Why Polychain Capital Founder Never Sells His Crypto | Olaf Carlson-Wee

Transcript

my investors know that I'm long only to me actually a one-way street it's genuinely a Vortex for the entire world's capital and all the money that exists out there I think it is the greatest wealth redistribution that will happen of the modern era um and I think in hindsight we will look back on it as being obvious all right everyone so on Empire you obviously know that we talk a lot about the institutions coming into crypto and that is why we are super excited to share that we are hosting the digital assets Summit we posted this since 2019 it's coming up in London March 18th to 20th don't miss your chance to get ahead of the curve you can get 20% off with code Empire 20 we'll see you in London this episode is

brought to you by toku if you are planning to launch a token already have a live token are granting employees or contractors vesting token Awards or are just trying to figure out how to take care of taxable token events for your team from easy to use token Grant award templates through tracking vesting to managing tax withholdings make it simple today with toku all right everyone welcome back to another episode of Empire we have Olaf Carlson we founder of poly chain employee number one uh from coinbase back in I think 2012 2011 2013 early 2013 13 13 that's right um but Olaf welcome back to the show man yeah thanks for having me yeah uh so I think uh so

last time you were here was May 2022 uh the peg on us had just broke went from a down to like 30 cents went back up to I think it was trading at around 68 cents at the time of recording Luna had fallen from like 84 bucks down to two or three dollars um and I asked you this question which was uh you've been through many Market Cycles right saw the crash of 2011 2014 2018 and now we can say 2022 I would love to just ask the same question that I asked you back then which was like what is your framing for how you view the markets today um you know crypto is most of the time in a bare market like when you just think about uh the amount of time you spend in the market it tends to go up

very very quickly um and then sort of bleed out over the course of several years this you know cycle so to speak has played out several times um you know I just think it's it's patience um you know I think crypto is in a sense um a relatively easy category to invest in in in that you just can sort of Buy and Hold um and there's very little counterparty risk if you do it right because your only real counterparty risk is sort of a protocol you don't have to manage um Too much exposure to lots of third parties that are holding assets or executing trades or things like that um but at the same time it's easy for

Market participants to get really distracted um and sort of short-term oriented um in general people who have just had a long-term view in crypto I think have done the best um relative to people who have tried to move really quickly and you know get you know get where they're trying to go in six months instead of over the course of say five years um so you know I I don't think it's that different I'm just I've always been very long-term oriented this is a big project if we're going to replace um the Global Financial system with software that nobody controls it's going to take a while um but not that long like it's come a very very Long Way um over the last 10 years yeah how are you

like how do you think about POS like I guess just positioning um as it relates to I guess both private and public investing when you think about when you see what's happening in the market today maybe it feels like the Market's you know we're entering a new cycle bull market is maybe kicking off either now or soon how do you think about just positioning the fund yeah I mean you know this these are questions about like Market Cycles but the reality is Market Cycles are a reflection of things that are happening you know underneath right it's prices are a reflection of um reality that's happening underneath so you know I don't think it's does it justice to think just in terms of like Market Cycles right so

the the reason that um we are where we are today is because people built things that actually mattered it's not like Bitcoin has just swung up and down randomly um you know you have the launch of of coinbase in in 2012 you have the launch of ethereum um in 2015 um you have the launch of a lot of the infrastructure around you know Define nfts in 20189 um you know these in these bare markets like real things get built that lead to Market Cycles it's not um so I you know I think that paying too much attention to prices is like you're kind of by definition um fall following um

you know other people who are paying attention to what's happening underneath um and that's you know these real things that result in markets moving um so I you know I think it's there's a lot of chatter in crypto about like Market cycles and prices um I think it's all misguided like if everybody could just um start paying attention to you know real questions like what's the best way to scale um applications that are embedded in blockchains that's a very complex question and the answer um to it will give you insights about um the way the Market's going to move or how to invest um if you're sitting there just on Twitter chattering about prices you know like you're not going to beat the

market um you're probably going to lose to even just like Market beta um because you're just distracting yourself and you're really misunderstanding fundamentally like why prices move prices are not random they're reflection of things that are reflection of basically Market participants having insights of one type or another yeah um so you know I I don't spend most of my time on so to speak the markets I spend most of my time um looking at um businesses and Technologies being built and how those things are going um that then informs my view on on markets um and and what to buy what to sell how to think about it so um you know I I just

think if you spend your time on this kind of qualitative reality that underlies prices um you're going to have a much better time yeah maybe we can go into some of those topics but the you brought up the you brought up this idea of like the best things get built in the bare markets you brought that up on the last podcast we had you know coinbase we've had uh coinbase in what 2015 bar Market 2016 um openc and like 2018 uh you know Unis swap maybe you could add that to 2019 as well what what do you think got built in this past bear Market that that really excites you um so the entire Suite of um Layer Two so-called um you know it's it's that's a

