CoinFund's Playbook for a Crypto Supercycle | Jake Brukhman & Seth Ginns

Transcript

I think a big thing that the FED is focused on a big thing that will impact Global economies just in the next year forget like five years out is the productivity gains and the disinflationary impact from AI I think it's going to come way faster than people realize and that's kind of why the FED like that could drive the super cycle because if you're the fed and you're saying look last decade we couldn't get any inflation despite QE and zero rates the most product itivity generating technology in Generations coming in an accelerating way over the next year or two like is your bias going to be that like this could like that that we could get into like an

inflationary environment again really quickly and you need to like be tight on rates or is it gonna be man like we could have a big disinflationary Dynamic coming into play really quickly and and we need to like keep liquidity out there this episode is brought to you by moned which has not only the highest performance evm L1 architecture ever built but also the wildest and craziest community in crypto mad's internal devet is live and public testet comes out soon so make sure you join the monad community today at discord.gg slad m o n a d manad hey everyone Santi and I have been talking about salana a lot recently and we're excited to have a salana sponsor of

Empire marinade marinade is a staking prodct protocol on salana and the only Stak pool that delivers Auto rebalancing me rewards and automatic downside protection with their new protected staking rewards optimize your sole stake with marinade by hitting the link in the show notes big thanks to marinade we'll talk more about them later in the show all right everyone welcome back to Empire uh we will miss Santi today I think he's skiing or something like that but uh either way we uh we have we have better replacements for Santi today we've got Jake Brookman who's been on the show before uh CEO co-founder managing partner at coin fund and then lucky be joined by uh Seth Gins uh from uh also from coin fund managing partner

so Seth welcome to the show Jake welcome back thanks hey thanks thanks for having us yeah um Jake I actually thought a a primer on coin fund which we really don't do these primers much um would would be helpful here um because I was so I was at this thing uh where Seth where were we pen blockchain thing and we were at this event and he was telling us about the liquid fund I was like I didn't even realize coin fund had this huge liquid fund and I we had um uh I was talking to David the other just talking to different people at coin fund I don't think people people know coin fund for being very early I think you guys launched if I remember Brooklyn 2015 like even pre-ic era like very early coming up on your 10 year

aniversary I don't think people realize the extent in this uh to which coin fund has become this like Behemoth of a crypto fund I would say so maybe Jake you can give us the lay of the land at coin fund right now totally um well I think depends how you define crypto funds but by some definitions we would probably be like the first crypto Fund in the United States like there's definitely like people in the market making investments in crypto in 20 like mid 2015 whatever but I don't know if there were like a ton of um fully crypto dedicated what what about blockchain cap blockchain cap that's yeah they were they were quite they were quite early as

well when I think of crypto funds it's like you guys panta blockchain cap those are who I think pan had a Bitcoin fund yeah in 2013 well in any case um we we we are we were quite early and I think the the way in which we had differentiated in at that point in in like 2014 2015 was me basically you know growing up with Bitcoin between 2011 to 2015 and then asking the question what other applications are there for blockchains and blockchain technology and decentralization technology and if you like if you had go if you if you went back and read the coin fund white paper there weren't even there wasn't even a concept of smart contracts in

that in that white paper um because everything was just in terms of cryptocurrency and you know the idea was like let's you know duplicate what Bitcoin did and like you know if we if we need a new application right so we've come like such a huge long way um I started coin Fund in our track record begins July 1st 2015 officially so we're going to be nine years in couple months here um that's pretty crazy we um started with a team of just like two people like me and my original co-founder like Alex bulin we've now grown to a firm of about 30 people about 20 or so of them are in New York uh I'm down here with our head of platform

