LIVE | Crypto Is Not Dead with Dougie and James from Figment Capital | 0xResearch

Transcript

[snorts] [music] [music] [music] [music]

Hey, welcome. Good morning to another live stream of Zerx Research once again. And as always, my co-host Picacio joining myself. And we've got the boys from Figma Capital today, Jim and Douggee. uh Douggee making the rounds on CT with his latest post which I think we're mainly here to talk about today uh that topic and and dig into it. But uh glad to have you guys on. Jim, we had you on recently. Glad to have you back. >> Um I don't know what duo. [laughter] >> I don't know why I'm here, but I'm happy to be your silent member.

>> Well, it's good to get people in duos or else the main person gets stressed out. So, you're kind of backing up Douggee to an extent here. By no means is he backing me up. We're just hanging out. We talk we shoot the [ __ ] all the time. So, I'm glad Jim was able to make it. Jim supposed to be in a car right now. And he changed everything to be here. So, I appreciate that. >> I really appreciate it. >> I want to be on my regular guest arc from Zerx Research. I spent too much time in that chat to have it go to waste. So, I'm glad it's finally paying off. Thank you.

>> Yeah. And also Jim got me into the chat. So I owe Jim for being here because he was talking the world of you guys and I was like he won't shut up about the Xerox research chat. Like what is so good about this? And eventually I joined and I was like oh this is a great place. Like I can't I still can't even conceive how it's possible. A public chat and a lot of amazing people from the space in it just saying completely unfiltered thoughts. Like it's it's awesome. It's a sacred place. >> It is pretty good. Um, it is public, but I do kick out around 50 to 60 people a week, which is why I think it's >> I think you have to be quite aggressive.

And even then, it's gotten relatively [ __ ] Um, we also have a third guest who made it at the very very last minute. Noah, thank you for coming on. >> I heard crypto was dead, so I had to join. >> This is Noah's dream. Um, uh, Douggee, you had a, well, Jim said that you've had a bit of a media run over the past few weeks. Um, I'm going to ask you to do this, um, one more time, I guess, with your Crypto is Dead piece. Can you give like a three bullet point takeaway for the listeners who may not have read it, and then we'll get into the meat of it.

>> Yeah, Meteorun is definitely uh, a bit of an exaggeration. Um, I've been on a few different things, but the three bullet note summary is since I've been in the space, which has been for a decent amount of time now, uh, it feels like the majority of people in our space have just been building for crypton natives. Uh, and the default assumption for a lot of people was that the world would just become cryptonative. Uh, and I'm here to suggest that that is not going to happen. Um, I think the people who want to be cryptonative are already cryptonative and we need to start building for the rest of the world. Uh, because that's going to happen whether

we like it or not. Um, there are large companies who are choosing to build on our rails today. Uh, and build the things that I believe mass adoption look like. And I think that unless the cryptonatives such as ourselves recognize that and start going beyond our insular world, uh, that we'll just largely be left behind in this mass adoption equation. Um, I'm not here to say crypto natives will just all go to zero. But I do think there is a much larger pie that is right now pretty separate from ours. It feels like and unless we have the intention and recognition of that then the next few years will probably feel more like the last few months have uh

despite everything happening around us. >> I think that makes sense. I have one like gut reaction the moment that I read this because I've heard people say this like oh don't focus on cryptonatives focus on the bigger picture. And sometimes I feel like it comes from this perspective of like kind of saying something but not really saying anything. And this isn't I'm not saying you're doing this, but I find sometimes people say it right. They're like, "Oh, like don't focus on the small thing, focus on the big thing as if it's easy." The only thing here is like crypton natives in my from my understanding bring most of revenue to applications, right?

>> Yeah. >> So, so I want to put the condition out there like I'm not saying like abandon cryptonatives. Uh like I actually think like a rational business goes after its most proximate customers first. uh builds out initial traction and then moves on to its second most proximate customer. Um where I think we are not across the board failing but certainly falling short is identifying and going to that next proximate customer. Um I think for most cryptonnative businesses or companies building on chain, it makes sense to go after people who are already on chain and they give you great feedback. They help build out your initial customer base and then when it's ready to go beyond you should absolutely do that. Um, and I think a lot of people just struggle to understand what going

beyond the little niche that we're in looks like. And that's what I'm kind of saying when I'm saying like move on past crypto native. It's not like you got to start from somewhere. You should probably start where people are most proximate, but you need to go beyond that eventually. >> Do you think it's Jim, please? >> Oh, I was going to say like I had like two reactions to Douggeie's article. Um the and and one one came like kind of more like with a conversation that would actually like reminded me of a conversation I had like months ago. Um which is that like most crypto teams like they have like a BD person or two, right? And like the BD person's job like as I've unders come to understand it is like try to find like other app builders

or like whales and like I was talking to a buddy who I've been he's been in crypto as long as I have because I brought up he's like my best friend and we both like were buying ETH and BTC and like I don't know Litecoin on GDAX back in like 2016 on Coinbase, right? And like he's like, "Oh, like everyone's just missing sales people, right?" It's like like who's the who's the salesperson who's like selling to like the the other people like like BD and sales are not the same. They they should essentially be the same thing, but they're not. Um and so there's never been maybe it's because of Dows or maybe it's because of like how the the industry initially kind of like was created and maybe I don't know you've been paying a lot of attention to like

the A stuff, right? But like who was it whose responsibility was it at any of these organizations to go like okay like we're going to pitch this to all right we have like you know we have 10 billion dollars of pe of of of like deposits like where do we go next and like how do we how do we expand beyond like this and and when when can we and how do we and it seems like we're starting to see that everyone's moving really quick. Maybe it's regulatory, maybe it's other things, but like like I think a lot of these companies are going to need to like kind of change like the trying to say is like grow up or like or move over um because like you're like you're going to get replaced and displaced if you don't if if you don't if you don't change. And then I think

the other thing of it was like there's this like kind of sentiment that like in the past like for last bull bull market like if you own crypto there would be a rotation into your token. So, if you were holding crypto tokens and it hasn't gone up yet, like don't worry, slugger. Like your your numbers coming up like right after that, right? Like like either the next one or the one after that, right? And I think what we're seeing is like a lot of people are pretty upset and pretty or pretty depressed because not because crypto isn't winning, but because like hey, just because crypto wins doesn't mean that your token's going to catch a bid.