complicated bucket but um I would call it layer layer two technologies um zero knowledge uh cryptography based Technologies that's both for scaling and privacy um um you know projects like Celestia um projects like arbitrum Celestia is a data availability layer so also sort of a scaling project just got just got off with Nick an hour ago yeah oh great yeah and then Igan Lair um you know is still in um you know it's not it's not uh Fully live at full scale but I think igen lay is in the process of getting there um so a lot of these are kind of these core infrastructure yeah pieces that you know are the result of

years and years of fundamental research in cryptography distributed systems BEP networks and how to best scale these things um I do think it's easy to forget that um when you're not a crypto native and you're sort of a you know kind of uh tinkering or just kind of testing out one of these apps they're still pretty um horrendously uh difficult to use um and there's a lot of Hoops to jump through and so I think that simplifying the user experience around these um is going you know it requires like real improvements to to these Technologies yeah the only you know the other one that comes to mind is um I would call it the next generation of these um social Finance experiments so things like um

frch and Tomo um that are you know adding a um Financial incentive layer to um you know the the person-to-person interaction that already exists in like these social media applications um and I think that has huge potential um there's we we've kind of gotten this um attempts at this in small ways um like through steemit way back in 2015 um bit clout in 2021 um and now this generation and I think there's really something there yeah um it's it's sort of like axi Infinity right it It ultimately um collapsed but there's obviously

something there right it it to get as as big it did um so this is another category where I'm just waiting for the right team um to have the right execution and I think something is very big there um from a consumer perspective um but those are the things top of mind for me that have launched over the course of the last year or so yeah maybe we can just go deeper into l2s then and just where um just like these I was it's funny we had a new employee start the other day and I was explaining the the first generation of the ethereum killers like the the original I basically back in 2017 kind of that wave um but I think so it's funny so so blur launched blast yesterday and I think the general reaction was everyone's really

sick of all these l2s launching right exchanges are now launching l2s there's all these l2s but I think people are quick to forget that I mean this this kind of wave of l2s has only really been around for I'd call it maybe two years you could say I think Unis swap launched on optimism and arbitrum in summer of 2021 if I remember correctly so it's really been only around for two years what is your just like General framework for how you're viewing like l2s relative to uh maybe the app chain thesis which I thought was going to happen on Cosmos but it looks like it's also happening on maybe the l2s as well versus you know other ecosystems like celestian and you know what they're doing with the da layer relative to maybe what salana is doing what is your like framework for I guess you could call this big bucket

like the modular versus monolithic debate yeah um so you know we could spend an hour just on this how much of that to you yeah exactly I I think to summarize um in general I think a um kind of modularized Stack um makes more sense to me for peer-to-peer networks and and things that are trustless um it also just makes more sense to me from like an engineering perspective um it's like let's not depend on one system let's build lots of different

systems that are interchangeable and can be optimized um in each of their relative components um rather than depending on a single system um the only real downside I see to that is um interoperability across applications and it's you know I don't mean to um downplay the the downside right that's that's a big deal um and one of the core um value propositions of you know web-based applications and also blockchain based applications is that they're all freely interoperable um so I think that's kind of the um the big question is um there's a certain Simplicity to a monolithic architecture um it's just kind of like

easier to reason about mentally um ultimately though I don't think it it works quite as well um for long-term scale um and I think it presents a bit more like Risk to um to the system I mean if we're going to build again like the Global Financial system um on the internet I you know I broadly struggle to see that existing kind of on one um one piece of tech or like one network I get I get the risk side of that but what what's the um like why doesn't it scale because w't the argument be that it's actually EAS maybe easier to scale on something like salana um so peer-to-peer systems um you know if if you're going

to have a a resilient dentalized system where you assume that sophisticated well- financed attackers have real motivation um to take down the system or halt the system in some capacity um if you're designing with that framework in mind which I think is the only way to design if you're building the Global Financial system obviously right you you can't assume everybody's nice and it's all Kumbaya um you need mutually untrusting parties to be able to operate on the same um substrate um I I think that you know scaling assist I mean this we're getting into like a a debate that is more

properly explained um very technically right um but at a high level I think that um it's very hard to to scale a peer-to-peer system with billions of users um in one kind of Monolithic architecture it makes more sense conceptually to me to break it up into different um pieces that all sort of settle back later in a sense um so I you know that's that's broadly where I stand on it um I do think it's um I'm happy that um we have the burbling chaos in crypto of every experiment being run simultaneously um it's the number one way to ensure that the entire thing

