you first of all so basically how did you guys meet what are your backgrounds and what kind of made you become crypto vcs

uh so hi everyone my name is shar i grew up in new york i met kyle at nyu when we were studying finance we realized that we were both fans of the intersection of finance and technology spent a lot of time thinking about you know just how mobile was reshaping the world and how the internet was reshaping the world uh during those very formative years for us we both you know have an entrepreneurial background after uh university we went and started our own companies that were both uh you know kind of modest little outcomes which is say not very successful but

you know we heard about this blockchain thing along the way which was very exciting for me specifically it was exciting because it was a new way to coordinate human economic activity and you know incentivize people to work together in ways that they had previously not been able to we decided in 2017 to launch multicoin after seeing that the technology was being validated that you know things were being built in the industry that were beyond just you know digital payments but also you know enabling new types of coordination and you know in fact funny enough uh the day we decided to launch multicoin was

the day of the gnosis ico so you know back in in 2017 that was one of the major data points for us that showed us that crypto capital markets were going to be a big deal it's kind of funny because we named the firm multicoin because at the time when we started uh a lot of people asked a question of like will there be many coins or will there only be one coin to rule them all and this was you know back when bitcoin maximalists had a lot more political power within the crypto ecosystem and you know shouted down anyone creating another coin is just another [ __ ] coin and you know we wanted to be very explicitly against that and say you know we believe you know with complete conviction that there will be many tokens there'll be many coins they will do different things

um so that's a little bit of the history of you know how we met and how we decided to start multicoin and why we called it multicoin super interesting given your background i mean you both studied finance and then you both started separate um companies in the in the kind of in the medical field right i mean kyle's yours was like a google glass based app and trisha you had like this this patient data company right so basically you you had this you you had this very strong entrepreneurial background um and then you moved into a a new field and be a new discipline so wouldn't it have been

um so why did you become vcs why didn't you start an application or protocol or you know sweden for tooling or something why why abc it was it was kind of through the fall of 2016 and early 2017 tushar and i were chatting pretty almost daily about various crypto things um we were just getting both more and more excited and both kind of losing interest in other things um and so we did have a conversation in the april may time frame uh of 2017 saying you know what what should we do uh both of us kind of knew a couple of things about each other fairly well one is that we're both like kind of insatiably curious

um i can spend my entire day reading just like all day uh as can to shower about different different subjects and ideas um second was we wanted to we both knew that there was a really interesting opportunity to educate the space um and share our ideas and help the ecosystem move forward um when that's why we started blogging so early on was was to do that uh and we we had a we had felt that the amount of uh uh that i've thought that leadership being put out by other investors around crypto was quite lacking it's gotten a lot better over the years um but but still i would argue it's like not not enough

um and we kind of identified that hole in the market fairly quickly and that turned out to be very effective strategy and i think both of us all just both had like a desire to uh just like focus on our thinking and our curiosities and so that kind of natural set of desires led us to want to start an investment firm uh instead of uh operating operating business we had done the operating business thing we learned a lot i think we both have a few battle scars from that and we're interested in trying something else yeah and just to add a little something there [Music] i remember thinking explicitly at the time you know what does the ecosystem

really need and this is you know 2017 people are doing icos for like really weird wacky stuff uh and concepts that quite frankly like don't make sense you know you're gonna use this coin to pay your dentist or you're gonna use this other coin to pay for coffee like it's just like nonsense and what we realized was that there was like kyle said a lack of understanding of how to think about this asset class right because the asset class was new and the heuristics for how to value these things or how these things you know would capture any value or be um you know marketable in any way those heuristics were just lacking right if you think back to all of the

heuristics that people have about traditional equity markets well those were created in the early 1900s as equity markets were just getting started like the idea of valuing a company off of discounted cash flows you know it isn't a concept that's been around since ancient times like that that was something that was created by you know this discipline of value investing when the asset class got popular and we realized that that was what crypto really needed at the time was those types of heuristics because there were a lot of investors who were curious who were interested in what this technology could be but you know they're full-time investors they're not full-time crypto investors they couldn't spend the time to develop those heuristics so the first one that we did was uh kyle published a post on

understanding token velocity which i think is the first post that we ever had that went viral that you know got a lot of attention uh you know we got a bunch of deals off that post i think we're still getting deals off that post so it's one of the highest roi pieces of writing on the internet probably uh and it was just to explain to the world that hey having separate coins for separate payments like does not capture value uh because of the token velocity problem which has since then become very popularized but you know we saw that as a way to contribute value back to the ecosystem and probably you know was the most effective way for the two of us to contribute value back to the ecosystem beyond if we had actually been entrepreneurs building something yeah i mean

i totally get that and i mean thinking back into 2017 there were a small number of of crypto vcs right i mean not i mean today it's uh everyone and their grandmother uh crypto vcs so but i mean back then it was literally polychain union square ventures metastable maybe fabric or something but they weren't super vocal about their investment hypothesis right so basically you guys were maybe the first people who really said look we're investing in this and this and this because um this is the way that we think it's going to pan out we think in public for better and for

worse let's talk about let's talk about yeah you're thinking so what's what's your current investment uh thesis and has it changed over the last couple of years um i think the investment theses have definitely evolved over the past couple of years i think uh you know we just have seen more projects more data that helps us understand how the technology will be used but at the high level the investment theses are are pretty clear right we've written a post about this uh explaining out the mega theses i think we can add a little bit to that but um you know the first mega thesis that we had is defy

right by having units of value whether they're tokens or equities or bonds or currencies or you know commodities et cetera all on a programmable ledger that works anywhere in the world permissionlessly you can bring access to capital markets to more people you can include more people in capital markets and that creates a lot of value and creates a lot of wealth uh for the world because you know you want everyone in the world to be able to participate in capital markets um kyle maybe you want to talk about web 3 thesis yeah i mean we were very fairly early to start investing in kind of web3 infrastructure things starting with live peer in the graph back in the early part of 2018.