In fact, like every some things might go up three or 4x and like here they might just go down 80% and like that's kind of not how history has trained the crypto natives to think. I I wonder if like that BD sales thing that you said is because things have tokens because in my mind I the only like people I think probably actually do sales is Privy Phantom um who like actually go out and do B2B sales versus I feel like a lot of I know there's money going around right like when someone says they partner with X protocol there is money being exchanged probably tokens being exchanged but I wonder how much of it is like not actual

sales but the thought process is like how do I make my token go up through a partnership announcement as opposed to like trying to sell to but I guess the more fundamental issue here is there's no like defined customer base for crypto products like they're kind of B2B and kind of B TOC as well it doesn't to me it's like like as a blockchain what who is your customer it should objectively be protocols but you're really monetizing the user which is a horrible way to >> your customers are your applications Like I I this how I think about it.

think blockchain's customers are their application developers like you're a platform and like you should be selling to the applications and the applications job is to like bring the users and the use cases like the the use cases like that's how I've always thought of like if if chains are talking directly to users and like like ultimately over time like that probably kind of goes away >> yeah this is not a perfect >> oh I think analogy >> but could you imagine if AWS was going after me like it would make no sense. Like I don't even know which websites I'm using are on AWS and like it's not again not perfect analogy but that's what Jim's saying is like AWS's customers are people who would build on AWS and need

it to build their applications. It'd be crazy if they're going after Douggee who can't code. [laughter] >> No, that Yeah, I think that is the fun one more like additional thing here is the BD thing. This is separate to this, but I mean BD and growth to me have historically been fake roles within crypto, right? Or at least like a large part of I imagine there's like two to three people out of I mean like the simplest example here is Monad, right? Like I don't know if anybody here is an investor in Mona, but just like going off my gut, I know a lot of people who work at Mona doing growth and the the the like example of them

doing growth is they they tweet really well, right? Super funny on the timeline and I think that's great, but like surely that can't be growth. And to me it's not it's not BD. It's like like I I think it's like I think I have some I have an idea for Monad. Um and I'm gonna be talking with Kone about it over the weekend actually. Uh I'm gonna pitch a crazy idea to him. Um but like and he's probably telling me how I am that it is in fact a crazy idea and like thank you for your thoughts and goodbye. Um crazy person. But like you're you're right. It's not like um you need to be going out and finding

businesses and developers that are like that that either have successful businesses and want to put them on chain um are on chains that like are going are not servicing you properly um and you should move over here um and or like I think the other thing is like asset issuance is like the most valuable thing that any of these chain like that's what every single chain needs is like asset issuers and applications um and those are like if you're not doing either of those things then like why do you need to exist? Like if you look at I think Hyperlid as an example like Hyperlid is a pretty in a pretty weird spot as a chain as an L1. Um because like number one the biggest

product there does not require any assets other than stable coins. Um and so the Hyper EVM is like it's it's it's it's functional like I think almost nobody uses it. like I I have used it. Um but like the question comes like like the the one thing that was like really a bright spot and a possibility for for Hyperlid was uh the spot trading was starting to pick up and I honestly thought that that like and I thought it was going to be really big and I think hope it hope it is. Um, I know units kind of like maybe moved over to like doing spot plus like equity purps, but like you need a team that's like really seriously focused on bringing as many assets over spot assets over as possible

and making that insanely liquid platform for all spot assets. And like you saw with the Monad launch, Salana take a real swing at it. Um, and they did it very successfully and like they're doing it again with Zcash and like that turns into like actual users coming over to Salana and trading all assets on Salana and Hyperlid had a had a head start with unit and they uh it seems like >> oh boy >> took their eye off the ball a little bit or found something shinier um and decided to go into something that's going to make more money like which is which is equity perks. So maybe that was always the plan, but like they need a

team that's like focused entirely on bringing all the assets and spot assets and having listings like like you do on Binance and like you do on Coinbase. Like you need to have an you need to be listed on Hyperlid >> and that is that should be an event of itself. >> I have I want to pull um I want to pull Noah in for a second. No, I want to ask you uh a I guess your general thoughts on the Douggee article and b um your general thoughts on this like how these things are going to go going forward because what Jim mentioned like spot markets hyper liquor revenue is directly related to that stuff but also

as the token price goes down because it's like there's no secular bare market and like for one token all token prices go down people don't want to trade and then that just leads to worse and worse for perexes and which is like also kind of ties into how you're going to bring it into the real world, which I feel like if everything is like an oruros, you can't really bring it into the real world. >> So I I fully agree with everything said in Douggey's article. Um so so that's one point. Um the the second is with regards to sales and BD and crypto. I think 90% of it probably is being accurately characterized on this podcast, but the 10% that is doing a good job um are the companies that

you've all heard of and probably are users of. So I think part of it is just a function of like quality of team and that like within the lending market I don't know a single team that has material aum that doesn't have like a very built out CRM. Morpho is like a great example where they know what assets we have in our fund and what we're willing to deposit on chain and they ping us whenever there's a new opportunity. Um, and when I speak to other or when I speak to yield funds, my sense is that they've spoken to anybody that has an opportunity for them to deposit capital in. And so, like on one hand, I agree there is a lot of lack of productivity within the BD side. But on the other hand, I think one of the

issues that we're facing is that from like a pure product perspective, it works for cryptonatives, but it doesn't work for non-crypto natives. and like lending being the example that I'm probably most focused on. Um like Camino just recently allowed for uh funds to have their collateral stored in Anchorage and borrow on Camino. Like that's that's a big accomplishment that opens up the market whereas previously many funds just never could deposit capital on Camino to begin with or weren't comfortable with the risks. And so I think a lot of like the expansion of the market opportunity is also about the form factor that it's delivered in.