Jenna Pilgrim in Miami um co-founder managing partner Alex Felix is in Boston with another person on our investment team and we have a few people here and there um we the lay of the land of coin fund is we have three sort of investment programs one is seed one is Venture and one is is liquid I tend to spend most of my time on the early stage uh seed program and that's where we're investing out of $158 million fund which we announced last summer during ECC and you have Mr Gins who runs our liquid program and David Pacman who's not not here with us today is our head of venture uh

looking at kind of series opportunities in a 320 or so million dollar fund uh as well so that's kind of the lay of the land and you know one of the the things I'll quickly throw out in there like what what's different about coin fund is is you you have this awesome so Jake like engineer super early in the space saw the development of the ethereum ecosystem out in Brooklyn like I we we need to find a way to support this and then you look at the other managing Partners going across the firm so David who who Jake mentioned he was at venrock like top traditional Venture for over a decade um he he led uh vr's partnership with coin fund back in 2018 so very

early to to crypto as well Alex who Jake mentioned was Private equity and uh and joined Jake early on I was 18 years public equities investing and uh got into crypto in 2012 and then Chris Perkins was co-head of Futures Prime brokerage at City Group the cftc was his regulator he's on the global markets advisory committee at the cftc so you you have this like and and you know long longtime crypto investor as well so you you have this great like crossover blend between traditional Finance perspectives and uh and really crypto native perspectives yeah I remember I remember when you guys hired Pac-Man I was like

man like kind of web to Legend coming over to join coin fund and then Chris was in our office uh a couple weeks ago I was like wow like I didn't even know about Chris like this kind of a cheat code to have him in house and then we we met and I was like man I got a stack team over there so yeah it's pretty cool to say by the way to David's credit it's not that he just got into crypto in 2018 with the coin fund investment he was doing doing crypto he's looking at crypto companies years before that actually yeah he did so he did we did dapper together but even before that um David was I think in like 2016 he was mining ether like with his son and stuff and David is an engineer by by by background that's why one of the

reasons and then Evan on the research team Jenna yeah stack stack team over there so okay so seed fund is what 158 million you said Ventures couple three did you say 32 Jake I heard um I Heard Chris Dixon from Andre talking on a podcast the other day about there's kind of two different um strategies in Venture there's kind of like TR I'm gonna Bosch this but like heat seeking and truffle hunting I think it was um where I think he needs maybe to improve that slightly but uh uh because it's not fully obvious what what the strategies are when you say it like that but heat seeking is like you're basically trying to win the big deals that everyone's chasing there's in crypto this might be manad it

might be bar chain it might be igen layer it's like everybody wants to lead the igen lair round everybody wants to lead the manad round like let's pitch and get this you know be able to lead the billion dollar round because we know at some point they're launching a token that's going to be um 50 billion or something so yes billion dollar valuation is high but 50 billion one day so that's like I think what Chris would call heat seeking and the other is truffle hunting which is like I'm pretty sure what he means by this is like you know you're kind of in the forage like Scavenging and you're trying to find these things before like that nobody else can find in the world and you're trying to find those what is the I guess if you had to identify the strategy of coin fund like which bucket do you fall

into yeah um I don't know which of those we fall into but I'll just tell you I actually had a a tweet thread on this where I like asked myself that question and then and then gave the four that we look for and it's basically the idea is to be like early technical longterm and right so I think technical means that like I as a as an early stage investor I'm very interested in the bottom up understanding of Technology I'm not necessarily going to be as deep as some of the experts who are building the thing Etc but I have a at least a functional understanding about like what the you know what the tech that's being

used there is why is it good why is it competitive with other Technologies what are like the threats to it longterm what are the advantages to it long term um and historically like we've been early right so we I mean for various reasons one one reason was just like happen STS got to see crypto like much earlier than most people learned about Bitcoin in 2011 but other reasons were like being early to the defi space and really seeing the potential of smart contracts and creating new types of public goods new types of you know fi Finance protocols cutting out the middleman Etc or another area that we often uh had gotten a lot of credit for being early

in was nfts it's the idea of like putting digital collectibles on chain and when I saw the very very first ones of these which I believe was in mid 2016 or so I saw rare Pepe on the counterparty blockchain I was like man it's it's just a matter of time before you know people purpose this for you know you for art more broadly and and that actually happened in in February of 2021 and we had this giant inflection and the nft space kind of reached a um gmv the size of the global Art Market for a while now that market is consolidating and and there's you know there's some maturing that it needs to do um but like Ai and web3 intersecting that's yet another uh example of how we

were early to uh particular trends like like we made our first AI web 3 investment really in at the end of 2020 early 2021 which is worldcoin we did one in March of 22 which was Jensen AI which had a nice confirmation last summer when they raised $43 million round from you know andreon um and now in 2024 like if you if you had gone to East Denver you know every other presentation of East Denver is really about like the intersection of ai3 um so that's being early is just us using your Insight to turn it into foresight using your technical skills to understand what might become really preent down the road longterm means we want to be investing in things that