um and i think another thing we've developed conviction and especially over the last like six months or so has been that you're gonna have decentralized databases um ceramic kind of being the most notable and there's other teams trying to tackle this problem as well um for storing user-owned data that is not financial and i think this is going to be if you just look at the developer ecosystem around ceramic now it doesn't get a lot of air time um in the press and on twitter but it's an impressively large uh percentage of the overall crypto ecosystem is now leveraging ceramic in some way um and i'm quite optimistic we're going to have a handful of tools that look and feel like ceramic

um and they're just offering these decentralized database things um and i think that's a really really big opportunity with obviously with elon buying twitter um i get the sense twitter is going to do more cryptoe thingies um i don't think his first objective is going to be to move the database from postgres or whatever it is to you know to ceramics but like uh i think that design space it just became a lot more probable that twitter does cool stuff there um and i think that's gonna provide a lot of inspiration for developers to build new kinds of things so yeah we're very very excited about decentralized databases you were also one of the early investors in our weave right

uh yeah correct we we we're not in the ico on i believe the artwork ico was in the fall of 2018 um we learned about are we in the spring of 19 um and completed our first investment in in june of 2019 in our weave again that one just kind of struck us as i think there needs to be permanence we did not expect nfts to blossom in the way that they have um and that turns out to have been just a phenomenal use case for are we if you look at most of our weaves growth in the last six months uh most of it is coming from nfts uh specifically around the metaplex integration that's been just a amazing integration for both metaplex and for arweav um and the other thing we've obviously seen is a lot of layer one teams and layer

two teams using rv for data availability um so it's been very cool to see that uh those kind of pro this thing find product market fit in those kind of two major use cases um but there's a lot of over low-level infrastructure that needs to get built you need to have um storage you also need to have databases you need to have bandwidth you need to have compute and generally speaking of the higher up the stack you go the harder those things get to do in a decentralized way um and so we're excited to see more and more of that stuff that stuff happened we've announced ceramic influence of maybe a month ago a month and a half ago and there's going to be a lot more to be done yeah that was also the first i heard of ceramics so somehow this had completely

bypassed me um so in terms of composability and the money legos that you just talked about in terms of defy um there were also i mean you guys were early to to the defy game but there were also um i remember very notable exceptions where you decided to not invest in d5 projects that would have been pretty lucrative like uniswap for instance because you fundamentally objected to the tokenomics can you talk about that a little bit yeah absolutely um so broadly you know

we try to think about value capture and defy or in crypto broadly from first principles and just think uh in the very long term you know we're not focused on shorter term you know what will the capital markets think of this in the short term capital market is a voting machine and long term it's a weighing machine and it's really about your ability to capture value over the long run and you know we believe unisop built something innovative and really cool especially given the gas constraints of ethereum you know if you want to have a decentralized exchange this was the way to do it and it has clearly been very successful in attracting trading volume and users and

assets however the uni token itself doesn't capture any of the trading fees that are earned by the uniswap system and the instant that they do turn on fee capture which you know there they could you know potentially do that and say you know of the 30 bips fees going to liquidity providers for a standard pool uh five bips actually ends up going to the token holders instead we just see that as indefensible in the long run uh because it's just rent extraction without providing any value back to the protocol or to the users of

the protocol right and that's very very difficult to execute in a world of open source and permissionless access where someone else can go and copy your code and say hey you know we just don't take five pips away from you as liquidity providers why don't you use this instead right and you have aggregators who will route traders um orders to wherever you know gives them the best fill so you know the the users aren't necessarily loyal to a specific exchange they want the best price over the long run so given that you know confluence of

things we just didn't see a way for a token in that system to sustainably capture value and we actually published a thesis about this that i think is one of the best theses that we've published it's called protocols don't collect fees dows manage risk we published it uh you know something like six seven eight months ago um and in it we talked about specifically defy value capture there are cases where a token can take a spread or take a fee right an example is a d5 derivatives market something like mango markets for example you know we think that mango markets can sustainably

collect a fee off of trading volume going to the mango dao or the mango token holders because they offer an insurance fund where because it's a leveraged trading protocol if a winning trader makes too much money and the system you know becomes um insolvent based on how much you know customer deposits are in their trader deposits are in there then the mango insurance fund has to cover that loss and if the mango insurance fund cannot cover that loss they will print new mango tokens or you know use mango tokens off the balance sheet and sell them into the open market in order to make sure that the winning traders are made whole and traders on leveraged trading

platforms want to know that there's a big insurance fund they want to know that there's a big backstop in case their trade is really really a big winner and that you know whoever traded against them gets blown out and you know the risk engine isn't able to handle that well uh and so in exchange for providing that type of insurance uh in a sense to those traders they're providing a service that allows long-term sustainable fee capture for something like mango whereas you know something like unit swap where there is no long-term value going from uni holders to users of uniswap right so that's really the key thing that we look for is like

is there some risk in the system that can be managed by the token um rather than you know trying to put all of the risk outside the system and then just have the token extract rent because oh hey we've wrote the code and so therefore we deserve to extract rent i just fundamentally don't believe that that is a sustainable model has this thinking changed um since you published the thesis because i mean basically if you look at the if you look at um the market since then um unisport very much is is still around despite the fact that often you can actually usually you can get better prices elsewhere if you go to to a dex aggregator right you'll you'll you'll get at the very

worst the uni stock price um so why do you think um interfaces are so sticky do you think uniswap really owns the user or do you think this is a temporary thing it's a good question uh you know is there some unforkable state in uniswap in the brand recognition and the answer is like definitively yes today people literally go to uniswop's website rather than going to xerox matcha or one inch or you know one of the other aggregators that offers you better execution you know uh so that that is currently the case however over the long run i always like to bet on

rationality i think that you know markets can be irrational in the short run but in the long run humanity tends towards rationality and it's very hard to see something like that sustaining over the period of years and years and years um you know we're not short-term focused we're not thinking about you know what will the market think 12 months from now that that's too soon right we're thinking with a much longer time horizon and our intention is to invest in things that we never have to sell because they have really sustainable value capture and we can just hold it for you know forever um and in order to feel the conviction to hold something forever you know you have to see value capture that's not

just unsustainable rent extraction yeah the other thing i would add here is the user's route team or actually the unit swap dow rather is is actually choosing not to really answer this question um the way they would choose to answer this question is they would introduce fees that pay out to the uni holders and that's when you can actually figure out for real what's working or not working right now they're just kind of like floating in like the uni price is still worth billions because yay i guess um but once you introduce fees that get paid to uni holders uni holders uh are strictly uh parasitic to both

makers and takers um obviously the system works today without uni holders being involved and it worked before you the uni token existed which is all the proof you need that that they're strictly parasitic um once you introduce those fees now you're creating a lot more incentive for lps and for both makers and takers to go elsewhere um and so i think that's also kind of core to the argument here um is that if you're if this stakeholder group is strictly parasitic to the other two that are obviously the two important stakeholder groups which are makers and takers um then the system will unwind a lot a lot more quickly yeah that's fair um and i think it's kind of it's this way of thinking not

