Mark Cuban on Why DeFi and NFTs are the Future

Transcript

Intro

All right, Bankless Nation. We are super excited about this extra special episode with Mark Cuban. I'm going to introduce Mark in just a minute. Just some quick logistics. We are live streaming this special episode for you. So, catch it live on YouTube. Hopefully, you're watching now. The podcast will come out next Monday of this. And then after the show, David and I are going to do something different. We're going to jump into Clubhouse and have an afterparty where we do a debrief on the episode. So, catch that as well. There's some instructions in the show notes for that. Last thing, shout-out to the sponsors that made this possible. You'll see some of the rotating logos. Gemini, Aave, Monolith, Dharma.

Guys, these are the tools to help you go bankless and they have helped make this episode possible. Use their stuff. Mark Cuban, you need no introduction to the Bankless community or really any community. Um you are Mark Cuban, the DeFi bull, I think now. At least that's how Crypto Twitter is seeing these days. How are you doing, sir? I'm doing great. How y'all doing? Good, man. It is awesome to have you on Bankless. I like David and I are so psyched about this. Your time is super valuable. We want to get right to the goods. Can we start with this question? You weren't bullish on DeFi before, at least that's our general sense. Why are you now bullish on on You weren't bullish on Bitcoin before, rather. But why are you so

Why Bullish?

bullish on DeFi now? What's kind of changed for you? So, let's let's go through it. So, when Bitcoin first started really becoming popular, and you're only Let's put aside 2009, 10, 11, 12, right? Um you know, I was I was very familiar with it, very familiar with blockchain. But the original um presentation or narrative, if you will, was that it was a a currency, right? That it was going to be used as a currency by normal people in normal circumstances. And I I just never saw that happening. To this day, I don't see it as being a replacement currency for the US dollar or for any sovereign nation for that matter. Is it a better way to transfer money? Yeah, of course, right? Is that Are there significant

benefits to to Bitcoin? Yeah, of course. But, it's really evolved to being a store of value. For the longest time, store of value was not the you know, was not the key to Bitcoin, right? There was going to be lightning and that was going to allow all these transactions to take place and yada yada. And so, that to me never got me excited cuz I I still don't think that'll happen. But, I've always thought it could be a store of value. I've always compared it to gold and you know, it's go it's what people will pay for. But, what really changed is over the last year, um as I started getting more into smart contracts in particular and really understanding more about their capability and seeing the enhancements

that have been made, that was the first thing that got me excited. What made me really blow up on it and really get fired up about it is when I went to mintable.app and minted my first NFT. And wasn't so much just minting the process, but when I saw the royalties, right? That was the game changer. Because the challenge for all intellectual property, whether it's art, whether it's music, whether it's photography, whether it's uh um textbook, whether it's anything is the rule of first sale, right? Once you sell it, everybody else has got the right to sell it and you don't get a nickel from it.

And this changes all of that. And the implications there and the applications are enormous. So, that was the first thing that got me started with NFTs. Then I started digging in more on the DeFi stuff cuz you can't miss, you know, from the summer, right? I mean, DeFi was everywhere and all anybody talked about, it seemed like. And so, I started digging in and there's a lot of hype, you know, a lot of BS going around and a lot of, you know, the yield farming thing and APY and token bidding and all this kind of stuff. But, what got me excited is really understanding that DeFi turned Bitcoin or Ethereum or even several other tokens into personal banking, right? And friction-free

personal banking. You know, with with the money I have in some of my bank accounts, right? I still got to go to a banker and I still have to fill out paperwork and it's still a multi-day process and that's ridiculous. Right? Even, you know, even though I'm over-collateralized and and I have a big NPL in my personal accounts, right? And so, you know, then I started looking at it and realized that, okay, put aside the over-collateralization, that's not really a limiting factor. Um but I can borrow or anybody can borrow regardless of size in seconds. And it's this decentralization really working to turn crypto into a personal banking platform. And that to me is the most

exciting um aspect of DeFi. And then you start applying that to corporations and then you start extending um NFTs and smart contracts in particular. And so, you can mint anything anything that's digital becomes a digital tokenizable um asset that can be resold. All those things together and it really is something to get excited about because not only can it change how people deal with their own personal assets and their own you know, borrowing and lending money, but also for companies, it can really allow them to monetize things they never been able to monetize before.

So, Mark, this sounds like you have uh fallen down the Bankless rabbit hole really. This decentralized, right? Like this this is this is what you are speaking our language, sir. Uh and you're talking about these the the potential of these programmable assets, whether it's an NFT or whether it's it's some sort of programmable interest account. But, uh a lot of the the the people listening here don't remember the birth of the original internet, right? Like we've got like more generations in front of us. For the kids listening, I want to know if you're feeling like internet vibes here, early internet vibes here. Is this like a an internet of of money, an internet of value? Is this like an internet 2.0 to you, or is it something different? I

The Early Internet

It's different, but it there's a lot of similarities, right? So, back in the day, um people, you know, so everything was analog, right? It was physical in a lot of respects. And so, people looked at the internet as a way to to simplify things and centralize things and make them available to everybody, right? That was the whole value of the net. And then you started to see unique applications. It's like my my company, Audionet, you know, we took sporting events, we took radio stations, um back in late '94, early 1995, when people didn't even know what the internet was, and we said, "You know what? Just like we're doing now, literally, you know, when we started streaming, starting with audio and doing live audio streams, um like this in 1995, people were like, "What's the point? You

know, I'll just turn on my radio. I'll just turn on my TV, right? I'll just listen to, you know, my I'll put in a CD in the CD player." It was like, "Why are you even doing this?" I'm like, "No, you don't get it. Bits are bits, right? They don't care where you put them or how They just want to be used effectively, efficiently. And now we can send audio where people want, how people want, when they want them, right? And so, but there were limiting factors, like bandwidth was a huge limiting factor. Fast forward to today, right? You know, back then, everybody tried to digitize and internetize everything. Now, with smart contracts, people and and crypto and um blockchain in particular, people are looking for new applications everywhere.

And it's hard to know what's right and what's wrong, what's going to work and what's not going to work. So, we were able to make things work. Um there were a lot of applications that ended up working, eBay, Amazon, etc. There were a lot that failed. And so, we're in the same place right now. And back then companies went public and everybody wanted to own stock in an internet company, even though they didn't understand it. Now, you know, there's tokens and applications and layer 1 2 3 4 and people don't fully understand it, but they're they go hype and they go for the narratives and and that's what makes it similar. But underneath it all, there are solid applications that impact the world and that's the important part. I can't tell you who all the winners are

going to be yet or who all the losers are going to be, whether it's the NFT space, whether it's DeFi, whether it's smart whether it's blockchain and smart contract applications. So, there's a lot of spray and pray when it comes to buying tokens and dealing with this stuff and that's what makes it really similar. People don't didn't fully understand then, we didn't know who all the winners were going to be then. There's a lot of okay, I'll try a little bit of everything to see what works and see what sticks and that's very similar to today. So, Mark, we there's a frequent conversation in like the bankless world and the Ethereum world that like all these DeFi financial tools, as soon as you get over this like learning curve, the the the experience of using these tools is this an absolute treat. Like like you said, we don't have

to go into a bank, we can use these personal financial tools in the comfort of our own homes and they're straight up more powerful tools. And so like on a personal note, these are all advantageous for us as individuals. Yet you and and notably you are on this the Shark Tank green screen right now, like to invest in things. So, how are you I'm on ABC, let me just add. Yeah, absolutely. And so like notably there's like one half where like these are personal tools that can better our lives, but also how are you thinking on this from like the investor side? Like you said that it was really the the ability for the resale ability of these NFTs to that offer commissions baked in via smart contracts. Like where does your investor hat turn into like turn

when you when you think about this space? Yeah, so, you know, there's a lot of battles going on right now, you know, and there's a lot of people striving for the crown, if you will, you know, wondering what's going to happen with Ethereum and E 2.0 and transactions per second. And there's a lot of hype around that. And so, you know, I'm trying to get my arms around what companies are going to be the survivors, uh and what's going to happen with the industry for that matter. You know, is 2.0 really going to happen? Is it going to be you know, is it going to work?

What what type of TPS is it going to hit? You know, you see what's happening with Binance, how much of that is narrative and hype and what's real. Um you see a lot of liquidity chasing to try to create a story that, you know, this company has got all this NVL and they must be strong and then you know, people talk about the market cap of the tokens. And so, there and that's really not relevant to anything. That's just all narrative, just like there's narrative, you know, like price-earnings ratio, price to earnings growth ratio, you know, those you know, those are narratives that that um analysts use to sell stocks. And so, there's a lot of narratives right now. So, from an investing perspective, I try to say take my same Shark Tank principles and normal investing principles. What are the good

companies? Who are the smart people? You know, what are the applications that are going to change the game? And like I said, personal banking is, you know, really a big change, you know, decentralizing what was centralized. Um governance is a big game changer, but those are macro themes, right? And so, you still got to determine which companies are going to be the ones that actually create the technology that really makes it work. And when I say technology, you know, it could be a competitive blockchain, it could be a layer two add-on, it could be, you know, layer four, it could be whatever, you know, and now you see all the arguments.