Um, and like the the hurdle to go from delivering to crypton natives versus delivering to like traditional finance or consumer is a large development lift. Um, so that's the other thing to consider is that like if you have a product that you can't really easily sell to the average consumer, the average tread five person, you have to like look back at your developers to go through a product cycle and build the required pieces for them to get for the BD people to then go out to the the average user to then bring them in.

I think if I could just jump in for a sec on that because I agree with everything Noah just said, like part of what I part of what motivated me to write this article was like this was the first cycle that actually showed me we do have the means to get in front of people um who are not already on chain. And the example that I think best demonstrates it is moonshot. Um, we can argue over whether or not the substance of like what Moonshot enabled was meaningful or not, but like there were people who went from having no sort of onchain wallet um likely had never transacted on Salana before who downloaded Moonshot, uploaded funds via Apple Pay, and then bought a memecoin on chain rather quickly. Like I think I within like 10 15 minutes. And before if

someone was just getting involved in crypto, they were going through Coinbase or name your centralized exchange. And this was for me like one of the first times I saw like people just go directly on chain, which shows me that like we now have the actual means to do this. We just lack the intent in a lot of places. And like for sure it's not like I'm not a like I don't I'm not an engineer. Like it's not an easy thing. It's not like a trivial thing to do. But we do have the means to do it. And if you look around, like there are plenty of examples that show that. So that's why I think like now is actually the time because it is possible. It's not just like there's some massive barrier that's going to take a herculean effort to overcome.

>> I think that makes sense. But is it moonshot or is it I assume they're using either privy or turnkey on the back end? Like is the >> Yeah, >> they're using turnkey. I think they're using >> right. So it would be >> yeah there's >> there would be moonshot actually didn't do that well but like the >> well it was the app that did it. Yeah, >> the point is like the tech exists turnkey um these things, but now the applications who come in and seize the opportunity can benefit from it. And so Moonshot is example of like more applications that I think will come to exist. People who aren't building the backend tech themselves, but instead using that back-end tech to get directly

in front of users who likely have pre previously never transacted on a blockchain before. Uh and Moonshot did that felt like overnight. obviously took a lot more time, but they're a clear example to me of someone who did that really well. >> Yeah, I think that makes sense. Jim, on your um Mona trading point from Solana, I I I looked into this the day of because I'm I was coping about Hyperlid not getting most of the volume, but when I looked, Solana made um Solana made around $112 um off like the first day of trading.

um versus Hyperlid made around $7,000. Um and then I think Meteora ended up making like $500 off just that first day of trading. So that's like it's great Salana is bringing in asset and it's something I argue internally at Blockwork sometimes and half of us lean into like you just bring in trillions of transactions and it'll work out and the other half's like these guys just can't make any money at scale. >> Yeah. Um, >> so what do you like? I think they should charge rent to applications. I think you make applications pay you money like revenue.

>> I mean there's a there's a that's a great idea or at least create like I so I I responded to Luke Cannon I think at some point this week and there's this like there's this article that I really really want to write and I am scared to write uh a little bit of like the the the the backlash that I'm gonna get. But I think what you want to do is you want to build a com a competitive marketplace for teams to like you want to be a like hyperl try to be as neutral as possible.

Um and create a competitive marketplace where the best team wins to both bring on new assets and are like or or at least equally supported to do so. And like I could the article would like argue that like that hasn't been the case. Um and that that's potentially hurt the that like like has hurt hyperlquid um in a couple different cases where some kingm seems to have like transpired. I don't know if you heard me or not like some king making has seemed to have transpired. Um and like those are like repercussions like there's going to be like there's going to be challenges as a result of that those decisions that were made. Um and so I

guess like it's more just like playing the long game. I mean like so so so Salana did is that does that include the DEX that was doing all the swapping the the $1,000 >> it's just based off transa median transaction fees >> okay >> which I assume is probably wrong it should probably be higher because I assume median transaction fees are just other things versus like I imagine most of the monad transactions were actually >> and so I guess the idea of like hey like how valuable really was this it was like I don't know I think it was like a moment where Binance didn't get a listing Vermont ad spot, right? Um, and all the volume was unsol. And like I think, you know, you want to house all of finance, you got to kind of be

the fastest horse and you have to be the biggest horse and you have to kind of be proving it and doing it. And like uh my my take there would be is that like they missed one of the bigger opportunities and like you know and and Salana took it and Salana is trying to be the NAS NASDAQ on chain and so like which one after the MAD launch looked more like I I think NASDAQ on chain and housing all of finance are essentially like the same thing. Uh and so like which one won this round? Um, and I would say that Solana won this round. And so what happens with the next large like you can you can TGE or you can you can have a a listing that does as much volume as a centralized exchange and you're going to