not being afraid of being contrarian this is actually a hallmark of you guys i mean basically if you think back to 2018 or 2017 um and basically everyone everyone was in ethiopia maximalist right so basically and i mean a lot of them still are um and you guys invested into eos big um and i mean obviously we all know that didn't really pan out well but um this kind of led you to to to invest in solana when really no one else really wanted to back then um i mean in hindsight

obviously it looks obvious but back then what what exactly um gave you the conviction to invest um into ethereum competitor layer ones i think the most important thing has been watching um really the ethereum foundation um and how they they operate so first just like uh there doesn't seem to be a sense of urgency at all uh which which i like find fundamentally problematic like i i think it's actually um very contradictory and basically almost hypocritical to say we believe our technology thing that we're building is gonna like be one of the most important

things in the history of the world it's gonna enable all this new human coordination and good for freedom and sovereignty and yeah whatever and then say yeah but like we're also gonna like kind of relax while we're building it and like not try very hard um and i i like i don't know i just i really struggled struggle with that i think that's been that's been a big part of it and the second part of it has just been like uh the research team is really not focused on what i'll call like product development um and and so like it's been like a journey like what is a later one good for and like i don't know like probably some d5 things maybe some nft things um if you're gonna build an l1 let's say you say okay i believe d5 is the most

important thing in the world i believe we're gonna have lots of financial markets right and we want to build the best thing for financial markets um then you would probably start to make a lot of optimizations in the design of the system accordingly uh the most obvious of which is latency you'd want to have as short of block times as possible because like if you have leverage in financial markets you want to have low latency all right and like you know eth2 design i think they're talking about somewhere between 6 and 12 second block times uh and it's going to be several blocks to finality right so you're talking i don't know 20 to 60 seconds to get finality and like i understand why the decisions they made based on whatever prioritizing like validator node count or whatever but like that's not optimal for financial

markets um like it's explicitly not optimal and they know that and like they're just choosing to optimize for like not the thing that it seems to be used for um and i find it to be like extremely problematic from a product strategy perspective and and so you know we got into crypto in 2016 and by the end of 2017 i remember i went to the uh to defcon 3 in cancun i remember a vitalik starting presentation and i remember like i was like dude i've been following this thing for two years and like there's not like nothing is happening at the core protocol um and i kind of at that moment i got very disenchanted because everyone at that conference was like super excited and like ethereum's gonna change the world right and it was all all uh uh

everyone was a little too happy and uh started to really re-examine you know how things operated uh i'll i'll contrast this with solana um from day one the architecture of solana was build and support decentralized nasdaq and like i think maybe that's a dumb idea to do i don't know but like they were very clear from day one like that's the goal um and it turns out you know year or two later uh as d5 started to really work on ethereum that that probably in it became more and more clear that that is certainly one of the most important things a blockchain is useful for there may in fact be others that are more important than that i'm not yet sure we'll see what emerges um but i think that's very very

important thing to do um and you know after all this time i i we've actually grown more convicted in this kind of general frame of thinking yeah to add on to that you know we realized after vitalik's sharding presentation at uh defcon 3 and kind of just like for talking to a bunch of the ethereum people that ethereum was going to choose the hard path to scaling right it was going to choose the path with a bunch of unsolved computer science problems and you know maybe they will solve them like these are some very intelligent people you know way smarter than me who are inventing new stuff

right they're inventing uh new ways to get these computer systems to talk to each other uh but it was just very ambiguous on the roadmap and the timing because and through no fault of their own it's very hard to project when you're gonna have a fundamental breakthrough in computer science or any other academic field really right so it's just an open-ended research problem of like how do we do this and we've seen this play out with the roadmap get delayed and get delayed and get delayed now you know reframe what it is and uh get delayed again um and it's just like kyle said a lack of urgency and open-ended research problems and what we were really looking for was a more defined

path to scaling now you mentioned eos you know we were contrarian in in supporting eos that clearly was wrong all right like we can look back at in history and you know we lost money on that position like quite a bit um and you know we were wrong about eos however our fundamental thesis was not invalidated what was wrong was the execution of the block one team which was quite frankly atrocious uh like one of the worst of any team out there that i've seen in in fact uh you know they raised the four billion dollars and didn't spend it on anything useful for the ecosystem which you know kind of defeated the

point of the whole capital raise in my opinion and so we took our losses on that position but as investors you have to be very rational and you have to think you know why did something happen and was it fundamentally something with the thesis or was it something idiosyncratic and after a lot of deep thought and you know this was a lot of deep thought we lost a lot of money on this one right we realized it was something idiosyncratic so he said no we're going to double down and we actually think that the deterministic approach to scaling um that something like solana offers is really attractive and so we made that

you know our largest bet we um have obviously been very vocal about it and we double down because we had the conviction there despite you know having taken losses on the first time we invested in that thesis yeah i think there's a lot of there's a lot of insight here so basically if if um if i try to reframe this in terms of um the blockchain blockchain trilam ah so basically security scalability um and decentralization basically you you're you're putting um the ethereum foundation or the ethereum core team the ethereum core developers are placing most of their eggs on decentralization and do you think that

is the wrong prioritization to make it's just backwards looking um so yes i i think it is the wrong prioritization to make because i think ethereum suffers from a problem where they're the ethereum core team is just comparing themselves to bitcoin because bitcoin was first and it's bigger right and they're looking backwards at bitcoin and the thing is like ethereum is never going to be as decentralized as bitcoin and it shouldn't try to be it's okay you don't have to be the best at every single dimension um but you should optimize for the dimension that really really matters uh and focus on that and i think ethereum just was too broad in that

focus you know they wanted to be as decentralized as bitcoin they wanted to be as scalable as solana they wanted to try and do all of these different things and it's just you know not plausible to do that and it slowed down the roadmap tremendously i also think that decentralization is a spectrum it's not a binary thing and i think that the value of decentralization is an s curve there is a such a thing as decentralized enough where you know you don't need everyone to run a full node at home that's pointless right like i don't check the maintenance of every airplane i fly in right i know that other people are doing that so why do i need to run a full node when i know that other people are doing that you know i don't necessarily need to do that every time

and so i just think you know over optimizing on one dimension that turns out to be the one where there's an s-curve in value uh delivered was the wrong decision yeah i think that's that's that's a fair assessment to make and i think even the most die hard your maximalist would have to concede that um the ethereum roadmap um has uh shrunken consistently over the last couple of years and i mean if you if you look at what's going to come with um eth2 now with um i mean even with uh you know after the merge with um with sharding i mean it's it's it's not what was talked about