Is it is, you know, is this DEX really centralized or is it decentralized, right? Is this yield farming sustainable or is it not sustainable? A a of this [ __ ] is not sustainable. You know, when when everybody is just liquidity chasing to to try to, you know, build up their NVL and and paying these astronomical rates and paying to be listed or at least hedging to be listed on on an exchange. And there's so many games being played because everybody is chasing the same money trying to find narratives to bring in new money. And that happens with new industries. That's not unusual, but from my investing perspective to answer your question, I've got to separate the [ __ ] from what's real.

Totally. And very similar to the late 1990s and kind of the the internet.com kind of bubble and bust. We want to get back to talking about some of the the areas in crypto that you're most interested in putting on your investment hat. But before we do, staying with kind of the macro picture here. So, we've got crypto as an internet 2.0, but you also said something super interesting in a podcast I was listening to you recently, Mark, which is DeFi is America 2.0. Right? So, I mean, famously America made some fantastic strides in the early internet, laid out some massive infrastructure, created a home for Silicon Valley, and has really led the way on the internet

DeFi is America 2.0

revolution up to this point. Do you think that DeFi and crypto could be like an America 2.0? How important is it for politicians and Main Street to get their arms wrapped around how important this could be for for the US as a country? You know, Ryan, that's that's a really interesting question because the reality is you know, the strongest plays and players are not American. Right? We talk a lot about it, but the biggest money doesn't come from here. You know, and the biggest, you know, day-to-day usage from everyday people is not happening here. Right? It's happening elsewhere around the world, but a a lot of the development, not

most, not even the biggest, is happening here, right? A lot of the biggest and the original stuff that's been going on for a while it is happening in in Asia. And and so, you know, we have the opportunity to really have an impact, but we're not we can't think America's like to think that we're always the biggest and best at everything, but we're not really in this particular case and that can be concerning because if we don't It's just like, look, most of the internet's in English, right? In terms of the governance. Um DNS, etc. Um and so, we've got to really hopefully be a leader in this. Now, you know, there's a lot of ways to to discuss that. Does that mean selling half the gold in Fort Knox and and buying a a

basket of of, you know, Bitcoin, Ethereum, and maybe some others? I would be all for that because I think gold is useless, right? You know, gold gold bugs will tell you that, well, it has intrinsic value. It has this much intrinsic value for manufacturing applications and all that jewelry usage, there's no law there's there's no law of physics that says gold jewelry is more valuable than any other metal, be it you know, created into jewelry or for plastics and jewelry for that matter, right? That's just a narrative that we've all accepted. Hey, gold is better.

Gold band, gold jewelry, whatever. You know, and and so, every store of value has a story, whether it's Bitcoin, Ethereum, or gold. And so, if we're going to have a store of value that at least is more more useful, I'd rather have Bitcoin and Ethereum in Fort Knox than I would gold. Um but a lot of that is just, you know, we need as a country to start recognizing that crypto's real and two, it makes better business sense as a country than it does for a lot of a lot of other applications. I'll give you an example.

You know, you if we created our own USDC, right? Issued by the Treasury. We lose money on every penny minted. We lose money on every nickel, dime, and maybe even quarter minted. We lose money on dollars and having to recycle them, right? Um it's bad business. And now with the pandemic where um if you if you have to go into a store, if you still go into a store, and you have to use cash and you get change back or you get dollars back, your first thought is should I even touch that thing, right?

You know, and and so with trying to get to a touchless society for for economics, USDC issued by the Treasury makes perfect sense. And so being a leader there, and I think hopefully we'll have conversations with politicians and leaders in government to to convey to them that 99% of transactions are already digital, right? We we already have a USDC. It just doesn't get down to the consumer retail level. We just don't call it that, right? When I when I do a wire transfer, it's in dollars, but it's all digital.

No one's, you know, printing anything out, you know, hopefully to confirm it until after the transaction. And then that therein lies the rub because all the centralized interests, government, but even more so the big banks, um they have a vested interest in not seeing this happen, at least the way things are set up right now. And so that's going to be the battle. Yeah, so it's exactly what you said, right? So and we didn't have these types of battles in the early '90s with the internet. So here here's part of my worry, Mark, is that did. We did. Okay, well, tell us about that because my worry right now is is the politicians don't get this, right?

Regulation

There's a few people in Congress who sort of are starting to wrap their heads around um crypto. There's maybe Andrew Yang who's who's talking about a little bit like in little pockets. But it felt like in the '90s Are you kidding me? I went to see senators and try to explain it to them. Yeah, WHAT DID THEY SAY? No clue whatsoever. Um, you know, are we doing anything to stop it? Kind of, you know, whether it was copyright laws, you know, whether it was dealing with bandwidth and dealing with I mean cuz remember, back in the '90s, you had a 56K modem.

And the biggest inhibitor to the internet was bandwidth. And so there were a lot of laws put in place in terms of being able for cable and telcos and satellites in order to how and where and when they could build, the restrictions, communities set their own restrictions. So, you had multiple layers of problems in terms of just creating bandwidth. And then you had people investing in fiber because you needed to connect all these things. And so there were there were inhibitors there, but it was easier literally to install fiber underneath the ocean than it was fiber to the home, right? Or fiber to a business. Trying to get uh DS3 45 megabits was expensive and it was

a hassle and there were all these taxes associated with it. And so, I mean, it was it was a [ __ ] back then, too. And people didn't understand it. You know, we we used to have this thing on broadcast.com called the CD Jukebox. And I remember and basically prior to 1996, we could put up any CD. There was no copyright laws preventing it. Then the music industry got these copyright laws passed, the Digital Copyright Act. And so we'd have to go get permission and I remember explaining this to Orrin Hatch, Senator Orrin Hatch from Utah, who was on the Judiciary Committee, trying to tell him that you had to be careful with copyright laws cuz it could really slow down the internet. And all he could think about was he had a CD of

hymns or something. He wanted to know if he could sell my CD, you know, and how you know, sell his CD. I'm like, "No, it's not CDs." Um, they just had no clue. And so it was very similar then, but you know, people find where there's opportunity, smart people find workarounds, and companies find workarounds, and capital finds workarounds. And the same thing will happen here. You know, as Gen Z start voting more, younger millennials start, you know, becoming more aware, because they're not even as aware, you know, um and so as they become more aware, then they'll make sure their politicians are more aware, and smart capital will find ways to invest. And that's what's happening now.

So you're optimistic that we'll be able to get over this regulatory education hurdle? Yeah, because there's you know, there's no choice because you can work around them, cuz it's decentralized. Look, if there's no USDC, that's not going to stop DeFi. The only thing that's going to screw up DeFi is the liquidity chase and the yield farming, because, you know, somebody in the government's going to step up and say it's too good to be true, and let me just tell you that why, and show all the problems, um you know, and like I say to people who yield chase, you know, the risk doesn't leave the system. You just don't know It's like a game of musical chairs. You just don't know when the music's going to stop. And so you've got to be really careful there in terms of yield farming, but you know, this now if

you're sitting at home, you're getting a stimulus check, I don't blame people from yield farming, because it's it's actually smart as long as you can be agile. Um but it's not a long-term It's not going to be valid long-term. So Mark, one thing we've been uh super impressed with is um your ability to go deep in DeFi. Like So our biggest criticism on Bankless is that many of the investors, you know, VCs, institutional investors, they don't actually use DeFi. Right? So they're not informed investors. Imagine going and buying uh like investing in Apple stock in you know, 2008 without ever having used an iPhone.

Showing vs Having Value

Let me give you a better example. So we'll go back to the '90s. So broadcast.com was going public in July of of 1998. And we go on this thing called a road show. And a road show is where you make an a um a presentation to investors. And we go I mean, we even got to take the Concorde to go to London and come back in the day. It was unbelievable. But we would go into these presentations and we could see their eyes just glossing over. And there were never rarely any questions. And the questions just showed that they had no clue what they were investing in. And then we go public. It's the biggest one-day jump in the history of the stock market at that time. Everybody placed their maximum order. And the price just skyrocketed. But none of those people

had a clue or understood the technology of what we were doing. None. And so it's it's no different here. I mean, that's just the way it is. People are momentum investors in a lot of respects. That's what we say. It's like your edge can just be actually using DeFi protocols. Yeah. Have you gone in and and and deposited something in Aave and are earning some interest? You have an edge because 95% of the other investors haven't even gone that far. No no clue whatsoever, right? Because Okay, so you know, investing and working with some of these companies, I'm like, you got you got to do me a favor. If I'm going to invest, here's what you got to do.

You have before you hit confirm, right? For that swap or whatever deposit, whatever it may be, you need to put up the transaction fee versus the APY and how long it'll take you to earn back your transaction fee, right? Because people will see an API of 60% or 70% and invest $100 or $1,000 and have a gas fee cuz they do it at the wrong time of a hundred bucks, right? And that's 10% immediately right off the top and don't realize even if it's a 50% APY, that's an annual yield, right? And you got to hold it long enough to cover just to break even before you even think about it, right? And they don't do the math.

And so I'm like, you got to save the little guy cuz otherwise, it you know, if you don't take care of the little guy like that, it's going to backfire on the whole industry. And, you know, whether it's Ave, um, or others, you don't see that, right? And that's going to create problems because, you know, there's a lot of people yield farming on a small level trying to figure it out and losing money. Including me. I you know, cuz when I when I first learned it and I first did my first deposit, and then, um, did did some yield farming where I deposited and I saw the high APY and I wanted to see what happened. Then, I was like, "Yeah."