produce or return on kind of a venture Horizon like five to 10 years I guess in crypto and not really indexing on those things that are flashes in the pen like meme coins um you know things that could reach like high valuation shortterm but have a fundamental business like medium-term like we really want to uh build real value kind of over the long term and right just means being correct about like the teams the Technologies the strategies the approaches that get these people to Market and and turn uh you know turn these projects into a success and we've had a pretty good track record of being right so there's this do you know Reagan

rean or Reagan Boseman at L of course yeah absolutely okay so I so I actually I don't know him but uh I saw this tweet says it is that he put out or she I don't know who Reagan is but um in in March that said it is widely accepted that the way to make money in VC is to be contrarian and right this is absolutely false in crypto Venture all that matters is your ability to front run the narrative and obviously that's hyperbolic and posted to you know get the the Twitter algorithm going but I do think that there's this interesting Dynamic where and it's one of the reasons actually I think a lot of web 2 investors Get Wrecked doing crypto Venture is because the main difference in the dynamic is in web 2 Venture there's a zero to one moment there's the

liquidity event which is comes at you know maybe series EFG whatever several years into the company it's an IPO or an acquisition and it is your right in your bet or you're wrong in your bet you either make a bunch of money or you don't and that's why you hear this typical thing of maybe you you you know you bet on 20 companies and one only one makes it but it Returns the fund that's the tradition vent in crypto it's very different right you get that liquidity event often times around the series a mark maybe series B but series often times in year two or year three or something so I think what Reagan's really saying here is like the reason it doesn't matter if you're right longterm is if you can just get if you can kind of front run the next The Narrative

that's going to be here in 18 to to 24 months you're G to make a lot of money um what your thought well that also that also assumes that also assumes that you're exiting around maybe around that time and what I'm kind of saying is we we don't necessarily want to exit at that time we want to have a horizon that is a longer term view on the actual underlying you know business or or network or scheme or whatever whatever it is um to be a successful business long term and um I kind of disagree like like I think I think that you can have the liquidity event around series a but you know there's plenty of examples where you had that liquidity

event and then the token sort of then just Peters out and depreciates over the long term and that's because Founders were never really able to find product Market fit or build you know a real business and so one of the kind of northst stars of coin fund is like is like selecting teams that are building real things and not just indexing on kind of token economics which by the way I'm not saying that you couldn't make money doing that and I'm not saying that aren there aren't like B you know investors who have that as part of their strategy I'm just saying that from a early stage coin fund Venture perspective we want to be picking um you know these like long Horizon fundamentally valuable

things you know how do you guys oh go ahead Seth well what I was going to say on that is when we think about once the tokens are liquid right because that's kind of the the monetization opportunity there there's that saying that in the shortterm markets are a voting machine in the long term they're a weighing machine and like there's nothing new Under the Sun right like the the fundamental analysis that we're doing on uh liquid tokens in crypto it rhymes with the fundamental analysis that I I was doing in the equities world for 18 years and what when you think about the amount of trading that happens in crypto and by trading I just mean like how many hours a week the crypto markets are open

it's like five times it's over five times what the traditional equities markets are are open so you're essentially having these Dynamics play out in in hypers speed right they're they're playing out at like 5x the speed and that that's not entirely true because obviously like projects off to ship stuff and you you know you'll have like a a Founder start to lose interest or move on but it's also like because these are 247 markets it takes that much more out of the teams and you need teams that are that much more hyperfocused and because it's like permissionless and Global um it's that much more competitive so I I think you can you kind of can line that up and say like

you're just playing this forward at like almost 5x the speed and what we find is what when you when you find the teams that are amazing teams that have real fundamental Dynamics at play the real fundamental momentum those are the names that might go down with everything else and and they might go down lot with everything else when you come into a draw down but then there the the tokens and projects that regain their highs and go to new highs even faster because they have real tangible um progress because they they're really doing important things so um I I think in the end like the