years ago in terms of uh smart contracts shots it's it's just data availability shots so yeah i think that's a completely fair fair assessment to make um let's talk about one of your other investment hypotheses um and that's proof of physical work just real quick i i'm sorry i'd like to add one more thing to that that i think is is really relevant and um important is vitalik published a post recently uh talking about how cross shard mev will lead to block production for ethereum being centralized in data centers anyway so

you know through this economic incentive of cross chain or cross shard mev that is going to end up with block production being centralized anyway so i i kind of think ethereum is ending back in the same position that some of these other chains are in that the ethereum community has been criticizing them for you know of having block production and data centers i think ethereum ends up back there because of the economic gravity that is cross chain mev and the highest yield validators on ethe 2.0 will be the ones running data centers not the ones run on laptops at home i mean one could also argue the converse that uh depth developers will optimize for mi-v-less protocols right

um i actually well i i don't think that's possible it's not possible i mean osmosis is doing it today um you obviously want to minimize mev but um mvv does not need to be zero um we already have mev today it's called hft and like it's fine like the world works um so that's that's okay again history is path dependence right so for the best example of this is the qwerty keyboard uh which is like known to be just stupid from a placement perspective but like that's what everyone learned in the for they actually made it slower in the 50s because the typewriters jammed and now we still use it today with electronic keyboards but my point is to say that like you have to think about how these systems evolve um and what's clear that everyone

wants by far is the most important priority is low latency high throughput low gas costs like without a question those are the most important things so you need to optimize for those first if you could concurrently do get all of those things done and also have zero mev via let's say something like osmosis that would be great but it just adds a lot of complexity to the system they don't have generalized smart contracts right uh block times are slower there's a delay on just things getting included in the blocks because the whole decryption thing whatever like you're just introducing all of this new complexity um and like if if you can guarantee that the upper bound of mev per trade is like i don't know three bips or something like i don't know like that might be worth it like that's totally okay

so um you know mev is bad but it's not like it must be eradicated from the face of the earth bad um and so uh when we think about the evolution of these systems we're thinking about like solve the most painful needs today uh and then maybe you can come up with other creative solutions over time uh one thing i think the world at large doesn't give enough credit to the solana uh team four is just like they assume that everything is fixed and static and done and nothing will ever change again and like this is kind of a stupid assumption obviously all of these teams are building lots of stuff um and all these teams are learning from each other and adopting some and good some good and bad ideas right so um maybe there will be a lot of zk roll

ups on solana in two years actually i think there will be that's just one example right and there others can can them happen too so um you know path path dependency matters and you you want to prioritize based on kind of the most immediate demands and then revisit other needs over time as you can that makes sense um so let's talk about proof of physical work um it's one of your other investment hypotheses and um one that isn't as widely distributed yet as uh the d5 hypothesis hypothesis and the composability right yes

it's it's just newer it's it's wacky it's weird um really i think it was inspired by helium i think is the first implementation of proof of physical work in the real world for the listeners who aren't aware helium is a new business model for deploying and managing communications networks um the first network that they built was a network for the internet of things or iot and uh the way that it works is you know regular people go buy a hotspot they plug it in they connect it to wi-fi and they try and find good locations for these hotspots to create broad coverage in their area and they can earn tokens for doing so for providing connectivity

and here what we've done is we've taken what is a cryptoeconomic game of you know go find the best location for your hotspot so you can mine the most tokens and the output of that game is something with utility something that is actually useful for the world because if we can connect you know a bunch of fire sensors to have early detection of forest fires or flood sensors uh for water um preservation or uh location trackers for pets or children or you know any any of these other items to the internet like that creates a lot of value um but being able to create the network through the crypto economic game and then have something of utility

created as a byproduct of that cryptoeconomic game is the core of that proof of physical work thesis another example of that is an investment we recently announced in a project called hivemapper where people are able to you know put a dashcam on their car upload their dash cam footage or annotate you know uh maps uh on their desktop and earn tokens for uploading their footage that the software uses computer vision to create an always up to date street map right or for annotating those maps and so we're taking these crypto economic games uh that have proven to be very successful through things like axi which we've seen you know with many many you know hundreds of thousands of users and

tremendous amounts of money flowing through the system things like step in recently or crypto economic games that you know aren't necessarily creating that externality that is useful for the rest of the world um right proof of physical work is about using the crypto economic game to create a communications network or create a map that is owned by the people or create some other asset that is useful to the world we're looking at other ideas of this around like you know electric car charging networks which is going to be a major thing that we need to solve if we want to combat climate change we need you know electric car chargers and more locations so you know can we create a cryptoeconomic game around that to incentivize people to put up more of these chargers to create the capacity for more electric cars you know

maybe all right we're thinking about that we haven't made any investments there yet still idea phase or can we do something around uh battery storage to make the grid more resilient for renewable energy is another example of a thesis around proof of physical work that we're really interested in and you know fundamentally just looking for ways to implement a crypto economic game to build something useful for the world yeah i think that's a very powerful investment hypothesis because i mean basically it gives you the ability to scale um through collective ownership right so basically the the way that you actually facilitate um payments more or less seamlessly hopefully um

through through tokens this is something that that was kind of missing and i actually remember something similar here in berlin probably like 20 years ago or so something it was called freifenk and so basically you put up and remember 20 years this was before smartphones and widely available mobile data and so on so basically the way that it worked is you you bought a wi-fi router and you set it up um in berlin and basically you either let um other people join um for free or you actually got some credits for it um and basically if you let other people's people join for free you could um you could uh use everyone else's for free as well um if

you had other people pay for your wi-fi then you you had to pay for other people's wi-fi as well um so basically i mean basically those two antipodes were called you could either be a linus or you could be a bill um because i mean obviously this this back this was like in 2000 so basically this was kind of the the dichotomy back then um but yeah and i think it never i mean basically i i knew lots of people who actually had them but this was a very specific subculture in berlin um and it never really widely took off and basically having the seamless integration of the ownership of the network this is something that is fundamentally

uh new i'm and i'm super excited about helium we had the one last year or so uh super fascinating so uh yeah that example is really interesting actually because we've seen other examples like this i think the key thing that's innovative here is like you said the user's owning the network not just getting access to it but also it's bringing markets to where those hotspots are placed right if you have the model that you described where if you know i'm a linus and i donate right like i can just put my device my hotspot anywhere and it's the same right whereas with something like the helium model that i think is really