And then I swapped it back out. Losing money thinking I'm getting this high yield, right? Well, well, but that this this is exactly right. Like, you have to have skin in the game and you have to be willing to experiment. And you have to have a few transactions where you're like, "Oh, that didn't go well." And like, here's why in order to level up and understand this stuff. So, what is is that generally how you approach investing? And is that how you approach DeFi? Like, tell us how you learned DeFi and how you approach investing. Yeah, I just do it, right? I mean, I'm teaching myself Solidity right now. I'm taking Solidity, um, tutorials so I understand smart contracts better because it's important for me to be able to say, "Okay, this is what you can do with a smart contract." It's almost like

Investing Approach

artificial intelligence, right? So, everything AI is included in almost every investment. Crypto doesn't really talk about it, but, you know, every traditional regular business company does. And so, I'm taking you tutorials in AI. I'm learning the difference between GANs, you know, CNNs, reinforcement learning, all this stuff. Um, you know, doing machine learning tutorials, you know, reading books, whatever, watching the videos so I can learn because I got to know what's real and what's [ __ ] And 99% of the deals that say they have AI or computer vision are [ __ ] You know, they have one guy or one person who is there, you know, that went to MIT or Harvard that took a class in data science and has done, you know, a three-layered neural network like I

have, and that's it, right? And they're going to try to figure it out. AI is hard. Crypto is easy, relatively speaking, but you've got to learn, you've got to learn what it is in order to be able to make legitimate decisions. You know, if VR, I've got a patent pending with a medical application for VR. I got, you know, a patent that was issued for computer vision for counting things from from the air on the ground. I mean, you know, I had help, but these are things, you know, over the years just diving in. And what you learn very quickly about technology generally is once you get these fundamentals in place, it's not hard to add new things, right?

You know, DeFi is really straightforward if if you just try it and you understand the principles behind it. But, you know, you've got to understand finance to a certain extent, you've got to understand why people are chasing liquidity, or why the DEXes are chasing liquidity and and trying to offer these yields, and why it's a game of musical chairs. But, that takes time and and experience to do it. Mark, so you've been playing in these DeFi apps yourself, which is absolutely fantastic. Like Ryan said, you're already like leagues beyond the typical VC who doesn't actually play in the fact that you're learning Solidity is insanely cool. We talked about gas fees, and gas fees are they're pretty prohibitively expensive for a large part

of the population. It's an unfortunate place that we find ourselves in where Ethereum has so much demand that everyone wants to use it, yet we haven't actually learned how to how to scale it, right? There are L2 solutions on the way. They're just very nascent, not very mature. We we do believe they're coming. There's been a ton of content that we've produced on L2s. But, one of my opinion one of my questions that I have for you is like, do you think the average person, like assuming that Ethereum scales, assuming that L2 does work, do you think that the average person, just you, me, just like the listeners here, are actually making these individual transactions, managing their own money, playing with their own D5 apps, putting their own money into Ave, putting their own money into Maker Dow, or do you

think there's going to be some sort of like uh service provider, some sort of like centralized entities, like how do you think how do you think about the long term every business ever, whether it's a little company coming on Shark Tank or the biggest companies. Customers take the path of least resistance. Period. End of story. We don't, you know, we don't want to have to think about it. Um we put our money in a bank because we don't want to have to think about it and we know FDIC insures it and we feel it's safe, right? Better than under a mattress, hopefully. Um and so whichever company creates Look at Top Shots, right? Look Look what Flow has done with Top Shots. Their biggest thing wasn't you know, creating the videos. The video moments aren't anything special. Their biggest thing wasn't a deal with the NBA. That helps,

makes me some money, I'm glad, right? Um but the biggest thing was there's no wallet. You just put in your credit card. Everybody's been trained for decades. You just put in your credit card, you buy what you want. That is the key. You can talk about Flow blockchain all you want, right? And, you know, you can talk about whether it's better or worse, and, you know, who's going to develop on it or why. That's not the secret sauce. The secret sauce is defense inside where there's no know your customer, there's no any of this other stuff. You just put in your credit card and you buy, and if the prices go up, you're happy. There's a 2 and 1/2% Well, no, it's more than that now. Um it's the Well, depending on the size of the transaction, but, you know, it's going to be a 7 to $10 transaction fee.

That's cool, too, because people are used to that cuz of shipping and credit card fees. And, you know, and that's a thought, right? There's no shipping fees. You know, on on NFTs and all that stuff. But, you get my point, right? It's the path of least resistance to dealing with things. Look, you can't take your money off of Top Shots right now. You know, you can have something that just skyrockets in value and okay, you know, it looks good, you know, in your collection, but it you know, you can't really take it anywhere. You know, so there's a lot of limitations and it just goes shows even despite those limitations, the site being down, it's hard to buy a pack, you know, they're still working on getting out bots, all that kind of stuff. People still do it because it's exciting to collect and

it's easy. And so D 5 right now is not super easy. It's not easy at all, right? Understand standing pooling and swaps or exchanges, different people use different naming conventions, right? Yield farming and prop what what's really profitable, people see API and they're they're used to, you know, the concept of API or APR because of their credit cards, right? And so the advanced users or people that just learn their way through it, um can get to it, right? But you don't see MVLs into the billions because of everyday people, right? There are big old players and I know some of them now that are just moving money around and you can do it now because, you know, the the

exchanges of the world are able to hedge still and, you know, there's still the liquidity chases cuz it's a zero-sum game. you talk about similarities to the internet. I used to do deals with companies because they wanted traffic and with broadcast.com we got a ton of traffic and we invented these things called guaranteed click-throughs, right? So just like NVL is the the metric for how successful you are because that leads to market cap, right? So traffic was the currency back in the day. And so we would charge ex you know, obscene amounts for sending people traffic because they in turn used that as a metric to either go public, stay public, their stock price, whatever. It was legitimate traffic, it wasn't bought

traffic or anything like that, it was legit. But we would charge the [ __ ] out of it, you You and it's the same thing now. People are paying overpaying for the metrics, the MVLs and everything. They're paying influencers who don't know [ __ ] about crypto to say, you know, come, you know, you know, just to jack up their TPS or jack whatever the metric is that they're using, their MVL, whatever it may be, their user numbers. And so you're seeing a lot of people gaming the system right now and you've got to really be careful of that and that hurts the ordinary user who doesn't see that bigger picture because it really is a game of musical chairs.

You know, if your yield that you're earning that you've committed to be locked in, whether it's, you know, 11 days on Ave or whatever, you know, or whatever it may be for whatever your lock is, um, I don't think that's a risk people fully understand. And you don't have the leverage to yank yourself out like other people do. Mark, I think Dave's going to get back to NFTs in a second, but I want to jump on something you said where where it hurts the user cuz I think it hurts the user in two ways, right? So, um, it it it hurts the user obviously when they're buying into something uh like a speculative type bubble. It hurts the users that way. But it also hurts, I think, the mainstream users who look at this whole crypto space and dismiss it as a bunch of speculation and nonsense

and shenanigans and games. And they dismiss Yeah, because they're partially right, aren't they? Yeah. So, it hurts them too because it shuts them out and they don't see the potential. Like like I, you know, I I do remember, I would you know, old enough to to sort of remember this, uh the dot com bubble. And everyone said that like the internet is dead at that time after the bubble popped. Like it would never come back and they dismissed the technology because of the speculative bubble. So, it hurts in two ways, this this kind of speculative nature of things. you know what, that kind of takes care of itself over time, right? Because the people who are just buying traffic, um, and don't have something sustainable underneath it, they're going to be gone. It's just a question of when. You know, you just

Hype vs. Revolution

hope enough um individual um players, you know, buyers. I don't want to necessarily call them investors. If you're looking for a 50% APY, you're not investing. You got to know that there's risk there, right? You know, and there should be a disclaimer that, you know, every DEX has to list, right? Every front end has to list saying that, you know, your yield is being paid in the tokens of the people that you're locking with. And most likely it's going to take X number of days for you just to break even.

You know, cuz what if if there was a break even metric, you know, for, you know, your yield versus your transaction versus the risk associated with the token you're getting, people would going to think twice and might not dive in. Mark, I want to I want to go back to the conversation of people using these things themselves rather than using somebody else to to be their proxy, right? Because there are some services in DeFi, some services on Ethereum that are very easy to obfuscate using a centralized service provider. But then there are other services, other things you can do in DeFi where it's really would make sense. And specifically where I think this is true would be NFTs, right? Like you people like NFTs because they like them, right?