short-term trading ends up being a lot of noise and and that gets washed out when when you look over the medium to long term and that's our focus on the Venture side and that's our focus on the liquid side I want to I want to add one other thing Jason if that's okay which is that I do think that there are key differences in you know between building like a crypto Venture portfolio and a regular you know traditional VC portfolio and I think that is because we're this is a different asset class right it it is an asset class that to your point is uh more liquid or becomes and has liquidity events sooner and I think the result of that is that whereas

in a traditional portfolio you know you know the the the wisdom which is like you know there's 25 companies and 23 of them go to zero and go out of business and then like one gets Acquired and one Returns the fund approximately that is not the case in a crypto portfolio because of these assets these assets aren't all zero to one I mean there are of course some opportunities in crypto they're very like traditional Equity opportunities that are zero to one but when there's tokens involved um there's a opportunity to have like a middle outcome where it's like 05 right and so what you so one key difference is that you actually see um you have more risk management capabilities in in this portfolio over time and you actually see

a lower attrition rate uh because some Capital can be recovered because of liquidity and that's one difference and then the other difference is that mathematically you can can actually build bigger portfolios in crypto and do better that is not the case in traditional Venture because if you like a traditional Venture if you take your like 25 company portfolio to like a 75 company portfolio or something like that right and what happens is you push down the average position size and then that small percent of the fund um that will return the fund can't return the fund because the position size is now smaller but in crypto so because it's not binary

and it doesn't have the same distribution you can actually increase the diversification and then do better on average like up to a point um you can model this H let let's I want to understand that better so in Venture I'm making up these numbers but like yeah you 20 person uh 20 company portfolio two of them exit one's a acquisition one's an IPO the IPO Returns the fun or something like that's the that's the model making that um in crypto Venture if you have 20 portfolio companies how many will you make money on well this is what I'm saying is in in a crypto portfolio then instead of doing 25 companies and you would do maybe like

40 or 50 right and out of those you'll have a lower attrition rate so fewer of those will go to zero as compared to the traditional you know Venture portfolio and so you'll you'll make a kind of a better return and then you can argue in crypto that kind of the more companies that you uh get like the more the more probability there is of getting that unicorn lottery ticket really um partially because of the liquidity profile of the asset so you get this like simultaneous lower attrition better risk management and higher opportunity for like the upside across more opportunities that

ultimately will probably result crypto VC outperforming you know traditional VC and hedge funds and many other asset question how do you decide when to sell because I imagine this is a tough so let let's say um let's say a traditional company Web Two company goes public there's kind of this understanding it's like you look you've been supporting us for like 10 years like I totally get it you guys are taking chips off the table like mutual respect here like I get it if you guys invest in a company and then you know they launch their token and it's two years into the business they're like what the hell guys like where we we just began our relationship so how do you yeah how do you make that decision well I just want to say like on the again on

the on the Venture side we do take like a long-term View and we're not very like likely to actually sell something I mean I at at the point of liquidity right like I think back to um balancer which was a defi um amm project we did in 20 2019 and balancer is actually one of those opportunities where yeah they did have like an equity kind of component but the purpose of the equity was just to convert the investors into token and the and the key asset of this network is token uh driven and the value of crws in the token and what happens was um you know in the summer of 2020 they had their you know token launch and we were we actually went more long even though

we were kind of like um early stage like quote unquote Equity investors there and and we took a you know 10-year view to say look when defi matures amms are going to be like key infrastructure um you know serving trading based on Defi and now it's 2024 it's four years later that has not quite happened yet right defi is has not gone mainstream you know your friends and your friends moms and and parents and grandmas like they're not using defi yet so there's still you know a leg to go in the product Market fit and maturity of Def so we're going long here um but if there was a I don't know some kind of systemic

failure like someone real like vitalic published the post and said by the way you know all amm curves are you know horrifying and um they don't work and here's the reason why and this is like attackable and it's all going to go to zero you know there's there's more of an opportunity um to to control for risk you know in in this setup and I'd also say that's that's not a a oneoff that's actually something that we do quite often um adding to adding to tokens continuing to to support teams um in a variety of ways on chain as the tokens start to trade so we're we're usually thinking about uh greater engagement as as they go liquid