innovative is by rewarding different locations with tokens based on how much coverage they create right you ha you live in a high-rise and you put in the effort to put your antenna on the roof and you know you got a big antenna and you invest all this effort you should get more ownership you should get more tokens than someone who just you know put the hotspot in their closet and i think that that free market incentive is really like a really important part of this uh proof of physical work thesis you know you want to implement markets in capital allocation or time allocation decisions whereas you know centralized planning of oh every hot spot is equal

to another hotspot it is just like you know it's very like um centralized committee soviet style planning right like someone's deciding that these are all equal but they're not they provide different amounts of value yeah absolutely so maybe that let's kind of change gears a little bit um so walk me through the process of how you select your investment so basically how do you source them how do you evaluat how do you evaluate them um how do you decide um whether an investment is made and if so um at what ticket size new deals get come in a bunch of places and at this point we have a fairly large

network of people in the crypto ecosystem who send us stuff which is great we also have a lot of relationships with entrepreneurs and those guys have friends who are builders and stuff um so we get a fair bit of that um we tend to do a fair bit of outbound as well um i make it a priority to spend at least 30 minutes per day scrolling twitter um looking at anything that catches my interest and like clicking links out from there i think it's very very important to never lose that curiosity it's very inefficient because you by definition don't know where you're going um but you can oftentimes find a lot of really interesting uh things accordingly ceramic is a good example of that actually i had noticed like two or three startups mentioned

they were building on ceramic and i was like okay that's like the second or third time i was like i gotta see what this thing is uh that's actually also how i got into ethereum back in 2016. i saw a similar similar thing so that's that's really important we do a fair bit of that and i'm i'm known for sending cold messages to the founders on twitter telegram email whatever so do do a lot of that and then we obviously published up on our blog in areas we're interested in we've published a lot about the web 3 stack i recently did a thing about audio rebundling value in the audio chain rebundling value capture in the audio chain to short reason did a post on proof of physical work in general whenever there's an area where we're kind of getting intellectually pretty intrigued we will

usually try and write something and use that as a basis for you know starting more conversations with more smart people in those spaces so there's a lot of that in terms of how we select deals uh you know there's there's different styles of investing um and that's a function of ticket size it's a function of like who the customers are is it developers enterprise is it consumers is it whatever uh function of uh just a bunch of bunch of variables um we have started you know we've been doing this for a few years now and we've started to figure out where we think the limits are of like where are we really good and what styles do we know how to do in which tiles do we not know how to do

um obviously you can't be too rigid about those things because the market itself changes over time and so um you always kind of need to like be a little uncomfortable you don't want i think you don't want to be too strict about like your strike zone here and so uh but you know we have a sense for things we like or types of things we like um and usually we're pretty quick like once we speak to entrepreneur if it makes sense to us as being kind of fundamentally crypto native um and can leverage crypto do something cool we usually get excited pretty quickly and we make decisions usually within a week or two frequently within a week because that's just how deals move these days i set up a few calls with entrepreneur to try and i get involved fairly quickly

and start kind of working working our way towards a deal um there's no unfortunate magic to it other than that um i i think the only the only other uh really generalized comment i would make is i have a kind of a joke i share with the investment team which is um there's a lot of stuff we look at that like we think it will make money with a very high probability but we find it to be boring not that it is necessarily boring but just like to us given our backgrounds and skill sets we don't find it to be very intellectually exciting um and so the rule i have with our investment team is if the entrepreneur calls you friday at 9pm are you going to answer the phone and you have to care enough about the thing to you know to want to answer the phone

um and i think that's a pretty important rule to have as an investor um and so that's something we try and try and stick to uh that means there's certain areas that we we are not going to be as active in um that's okay other people can do those deals and make that money like that you know that's fine uh we just want to stick to where we can be in our strike zone we are intellectually excited and then when entrepreneur calls we're going to answer the phone you are also known for writing pretty big tickets um is is that um is that just you know your risk inclination or is that just the way that you do business or is there a business rationale behind it

uh that we're just fortunate that we have our fund structures uh plural uh enables us to do that we have our venture funds that we invest out of which um can write smaller tickets and then our hedge fund is is quite large uh and we can write 100 million 300 million dollar tickets out of that thing um we've never done anything in that size yet but you know probably in the next 12 months it'll happen you know but we'll see so we're fortunate we have a fair degree of flexibility there um we generally are sensitive to not over capitalizing a business um uh in in this startup environment uh or i should say this fundraising environment a lot of founders feel like they can raise more money than they know that they need and they do it anyways and you know like i get it everyone wants to

have more dollars in the bank uh we generally try and push back against that but you know like sometimes it's entrepreneurs do it and it's fine it is what it is um but when we are excited about something we will size up aggressively um and i think that's very important is to like lean in hard when you're very convicted yes and i think the thing that allows us to do that is thinking for ourselves and thinking from first principles to build true conviction in something and that allows us to have very concentrated positions you know a lot of investors aren't investing for maximum returns they're maximizing their logos and like you know it's almost like

they're trying to complete a collection right they're like oh no if that deal makes money and i wasn't in it like my collection will be incomplete uh what will i do right and so they try and get in a lot of deals and the thing is like if you see uh an investor join uh around and you know goes up 100x but you sized it as like 10 bits of your fund you know like that's a 10 return to your fund it doesn't mean anything actually in the in the grand scheme of things so you know the reason that we do larger tickets is because one we think for ourselves we build conviction and we have concentrated positions uh because of those reasons and how do you construct your portfolios

i mean is it kind of a a deal by deal kind of uh decision flow um or do you have an overarching um strategy of uh constructing the portfolio so we do think about it overarching um right and there's a few factors here right the first thing we think about is what markets are we interested in and the market size has to be big enough for us to be excited to you know meet that bar that kyle mentioned of being willing to pick up that phone call at 9 00 pm on a friday and if the market's not big enough to be that exciting right like then then we're

probably not going to go much further than that then the next step that we think about is what are all of the fundamental trade-offs if you were designing a product in that market because in the things that we invest in that are at the very frontier of technology whether it's you know computer technology or social technology in terms of coordinating people when you're at the very frontier usually there's no one right answer uh there's not one product that is just better than another it's all trade-offs uh you know you're trading off something in order to optimize for the variable that you really care about and so the the second thing we do after we identify a market that we really like because the market is large enough to be exciting so