think about where to launch the token. And I guess if it's a L1 or L2, you kind of hope it's on your own chain. Um, but if it's anything else, like you start to go as a team that's launching a token and wants to have a liquid market and maybe doesn't want to pay 5% of its token supply to Binance or or more, like where do you go? And like I think you're gonna eventually say, I want to go where the where where all the other successful high volume transactions have been done. Where have those been done? and you're just gonna look at like the history of like the last like five or six or 10 or 20 or 100 and you're gonna be like, "Oh, this is where I'm going to do it." And that's, you know, it's like it's it's kind of

been for XPL it was it was Hyperlid and um for Monad it was Salana. >> Yeah, that's right. It's not. We have a We have a younger analyst named Shondaanda who wrote something on this and his argument was >> you actually don't make any money if you're the NASDAQ versus like Robin Hood, etc. make a lot more money. Um, >> it but it also like what else does it like allow for, right? And like I I think like with the most recent thing that Hyperl just um like there's going to be able to do basis trading now, right? you able to use like other assets for collateral and so like that opens up the like it opens up more opportunities

down the road um if you have these spot assets and like it commands like a you know probably a higher valuation and allows for users to like house all of their assets like on this like they're trying to compete with like not just like you know with Binance and like you have to have spot volume also you can't not you can't ignore that you're not competing with anyone if that's the case. You're just like um GMX. >> Yeah, I think I like a lot of what you're saying here, Jim. My my thought process on like this soul versus hyperlquid thought is um we've seen Salana have success on the spot side.

propm have been a big piece of that and now it's like can they translate that into per um to have real like meaningful success in a competitive way um with the rest of the market or maybe like relative to like a Binance for example um which we've seen on the spot side and hyperlquid it's been the complete inverse right they've seen the success on the per side um and have had trouble converting that to spot >> I mean ellipsus labs is coming for you and they have a prop amm so I think to to kind of step in, I think what Jim's point is, and I tend to agree with it, is I look at a lot of what happen has happened on Salana as a result of memecoins existing on Salana

predominantly. Um, we've seen like meaningful strides taken in onchain DEX design as a result of the volumes and onchain participation that happened via memecoins. And again, like you can argue memecoins lack substance, sure, but what they did do was bring a lot of innovation around them because people who wanted to innovate on chain and swaps and DeFi looked at the place that was dominating in user user volume and daily transactions and like I'm going to build there. Um, and now we have prop amms and now we have a real chance where Salana is like the best place to swap on chain. I think that's still too thick TBD. Um, but Jim's point is like if you win the assets, you win the innovation around it and that's how you end up

being the long-term winner. And we can argue over how much value that actually captures, but I would rather be in that spot and then figure out how to capture value versus not having any assets to even think about capturing value from. >> No, that's fair. Um, no, I asked you last week because you brought I do this quite a bit where Noah mentioned something in the chat and I don't really get it so I have to bother him. How do you see um uh like do you think Hyperlid is not monetizing it correctly with all of their business or do you think I guess the question here is like I don't particularly understand the NASDAQ versus Robin Hood that much but surely they can make more money apart from just fees right?

I mean, it's nuanced. I feel like comparing traditional financial market structure versus crypto spot financial market structure is probably not easy to do apples to apples given that a lot of the ways that fees are accured is a function of regulatory capture. Um, so like when there are monopolies in certain parts of the stack versus like perfect competition that is almost purely a function of regulatory. But I I agree that like owning the user is probably more monetizable than being the the back end. And I also agree with the the general perspective that this is a winner take most market and the address market is really large. And although nobody seems to be capturing it too well today besides Hyperlquid because they're

monetizing purpose volume um like there probably will be the ability to to monetize in the future like do you just believe in Mo's law the cost of computation posting on a blockchain should continue to decline and you know last cycle we were all complaining about fees now I don't really see it too much if fees go down an order of magnitude could Salana just arbitrarily say you know what all the marginal cost compression from here we're just going to take that as our margin margin. I don't think anybody's going to push back too much. There's probably going to be some political debate around it, but it doesn't hurt the user experience in the same way that if these blockchains try to monetize, you know, three, four years ago, it probably would have been a large barrier to maintaining market share.

>> Yeah, >> I think that's a good point. Like if I think of Ethereum on the fee piece of this, you you had the complainers or you know people up in arms about paying several hundred for a transaction and and then I think people had the complete opposite view when they pushed all the execution off to L2s and they say well actually ETH doesn't make enough money now from this like complete reverse of what 2021 was. >> Yeah. But there's a very real world where let's assume memecoins are dead and let's assume that like that form of activity where you have to be first so you have to pay whatever like you have to pay the 8 to 10% fees that you have to sometimes pay if you're just chucking one soul whatever then there's a world where

salana is also in that boat where it just doesn't make enough money right because no one wants to pay 8% fees to go long on a to buy spot monad who like you'll just wait or like you'll no one's going to pay the geo tips or whatever. So it's I guess like with the new um perplex I think it's the ellipsus labs guys right um if I was salon I would say look like we'll make you guys the official per stacks like we'll back you and whatnot but you have to pay us 5% of your revenues. I don't even know how this would work on the back end. It would have to be like a social thing. You can't change the code. But because that's what Hyperlquid is doing,

right? They're like, "Okay, we're gonna push unit, but you have to pay us 50%." It's objectively also not the greatest thing. Like lighter is just putting all assets themselves capturing 100% of. So I feel like it was very much, okay, well, we can't deal with this. So you do it. You're like semi kingmade, semi-enshrined. Um because we're giving you guys the USDC tickers. I just want 50%. They could have taken 80 probably, but they took 50. And then why shouldn't Solana do the same thing, but instead they take 90%. No, not like 90. They take 20%, 30%, 50% even. And then there's no like issue where you're like, oh, I need to have like a billion transactions. No, you don't. You just