works um long term and I don't you know I obviously I have to invest and and place bets on the way I think this future will play out um but broad brush Strokes um you know I care about the entire thing thing succeeding like the entire project of crypto and um I'm glad that every single experiment is being run simultaneously yeah if I remember did uh did you guys co-lead the seed in dydx several years ago I think five years ago so what I'm be very curious to just to hear what you think about like the app chain thesis dox moving from um or were they building on starkware uh I'm just curious how you think about like apps as they hit scale moving onto like their own Sovereign chains yeah so

um one of the original um complaints about the ethereum architecture is that every single application has to compete in one fee market right right um and what that means is that um the transactions or or software executions that have the highest p&l um for the end user end up getting bided to the top of the kind of block auction um so it means that things um like large derivatives trades you know end up taking up block space um away from you know trading um dog playing cards or something like that right um where the end user is not expecting p&l maybe at all um so I I

think that um that argument you know like has real Merit to it right like um every time we see for example a big nft Mint or a big icoo or something like that you have Market participants um bidding up um block space you know for that time period and regular users sometimes can't get um their just normal transactions to execute in a timely way so I think that app chains allow um a specific application to sort of Escape that um fee auction and block auction and so they're they're sacrificing some level of interoperability in exchange

for a more predictable consumer experience for their users um and so I think it's it's just a tradeoff I don't think there's um a right way or a wrong way um but I think for an application like dydx um execution matters a lot right you can't have derivatives trades failing because there's an Ico or something yeah some big boate Mint or something like that Crush crushing your trades yeah exactly so I I think that in a case like dydx um it it's quite logical to me that the users value um predictability and stability more than um um that's probably not the case for other types of apps so you know this is

why like these questions about the best way to scale or different architectures they're very nuanced and it's um it's not one size fits all I don't think there's like a silver bullet and I don't think um one way is best for every different type of application developer or user yeah um so I'm just glad every experiment is being run simultaneously we have an open market um and eventually that market will figure it all out yeah yeah it almost does feel like uh if you are a Founder in crypto you are basically building from a ecosystem first perspective then figuring out the app occasionally so you're like maybe I want to build on on on ethereum or I'm a salon developer and then you figure out the app um as opposed to traditional

systems which would say no nobody says hey I'm I'm building on AWS let me then figure out the app you say look here's my here's my you know wireframes here's my figma um here's what I'm trying to build what's best for me where where you know where should I go build this and it does feel like it's kind of flipped sometimes you think developers um make those decisions based on something other than the best user experience because I I think developers 100% I think now for the first I think they're agnostic and they build for the best user experience 100% um uh I would say yes except for the fact that the you the user aggregation layer uh historically has been in crypto it's been at the L1 layer

so whereas in Trad traditional systems that's not how it should actually work it's like AWS doesn't have the user hasn't aggregated all the users so you don't go build on AWS for the users in crypto that's how it's worked so you will actually go build I I think that you will build on something that is a worse user experience because they have the distribution um but that's a flawed system yeah um I don't know if I would call that flawed that's how just so many different things work um you know it's it's we have so many different kind of Legacy um ways that there's distribution um you know just like roads versus

Railways or something like that right and um you're always kind of Trapped in um that those Legacy Distribution Systems um you know people it takes a long time to shift teex standards um you know like people are going to always build on um the sort of distribution you know you know it like getting distribution matters so much more than an elegant piece of technology right how do you guys I mean you how many portfolio companies do you guys have um probably you know total Investments we've ever made probably around 200 around 200 so how do you think about it like if someone came to

you today where um and they want to build in def5 they want to build a new I don't know purpose Market or something like that like are you should they go build their own Sovereign chain on Cosmos should they do it on Celestia should they go build on an L2 if it's on L2 where should it be should they you know should it be on salana like how how do you direct that guidance um well it it depends on what their goals are you know and broadly it's just um you know what what's going to allow you to get the most users uh the fastest and build a good product that's offering value to users yeah um you know so I I often think that um entrepreneurs and developers might have

um a better sense of that than even I do right um but broadly like I you know we're very agnostic I just I don't have a strong opinion other than like if you're building a consumer product you need to just go get users and your go to market um approach matters a lot more than um you know a very elegant Castle in the Sky piece of software that nobody can use yeah agreed and it does seem like a lot of this is starting to get abstracted away I had coffee this morning with um this company privy the founder of privy um they were the like embedded wallets inside of frch and it seems like a lot of that is uh the infrastructure is actually getting getting fixed there or just getting not

fixed but getting improved upon what about um just one more question on this Olaf is uh like how much weight do you place on I guess what I'd call narrative simplicity which I would describe as like if you're a developer coming into ethereum you can choose arbitrum you can choose optimism ZK sync and so many others as opposed to like look that's confusing let me just go build on salana because it's the or or Avalanche or what you know what this the simpler option how much weight do you put on that um well I mean you know I I think I don't know if that is if it is simpler um like um you might think it is but you know I