You can't you you can't outsource your own taste, right? So, there are some things in this world where you actually do need to be the person, you know, with making the transaction, buying like choosing the specific asset. And like one of the reasons why why we call Bankless Bankless is because there are all of these platforms that can remove these intermediaries from Right. from choices in a bankless world, right? The bankless thesis. And so I kind of want to get get your take on that because I I know you love NFTs and I'm I'm assuming you wouldn't trust anyone else other than yourself to make your NFT selections for you. So, when you go and and you look at NFTs and you are making those choices for yourself, like how do you look at NFTs? Like how do you evaluate these

things, especially when they're so subjective? Yeah, so that's a question. So, there's a couple things there. If you if you analogize it to the art world, right? There are um advisories like I'm not an art guy. There's no art in this house that you know that I've bought. and there are advisors that come to me every now and then oh, you know, I'm I'm a consultant I help, you know, wealthy people buy art. And I'm like okay, good luck. You know, and so there there are intermediaries that that try to fill that role that understand the marketplace. You know, I know some people that know that this artist is really hot, right? This artist has got a following and really what it comes down to is and it's the exact same thing follow applies to NFTs. It's not so much

the subjective aspect of the art itself. It's more what kind of following does that artist have? Because that following is what creates the demand. Because you're right, there there's it's almost impossible to think that that if you put up a picture that everybody's going to feel the same way about it. Like you look at the Mona Lisa and you go okay, somebody thinks that's special. Not me, right? But it's the Mona Lisa. Okay, so everybody you know, so you're you're not going to get that commonality. You're right, it's very very subjective, but what's not subjective and it's quantitative is the size of the following. And so so when you look at um CryptoPunks, um when you look at some of the things that

Hashmasks is doing and you look at Beeple, right? They have huge followings and that's what creates the value more because it becomes a community. It becomes something that creates a commonality. It's like being a fan of the Dallas Mavericks. You know, there's some people who are just me okay, you know, I hope the Mavs win and then there are others like we lose a game and like me, right? And it's the end of the world. It feels like, you know, the world just came to an end with every loss and I can't sleep that night. And you know, that's community. And community creates value. And people in the NFT world, you always have to remember that. Community creates value for NFTs. And when you're evaluating them, you have to evaluate the size and

the strength and the intensity of the community. Um and so, I don't The only time I've bought NFTs as an investment per se where I'm just going to let them sit there, um was Bitcoin Origins because I thought it was cool. And I I know those guys and I'm going to do some stuff with them. Um I did it one Oh my god. Um Euler um Oh, Euler Beats, the music one? Euler Beats, yeah, Euler Beats, right? I bought two of those because to me it was the most genius idea ever. And I since I've talked I've talked to those guys since at Shriram. Um but what was genius about it was it was generative and they did the bond curve and they did a 90% reserve, which means they created

a floor for every item, right? So, if you took a a chance on it, then you're you know, as long as the prices are going up, you're not going to you're going to make money no matter what. And if the prices are going to go down, well, because the reserve was so high, at least it's not going to zero, right? There's some value there. And for them as a company being, you know, a shark, I'm like it cost them nothing to to cost to mint. Their marginal cost is zero. And so, you know, their only mistake was setting a 90% reserve. You know, even though that made me buy more, you know, um and so, you know, the the business side is interesting to me, but again, the community side is most important. But sometimes, like the Euler Beats, when you just come up with

an idea that I thought was just really differentiated and unique, that's cool, right? That is really cool to me and that's why I invested in them. Yeah, man, there's so many directions I want to go in. I think the topic of audio NFTs is is a a one that we are just now scratching the surface. But, I want to go back to something you said where the the community creates the value. And this is this is a drum that we've been beating on the Bankless program for a while now where one of the cool things about all these DeFi apps and all these DeFi tools on Ethereum, they're money tools, they're value tools. What they do is they allow for cultural expression, right? And one of the reasons why I'm particularly so bullish on NFTs is that there can be one or many sets of NFTs for every single

community out there, right? Like the NBA Top Shot is the the the NFTs for the NBA community, right? Like there's a one of my favorite artists, musicians, RAC. He's got his own token and it's like the community token for every sort of culture. about so, are you talking about on on Audius or on Zora or Uh I think I think his specific token is his is its own native ERC-20 token on the base chain of Ethereum. But, the important thing about that is that he made he made a token and his community loves it. And it's a way for him, the artist, to engage directly with his community, right? There's no intermediaries. He didn't have to ask permission to anyone. He he made the token and then the the community's like, "I like RAC. I like his music." And it's

a way for them to engage. So, what's your what how how does that lay land with you? Like the the one community one NFT like connection? Yeah, I mean, look, there's there's two things there, right? Just doing an NFT doesn't necessarily mean you want to create a token, right? Because a token carries with it a different set of responsibilities. But, truly, if you try to do original sale to make money um or to raise money, that that creates a set of obligations. Like I say on Shark Tank, raising money is not an accomplishment, it's an obligation. The people that gave you that money want something back for it. Now, you may give them back an NFT and that's fine. That's that's a sale.

That's not a necessarily a money raise. Um but, building community is everything to every company everywhere. I don't care what company you are or what you sell, you know, if your customers aren't don't feel like a community, you're going to suffer at some level. And if you're an artist, um creating community and using Telegram and Discord and Twitter and what wherever your customers want to be is great. The challenge in all of that is only the token. That's it. You know, because again, that creates a different level of responsibility um because if people come if you're RAC and people come to you for your music, they just love your music. Love everything that you do as an artist, everything.

But because they love you, they put their life savings in your RAC token. That's a different responsibility. You know, and it's what you know, I get I've gotten asked so many times over the years why don't I start a hedge fund? Why don't I start a fund? You know, why don't I do a SPAC, which is a really hot money raising thing right now, right? Because people are going to put their life savings in based on my name. And that's a huge [ __ ] responsibility that I don't want, right? Because like I said, you know, broadcast.com had the biggest IPO jump um in in stock market history at the time. And we ended up closing that day at like $63, but there was somebody who top ticked it at $72.50.

And I was like, oh [ __ ] how am I going to have that person make sure they make money? And that kept me up at night and that kept me working hard, um but you got to have that attitude, otherwise people are going to lose. And it's like all these DEXes and all um these liquidity chases and yield farming. Somebody's saying, you know what, some of my customers might lose out on this, but [ __ ] it. I can't do business like that, and that's the challenge. Yeah, totally agreed. Like so, um this is what tends to happen during during bull runs is you start to get a bunch of short-termers who enter the space, right? So like but the long-term projects that are playing long-term games, they're not going to screw over their community. I want to get back to the NFTs, because I think you have a

NFTs!

unique uh I guess a take on this, Mark, is like it feels like we are in the very first stages of NFTs, right? Like Disney hasn't discovered NFTs. My god, like the biggest marketing company in the world with massive communities hasn't discovered NFTs. Athletes have barely discovered it, right? Celebrities haven't discovered it. There are all of these communities outside of crypto, and what crypto provides and Ethereum provides is this blank canvas, essentially. So, it's like the internet, you know, anybody could spin up a website. Well, now anybody can create an NFT. How big could this get? And what what do you think we're going to be seeing next? It's a hundred billion dollar industry, but probably not for 15, 20 years.

Right? No no doubt about it. Because and put aside the art side of it, the music side of it. Look at it from a business side of it. Look talk college textbooks. Right? Literally, I'm checking the market caps of the biggest companies that create college textbooks and asking, you know, if they were under severely undervalued and like all companies now they're overvalued to a certain extent because interest rates are so, you know, relative interest rates are not overvalued, but relative to history they are. Um just looking to see should we be looking at buying these college textbook companies because there's no good reason at all to have a physical college textbooks. The only way reason they do it is because that's the

way they've always done it. But the new style college textbook company is going to use, you know, the equivalent of an NFT, whatever they decide to call it, because now with college textbooks they lose the resale value. That's why they're overpriced so much, right? You know, kids buy so many kids buy, you know, used textbooks like I did when I was in college because that's just smarter way to do it. Maybe you get some good notes in there, too. And so, but now because you can get your royalties ongoing, right? Why won't you do every college textbook as the equivalent of an NFT, whether you call it that or not, and then just issue it.

You can charge less knowing you're going to get 25% of the resale value and make a [ __ ] load more money. You know, those are the things that are going to drive this NFT to a hundred billion dollar industry. It's not going to be artists because you're you know you're going to start getting into long tail that's too long, right? It's like publishing a book. It's anybody can publish a book. You can get it on Amazon. You can get it in bookstores if you work hard enough. That's not going to mean that there's a market for it and people are going to buy it. Anybody can publish music. It used to be really hard and expensive to publish a song that was you know well mixed and and produced.

Not anymore, you know, it takes nothing to produce a song. That doesn't mean anybody's going to buy it or listen to it. And so you're starting you you know we're already starting to see that with NFTs, right? If you go on Minable or Rarible or OpenSea, you see a lot of stuff even a lot of it that looks good, right? That is really interesting but has no bids. And so the the real jump is I mean we really haven't hit with music yet, so that'll jump. We really haven't hit with professional photographers, so that'll jump and grow the market. But like you mentioned Disney How about sports? Yeah, how about sports?

Sports yeah, we'll do everything from tickets to pictures to um moments to everything and anything. We'll you know, I've got a company NBA me um that I'm part owner in and all these memes we're going you know, once we get the rights we're we're going to make NFTs of them. And so that will bring in more users, but the holy grail of all this are the business applications. You know, if you think about the removing the friction of bankers because every bank has got to touch it every you know, and you've got multiple layers of people who have got to approve. Businesses work that way in general. Think of payroll.