need a regular amount of transactions and you just take a cut out of like whatever people make money on. I >> Go ahead, Noah. It's a dangerous game for Salana to enshrine an application at this point. I think it's like an order of operations question where when Hyperlid came to be, it started off as a per DEX and so they had a lot more ability to centralized or centralize and make commercial agreements. Whereas if Salana King makes an application, I think every uh developer not necessarily within that segment is going to ask will my competitor be kingmate in the future and does this mean that Salana is a like

risky dependency for me to build on top of? So I I don't know. I I don't think you can go the the path of enshrining applications. I would be I think it's really quite bearish if if Salon were to do that. Yeah, I feel like a lot of builders on base feel that way with how like Coinbase has like arguably encroached a bit there and people are like, "Oh, am I going to be the next thing that kind of just gets picked off? Uh, am I swimming upstream against a force I cannot possibly defeat?" And I'm not going to like admit that like it's impossible to kind of like enshrine, but I think like so far the versions of it that I've seen often create more harm than good.

What about I hate bringing this up because Jim's going to bring up Euphoria, but what about building out an incubation program and you take equity in the products or something like that? Like there has to I don't know. I've spent a lot of time past two weeks thinking about how to fix this thing because these these guys are like there's a re the only reason Hyperlid is so bulled. I love IPL liquid but the only reason it is it's the only application it's the only chain that can monetize itself properly and that's because it's an application and not a chain. It just has a chain theoretically in the back end. Um not theoretically really but so there there has to be

another way to think about this that works. >> We Douggee and I have been thinking about it a little bit. I think we're still thinking about it like we haven't we haven't found the silver bullet or anything like that just yet. I think um and I don't think there's going to be like a one-sizefits-all, but like I mean like Salana Foundation and Salana Ventures like for up up until F FTX uh and I think it still exists maybe in some form or fashion. Um they there are certainly ways to like if there's something that you really want built to like have someone talented build it. Um the the the the challenge I think has been historically is a there's like a lack of talent in crypto. Um so that's like

number one and number two like you really want people to build stuff that they want to build. Um I think like I mean I think I think the world of the Ellipsus Labs team um they're incredibly talented and smart and like they execute really great. I would be curious [snorts] and I think like I think what I kind of understand I I don't speak with them at all so like I don't really know them. Uh it's just what I what I see from the outside looking in. But like you can sort of start to see the pieces of the puzzle that they're putting together. Um and like how they're going to approach the market structure of Salana in a way that like they can

win uh quite quite handily on like both spot and and pers. And so it's a it's like a it's tough like the the teams that the teams that want to build something and and are talented don't need the help um and don't need the enshrinement and that's kind of who you want building on your on your platform and like and if you are going to enshrine something like I guess I what I'd say is like you kind of get hey team you kind of get one shot like you don't get multiple shots on goal here like oh I want to I want to be the enshrined version of this. Oh, actually this is more interesting. I want to be the enshrined version of this. Like can't you can't do that. I'm gonna do that. And uh I think that might be

part of the perceived issue with some builders coming and building on Hyperlquid right now. >> I think that makes sense. Um h how do you uh Douggee, one thing you brought up in your article was um infrastructure layer becoming more and more boring. How do you I guess we have the pleasure to talk to both the VC side and the liquid side here. How do you will you guys keep investing in infrastructure layer going forward is probably the best way to ask this but realistically however you want to take the question is fine.

>> Yeah. Um I think the short answer is yes. Uh it just looks different than how it did previously. Um, we actually had a pretty conscious realization of like cuz like our fund originally was focused on infrastructure. That was like what we were known for and we've definitely since like become a lot more generalist over the last few years because we've realized we have to start investing in applications that's going to build on top of all this infrastructure we've invested in. um when we had the concept realization of I don't know probably a year ago honestly is like there's still room for infra but it has to be applications first and you invest in the infra that enables the applications that you believe should and can exist but can't due to some missing piece and the

turnkey example is actually a great example like now that turnkey exists moonshot can exist and turnkey is a pretty boring business but It is a good business and if more people start building applications that do volume on turnkey great and like their margins are never going to be like Robin Hood's margins for you know comparison but like for them it's going to be a assuming they can be successful execution like a pretty lucrative business to continue forward with and so I think like turnkey is like closer to the model in my opinion of like what future infrastructure investments look like.

It's gonna be fewer like general purpose networks and that for most of the space's existence has dominated infrastructure investing. I >> think that makes sense. How do you underwrite? >> I mean, historically, we just chose not to to invest in infrastructure. Um, and I think that's partially a function of like liquid market uh assumptions for infrastructure versus venture market assumptions and that a lot of the projects that launch tokens that are infrastructure related projects are not focused on monetization. Their token is their monetization. And so when we're going in, we're trying to build a capital model. I over the past couple of years have spoken to a lot of the info

projects with tokens and I've asked like okay so where what's your revenue and they're like we're we're still trying to figure out how we're going to monetize because for the prior several years nobody actually asked them they had their token it traded well and they were mostly just focused on market share and so it's all to say like for oracle providers um chain link is a great example like what is the real monetization opportunity. It's It's meaningful, but is it meaningful enough to support five to 10 oracle providers all focused on oracles? Um, maybe, maybe not. I think when all their tokens trade well, then nobody asks the question.

When they don't, they they start asking the question. And if you're not monetizing today and all of a sudden you're being asked by your investors to start monetizing, like you don't really know what the the customer's willingness to pay is. And so it's all to say like I'm now much more interested in investing in uh infrastructure tokens than I have been for the prior three years. Not because I necessarily see any opportunity today, but whenever I speak to founders, their tokens have gotten hammered enough to the point where like they get it. Like one, the tokens at a price where like if if they monetize correctly, they can justify their token price, whereas prior there was no point in trying to monetize because then you're just trading at a high multiple.