we try to identify what is the right variable to optimize for uh you know the case study for that that i think is the most impactful is we identified the market for block space as being incredibly lucrative we thought that's going to be an enormous market we want to be very active in this market we thought what is the right thing to optimize for is block time throughput low fees you know that that's really what matters to optimize for uh and so then we'll go and you know we'll try and understand what are all the different approaches to building based on that optimization function right and what are all the ways that you can do that who are all the people who

are doing that let's talk to them and learn from the experts and from there we'll make investment decisions so it's very top-down in that way right i find a lot of investors are investing like they're swiping on tinder they're like do i like this one or not and they just you know they just get served up a new deal and they decide let's swipe right or swipe left right and and we are really starting from first principles of you know like do i like this market what is the variable to optimize for who are the people building who actually fundamentally understand the trade-offs and know why they're optimizing for the variable that they're optimizing for cool yeah that makes sense so basically when when a founder calls you at 9pm on a friday night um what what kind of services do you

provide to portfolio companies i mean so basically if you look at vcs right i mean there's a large spectrum of what they'll actually do for you um so where do you sit on that spectrum so usually a friday at 9pm phone call it means there's a problem and it's urgent so uh that means we're dealing with whatever the fire is at that moment in time could be a hack and money's gone or who knows what else right but that's obviously um fairly idiosyncratic but that's kind of different than like general portfolio services type things i had a number of discussions on how we think about this at multi-coin and the thing that we've decided we want to focus on is

if if we're going to do portfolio services it needs to be strategic to the company so that means it's not just like hey we're helping you with this function uh because like you need help in this function that that's fairly commoditized um rather once i want it to be hey we're engaging so that we can help you make decisions that are gonna change the outcome and directory of your business um and that's really kind of where where we engage is along that vector um in practice probably the most important uh version of that is kind of what we call like full stack capital markets engagement um so what does that mean if you think about a company that goes public in equity land it's an extremely structured process obviously how you

work with the banks the deals then once you go public like how you disseminate information you have these quarterly analyst calls you have the quarterly 10 filings right like who can join those calls is like i don't know 20 analysts who work at 20 banks uh like the public at large doesn't get to join those calls right uh and what would have said is very scripted and structured and kg um you look at crypto and it's like i don't know how do people learn about the token and it's like they [ __ ] tweet at the ceo and like maybe the ceo responds right uh so it's just a very very different and then there's people all over the world in all time zones speaking 25 different languages uh and so the kind of entire mechanism for engaging with the market at large is

like is just completely different um the composition of the people who are in the market is different how they want to consume information is different um and it's extremely unintuitive if you're a founder you've got i don't know 10 15 20 employees building whatever your thing is like dealing with that whole class of problem that i described is very unintuitive to most people um and basically 100 of them do it wrong um uh because it's just it's hard and weird and new um and it's like not strictly serving your customers which is like the traditional kind of silicon valley mantra of like focus on the customers kind of a thing um but it turns out it's a superpower if you can engage um

the market in a productive way and so we we help teams think through kind of all facets of this uh what should the messaging be above the fold and below the fold how should you think about working with exchanges and liquidity how do you think about token design um there's a whole bunch of variables to this that matter how do you on what cadence are you doing comms to the public and how are you getting that out there right um and there's just a whole bunch of considerations here these are all fairly idiosyncratic um we've obviously made some dumb decisions we've watched a lot of other people make even more dumb decisions uh we've learned but i think a lot of the dumb decisions are and are trying to avoid those on a go forward basis uh and and help those teams avoid those things i think that's kind of our

primary vector um that we we engage we do a lot of work with token design in particular um some other stuff i'm too sure maybe i'm missing something here i think that that hits on a lot of the key items you know first is engagement with crypto capital markets understanding how cryptocapital markets work uh you know we have worked with a lot of portfolio companies who've gone through this process and you know there's very few people out there who've gone through this process more than once usually an entrepreneur is going through it for the first time and you know they want some guidance next is token design uh that is you know probably my favorite part of my job is just like trying to think of token mechanisms that can sustainably

capture value right we talked a little bit about you know value capture earlier in this conversation i think that is one of the most fundamentally important questions uh that all of these projects have it's like you know if you go build something and it's very useful and it creates a lot of utility but you don't figure out token value capture well it's not gonna be great for investors uh to to be involved in that project right and so like those things are great like i can go and do that out of uh you know my personal account and like i would consider that a donation if i'm investing in something like that right it's not really an investment um but when we're investing we want to understand how the token will capture

value and we want to help them think through that and think through how that will be sustainable and not rent extraction and just have an allergic reaction to unearned rent extraction um and you know try to steer teams away from that actively wherever possible and you know i would say the last category of things that we do for entrepreneurs is help them avoid unforced errors there's a lot of unforced errors that people make because they just don't realize the second and third-order consequences of what they're doing whether it's a design decision whether it's a product decision whether it's a capital markets decision or a hiring decision you know we have made a lot of mistakes we've seen a lot of other people make

mistakes too and just helping portfolio teams avoid unforced errors i think is a huge value add you're one of the few vcs um who actually speak out vocally against projects that you feel overvalued is that a business decision or is that just who you guys are that's a good question um i'd say it's more of the latter uh honestly because from the vc perspective right like you kind of want to be friends with everybody always right um and you know you just you don't want to

give people a reason to not like you however you know the way i look at this is like we operate in public markets that requires public discourse you need to be able to talk about these things in public and if the large sophisticated investors who have the resources to do research and have uh you know spent a lot of time thinking about it are censoring themselves that is doing a disservice to public markets that is doing a disservice to capital formation for our entire industry you know every new person who ends up buying something that you know everyone serious in crypto you know thinks that xrp is

not going to be the global liquidity bridge but you know if no one speaks out against it and no one says anything then you know you just have retail come in and buy that because they don't know any better and you know that is bad for the industry that capital could have been put to much better work elsewhere to promote building useful things right and so i kind of see it as helping create value for the industry probably you know at some cost to us but uh really like can't help it you've actually shorted tokens before which is which is very unusual for for you know a vc fund um so and to me it also seems like um

i mean there are so many tokens where i know their [ __ ] tokens and i would never buy them but basically shooting them is is a different matter because you you have a limited upside and then and you have an asymmetric downside it just seems like a bad business decision no i mean you know you know the market can stay irrational longer than you can stay solvent kind of thing right solvent yeah we uh shorting is decreased as a percentage of what we do pretty pretty substantially uh it's not zero percent but it's it's pretty small for for primary not not for the reason of like annoying it pisses people off but just because like the reward profile is