uh not not monetizing the moment they get liquid how do you think about using One Fund for the of another fund so for maybe to for like the for as an example here I would imagine the Venture side could actually win more deals if you're like look we've got this liquid book where we can actually come provide liquidity on on your protocol however providing liquidity on the protocol might decrease the return of the liquid Fund in which you have outside investors so how do you make those kind of decisions so for a situation like that it it would be the same fund that would provide liquidity so we have uh

different sets of investors across each of our funds and there isn't a um a dynamic where um we we would want a totally separate fund engaging for the benefit of uh one of our Venture funds one of our earlier funds um but within a fund that that's absolutely a benefit and just from the knowledge that we have across coin fund I mean we have a trading team right so T that that's a result of having a um a whole liquid discipline and I think we have one of the best trading teams out there um we we have all of the right connectivity we do it all in a really institutional way

so um it it's something that we can do easily um it's an expertise that we can bring to the table and there's there's a lot of that if Jake you want talk about our um portfolio growth team and kind of the um the the support that we give portfolio companies it it really ties into all of these um uh different disciplines that we have at coin fund but that that would be a conflict if we had one fund supporting another fund directly and and we absolutely avoid that I would say in my experience on the Venture side there have been times when we had gotten Venture deals in part because we had a liquid fund however that's not because they

necessarily wanted the liquid fund to you know trade their token or something that but it's rather the knowledge and expertise and like analysis of like macro crypto markets and macro markets in general and it's um um it's it sometimes it's like expertise on things like treasury management that really helps um kind of the Venture view opportunities to also take advantage of the fact that we have a liquid fund without actually using liquid funds capital and that's been powerful just the the kind of the network effect and the knowledge that accumulates the multidisciplinary knowledge that accumulates when you have a venture discipline and a liquid discipline um

could be powerful in crypto because right those assets are um like the bread and butter of like what people are building I'll give you another great oh go ahead I was just G to like I uh listening to this I know a lot about the Venture side of coin fund and I we got teed up with the liquid side and I know you've got this big liquid book but like can we can you just tell us more about the liquid book like is it are you going is it long only long short like are you putting on like hundreds of positions at a time is it very concentrated bets is it kind of Swing trading are you making hundreds of Trades a day like I would love I just give us the lay of the land on the just on on on what your guys' strategy is

yeah so so just talking about uh liquid Investments in general at at coin fund we take a fundamental approach so think of it as the the type of underwriting that we would do on the The Venture side but doing it for for liquid tokens um and and then you have the benefit of being able to sell out of those if it turns out that something changes with fundamentals and and go into higher conviction liquid names at that new point in time so it it's really um a um a part of the firm that that looks a lot like traditional equities investing but doing it in in liquid crypto tokens and

with with a very fundamental Focus what do you mean by fundamental Focus here so looking at Revenue generation looking at activity right if they don't have Revenue yet thinking about valuation coming up with price targets using uh a catalyst Rich developing a catalyst Rich path to get to that price Target um the these are all things that are just kind of the the basic uh blocking and tackling of uh equities investing and it it's funny four years ago um what when I joined coin fund we would be having conversations with investors about like are are there even fundamentals in in

crypto uh tokens how how can you do fundamental investing and I think like totally non-controversial today like people know you you can go to token terminal you can pull up a dune dashboard um you you can track what's happening with fundamentals there's a really interesting Dynamic that's starting to happen so we've seen this continued evolution of markets where again four years ago investors were saying are there even fundamentals to to crypto tokens aren't they all just about narratives and you know people buying the the token until it stops working and then selling it kind of getting into that um the the front running the

narrative thesis that that you were talking about a little earlier now we're finding you know you used to be able to generate Alpha by finding inflections in onchain fundamentals before they were priced into the tokens now we're finding those inflections in onchain activity those get priced in in real time but you're you're to see a dynamic where you have to combine what's happening in in the protocol in real time with what the team has talked about on uh more qualitative catalysts like they've been out talking about how they're they're going to do their V3 uh upgrade right well here we are now only a few months

from it and we're starting to see an inflection in V2 activity and you kind of pull together this Mosaic and again it's exact ly the same way um that that you do fundamental equities investing but with the advantage of having direct access it would be like having every company publish their uh their daily p&l right so you're you're kind of seeing the same dynamic in real time but then you're still like that would be priced inefficiently if I told you like Amazon's p&l is published daily like you know 72 Citadel all these guys would be pricing that in immediately right so you need to then understand the end markets that they're in you need to understand