Think of college transcripts, high school transcripts. Think of, you know, borrowing against receivables. Um there's just so many applications. And so, and they apply not just to DeFi, but to to NFT um technology as well. You know, so if I write uh if I do a presentation, or if I give a speech, um and you guys are talking about going on Clubhouse. Well, Clubhouse to me is the anti-NFT cuz it's ephemeral, right? There's nothing there to remove. To me, that's a mistake, right? I'm working with a a company called Fireside Chat.

And, you know, so if rather than having that afterparty on um on Clubhouse where it's just gone, You do it on on Fireside, and you're going to turn it into an NFT, and you're going to price it at the equivalent of five bucks or 10 bucks, right? And when someone's done using it, you're going to have a 50% royalty, and they can trade it. Maybe no one will buy it. Maybe no one will trade it, but it'll be there, right? That's the long tail that in aggregate for business applications that makes this a hundred-billion-dollar marketplace. I listened to this uh fantastic Frank Zappa clip last night where he talked about the uniqueness of specifically live performances. And the reason why bootlegged uh video recordings of

performances still go for like extremely large sums of money is because the live performance is only happened once, right? There's only one of them, right? And the Grateful Dead, right? That thing. Yeah, I've been listening to the Grateful Dead for like weeks now. It's been been a It's been It's been a fun time. And that's why I want to go back to the the question of like musical NFTs, music NFTs, where you know, we talked we talked about Euler Beats, which is like kind of like the first big music NFT. And it's it's programmatic, computer generated. Less less art, more computer, right? Like more algorithms. Um but the the thesis is that's kind of just the start of the but the music is just secondary. It's really the first math NFT, right?

Mhm. That's what it is. It's the first math NFT. And there'll be other things that are math generated that are unique. Maybe it's not visual, maybe it's something else, right? Maybe it's a calming pattern. I don't know, right? It could be like there's one NFT that I'm thinking of putting up. So, I have long story short, I ended up creating this application in VR that just has these squares that flow by, which allows your if you're dizzy, it recalibrates your brain, your vestibular system in your eyes. And so, it helps some people deal with dizziness and it's patent pending and all this.

But, it's all generative, right? And so, I'm thinking about putting it up as an NFT because it's just math effectively and it's calming based off the math. There's going to be a whole industry of math based, you know, NFTs that just have an impact in their own way. Um and so, it you know, Euler Beats was just the first. This this can go in any direction. Right. So, like there's there seems to be a fork in the road, right? There's the math-based NFTs and then there's like the the music auditory NFTs that maybe a musician could be more more resonant with. Where where do you see what do you see happening first?

Cuz I'm particularly bullish on like audio and music and tracks like specific songs based like tokens where, you know, you buy you buy the NFT, you get the rights to the to the audio. Where where does your head go when you extrapolate audio-based NFTs into the future? Um really depends on what is the standard 1155 for Ethereum for royalties. 1155 and and 721s are the two NFT standards. Yeah. So, the 1155 is the royalty side of it, right? I believe so. I think they can both be programmed, but I think Look at Mark Cuban spitting out EIPs, dude. This is crazy. He's asking questions I can't answer.

He knows more than us. The 721 is already in place. So, that's a given, right? So, that's basic royalties. And if I read it right, 1155 because I'm also reading this stuff I think is whatever about burning Ethereum and the miners are arguing and all that kind of [ __ ] right? Um and so, um but on the royalties, that'll drive the music implications, right? Because being able to allocate royalties to the the whole publishing litany, right? The songwriter, the performer, the um people who do the music, the musicians, all that kind of stuff. That's the hard part. It's the same with the movie, right? The executive producer, the producer, the actors, the writers, the this, the that. Like, you know, all the little cameos and and um acting [ __ ]

that I've done, I'll get a royalty check from this episode of um Entourage from, you know, a free screening in in Korea. Um and it the the royalty will be for $1.15 and they'll send me a check. I literally have a stack of checks that big from Entourage that are $2 or less and I'm just saving them to auction them off on eBay for charity, right? When I autograph them. so, you've got to solve the business side of the problem first. And smart contracts are a better way and when they this standard really becomes usable for the distribution of royalties, then you'll see the explosion because it's a

better business um solution. That's always the key. You always have to ask yourself, on one side you think about the demand and that's always important, right? More music, more people, more demand, right? But you got to think of the business side and is this a better way? And [ __ ] yes, it's a better way. It's not even close. But there's got to be standards because Ethereum right now has, you know, got its scaling issues that hopefully go away with 2.0. And then there's all these other competitive blockchains and you, you know, do they go there where you kind of control it? Will it be acceptable? All the normal questions, right? Um but those have to to solved first.

So, what's exciting about all of this? And I don't think yet mainstream sees it, but we see it because we're here is this is Mark, this is like the birth of a new economy here, right? Like we're talking about all of these products, all of these cool things in the digital world that you can't get in the in the physical in the analog world, right? So, this is the birth of a whole new decentralized finance Ethereum crypto economy here. What I want to find out and I think what what people listening want to find out too is how you think about this space more specifically back to putting on your investor hat, right?

Skin in the Game

So, like your skin in the game It's really, really, really simple. Go. For individuals, is it the path of least resistance? Does it make your life better? Yes or no? That's it. On the business side, does it make you more productive, more competitive, and more profitable? That's it. And the answer's yes. Across the board. Yeah. Okay, so let let Can we talk about basically where you have skin in the game, what you're kind of betting on, right? We don't have to get into specific projects, but I want to know like what layers, like Bitcoin for instance. Is that is that we we talked about that earlier. Is that something you like? Yeah, I've owned a bunch of Bitcoin for a long time, right?

Despite what people think, right? People would send it to me when it wasn't worth much trying to convince me and I kept it. You know, I bought some along the way and I've kept it. I've never sold one Bitcoin or a fraction of a Bitcoin. It's extremely rare that people keep their Bitcoins that people send them to them. So, so congratulations for doing that. Yeah, I did I mean, I didn't need the money. Oh, you know. Um, you know, same with Ethereum. And I got a bunch of shitcoins that some of which I thought were shitcoins that now are turning into real value cuz everything's trading up. Um, and I bought some more along the way. Um, and so on the token side, you know, that's not as big a play for me right now even though in absolute terms, it's it's a fair amount of money

even for me, right? Because I've accumulated over the years. Um so, you know, I lose it when the the price goes up, I make a lot of money, when the price goes down, I lose a lot of money, relatively speaking. Um but I'm not I'm not selling it, not changing it. Sometimes it's fun to trade in and out of some of the smaller tokens just to try to be right, but that's not really investing, that's just that um speculating. Now, in terms of investing, you know, there's a difference. As an investor, I don't look at tokens as an investment, other than, you know, you can look at Maker because you get a percentage back, right? You can look at, you know, others where I've I've done things on Rarible and they've given me RARI, right? You know, and and maybe that's earning it, so that's an

investment. Um but I look to make more equity investments, like traditional type investments, as opposed to looking as a token as a traditional investment, it's not, unless it pays you a dividend of some sort. Um and so, there I'm investing in the minting side, right? Because I think, you know, simplifying minting and integrating the different um EIPs that come along, you've got to be able to do that. All these things that we're talking about with music start with minting, right? If the minting's not easy and it's not usable and it doesn't um carry over into as many marketplaces to get in front of as many music users as possible, if that part doesn't work with minting, it doesn't work at all. I'm investing some in marketplaces. There's so many marketplaces popping up, but there's one

you know, um Bitcoin Origin, right? I like those guys simply because they talk about the narrative, they create stories, right? So, their marketplace isn't about just accumulating as many um NFTs as they can, but about working with artists that generate stories and generate narratives and that cuz that builds community, right? It it and having that community, as we said, is important. I'm working with Injective, right? So, you know, for cuz I like that their order book decentralized, meaning that they're using traditional market makers and bringing them over and you'll be able to trade in stocks and um crypto and whatever else, right? Um I haven't invested, but I work a lot with Ave, right? Because even though I they need a lot of help with their user

interface, that's where I got started and and they're fair, they work, right? Um What else have I done? Um but I'm looking at those types of things where there's literally a business there and I'm investing in the business and the technology and the entrepreneurs and hoping that they're the survivors and the thrivers, right? Um and so that's what I look for right now. Crypto has always had this question of where is value going to accrue in crypto, right? We're we're building this whole new economy and you know, Bitcoiners will tell you Bitcoin it you know, Bitcoin is the value accrual for this stuff. This is store of value.

We're not building a whole new economy. Okay. What we're doing is trying to make the existing economy more efficient and more productive and you know, if you're a business more um profitable and if you're an individual more usable, right? It's not a new economy. It's any more than the internet created the internet economy, right? We're still transaction. We just moved where we transacted. We saw that with the pandemic. You know, there's still people who preferred going to stores and you know, my wife used to love grocery shopping, right? Not anymore, right? So now you know, it's all Amazon all the time for me. Um and so the economy's the same. We're just trying to make it better.

Yeah, so this is this is moving across from from analog to digital. Maybe same economy in some respects. We're making it better. But like tell us where value's going to accrue here because there's kind of two layers we're talking about. One is like the money layer, the store of value layer. We might put Bitcoin there. We might put Ether there, although Ether also has some utility value, right? You have to use it to pay for transactions. Talk about that layer and then let's talk about the layer up, which is the application layer and where we've got all of these DeFi tokens. Where's value going to accrue here? So it really depends on what happens with 2.0, right?