I um I like again it's like build where you think you can acquire users fastest right like I this is is complicated questions you have to make a a bet um on where um users will go you have platform risk um as an as a um developer right I mean this is is not that unique to crypto um just across everything like if you're going to build um let's say on a social media Network it's like do you build on Instagram or do you build on Tik Tok um and you do have to on some level have a prediction about where

those platforms are going to be five years from now um you know in the early days of the internet it was the decision to build on the internet instead of advertising in cataloges or something right like there is platform risk um as an entrepreneur um 's jurisdictional risk right if you're going to start a a company um in America um you probably should have some level of view about where that country is going to be in five or ten years right um so you know this this never ends like as an entrepreneur you're making a bunch of layered directional bets um that you should have some view on yeah um I I just I have views on these things but

the reality is um for me you know it it it's clear because we're asking these questions that nobody has um a definitive answer right now yeah um you know I can't look at a crystal ball and know exactly how this is gonna play out I kind of have a probability weighted view as the way to put it what about um maybe Switching gears a little what about leverage so if you think about the last cycle I think um you could probably categorize this as like the the cycle the The Leverage driven cycle whether it's block Vibe Genesis Celsius um I mean the the kind of list goes on and that was I think actually great at the beginning I it kickstarted a lot of things um but

obviously ended up in in Flames what do how do you think leverage evolves in the next cycle um you know I I think there's a lot of interaction um between leverage and sort of like larger financial markets and like um interest rates um for example so the fact that during covid interest rates basically were at zero um there's a lot of capital available I think that leads to you know at a macro level more leverage um I think if interest rates you know go up you probably see less leverage um if interest rates go down you see more um I know it's a very basic observation but I do I think it is a big part of what led to leverage in the

previous cycle um you know and I I think in general uh crypto is a very reflexive asset so yeah what I mean by that is demand often goes up as price goes up which is sort of against um like microeconomics 101 right um where if prices go up you assume demand goes down um here demand in a sense goes up because the price going up sort of is the project um so as Bitcoin becomes more and more valuable um the probability of it um succeeding as sort of an electronic gold or non- Sovereign store value is going up and up and up

yeah um so you're you know you're in this interesting position where um one thing I've said in the past is that the the risk reward of you know buying Bitcoin is sort of equivalent at every price um because the the the price going up sort of is the project of of becoming like this store value system yeah what about um another form of Leverage which is reaking be you mentioned Ian lir be just be curious to get your general views on on reaking in the next cycle and like the way that I've been kind of thinking about it is it's it's almost maybe the new this Cycle's form of Leverage within ethereum right it's more claims on the on the same existing eth

but be curious if you think that's a the right framework to be looking at this or just in general how you view Ming yeah I mean I think one interesting thing is we're going to see um very high kind of velocity of money in these systems um because you can reh hypothecate the same unit of money um to secure many many different applications pieces of middleware and things like that um so I do think that with this reaking you're going to see on assets like like eth that can do that reaking uh potentially see um you know very good yield right where if you're securing um many many different pieces of middleware

um including the main ethereum chain and you're getting paid uh to do it in each one of them um you know I I think a big part of unlocking that is going to be um slashing and you know one tricky thing about proof of stake networks is the the vast majority of the time when people are slashed it's because of it like an administrative or operational mistake right it's not actually because they were trying to attack the system they're not a malicious actor it's a something yes and of course the protocol cannot tell intentionality and so it can't really tell if you're like malicious or you just misconfigured your node um I think solving that problem um is going to be a very big part of how we can get

um this sort of reaking ecosystem to to be very big because if can sort of solve that problem um you know through an insurance product or something else there's there's lots of different approaches um you know it just means you can have your node you could have it sort of like Auto restake right and so you're just like I'll sign up for every single piece of middleware that people can come up with um if that's the case and I suspect that there's lots of different types of applications that could use the security um afforded by an ethereum like system um I think you could see eth become like a supercharged asset right very um I know that's sort of a dumb way of putting it but what I

mean is getting yield from lots and lots of different places all at once um because all these other blockchains will want to rent the most one of the most valuable things in crypto which becomes eth security so eth starts exporting security to other like daps and blockchains and stuff like that and eth just becomes this what you call it supercharged asset because of is because of that is that the right thesis yeah basically I mean every type of uh middleware um that needs the security afforded by this this massive system um just pays those reaking nodes for it um so you also get a I think a more precise Marketplace for how to value that um security um you know today I don't think

these things are priced in a super efficient way yeah in part because nobody really knows what they're worth yeah do you will we do you think we'll see more and more I guess if you extend that out enough like more and more l1s like I saw cell which used to be an L1 is now becoming an L2 um like being a little more ethylin um will we see will that Trend continue do you think yes why yeah I mean I I think that it's become very clear bootstrapping your own um blockchain system um distribution to users nodes um having the an asset that's that's liquid having a stable