is not there especially as our size is grown um but i want to add one of the comments though kind of building on what tushar said about like you know to some degree we think it's our mandates like socially to uh call out problems um there's actually a little more than that too that happens which is so a lot of the best found like if we call out some [ __ ] and let's assume that our view is correct and that it was in fact [ __ ] right there's a lot of founders really really smart people who also probably believed that thing was [ __ ] and uh i think a lot of them appreciate the courage it takes to call out the [ __ ] and so it actually makes a lot of those guys want to work with you more

it feels risky in the moment but i mean i've had a lot of founders call us and tell us like dude you are the only ones who [ __ ] stick your necks out there and like i want to work with you for that and it it wins you it obviously pisses some people off but other people uh are really drawn to it um it's hard to as you measure like the relative value of those two things and like counter factuals here is pretty hard to do but it's not as uh simple i would say as it appears on the surface yeah we're we're just not scared of being wrong in public you know we've been wrong before uh it's okay all right it turns out that nothing bad really

happens uh if you're wrong in public a few times and i think it takes um courage for people too willing to be wrong in public um and i i think that the market does appreciate that like like kyle said there's some people who do appreciate that and um they want that kind of public market protection of having these narratives out there yeah i agree speaking of being wrong any investments that you regret missing out on basically people people people who pitch to you whom you turn down and where it actually turned out to have not

been a good decision i mean look like there's a lot of things we've said no to that have made money so i think the question needs to be a little bit more specific um i feel like maybe to quantify qualify it more to uh like we agreed with the thesis and like got caught up on some dumb detail that ended up not mattering like those are the ones that like you really kick yourself for after the fact um it's like classic middle of the iq curve like just in like it you know um i mean i'm sure we've done it i'm trying to think of something that comes to my mind uh where we were in the middle of the iq curve i'm not too sure what what what resonate

stands out to you oh i'm scrolling down coingecko as we speak trying to to find examples because you know they're like kyle said there are a bunch of things that we passed on that made money but that's not necessarily what we regret the most um you know he's right the thing that i would regret the most is we were right about the market but wrong about the variable to optimize for um you know maybe an example of that would be dydx early days uh you know we were right about the market of decentralized derivatives uh you know we've published about it we've made a number of other investments there uh and are quite excited by that market uh we don't have a meaningful position

with dydx it appears that team has executed extremely well um and has has built up you know quite a brand for themselves i don't know you know what volume would look like if they turned off their liquidity mining which uh you know would be a very good experiment to run uh i generally think a lot of projects would look very different without their liquidity mining um kind of sheen on it that's covering up some of the rough spots but generally you know been impressed with their execution um and uh you know i think that that might be interesting another one might be polygon we looked at that early on um and you know i think the thing we got caught

up on was the technology was just not that compelling uh but what we missed was that they're experts at business development and that you know in an open source world you don't have to build the tech yourself as long as you can get people to build on your platform and the tech is good enough you know you can go from there right like the right now the polygon side chain is just the evm being run faster all right let's just take the evm and you know have it go faster but i think if someone else goes and figures out zk roll ups or you know maybe one of the four research teams they have figure out zk roll ups that's really powerful

and you know maybe the right variable to optimize for in the market for block space isn't necessarily the best technology it's who has the best business development all right and polygon team is up there uh we did do flow uh which is similar in that thesis right like flow is the best business development i think for nfts at least so far um so you know we have made a variety of bets there but i think polygon and dydx are the two that stand out the most as uh misses in the way that you know actually is painful what what do you think um the blockchain ecosystem will look like in three years will people know which chains the apps

they use are on um will it not matter people like to use analogies to reason about things because it can be helpful um 95 of analogies written on the internet are wrong uh um the least bad analogy for blockchains is cloud providers uh it is not a great analogy but it's the least bad of them one of the ways in which cloud providers are fairly obviously different there's a few obvious differences between them one is uh blockchains have tokens uh and you pay gas to use the things

it's possible gas is 100 abstracted i'm not sure that it will be but it's possible that it is um but in the event gas is not 100 abstracted then obviously like you will not see the native token and so you'll know what the blockchain is so unlike you know my mom obviously doesn't know if and netflix is on amazon or google or microsoft um i i'd say it's unlikely you get to that degree of uh you're just not not needing to know um and the second and actually this is maybe even more important is all the blockchain things have tokens um and people like the tokens and they talk about them on the internet uh and so i think it's likely people will know which blockchain things are built on just simply for that reason um

aws does not have a token and so it's just like why do people have a reason to talk about it um so uh more than cloud providers uh less than today okay probably is that's a fairly high conviction correct yeah i i think that's right and then when i think about the specific chains and how that might work my best current mental model of how the chain ecosystem will evolve is i think we will have kind of center of gravity in one monolithic chain that just is you know to use the cities analogy is like the biggest city it's the one that has you know all of the finance activity specifically you

can't shard an order book sharding order book doesn't make any sense no one wants the third best bid or the fifth best offer everyone wants the best bid or best offer that means you need to put the order book in one place right so i think you're gonna have one big monolithic blockchain that has the order book and has you know a lot of the defy activity and i think you have a lot of smaller chains smaller in terms of state specifically that all connect to each other using either cross chain bridges like wormhole or layer zero or something like an ibc type system in order to connect to each other with certain state guarantees or trust guarantees and they all settle back down to that main chain as well but i think

that main chain needs to be as big as possible and then you can have your you know specific uh game with its nfts and everything else live off on a side chain or a sub chain but i think it needs to then settle back or talk to the other chains in a composable way using these types of bridges or um other protocols but i think that you know of those smaller chains by by state um like a lot of the value in those is going to be captured by the apps themselves right the the game that has you interacting with that specific cosmos zone or that subnet or you know maybe their own implementation of solana or

you know whatever right like is going off and going to capture a lot of that value not for the l1 token that of the system that they're building that they don't care about that they're going to capture it for the game developer with the games token right and i think that actually the vast majority of the value is going to end up being earned and collected by that big instance which is kind of the central hub where everything interacts which chain do you think that'll be on or which thing do you think it'll be solana same for you kyle agree okay dominance of d5 so i mean basically if you look at the number of transactions today um