Value in Layers

Because there's a lot of bets for and against. Um, the companies I work with, I try to make them blockchain agnostic, you know, cuz everybody's trying to do their best to come up with an alternative to ether or to complement it um at some level, but it you know, if you're creating your own blockchain, you've got to have an application that's already driving it. So, it's just like flow with top shots. They've got an application that's driving it, and that's what's making it work. Um, and so I look for combinations there, right? Now, you know, right now you can't bet against ether 2.0, you know, but I can see why a lot of people are trying to preempt it and trying to, you know, hype it in every way they can.

You know, you see Binance doing what they're doing, you see flow doing what they're doing, and you know, it's different, but in their own way, they're trying to be that the gravity that brings in users um cuz that's the traffic and that's what's going to make their business work. On layer two, um it's really just depends on the application. And what I look for are business world applications, not just crypto world application, but what changes how businesses do business. You know, smart contracts, that's why I'm learning solidity, so I can visualize, okay, here's how you would program it, this is why it works, this is why it's better than what a company is doing right now for payroll, for human resources, for accounting. I mean, imagine accounting system, you would never have an Enron or a fraudulent

accounting if you had um if you had and I'm going to get all these wrong with proof of work, right? Distributed proof of work where you've got hundreds of hundreds of accountants who decided to make their money staking or, you know, confirming blocks for general ledger entries. And I know I'm getting the terminology wrong, I'm still learning it, but you know, you get my point, right? If I if I have a whole group of accountants that are, you know, are are validators, um and they're confirming Look at Look what happens in healthcare, right? This is the best example. So, right now, if you go to your doctor and and they say you need this or that, and then you go to your insurance company and you hope they don't deny it, right? Or you know, and

it's a battle. Or in the hospital itself, once you get it done, you hope they don't upcode it so it costs you more. Um, well, if all that was done by independent validators who have been trained and are rewarded by doing a good job and confirm each other, right? For accuracy, now all of a sudden, it's not just in a hospital and you you you eliminate fraud, right? And you humanize the whole process. And those are the types of things that I look for. So, to me, like I mentioned earlier, the grand slams aren't the crypto community. Those are proof of concepts. And it's interesting and exciting and fun. You know, there's a lot of great things.

But, if you could change healthcare because you have validators that have all been trained and they're all independent of each other across the country, across the world, whatever, right? And they're confirming whether or not a um um a claim is payable or not. You know, or whether it's accurate or not or whatever it may be. And same for, you know, accounting applications. That's enormous. Enormous. All the healthcare fraud and [ __ ] and pain and agony that people go through, you know, when you get sick and you just hope to God that you can pay for it and not go broke.

And so, when you talk for Medicare for all, that's, you know, you can argue whether that's right or wrong. But, when you talk, you know, validating independent decentralized validation of claims, that's healthcare for all. Right? That's sanity and reduced anxiety for all. And that's what I look for when I look at with things. And that's why when you look at this you know, the Bitcoin and everything as a store of value, that's great. That's fun. That's exciting. It's an investment, you know, if if you really understand it. The NFTs starting with music, that's great, right? Um it can change industries there as well. Um textbook, we talked music, etc.

Just blockchain itself and layer two, you know, all the way up to layer four applications applied to traditional business and making them fair, decentralized, and more efficient, which in turn leads to lower cost and more profitability, hopefully. And imagine you know, a company built around blockchain that does have their own tokens or your partner, you know, uses someone else's tokens even, and you're able to give to all your employees not only shares of equity if you're a public company or even private, right? But also those tokens so that every one of your employees have an appreciable asset.

Hopefully appreciates, right? Because that's part of, you know, income inequality. And that's part of the decentralized nature of crypto, right? If you can get, you know, any any coin or token with algorithmic scarcity built into it, and you get, you know, one satoshi into 330 million Americans' hands into a, you know, a wallet that's automatically set up at birth, and every time they, you know, they graduate from from first grade, second grade, third grade, you know, they they get, you know, they're fed, right? They get a satoshi, right? And they're building up things for basic, you know, and and it's, you know, even if it's 1/10 of a penny, you know, in valuation. And I'm not trying to do the math in my head,

but whatever it is, right? You know, and they're just accruing this and accruing this and aren't allowed to sell it till they're 30 years old or whatever it may be or have to hold it for 10 years. Now you're you're you're seeing how this decentralized nature and the fractionalized nature of this and the value of a USDC. So, put aside satoshis just to say it's one, you know, of a of a fiat equivalent, you know, um stable coin $1, and you're giving somebody a penny every time they do something right, but over from the day they're born. You know, and they're able to accumulate this this asset that can appreciate that's huge. So So, Mark, there This is a conversation that we also have on the on the Bankless program quite a lot, which is where crypto, where blockchain,

WSB & Value Props

where Ethereum, and some of the biggest issues that we see in society intersect, right? And I I know that you had a tweet that went pretty viral with the whole like GameStop buckle and comparing and contrasting it to DeFi. And one of one of the big things that I think that, you know, Ethereum can bring to the world are solutions that are helping or that are that can help mitigate some of the the social unrest, the the wealth inequality in this world, right? Like we saw like the deplatforming of people that were wanting to trade on on GameStop, right? Or wanting to trade on Robinhood, excuse me. And And there's a exactly what you were talking about, these broader conversations of wealth inequality where in the legacy financial system, the non-crypto financial system, there's very well-capitalized entrenched

players. And like the the younger millennials, the the the zoomers, there's this sense of like kind of despair that like climbing the ladder and making a name for yourself is just like too hard in this calcified system. And like one of the the value propositions of DeFi and Ethereum is like there is no ladder. Like everything is so new, it's so flat, it's easy to climb that ladder. And And one of the narratives that we're trying to to harp on is that like this new world is unsaturated, and young entrepreneurs can do something cool in this world, and it can help solve some of the biggest social issues of the day. How do you think about this? I agree. I mean, it's like the early days of the internet again, the early days of the PC industry, right? It It

there were the tech dinosaurs, you know, that never believed oh, I'll never use a PC. Who the hell needs that? I got Betty and Suzy and Sam over there. They do my PC work. They're going to die eventually, right? But it was opportunity when I was your age, right? And when everybody else was [ __ ] on it, I was like, "Fuck y'all. This This is going to change everything, right?" And I'm going to connect these things together. Um and then it was the internet. It was the same thing for we're super young millennials back then, right? It was like, "Okay, let's go, right? You know, this is changing everything." And crypto's the same thing. But the underpinning, and I'll keep on repeating this, the underpinning of it is there's got to be value created from the applications.

And there are. And that's why I'm excited because I can see, you know, and I mentioned some of them, just like I saw with PCs and software, and that's why I taught myself how to program, and local area wide area networks, and then mobile, and then high def, um and now with crypto and teaching myself and AI for that matter, don't want to leave that out, right? Um AI is also a world changer. And now crypto, right? So, each of them has has had their own dramatic impact on applications and business, right? And people's lives. And in hindsight, it's really easy and it makes perfect sense. Of course you're going to stream. Of course you're going to use a PC or a phone. Who the [ __ ] would would think otherwise? Well, back

when it's happening, everybody doubts it. Every single idea that I've ever had that's made me big [ __ ] money, everybody thought I was crazy. Everybody. And if you don't think I'm crazy when I come up with it, then it's not the right idea. Because there's, you know, and that's the same thing with this. You know, oh people don't know what the blockchains are. They don't know what smart contracts are. They don't know about layer one through three four, right? They you know, it's all foreign to them. So, they're not going to understand it. But if you or I or any kid out there um can see that application and figure out and then do it and then implement it, Bam.

Right? It's like, there were plenty of search engines before Google. So at this stage, like, how do you I want to know how you explain it to people. So you got you got somebody who sees your tweet, see a friend of yours maybe, knows you're into crypto, knows like you you're into tech, you got in on the internet. How do you explain it to the to the average person on the street what's going on? Don't. Right, I don't try. Um you know Try cuz so trying to get into DeFi right now, it's too early. It's just like, you know, when we were starting streaming. I didn't try to explain streaming, I just said, "Do you want to listen to the Cubs game while you're in the office?"

And then we did research that said, you know, the PC was the dominant media device on 97% of corporate desktops. And only 3% of them had radios or TVs. So we were the only way for someone sitting at their desk in the office to be able to listen and then watch something. I'm like, do you get that? You know? And so what you do is you think of a basic application. How would you like to borrow money? So you cover your overdrafts in 10 seconds or 30 seconds or less, and not need permission from anybody.