system that people can build on um having developers take that sort of platform risk on your system it's all really really hard um and so I I think that it's it's become clear um you know launching your own blockchain is a very difficult proposition yeah um whereas you know plugging into an existing um system you know obviously much easier so I I think we will likely see that migration continue I also think that um future launches will be much more likely to be just say um a layer two system or or on a layer two system um like an

existing one like arbitrum instead of um trying to build their own Sovereign uh trust Network yeah this is totally out of left field question like Switching gears a little bit but how how excited are you about Bitcoin still oh very I mean I think Bitcoin has carved out um a very clear value proposition yeah um which is you know not doing anything yeah um and I think there's um no but I'm serious I think there's real value to that um you know governance um quote you know you can really View VI as a as a security vulnerability right um

and the system being able to change at all in any capacity um you could view as a security risk which I think is is appropriate um so in in the context of Bitcoin you know just the assurance that it is what it is um I think is is the right way for it to be positioned in the market yeah do you think something like or I don't know have you been paying attention to ordinals and there urgence of ordinals and fees on bitcoin have you been following this yeah I I think that you know building all these stuff on top of Bitcoin makes no sense to me okay that's yeah it feels foolish to me it feels like uh try to be you you've got the best product Market fit in all of

crypto right now arguably outside of maybe that or stable coins and stop trying to be something that you're not yeah I mean nobody controls Bitcoin yeah like no course there's no there's no CEO making decis important to point out that this is just a absolutely chaotic permissionless Market where anyone can do anything anywhere yeah um so it's it's you know it's hard to say don't you know don't change the Bitcoin narrative or something like nobody controls that um but I I do think just from an entrepreneur perspective it's it's like why try to build on this platform um you know apps that already have work built

and exist on other systems um and have for years it's it's like it doesn't make any sense to me all right everyone so we talk a lot about the institutions coming into crypto on Empire Santi and I are both headed out to London March 18th to 20th for Block works' 8th ever digital asset Summit Das this is an Institutional buttoned up conference that we've hosted since 2019 I like to joke that it is probably the last remaining kind of suit and tie event in crypto people are still wearing suit and tie it's pretty funny but you'll actually hear from a lot of the largest institutions in the world coming from Standard Charter FIS JP Morgan framework folks coming out winner

mute vanc golden Sachs there are a couple big themes of this conference one Bitcoin Catalyst the having and the spot ETF two A View From the buy side three rw's tokenization and stable coins four Global regulatory Frameworks five institutional infrastructure including Bank and payments and six the macro case for crypto if you have anything to do with the institutional side of crypto you have to be there Santi and I got you back we hooked you up with a 20% off code it is Empire 20 there is a little competition running internally at block works to see who can drive the most number of tickets so help Santi and I out register with our code and you get 20% off that is Empire 20 this episode is brought to you by toku toku makes

implementing Global token compensation and in incentive Awards simple with toku you get unmatched tax and legal support to Grant and administer your Global team's tokens from easy to use token gr award templates through token vesting to managing tax withholdings toku understands every Grant structure token purchase agreements restricted token Awards restricted token units token options token appreciation rights and even Phantom tokens for legal finance and HR teams it is a huge complex task to have to comply with global regulations around compensating people with tokens not to mention the payroll tax obligations tax reporting in every

country that you employ someone it is difficult timec consuming manual and costly and it is drawing more and more attention from regulators and governments toku makes this simple for leading teams across the space protocol Labs dydx Foundation Mina Foundation hadera nosis safe getcoin and a lot more more reach out to toku at tok.com Empire or click the link in the description when did you get like I guess quotes like get into crypto Olaf you said 2012 no 2011 2011 what what do you think of um in terms of like if you had to categorize the first 10 years of being in crypto versus the maybe the next 12

uh the next 10 years like what do you think are the kind of key differences between what the industry used to look like versus what it will look like um I mean I think the first one is that I mean it didn't it wasn't an industry it was just an open- Source software project um you know and I I think it was in just total obscurity like real obscurity until 2017 um and even then it was like quite Niche um I think 2021 was the first moment where we saw like a glimmer of you know real mainstream awareness of this whole thing um you know the the next um 10 years are going to be defined more by um

institutional um acceptance and adoption and um what that looks like um and I think that just means how different geographies react to this um it means how companies like say coinbase um scale and how they you know grow internationally or work with Regulators um it's building just a lot more in public right people are paying attention a lot more people care about this um but I I mostly think that the first you know set part of this project was a bit ideological like most Market participants joined for ideological reasons or like they were you know