i mean the very large proportion of them are d5 i assume that numbers gonna go down i mean not total but proportionally how much do you think it's gonna go down in the next two years and what are the non-d5 primitives are we gonna see um i think tvl as a measure is just kind of f flawed uh like serum versus uniswap is a good example of that um it just doesn't make sense right to have compared tvl of serum to unit swap um that's part of it liquidity mining programs and other things kind of distort those things so i wouldn't really over index on on tbl

um it's hard to know exactly what to compare i realize i'm kind of not answering the question um but uh my sense is that the probably right way to think about this is like what is drawing in retail users that is not defy and that is something fun and cool whether that's instagram nfts whether that's games whether that's stuff like audios you know whatever and i think kind of sort of 100 of those things will use define in various ways um so i would really be looking to uh [Music] i'd be looking to optimize just like general user growth of people doing stuff

um and as that happens i think that will drive defy because all of those things need to have some notion of liquidity they need to have some notion of uh of finance and money flowing through them and i think solana is extremely well positioned for that there's some awesome stuff that's gonna ship this year uh and it's gonna change a lot of perceptions of solana is there a thing that you think most people get wrong um about the future of crypto uh i think most people think too much that that the past will represent the future um like and this is the big example of this is like look at web 3 thinking versus

web 2 thinking um you could have never come up with proof of work and permissionless consensus and whatever all these things um it like if you're like a hardcore web 2 person uh and sort of required like a first order change in thinking to get there um obviously bitcoin is like arguably the purest form of a lot of that stuff a lot of the hate the theory i got in the early days was like that's too centralized ah why you know the white jews ico and all these tokens and [ __ ] and now everyone says oh solano's decentralized and you just realize it's kind of the same class of thing um our kind of view of the world is the right way to think about innovation is hey look like look i would have never been early in bitcoin i was not early in ethereum

because i just like didn't i was too web too you know uh mental frame and so like we missed like we missed that we also had other jobs we were doing so whatever we were busy with our healthcare stuff but like i just wasn't prepared to rewire my brain into like a new kind of way of thinking but once we did and we said okay we can accept this new way of thinking then the next question is okay well how do i can take everything i can learn from the old paradigm and like what can i apply intelligently and like there's a lot of things that you can do product design um user experience messaging comms hiring business development teams like this is all just like blocking and tackling operational things um

the web three world bitcoin and ethereum in particular like just because of the culture and timing and whatever of all the other things around their their foundings were just like these very uh loose orgs that like you know almost um rebuked like a lot of the common called tech startup practices that are like generally accepted to be best practices on how to like do it get things done in the world they just didn't do it and i think they framed it primarily as like an ideological thing um we're like no no we're not gonna do it it's gonna be decentralized the community's gonna do it or whatever um and that was probably necessary in the earliest days like

um but like at some point it's become counterproductive because like as these things scale as they get used by more people and get in more places like you you need to embrace like facebook is not going away like instagram is going to do nfts right zuckerberg has said this publicly um you know paypal is going to do something twitter's going to do something and and so like if you want to win the game you need to win those guys and you got to do some stuff uh and like you got to show up and you got to talk to them and like got to give them support like whatever whatever it is that they got to get done like you got to do it um and uh i i think uh you know up until probably 2017 or thereabouts um the right mental

frame was like decentralization first community first and i think somewhere around 2017 2018 probably the optimal thing to do changed uh where it should be look leverage the technology so that you have you can be credibly neutral and be decentralized but then have as many commercial instincts as possible and like run it like a business um yeah somewhere between 2016 on the early end and 2019 on the late end like that that that flip and it wasn't obvious exactly what the moment in time was or what the event was but somewhere in that range i have a different thing i think most people are wrong about encrypto which i think most people are wrong about bitcoin

actually i think uh people are wrong about bitcoin's relevance to crypto broadly i think that you know crypto markets are decoupling from bitcoin uh i think that we have productive crypto assets and non-productive crypto assets and bitcoin is clearly non-productive you know it's a digital rock you you buy it it sits there you don't do anything and i think that most of the world wants to interact with productive assets i think unless the world wants to invest in productive assets people like doing stuff um i also just think that the scarcity of bitcoin is actually replicable to an adequate degree with

other assets uh yes bitcoin has the strongest scarcity guarantees of any asset but once again just like decentralization is valued on an s-curve or you can have enough decentralization i think the same thing is true of scarcity and so i think um that you know you can go buy another asset that gives you substantially similar scarcity guarantees and inflation resistance as as bitcoin um and the last point i'll make on this i think the bitcoin security model is fundamentally challenged over the next 10 12 years you know we need probably three four halvings before it becomes really clear that hey people don't want to pay enough in

transaction fees on this chain to actually secure the chain and that is going to create major major problems you know you just need one big block reorg and it forces everyone to re-rate this thing um and you know when you have a system that only has probabilistic finality if i send you you know 100 bitcoin i am going to need to wait an extraordinary or you as a recipient are going to need to wait an extraordinary extraordinarily long time in order to confirm that transaction this idea of like six blocks and you know no rollbacks any more than six blocks is going to go away as a security budget gets slashed so i think that's something that you know a lot of people in crypto are closing their eyes to

they're not thinking hard enough about how that's going to evolve and i think that people will be very surprised as that plays out over the next probably you know 10 12 years yeah or you need to mix the hard cap and i and i mean that's kind of that's kind of the meme it's uh yeah uh yeah it's between a rock and a hard place for bitcoin i i agree um so what's uh what's up next for mightycoin i mean we're pretty happy uh doing what we're doing we love supporting portfolio companies uh right like what we care about is working with the best founders to help them change the world you know we're not trying to build an asset management

empire you know we don't want to manage uh you know a thousand people or hundreds of people uh we're a pretty small team um we are content to keep it that way right that way every entrepreneur who works with us knows that they're working with the a team we're not big enough to have a b team you're not going to get relegated to some b team if you're an entrepreneur and you know our portfolio company's success is our success so really that's what we're focused on we're focused on finding new theses we're focused on continuing to support existing portfolio companies continue to invest in the theses that we've already developed um and you know just like helping crypto achieve the lux the next level of maturity i want to see a billion people

interacting with blockchains uh you know that that's really the dream um and i i think that will be a major milestone thank you so much for coming on it's been uh fascinating and uh it's uh yeah it's uh it's good to speak with the people who uh who are not afraid um to say things that some people won't well i like the truth that's uncomfortable sometimes but that's okay and uh we'll all get better for it and keep pushing forward and we're gonna make this industry successful and get tokens in the hands of billions of people whack me wag me wag me