Um, and two, they understand that because they've gone through so much of their runway that it's kind of an existential risk for their business. So, I don't have any infrastructure investments that we're making today, but it's definitely a much more attractive environment in the liquid space than it has been for, you know, the past five plus years. >> I guess the one thing that like uh I know like USDH like so, so Mega E is an investment of ours, right? They're a portfolio company of ours and like they announced USDM shortly after USDH like auction had been announced. They they'd been working on it well before the announcement, right? So it wasn't like a follow like hey we're just following the hyperlquids lead here. Um but I also saw I remember when those two announcements

went out like MR also kind of like tweeted like oh hey like maybe this is like a good idea. Uh and so I think like that's like the one area of like you know if you have all these stable coins if you look at I mean like circle is just getting like a free ride here right on on Salana on all these chains and it's like okay can we figure out like like Athena seems to be moving in a couple different directions. One of which is like stable coin as a service. there's other stable coins as a service companies and like you know I there's a world where like circle also become stable at coin as a service like over like it and the market can push it

in that direction I think over time um or or they can or or or they like maybe lose market share over time and you have to make a pretty tough business decision at that point I guess arc is maybe their response to that but like you know like that's a way that's a way for chain to monetize Like you could you can build a wallet. Like Tempo's looking at ways to monetize as well. It looks like they have their own model, but like you can launch your own native stable coin. That seems like a one way to monetize. In high interest environments, it's obviously going to be more lucrative than in low interest environments. And maybe having some other features that applications want to use um either out of the box that really

make for like a really holistic sort of ecosystem feel. uh are are worth exploring like an inch chain wallet seems like a like and you connect to this and you can just connect one thing and it all looks and feels the same and it feels very like homogeneous like that's another way like you you look fortunately like for some of the companies that we talked about earlier like like that's kind of the way that you monetize is like is there infrastructure that we can bring in house um or is are there apps that we can bring in house. And I think if I was like a I mean I I would I I would try to figure out ways to like probably bring the infrastructure in

house and let the builders build. I the stable coin thing makes sense, but for like the past three years, we've just said like, "Oh, we don't want fragmented stable coins, so you need USDT and USDC everywhere." And then now on the cryptonative side, chains are like, "Oh, we just want our own native stable coins so we can internalize the yield." Even though I'm contrary to popular belief, I'm not a rates trader. So, I don't know where they're going to go, but I imagine we're going to see lower and lower the treasury yield. And on the other hand,

every single seems like after CLA launched a stable coin, it's like, okay, like I guess everyone's launching a stable coin, so we're going to this place where there's going to be a billion stable coins, which first of all sounds like a nightmare. And the second thing is to me that's I'm sure someone here is an M0 investor, but that's like their whole thing, right? like that's and it's not like a Ephina thing. I love Ephina. I I don't know if it's a great dollar product. I think it's a great dollarized product and I don't know how it will work out as like a stable coin as a service thing.

They're doing it a lot now. I've seen multiple proposals across chains and stuff, but I don't know there surely there's other ways to I don't know. It's I'm just going somewhere random. Danny, maybe you want to save me here. >> Yeah, I'll save you here. I wanted to give a quick shout out to our sponsor for today's stream. >> Thank you to Uniswap for sponsoring today's stream. The unis swap trading API solves the problem of adding crypto to your products without the hassle of needing deep crypto expertise, ongoing maintenance or liquidity aggregation. The trading API provides access to the uni swap protocol, which is processed 3.3 trillion in alltime volume, handled over 465 million swaps from more than 25 million addresses, all with zero security breaches. Developed by Uniswap Labs, the US-based team behind one of

the most used DeFi apps access some of the deepest liquidity in crypto, combining both onchain and off-chain sources for optimal pricing. The same liquidity that powers billions and swaps now available via a single API. Let's get back to it. Uh, you were going on a bit of a tangent there, Boach, talking about different products, monetization. We were talking about stable coins, every chain launching their own stable coin. Um, I don't know how we want to tail this back in. I do think that there is a root question there of like it get gets back to like maybe your original point Douggee in your article of I don't know look to the problems and like invest in some of these teams that are like solving some of those core problems and it's like not necessarily a crypto product or a crypto

team but just like this is a good app or product and someone will use it and I think to that point when I think about like okay there's a thousand chains and maybe all thousand chains are going to launch a stable coin I think probably like the needle through the hay stack of that for the user is that ideally like some of these winners are going to be the user doesn't even realize that's happening. It's just like okay they sign up for this cool new fintech app and maybe there is a unique stable coin that like underpins their dollar balance but they don't know they don't care. They just get like you know they get 2% on their on their cash per year. Um, and you know, it integrates other great products inside of that that that app can monetize, but the user like loves the experience and that's fine.

[snorts] >> Yeah. I mean, I feel like a lot of my article was just oriented around like applications. Uh, there's a the debate we just had is like what do protocols like L1's and L2s do in this world when like these conditions hold true? And I don't know. I that could that's a whole separate article I think. Um but I do think like the emphasis is on like applications being the ones to like get in front of everyone else. Um and people start using the infra without consciously realizing it. It's like when someone goes to Starbucks to buy a coffee, they don't think of themselves as going to Square to purchase the coffee. Uh they're the Starbucks coffee user. That's what they want. Uh, but

there's a lot of things going on behind the scenes that allows them to actually go and buy that coffee. And it's a stupid analogy, but like I do think like a lot of onchain interactions will feel closer to that than what they do now, which is I'm going to go on Salana because I have a bunch of Salana and I love Salana and I'm going to go use these different applications because they're on Salana. Um, I think it's already going away now, but like when I first got into crypto, that was literally the user journey. It was like, which chain do I have a bag of? Okay, I'm gonna go do everything on this chain to try to acrue more of whatever that is.