interested in attack or or something um I think the next wave of users are just pragmatists right like they don't care coming in for the ideology yeah they they're here for to accomplish a very clear goal and this thing is a tool for them it's not like an end in itself um so I I think that is very high level is probably the biggest shift yeah what uh what do you think some of those product uh products will be I mean the argument I think is like the first 10 years people came in for this like ideological it was an ideological user base maybe you were a Libertarian maybe you were you know down with the banks whatever it may be um but now the next 10 years you'll have these pragmatists who are coming in who are

have no interest in the ideology they just want good products what what do I guess from a product perspective like what what gets you excited there yeah I I think um you know this is a pretty common opinion but I I I think it is my opinion overall it's probably um social media systems that have a financial incentive layer like like a like a front Tech essentially yeah like you know I I like I mentioned there have been multiple attempts in this category you know steemit bitcloud frch what what I've seen is that there is a spark there right I've seen lots of regular non- crypto users sign up to these apps and there is something there for real um I think getting the form factor right um

you know it's not clear that we have gotten it right um but something there I think is possible um to get to global scale like billion plus users um the second category you know is is Al is is gaming basically um and it's very similar right it's adding a financial incentive layer um to the already existing application logic in a video game um so it's it's not like Reinventing per se video games or social media it's just adding a financial incentive layer um to a lot of the user behaviors that already exist there so for social file you get less excited about this idea of like you know you can't get cancelled or you can't get

um you can own your own data you get less excited about that more excited about like their uh like basically embedding financial markets into into social platforms yeah yeah definitely the average user doesn't care about censorship I agree I agree I think that's always been a foolish value like the average user that says oh wow like you know I have um a small influencer following on some XYZ platform and if I sign up to this new one there's like $80 waiting for me or something right like that ability to I mean how many of your I don't know you do this but I have friends who will uh or or I'll do this either it's like I do it with music and

I'll do it with accounts where it's like I found that song early like I found Fred again early on or something or um so the ability to bet there or the ability to say like hey there's this big Instagram account they have 500,000 followers and I'm like oh I found them when they had 2,000 followers yeah yes exactly the ability to turn um all of these mechanisms into markets is it's very clear how that's could be compelling to your average user um like imagine if you could get paid for being the best Tik Tock scroller right like the number of people that are already competing in that without getting paid is you know in the hundreds of millions and billions yeah

um so you know if we can add markets to things like curation of content um like like I said you know we already have massive massive scale content curation systems out here um and it's just adding a financial incentive layer to a lot of these behaviors that already exist um and I think that adding that Financial incentive layer can also like extend the sophistication um of these systems um and also lead to kind of new behaviors that may be um are a level of work people were unwilling to do voluntarily um yeah it reminds me of this tweet that you sent I don't I forget when it was a while ago

was like over time the the lines will blur between playing a crypto embedded video game and working a job yep yeah exactly I mean it's um in a sense um like you and I already work for Bitcoin um and and I I think that you know this just gets extended more and more and more where you can embed um if you can basically align a sort of work or output with a financial reward in in a you know in a protocol um you basically get a bunch of people working for that protocol right um and I I think that the people that um are are

playing around in in video games where they're getting rewarded for playing the game um like sometimes that's sort of quote useless and what I mean is that the video game isn't doing anything per se it's it's like an end in itself um but I think there's other mechanisms where you can make the behavior a means to an end so for example um labeling to train a machine learning algorithm um where you think you're playing like this little picture game but you're really actually like contri to a labeling system for a machine Learning System I'm just that's just off the top of my head but it's it's where you have a gamified financialized like experience that

actually is is work for somebody or something yeah no different than than captas right so yeah you guys have been doing a ton of research uh and and work and and investing in the in privacy but like the best part about friend Tech and the worst part was that you could see everyone who was buying and equ you know also on the flip side selling selling your shares right so I remember I was having dinner with dinner with someone who I thought was a buddy and he sold my shares the you know like two hours before the dinner and that should be I'm kind I'm half joking about that but also I remember being like Oh man he's selling my shares and I'm I'm I'm curious how you think about just like okay there'll be uh financial markets for all not just in financial markets

how we historically think of them but in Social markets and things like that how do you think about like privacy and would love to just hear like the work that you guys have been doing in the Privacy space yeah so I you know I think that um you know privacy by default is obviously to me um very important you know for everything um and I think the ability to opt out of it um and sort of reveal um is is can be very important in in certain circumstances as well um but broadly like for this to go mainstream um in a big way we need privacy right we need businesses to be able to have um

bank accounts that aren't public balances or spending um that isn't public or you know the ability to sell your friends friend tech key or something um privately so um yeah I mean I think privacy is is going to be critical here for um long-term success um I think that as was revealed with the growth of the internet on average people don't care about it that much um you know by default we don't have very good privacy on the internet um in sort of non- crypto apps um I think we have an opportunity to kind of fix that with crypto but you know so far it's clear