How am I going to do that? Well, you got to have more than you're borrowing, that's the first problem, you know, for right now, you're going to be over collateralized, but if you're able to save that money right? And you just don't want to you want to leave it in your bank account, and you want to borrow it to pay a bill, knowing you're going to get paid next week. Great. You got to save up that first you you know, tranche to be over collateralized, but after that, you never have to talk to a bank again. Does that work? Well, I can't really save the money, but if I could, I would, but then slowly but surely, hopefully in your life, you're able to save some of that money, right? Um and then you start seeing. And so it's the application I don't try to explain

the crypto, I try to explain the value. And when people start seeing the value, then it works. That is such a good point that like I think people who are deep in crypto maybe sometimes the listeners on our show maybe ourselves David that we sometimes miss is we Oh, you want to learn about blockchain? Let me tell you about how blockchain works. But really it's like they don't want they want problems solved. How do I'm making like close to 0% in my Wells Fargo bank account. How can I make 5%? Right? In a relatively risk-free rate way. That's a that's a problem you solve. I I just got disconnected from uh Robinhood cuz they stopped me from trading GameStop. Well, there's a synthetics version of the S&P 500 and stocks on Ethereum that they can't shut down. That's what you're

talking about. right so like Injective. Why do I invest in Injective, right? So one, the whole stop out right because of the capital requirements. Robinhood didn't do it on purpose to hurt on purpose to hurt them. They just didn't have enough equity, right? They didn't have enough capital. Um and so they had no choice. They would have gone bankrupt because they had they had too many customers. But doing it in a decentralized manner but because it's transparent. That's the thing. Because it's all on the blockchain, every investor gets to see exactly how much Injective has of all of this, right? There's no, you know, it's not it's all decentralized so there's no hiding it at all. And so that creates one opportunity. But the the second part of that is the governance aspect of it. You know, if

you created a Wall Street Bets governance token and everybody got to vote every hour, right? Or assign somebody which stocks they're going to buy or sell or for each stock that they own have a governance or whether they hold it or sell it and it's voted on every minute, hour, or whatever they set, that's Wall Street Bets and it's going to work. It's so crazy because what we're talking about is all all we're talking about is adding a a capital coordination layer to the community that's that's already happening Wall Street Bets community. It's just giving them an outlet. Yeah, that's the application. That's the way I think. What are the That's the programmer or business programmer side of me that when I was first getting started, here's what you're doing manually, here's how I'm going to

automate it, how to what's what's the logic to get me from point A to point B. This is no different. Here are the applic- That's why I'm I'm trying to learn Solidity. That's why I'm learning as much as I can about blockchain and um smart contracts, because that allows me to visualize how I get from how they're doing business today to where they should be using these new tools and whether or not it can be done. Same with AI. It's one thing to talk about it. Look, my investment thesis, you didn't ask me on on traditional stocks, is who does AI the best? If you look at the If you look at the biggest market cap companies, without fail, they are the ones that have been doing AI the longest and do it the best.

And they continue to take market share from people and make more money at times when their competitors are not, because they're that good at AI. And the same thing will apply to crypto and companies as well. The companies that are best able to to apply um blockchain and and smart contract technology and whatever else comes along to layer on top of that will be the ones that will have the biggest market caps and the most profits, because they'll be more efficient and will have happier customers. That's the way I look at it. Mark, I want to ask your perception about about narratives, because the crypto world uh runs on narratives.

Everything is a narrative. Like, we can talk about the fundamentals of certain DeFi tokens, but I will promise you that that won't be the reason why that token goes up or down in price. It's because of narrative. It sounds like you want you already know where to go. Um a a a a comment that I heard you uh talk on on a different podcast was something along the lines of like you you slapped like a a baseball card down on the table and then there was some stock. And you were saying, "Which one's going to go up more? I don't know." And so so talk about that, cuz like the the legacy a big criticism from the crypto space to the legacy stock market is that we think it's based on fundamentals, but it's actually based on narratives. Like, talk about that and and talk about how

crypto's different. about that [ __ ] 15 years ago, right? So, if you go to blog.maverick.com and put in the word stock, you know, for a search term, you'll see the stuff I wrote. You know, what is buy and hold? Buy and hold is just a narrative from, you know, stock brokers so that you hold on to your stocks, right? And, you know, think about Wolf of Wall Street and all the [ __ ] that, you know, when they were pitching these shitty ass stocks. It was all narrative, right? Creating the story and and, you know, they would they would talk about got to create the story. You got to let them see that wealth in their mind and and all this.

And, you know, price earnings ratio. What does that really mean? Look at Apple, right? For the longest time Apple was considered a cyclical stock, which meant it traded in the 10 to 15 price earnings ratio um range. Then, all of a sudden everybody decided it was a growth stock. And so, now it can trade as a multiple of everything else, right? It's all narrative. My broker taught me the So, when I first sold my first company when I was 29, 30 years old, and I made a few million dollars, and I told him I wanted him to invest like I'm 60 years old, right? Because this I wanted this to last me a long time cuz I just wanted to party like a rock star. But, a lifetime pass in American Airlines just went out to get party with as many people as I could. Um and he told me something. He

goes, "Look." He goes, "You have a platform, you know, back then it was much smaller, but you have a little platform. And the thing that makes stocks move is when you get long a stock, you get loud the stock." And I learned it. And it's the same thing. When you buy a token, get long, get loud, and that's what people do. You see um CZ at Binance. He's he's a superstar at that, right? He knows how to play that game. You saw Tron, um you know, talking, you know, paying people to pump up their their um their tokens. And you're seeing it in other places as well. People don't know anything.

And but perception is reality when it comes to valuation. Why is Why is the stock market where it's at? The stock market has been down the last five or six days. What really changed? Nothing. Nothing. You know, maybe interest rates went up a tiny bit. Maybe there's some fear and you watch CNBC and they get people coming on all the time and I remember going on CNBC, you know, a while back and it was fun cuz I would tell people, "Yeah, I'm going to talk about this stock. I don't know it but I'm going to talk about it cuz you own it." And you'd see the stock go b b b b b b b b b b b and then it would drop.

It's no different. It is absolutely no different whatsoever. So, now it's just streaming shows like this where if I say, you know, I'm buying this token, chances are the price is going to go up. So, what are you buying, Mark? I told you actually what Yeah, I'm not What am I buying? What did I last buy? No, I'm not going to do it. I was like, "No no way is he actually going to say that. No way." But actually, one of my wallets one of my wallets is public. I got a bunch of them. One of my wallets is public because of the minting I did on the NFTs. And did you know that you were going to make that wallet public when you did that? No, I did not. I did not know.

Mark's Advice

That's really funny. So, so I want to take to put this into a takeaway lesson for any of the listeners here. So, for for the for anyone who's new to DeFi, anyone who's listening in the stream, like do know that like DeFi and Ethereum and crypto and basically that run runs on narratives. So, so Mark, you you've been on both sides. You've been on the legacy world, legacy finance, and now you're playing in the in the crypto world. Understanding that everything runs on narratives, what should new players understand? Like how what what are the lessons that that we can teach them right here on this livestream that everybody about a stock, do your homework. Right? No one sells you a token thinking the price is going to go up.

Everybody sell unless they just need the money, right? For some other external reason. Like cuz particularly in crypto cuz you could borrow against it. Now, maybe they're selling it cuz they got called in a margin or whatever cuz the stock the the price is going down. But, you got to do your homework. You got to do your homework. You got to know why you're buying it cuz if you don't know why you're buying it, you don't know why you'll sell it. Right? So, if I buy a stock, I'll hold it and I learned this the expensively, right? Cuz I used to try to time the market. I used to think, "Oh, I've got a great feel for the market." You know, um no. But, what I learned and what's paid me a lot of money since is why am I learn why I'm buying the

stock and until that changes, just hold on to the stock. And if it falls back and it still stayed the same, buy more. So, if it's Injective and, you know, they're they're not live yet. They're still on test net. So, you know, it's all just fun and games right now. But, if I like what they're doing, right? And they keep on progressing the way I like it, if it falls, I'll buy more. You know, and if something changes where they set a goal they're going to do A, B, or C and they weren't able to do it or they they were only able to do A and B and they failed miserably at C, then I'll sell.

So, if you're new into this, whether it's NFTs, whether it's tokens, whatever it is, know why you're buying. And if you're just buying because somebody on Twitter told you, like Doja coin, doggy coin, like I tell my Literally, like my 11-year-old son, I I have a account I set up for him, um my account for him on um Robinhood. And my daughter as well, my 14-year-old daughter. My 14-year-old daughter doesn't get as fired up as he does. And um I'm like, "Why are you buying this doggy coin?" "Because um it's Doja coin." I'm like, "I know, but it's still a doggy, you know?" And let me just say, buy Doja coin all you want if you know it's fun and it's like a lottery ticket, right? And you're just playing a game.