>> To be fair, I think a lot of people still interact with crypto in that manner, especially if they're like trying to farm [clears throat] something. Um, >> Daniel, unless you have something to say, I want >> I want to ask one more question. I think we talked a lot about on the product side and like the ecosystem side of this, but I'm curious more on like, you know, you talk about winners and losers in your article, Douggee. And on kind of like from the investing side, I think the question that maybe I'm curious about is do winners look like, you know, we have a lot of crypto native or cryptospecific funds and investors and teams in XYZ.

Are the winners those like cream of the crop of that bunch? Or could do you just see like more generalized fintech or tech or finance focused investors that understand enough about what crypto brings to these types of products end up being winners? >> Yeah, it's a great question. I think um so someone tweeted I forget who it was. I read it first thing this morning that like coincidentally YC seems to be behind like a bunch of like the um successful like on crypto fintech apps that are like doing well right now. Um even though like they're a fund that like historically has like been anti-crypto. Uh and so that for me is like a clear statement of like we're not

safe uh in terms of like there will be non-cryptonative funds who come in and start like taking shots and they already are and they seemingly are doing pretty well. Um, what I'm suggesting is that crypto funds will not exist as a label. Um, you're going to have to specialize within whatever we're determining to be crypto. Some funds will be really good on the speculative side because I do think like that side of the space will continue. Um, some will be really good in the fintech side, some will be good in other areas. Uh but like just how you know I'm I don't know this for sure because I was probably not even alive at this time but like I assume there were like internet funds back in the day uh probably in the 90s something along

those lines. There's no internet funds today. Like if I try to raise a fund on investing in the internet people would be like what are you doing and my hope and kind of what I'm suggesting in the article is that in 10 years if I say I'm raising a crypto fund people are like cool what does that mean? what else? Like what are you actually going to do? But right now, if you say I'm raising a crypto fund, like a lot of people are like, "Cool, that checks my box in terms of like I need to allocate 2% of my uh pension fund to crypto." >> Yeah. And you could probably say the same, you know, you've got AI funds now, but what does that mean in 20 years?

>> Oh, a AI will go will undergo the same transformation 100%. >> The I guess is there anything that hasn't? I'm thinking maybe biotech, health, that's kind of a specialized thing, but I guess you need a very specialized knowledge set for that, right? >> Versus like I feel like crypto, internet, AI also is like you can kind of just do it. >> Yeah. And AI is something that like, you know, really goes into so many different categories of products. Uh like you could have AI for education and there's like edtech exists. Um, and so like when you have like a technology in my opinion that's like can be so pervasive across different verticals like that's when eventually like just saying you're going to invest in that technology sounds

crazy. Uh because if it goes so pervasively like you can't possibly cover all these different use cases and understand each thing very well as an investor. >> Yeah. It's like saying you're investing in AI like at some point becomes equivalent to just saying you're investing in tech. >> Exactly. >> No distinction at some point. Yeah, >> I have one last thing before we end it, which is the A DAO versus labs thing. I think quite a few of you might have a very strong opinion on this, so I'll open the stage to whoever wants to first share.

Shall I pick? >> I I can go first. I I have a strong opinion although I'm not privy to all the facts to know whether this is my like end opinion but at a high level I think it's like kind of where I land which is separating the cap structure is problematic like net net you probably get a higher enterprise value for a if a labs is attached to the a token then if a labs has an equity entity and then there's the a token um because there's going to be some risk premium associated with like understanding where that value is flowing. Um and so I think that a labs has been like generally a good

steward of of a like historically there hasn't really been value leakage. Um the the other component is that the the history of A is is lengthy but in 2022 after V3 launched the A labs team started to build Lens and Family um and so they were making kind of this concentrated pivot away from A. There were a few reasons for that. Maybe there was a regulatory maybe it was also the fact that like A token went up so much that like we're never going to justify that value. you just had to go elsewhere and a lot of I I would imagine a lot of the early teams sold. Um and so it's all to say like the the cap structure is

like very clearly a bit of a mess today as far as like a labs has outside equity investors. They've moved fully back to a have moved away from lens and and family. Um, and I I think that's like net negative for a and you could see that as far as like when Horizons was uh initially contemplated, there was this discussion whether there was going to be a second token. Ultimately, there was enough of like kicking and screaming where they didn't end up doing it, but there is a 50% revenue share. Um and similarly like board ghost developers the other major service provider they're starting to explore their own monetization pathways that are going to be some type of revenue share. And so it's all to say like if you play this out long term the

value just continuously gets siphoned away from the a token to the equity entities because those people are the ones making the decisions as to how these products are going to continue to iterate. Um, and so my my view of this whole situation kind of coming full circle is that there's some legacy cap structure debt that we have to accept it is how it is and figure out how can we repair it. In my view is the easiest way to repair it is to pay people to come back in like putting aside the decentralization theater. A is like a bit more decentralized than other Dows, but realistically I as a I don't own A, but if I did, I would be happy to get diluted, depending on what the amount is to get

the A Labs team to be a balance sheet company that holds A or whatever it might be such that they're not seeking other monetization pathways because the continued development of A is critical for the value of the A token. >> Yeah. Especially since I think Morpho is probably the most significant threat has had in a I don't know when V3 was and I don't know when Morphos started getting popular but off the top of my head I feel like it's a very significant threat also Kamino as well to let lesser extent but yeah I agree with that Jim you were >> yeah like I I mean I remember seeing like Lens raised four years ago three years ago something