that it's playing out the same way people on average don't care that much um but I think that you know getting to global scale it's it's a very important component of this all right so we talked social F leverage reaking I guess those are like those almost feel semi obvious to me in the next one to two years that like they'll continue what are some things that you're uh I guess when I think of you and like poly chain I've always thought of you as being someone who's good at thinking on the margins of society um I'd just be curious like crypto or non-crypto like what are some things that you're paying attention to on the margin and like on the fringes that maybe are starting to seem obvious to you that don't seem obvious to other people yet

yeah um I mean I'm I'm very excited about um like wearables um that can so there there's a surgical approach to um like a neuralink type surgical which is going into FDA trials I think right this week yep um with sort of embedding um computer augmented capacity to the human brain directly right um there's a different approach which is using wearables so it's non-surgical um and usually this category um is based on a kind of new research um that's called focused ultrasound um I think that's a very big

deal because if you can get that to work um it means that um developers could program um brain States basically like you'd have the ability to programmably say um I want to be alert or I want to be sleepy or I want to be relaxed or I want to be whatever right um if if we can build that thing people are going to put that on and they're never going to take it off it's like bigger than mobile phones to me if what is the this FOC focused ultrasound it's it's a wearable version of um something that can use Focus ultrasound which it basically stimulates

um you know in a research setting with cubic millimeter accuracy uh specific parts of the brain um so it's related to trans cranial magnetic stimulation um which is what we've kind of used today um to activate different parts of the brain um using an external device it's it's substantially um better at targeting a certain area um than trans cran than traditional transc cranial magnetic stimulation um and so it's still kind of in the research phase um it's you know this is pretty far from being like commercially available in in a consumer product um but if it does work um it's a very big deal because you're going to be

able to put this thing on um and basically program um whatever type of brain State you want to be in like if you want to be sleepy you want to be relaxed you want to be alert and a away imagine it also be I mean I know nothing about this I'm hearing about it for the first time but I'll look into it but imagine it would be not just helpful for your states that you're in but also I mean if you can Target that deep or that that that specific of an area layers deep into the brain you can probably start to remove some some bad stuff whether it's like a tumor or some something like that um yeah I I don't I don't yeah it it doesn't quite work like that it's more like it's just stimulating um a very specific region of the brain um but it's um you know I'm

very excited too about surgical approaches the problem is like the go to market with the surgical approach is obviously tricky from multiple angles there's a regulatory issue there's just like a consumer um trust issue it's going to take a really long time to get everyone feeling comfortable with like surgical brain implants um especially this feeling that wait I got like version one um should I have waited for version two or things like that you know I think just the surgical approach I'm very excited about it but it's it seems tricky to go mainstream with that um quickly um this wearable approach if it works um it's a really you know it seems pretty easy um and the the other thing

that's nice about it is if like you don't like the way it makes you feel or something or it gets hacked or something you can just take it off there's no like um surgical implant that's like just s of in there um so I'm excited about that um when it comes to wearables um I think that yeah if I was going to say one category I think people aren't looking at very much it would be what about inside of crypto um inside of crypto you know um I'm you know I think there's a lot of awareness around igen layer um but I think that it is um still underhyped sort of for how big a deal it is um because it just it it

allows you to take this security afforded by ethereum that we pay billions and billions of dollars for every year in the form of um minor Rewards or validated rewards um and allows you to apply that security to arbitrary application logic right um so I I think that's a really big deal and I think we're going to see um a lot of things launch that wouldn't have um if not for um igen Lair um like like like what Olaf or like what like what does that unlock that we couldn't do before I mean any any so this is what makes it a big deal is that

it's very hard to imagine all the ways it will get used um you know like the fact that um in the past to get that level of trust you had to launch a crypto asset um with the kind of peer-to-peer network attached to it and get the asset to have value um and liquidity um and get developers to sort of build on top of your platform um it's it just it's it's very tricky right to to execute and get right um the ability to sort of take away all that and just plug into igen layer and say oh all of a sudden my application has um you know

nation state level um security right like it's got protection from um any sort of attack or hacker um it's hard to imagine all the different types of apps that either exist today and would move to an igen layer like system or will be uniquely enabled um by this you know existing you know a simple example is like an oracle system yeah you know feeding a price into that's not endogenous to a blockchain into a blockchain is actually really really hard um it's it's sort of an equivalent proc problem of feeding a valid block into a blockchain right where sort of by definition um you know there's a huge financial incentive to feed in bad data