what catalysts are coming up you need to have your own view about how important those catalysts are going to be to meld that with what you're actually seeing on chain in order to come up with where where it's likely to trade over the next uh 9 12 months oh man that's really interesting um Seth I need to bring you into some of the product conversations at blockworks research that we're having this is the exact so actually maybe we'll do this live so one of the convers ations that were having a blockworks research in inside of our product which actually coin fund was a an Evan specifically was very very very early supporter of that and I appreciate that a lot um are is this question of fundamentals right because there are two conversations to

be had here I think one is you can put as much fundamentals into this IND industry as you want things still do trade on these narratives even though we have the belief and it sounds like you guys have the belief that fundamentals will get more and more important still narrative driven the but the other thing is there's no consensus around what fundamentals matter and fundamentals is kind of a madeup thing in a sense until everyone agrees that this is the fundamental that matters and then it and then fundamentals quickly flip to becoming one of the most important things in the industry and you can see this in uh in in in equities markets right there's maybe three to five metrics that everyone cares about more than anything else what do you think those metrics are going to be in in crypto so it it's

funny in equities it always depends on the industry you're looking at right it it could be IA it it could be like if you're looking at like a an unconventional uh EMP right in the energy space it could be um the the net asset value right the the way that the market thinks about the value of their um their assets and by the way it could also be like an industry where everyone looks at some of the parts right there uh there are a few Industries where some of the parts is really important if it's like super high growth uh Tech it could be a revenue multiple right so revenue is all that matters no one cares about the fact that they're not profitable if it's a more mature company could be like

free cash flow yield so they're all types of dynamics that that are used for different Industries the key is understanding so industry-wise the key is understanding how all of the other investors are thinking about valuing those companies so like EV the EA is usually important where it's a growth industry but you have balance sheet at play right if balance sheet is at play and they're continuing to like they're generating cash flow they're Levering up their balance sheet EVD e usually ends up being the way that people think about uh valuation again if it's high growth tech and and at this point no one cares about profitability because it's just like a Battleground to get your like to plant your flag well then it's about a

um a revenue multiple so and and then it's really interesting if you look at like a a few specific names like back when I was at Jenison we owned we owned Amazon uh back in uh the the early days and the analyst I wasn't the analyst for it but the analyst back in 2011 2012 I remember talking to an analyst and another firm and they were like you know there's no way I could ever own Amazon like they I I just don't get the valuation right like they're they're not profitable doesn't make any sense and our analyst was saying you know what I'm going to put Walmart's net margin on Amazon's revenue I'm going to give it a higher multiple because they're growing

faster and guess what like it it got us to have a big position in the name like absolutely killed it but for all the wrong reasons because it was never retail that actually drove profitability it was AWS it was the ad platform but again so you think about like eth what were the fundamentals on eth back when people were buying it in like 2017 2018 right it was just that there was a lot of activity right it was showing product Market fit for fundraising great right but like there was no 1559 right there there was no like merge yet in fact like we we weren't even having like we we were still going through other scaling iterations of eth right but there was a view that at some point this activity is

going to translate into something that we can actually draw a solid line into valuation for and that's that's where we are now with e how do you how do you value because I don't even think the the industry understands something like an L1 like half the people like token terminal is talking about like the the p&l of of eth like revenue and profitability of like salana and I'm like that makes no sense like these things are Commodities we can't even agree like like in my mind eth and soul these are just these are Commodities so you're not like what's the revenue of wheat today um or what's the you know in the in the the global Capital markets we're not like what's

the revenue of oil um you're you're probably like Supply you don't pay uh you don't pay transaction fees to bushels of wheat either right like the the thing about the thing about digital assets is that they combine like their design space is much wider uh you know and more Rich than traditional sort of Securities or or instruments and so you get these hybrids which are like like some people say eth is is money right so eth is money yes it's also a commodity yes and it's also something that generates Revenue at the same time so what do you call that I mean e eth is in a really interesting spot because stores