Otherwise, think twice. And I said to him, you know, "Why Why are you even into How did you even hear about this?" TikTok. Right? So, there's all kinds of people blasting [ __ ] out on TikTok that kids are getting into and, you know, it's just the whole get long, get loud principle and you've got to ask yourself, why are you buying this? What do you understand about this company and what they're doing? You know, um so, when you see BNB or Matic or, you know, who else is layer one? Near or Solana, is that right? Solana? Um so, you know, the the layer one guys, the blockchain guys, that you read their white papers, they're all great stories or flow for

that matter, right? They're all great stories. No one puts out shitty white papers for the most part, right? But, at least, you know, be very critical of them and understand and know why you're doing it. So, in the event they don't deliver, that's when you sell. And so, that's what you really have got to do if you're getting involved in this. If you're just winging it, then that's fine. Like in stock, stocks, you know, they have technical people people who buy based off of technicals, right? They just buy or sell based off of what the charts tell them. That's okay, too. You know, and you're seeing more and more of that and I think if anything, that's probably one of the biggest problems crypto has is that it's not a truly efficient marketplace. And you're getting more and more quantitative sellers, I mean, traders

involved trying to arb all the variances um across the board in in real time and their own version of high-frequency trading. And that, in one respect, it helps balance the market, but in another respect, there's a lot of front running going on. There's a lot of people that, you know, are getting you know, getting ahead of retail investors. So, you you've got you've got to be careful. Um this is not like buying or selling stocks just because it's not regulated. Good advice, Mark. This is great. Okay, so, I I said this in the intro, it feels like you have uh fallen down the crypto DeFi rabbit hole in a big way. I feel that even more so at the end of this conversation. So, my My to you is, what are you going to do next, man? Is is

crypto going to be like one of the areas you play in for the next like 5 to 10 years? What What are you doing? Well, it's really what I talked about. How can you disrupt? So, the way I look at it, how can I use blockchain in particular and smart chains in particular and come up with applications that just disrupt [ __ ] You know, I we talked, you know, I mentioned medical, you know, insurance, um textbooks, um we talked about music, but everybody's looking at music, right? Um you know, there's business applications. Exactly, you know, back in the day when I was first getting started with PCs, how can I [ __ ] things up, right? How can I change the way a company does business? Then I got to local area networks. How can it change? Wide area

networks. How can it change? And along the way I taught myself how to program because that was the only way these applications are going to get done. I wrote the first, um purchase order system that integrated with Walmart, you know, back in the day. You know, I wrote an application that took pictures of jewelry at Zales so that they didn't have to store physical watches and everything in the vaults for buyers to go look to make sure it's the same way. How do you change those games, right? And then same with streaming. You know, even though we did, you know, you can watch the Cubs game in or listen to the Cubs games in the office, we did that as proof of concept. Back then, in order to have an all hands meeting for a company that was in multiple cities, they would literally rent satellite time and go to

theaters during the day when they were empty and send their employees there and beam it down and that's where how they would have all hands meetings. And we made most of our money doing corporate applications like that. We called it our business services. That's the exact same thing I'm looking to do here. How do you take things that are done in a non um blockchain, smart chain world, a smart contract world, um and apply it to the way things have always been done and say, "How do you disrupt it? How do you change the game so that the world is just a different place?"

Hey David, you're muted, buddy. Muted it. Uh there we go. Mark, I want to present a scenario to you which I think is going to happen in in the future, right? So, you're on Shark Tank like doing doing your thing and tonight on ABC? Yeah, yeah, yeah, that's the one, that's the one, that's the one I mean. Um and so then someone comes in and pitches you and it's something Bitcoin, Ethereum, DeFi related. And it's I'm assuming this hasn't happened yet. What gets you out of your seat? What gets the checkbook and out and like gets that check signed right then and there? That they know their [ __ ] right? They got to know what they're talking about. Because I don't want buzzword, you know, promotions or buzzword buzzword pitches.

That that is of no value to me whatsoever. It's just like AI. People will mention AI or they'll know that I like sensor-based applications, right? So, they'll mention sensors. And then I'm going to quiz them. Is it off-the-shelf or is it something you created? You know, um who you know, for AI are you using open-source libraries or is it something unique? Is this a unique data set? How are you creating your data? How are you scaling it? Yada yada. Cost. People don't realize how expensive AI is. Same with blockchain. It's not so much that it's expensive, but, you who are you competing with? Why are you better? What's unique? What's differentiated? Um what's, you know, what's going to make people want to do business with you or what impact are you going to have on the business world that allows businesses to

become more profitable, productive, and competitive, and you know, change the game? Mark, you got any predictions for us as we close out for 2021? What's in store here, man, for I guess, you know, let's talk crypto, DeFi, NFTs, anything you want to throw out and then, you know, maybe more broadly. First of all, Shark Tank's going to be a great show this season. Second, Mavs play tonight, so that's all I'm thinking about. Third, you know, it it's going to be business-driven.

As much as, you know, it's like again like the early days of the internet were people who are passionate about the net, you know, I would go on to CompuServe, long gone, right? Prodigy, long gone. AOL, the old walled garden AOL, long gone. And have these conversations about the internet and how they're going to screw up, you know, those businesses, right? The chat rooms. and the but the people there were really passionate. And then you get on UUNET and the people there were really passionate about the internet and those chat forums. Um and so now it's the early adopters that are really excited about it. There's ways to make money, there's better places for individuals to earn some yield as long as they're careful and and

know what they're getting into, right? So, that's all good, but that's kind of just basic stuff. The big money, you know, and so we're talking about trillion-dollar Bitcoin. Amazon's worth 1. whatever, Apple's worth 1. whatever. That's just a singular company. You know, um and I think gold I mean I think Bitcoin's going to take away from gold, but macro basis you know, there's still a game being trade played for NVL and market cap valuation for tokens. So what?

You know, that, you know, that's just ego more than anything else. The market cap of a token really doesn't mean anything. The NVL of a site it's a great metric. I mean, I guess it's the best metric we can come up with so far, but it really doesn't mean anything. What does it really mean? There's definitely a lot of, you know, vanity type stuff going on. And as you talked about earlier, there's there's ways to sort of, you know, hack those metrics and bend it in in any area. This is definitely going to be a proving time for crypto, I think, in a big way.

It also application. The way you'll know, you put aside what Tesla did and talking about the valuation of Bitcoin. The proving ground for crypto is in the applications where you see companies all of a sudden using blockchain and using crypto in a unique way to disrupt incumbents. That's when the game changes. So, when you see some zoomer come in that's you know, 20 years old and came up with a new payroll system that disrupts all the SAS and all the you know, the new payroll programs that are out there, right? When you see one coming up that displaces Twilio, right? You know, that displaces Plaid, right? Plaid should be

you know, first in line for to be disrupted, right? They're a great company, but it you know, they're what they do basically is arbitrate the hassle factor for traditional finance. And so, when you see people coming up with applications that just totally mess them up, that's you know, it's here to stay and it's going to grow. That's really the key to the future of crypto. And if I'm wrong and those applications don't exist, then it'll just be a sideline and it'll be a store value and that's it and there'll be some specialty applications.

Closing & Disclaimer

Well said, sir. Yeah, and we on the Bankless program think that the banking and finance layer will want be one of those first layers to be disrupted. But you make it easy. Right now, it's too hard to deal with the wallet and understand it. You know, it's too hard to yield farm for most people. It's hard to understand the the macro basis. Maybe you can make some money off of it. I bet half the people that do yield farming are losing money. You're you know, if the whole thing in this is decentralization so that anybody can make some money from it, between transaction fees, even if you're on some other blockchain, right? You know, it's hard to to really cuz you don't only have the risk, you

have the slippage, you have, you know, beyond that's just on the time of the transaction, you have the movement of the token, the volatility of it all, and so unless you time it right, you know, it's hard. And so I would bet half the people and and are losing money on yield farming, the small people, right? And the big ones, you know, they get to call their own game because they create the liquidity that that's needed. And so it's not the the the fairness that people want it to be today, right? But as these applications get easier to use and the the tutorials are better and the friction is reduced significantly, then you're right. Like I said, you know, owning any, you know, Ethereum or

Bitcoin in particular is like owning your own private bank. You just have But the hard part is figuring out where to deposit it and how. And once that is simplified so that, you know, you know, the the thought that you have to get it from your bank account is dismissive in the first place, right? To get it from fiat to Bitcoin, that's got to be easier. But once it is and I'm getting paid in USDC and it goes right into my wallet {slash} bank account and I convert it to whatever I want to, whether it's algorithmically or I get to choose, and now I'm, you know, I'm incentivized to save, right? Because of the the collateral basis, right? So I'm

incentivized to save because now I can pay my bills from there, I can borrow from there, and it all happens simply and at the lowest cost ever. And so when those things start to happen, that's when the game really changes. That's a message to the builders. There is lots to build out in this space and I think Mark Cuban he wants to hear from you if you've got some good ideas, I'm sure he'd love to hear from you. Uh guys, as we say so often, this is the frontier, it's not for everyone. It's risky out there in D5 world, but we're glad you're with us.

We want to do a last shout out to Gemini, Aave, Monolith, and Dharma. These are the sponsors that made this show possible. We want to also thank Mark Cuban. Dude, it is awesome to have you on the Bankless journey with us. Like, we need advocates and supporters who understand this stuff, who have used MetaMask and deposited into D5 protocols to help spread the word. And it's awesome that you're doing this here. So, you guys having me on. It was enjoyable and I always learn something from this, and so that's what's important to me. Awesome. Fantastic. Well, lastly, guys, we went over risks and disclaimers, but David, you and I are jumping into Clubhouse for a bit of the afterparty.

What's going on there, man? Yeah, so this is going to where where where me and Ryan are going to do our after episode of debriefs, right? So, this is something new that we're doing on the Bankless program. I'm going to open up that room here in just a second. There's a link in the YouTube description. If you want to join the Clubhouse afterparty where we talk about the episode, that's where it's going to happen. All right. Mark, you're of course welcome to join us, but I'm sure you've got other things. Mavs games Mavs game up tonight. All right. We'll take care. See you later. Thanks. Take care. Bye. See you in Clubhouse, everyone. Bye.