like that and like I was just messaging in the chat was Like the funny thing is like I didn't realize that it was like a labs that was raising for lens. Um it's just like a you know I Noah like my my updates have come from Noah up updating the chat with like uh like the governance proposal and then also like some of the responses. There was a there was like a a bold tweet that Stani made about a um uh recently like this week about like a is going to win, right? And I just like quickly like controlf search a labs and then search like a dao and a lens was sorry a a labs was mentioned like 11

times in his like a will win and a dao was mentioned exactly once all the way at the end in italics saying that like thank you so much for your support a dao um which like kind of gives you like a less like it kind of tells you all you need to know about like what kind of a like like what what was being said without saying it. Um, and like it's just a very interesting time for I my way outside perspective on this is like what an interesting time to be having this conversation. Uh, you see unis swap labs trying to bring the uni token and unis swap labs

like under the same I think Dan from nent made this like observation. I'm sure others have as well, but um that's the one I saw. You you're trying you see them trying to do everything they possibly can to make it like value accreative to the UNI token and to have this like unis swap is like the am like the king of AMMs, right? Like a is like the king of lending protocols and to see them going in like the exact opposite d like making this the mistake that a lab like unis swap labs made years ago and deciding that now is the right time to like do this versus like what Noah is suggesting uh is like a headscratcher like like what

is going on here like what why would you why would you choose this path and like I've heard that like a is like raising Lobby Labs is raising again right now. Um like like equity amount on equity and it's just like what are we doing here? What what there's clearly an amount then right like actually also to Noah's point there's clearly amount of a tokens that like you could pay them and then they wouldn't have to raise an equity round. I don't think so. Like >> make it all one thing like like for God's sakes like make it all one thing.

like let's not go let's not go back let's not backtrack into like mistakes that have been made in the past like let's move forward and like be a steward of like how to make this work not the opposite >> especially I I think if you're an investor you want to invest in a labs as well right you don't want to necessarily invest in a the protocol to be honest with you I the this stuff is so convoluted that I think most people shouldn't have to learn about it to the point that if you're investing in a you should be investing in lenses as well as all of a as well as everything that Stani decides he wants to build out on the side.

>> Well, yeah, because like a lab also on A Labs, right? Like apparently A Labs owns the IP. Apparently they own the front end. Apparently they own like the logo. Um and you get into this like issue where things look a little bit more like like what just happened with Axelr? Like what what do you mean like a what do you mean the team is leaving and being acquired and the foundation is gonna hire someone [snorts] else to manage? Who who are they hiring? H how did they hire them? Like who agreed to this? Like isn't it their governance to I would assume this would be a governance proposal of like who is going to take this over? Um there's just like so many questions that it raises and like the answers are going to be unsatisfactory.

99% of the time like and I I think nobody really thinks that they're not investing in the labs team like right like what do we >> what do we say >> and this is like the the issue with the spoke that's currently going on which is essentially like the DAO trying to claw back the IP that they probably should own is what's a lab's reaction going to be if if this is successful I mean on the margin they have to be thinking okay I should be diversifying my revenue away from a DAO in some capacity or other.

And so like there's there's no good like outcome from this current vote in its single iteration form because either it goes the way of A DAO and A DAO owns more of themselves or goes the way of A Labs. Um but either way you end up with misaligned shareholders going forward. Uh just goes to show you that all of crypto is advertisement for metadal. Um and on that note, Danny, do you want to wrap it up?

>> And on that note, Bacio asks me to wrap it up. Uh and on that note, gentlemen, thank you all for joining us today. Jim, you said you wanted to become a regular, so we'll have to invite you on again, but uh I it might have to be a requirement that Douggee joins as well. We had a very lively conversation today. And we can always pull in Noah. I hear he's always down for a good chat. So, >> we all work in the same exact office, so it's get us all together. >> I notic [laughter] you guys all have the same background today. So, that's >> one camera, >> three guests.

Uh like we were I guess like one uh thing that we still haven't been successful at Douggee like we were talking about it at lunch was like we see Noah in the chat there's boxer Noah in the chat and then there's like professional >> media Noah >> media media media darling Noah and we were trying to like pull the boxer Noah into the >> I should have just went straight at him with a take I don't even believe in just to get Let's [laughter] see if that works.

>> We'll get him. We'll get him. We'll get you eventually. No, we'll get you a break eventually. >> Yeah, maybe over beers, but on a podcast. I don't know. >> I think he's he's known to be uh more easily excitable within the chat, but less so on the live podcasts. But, uh, who knows? >> Objectively, >> it's probably good for himself. Yeah, maybe if you get him on a beer on a Friday afternoon sometime, late Friday afternoon, maybe you can get him uh more willing to comply to that. >> You break character. You break character.

>> The reason I'm not breaking character is I have signs right next to my monitors. This is one of them. Oh, you can't see it. It says be nice. [laughter] >> Is it as a result of your uh >> I have one that says be positive as well. >> Very [laughter] good. Did you write these or did somebody else write them for you? >> Oh, I wrote them. >> Okay, that's very good. >> He's been such a bear poacher that uh he's he's had to write those up himself. >> What do you What do you do with those when you're messaging in the chat? You just like kind of like like it's like laptop down. You just kind of just like he's out of here. Like I got I got stuff to say.

>> I forget. That's why I have to have the signs right next to my monitor. Every few hours I look over and it's like ah yeah, I remember. Awesome. Well, we can close it out there. Um, glad to have you guys on. We'll have you guys on again sometime soon, I'm sure. Um, and maybe Jim, if you really want to get that result from Noah. Uh, you might have to raid his office and just tear those signs down one day before we go live. So, that's always an option. But otherwise, until then, thanks to all the viewers for tuning in and uh, we'll catch you next time.

>> Thanks, guys. >> See you guys.