um and you have this you know the whole system is basically designed to validate um the legitimacy of this one piece of data that's like not inside the system and add it to the system um so it's really really hard to build with igen layer it's very easy to build right um something like an oracle system h we can come back to this idea uh that we started with about about Cycles as we like think about wrapping this up so I listened back to this episode that we did back in May 2022 and you said this line you said now Begins the era of buying not selling and I think that was a a pretty good call um maybe I'd ask the the inverse of that which is like how do you think about selling not buying and like when when to start

thinking about that yeah I mean I I don't sell like I think that this is a one-way Street um to be honest like I know that it sounds um maybe ludicrous to people but I really think that um crypto assets will outlive um you know Fiat money in the long term so I to me it's um it's like a one-way Street the goal is not to um you know go from dollars into Bitcoin back to Dollars it's like just to convert um into crypto yeah so I get that I actually agree with you I had this

debate with Santiago who couldn't make it today um on the last like Roundup podcast that we did but I I don't sell like I don't sell my Bitcoin I don't sell my eth I'm not like trying to like trade in and out to stack more SATs like I don't do that and he was arguing that you should have a price Target on everything the counter so I actually really agree with you the counter I might have though is like you have LPS that you have to report to so price of eth hits $20,000 in this cycle like do you think about taking any money off the top to like because you have to send a quarterly investor report or something to poly chain uh you know LPS or or or no my investors know that I'm long only well so I you know I

um it it's it's to me actually a one-way street it's genuinely a Vortex for the entire world's capital and all the money that exists out there um I think it is the greatest wealth redistribution that will happen of the modern era um and I think in hindsight we will look back on it as being obvious um but we're in it right now and it can be quite confusing um even though you know so far when I look at the um validation right um it you know we've seen just this incredible growth it's sort of inarguably been um the best investment category of the of

the last decade um and I have very little reason to believe anything has changed like my initial thesis around this category um I developed you know over 10 years ago and it's basically just played out um it's also expanded substantially because back then I did not foresee that arbitrary programmable logic could be executed inside these secure blockchain systems like I assumed it was just about um this one asset and a kind of payment system for that asset um I did not foresee things like synthetic assets um or uh

marketplaces for trading or lending being actually embedded inside blockchains right so it's expanded from just money to money and finance um and now I think it's expanding to like money finance and application logic right um so I think it's it's turned out to only be bigger and broader than I could have ever expected um and you know I just need a really convincing reason to change my view um because it's it's been nothing but validated so I'm not here to try to convince you of that i' I'd be curious though like one more question on that note would be on a macro scale I very much agree with you and like so I I I I also don't really sell things but I'm

curious how you think about so like Bitcoin eth never sell maybe you have like a couple other assets you're never selling do you have other things in your portfolio where you say look there is something that could cause me to sell I don't want to name any names but like insert project here like eth Bitcoin I'll never sell but this and this like and maybe in the cycle I'll sell it or if you're taking a position on something you just don't sell it well it's all um it's all fastest horse right so like um you know when I say long only I mean like long crypto long well that's what I'm saying I know you're long crypto but on a micro you know you have um some level of diversification um you know inside crypto and then you want to have the

fastest horse um inside crypto yeah um but I think one thing that you know your friend who says you want to sell the thing like they're still trapped in this idea that there is a foundational unit of account that's sort of like Cosmic or something when it's there isn't there's just relative value between different assets like there is no default go back to thing it's just the value dollar the dollar is just another asset um and you know it's it's has a lot of liquidity um but it's you know every asset is only valuable relative to every other asset um and you just want

to own the fastest horse um you know if you're growing a portfolio so to me it's it's the whole idea to be in crypto is because I think it's the fastest horse uh category um and then inside the portfolio you know you want to have some level of diversification to make sure you're yeah um you're Diversified a bit and then you just want to own the fastest horse inside crypto so um I know that's I didn't answer your question directly but that's you did actually you did I this is um this is maybe too personal of a question we can cut this out of the podcast episode if if you want to but um do you own do you own assets outside of crypto do you own stocks do you own real estate do you own

like do you or is it all crypto yeah I I do but the vast majority is crypto ol of man this is a an awesome conversation any anything that um we didn't talk about that you really want to cover plans for polychain topics inside of crypto anything we missed um you know I think I think we covered a lot um there's there's always more to cover but I I think we covered um a lot of the big topics here all right thanks for coming on man always a pleasure yeah thanks for having me hey everyone thank you so much for watching today's episode really hope you enjoyed it we wanted to take a second to just remind you about our upcoming digital asset Summit in London March 18th to 20th Santi and I

got your back seats are limited and we hooked you up with a 20% off discount code it is Empire 20 if you heard it earlier in the podcast there's a little competition running at blockworks to see who can drive the most number of tickets so when you register for the digital asset Summit make sure you use our code Empire 20 see you in [Music] London