of value tend to get much higher valuations right like Gold's overall value Gold's overall market cap is way higher than any individual Equity right it's like 15 trillion something like that so if you think about like the addressable market for something like Bitcoin when Bitcoin is just like digital gold it you could argue it it's Gold's market cap right and then Gold's market cap is going to continue to go up as as we see the dollar devalued and other currencies devalued but when you and by the way like as Bitcoin gets more utility maybe that will start to affect the ability to Value it that way same thing with eth eth has this like this dissonance where is it going to be

valued like a tech stock because of the activity that it has or is that activity through through 1559 and the lower emissions from uh from going to proof of stake because you have contraction of Supply when activity is picking up is eth going to have this like ultrasound money valuation or is it going to have a a valuation that's more based on um on Tech fundamentals and looked at like a a tech stock like a a growth Equity um I think we're going to see how the market ends up uh balancing those two Dynamics but they're like they're wildly Divergent from a valuation perspective because the biggest Tech stock is what

like three trillion right and then you have gold which like does nothing right it it's just a store value at 15 trillion plus so um but for for base layers broadly right now we really just track activity activity as measured by I you know primarily tvl um but but also looking at um daily active users transaction count like what you want to see is activity because activity has to be a precursor to monetization and then the view is there there're going to be plenty of ways to monetize and and by the way as we get regulatory Clarity and we think we're on the path toward uh regulatory normalization that's going to

allow for much clearer ways of pass pass ing value along to uh to token holders and driving uh valuation analysis when let's say you have a thesis on something do you spread that thesis that bet across uh let me get more concrete here so let's say you really like a like move you're like move program programming language good language okay maybe we can make some Venture bets um on that side but maybe Seth you and your team says move is going to be this big thing that everyone's like you know maybe activity comes to the an L one that's using move okay so maybe Venture side invest invests in like movement Labs or something and then you guys put on a

trade for I guess there'd be uh soie and Aptos would be the two you'd look at do you kind of like bet the farm on one of those or do you spread them across too well first of all there there's definitely like a Synergy in the research process right because the technical due diligence for you know move or or any other area of the technology ology um is the same across um Venture and liquid um but in terms Seth do you want to talk about like putting on positions yeah I mean again like we're we're one firm that that's doing research on areas that we think are exciting so that that to me is like the power of coin fund is the fact that

we're having all these conversations whether it's in our our morning meeting whether it's investment committee whether it's in our working groups and and we're talking to all of these teams right the teams that are super early stage the teams that are already liquid so and by pulling together that view um like I If if we're looking at liquid Investments well yeah we're limited to the the names that that are already liquid and then you're looking at what their activity is you're looking at what you think is going to come down the road what their um likely BD opportunities are and then on the early stage side we might be making an investment um that that's um much earlier stage that that might be either um within an ecosystem

of of one of the Bas layers that that's already out in liquid or or it could be a challenger to them so we're really like creating this um I I'd say th this set of uh 10 to 15 um really well-informed researchers in crypto that span liquid markets and venture markets we're all bringing our own uh perspectives biases areas that we're excited about areas that we're less excited about um and and then that kind of works its way into each of the funds based on what the investable universe is based on what what time Horizons we're looking at and

and where the opportunity sets are one one recent one was across protocol right Seth so we doing like a lot of research on intense based bridging yeah Hart was in our in our office in uh in New York last week and me and him we had this like whiteboarding session we like really deep into how um you know basically like intense based bridging works and it's really fascinating it seems to be one of those um approaches that like approaches optimality almost right because in the sense of like having a low latency bridge I think you can't really do better than a relay Network and in terms of costs you know

Hart has laid out ways in which they are um optimizing the the costs of the network and there's also free market competition that is optimizing the fees you know for the customer so you get this sort of like Best of Both Worlds lowest latency and like you know most free market optimized costs kind of protocol uh and this protocol only has a liquid token right so it's something that um I I believe Seth we're we're looking at in in in the liquid fund it's something that we're we're thinking about holding in uh in in in a venture way in in the early stage fund as well oh so you could buy that fund or you

could buy it in both funds basically yeah and and it's it's a little bit of a unique opportunity because it's one of those protocols that only has a liquid token that's actually not the case most of the time uh most of the time we see something that has kind of an equity component and token component well like Ai and crypto another area where uh we we just did a lot of research on defining what the opportunity set was going to be on the liquid side right now it it's two things really right it's proof of humanity with worldcoin and then a lot of it is some form of uh of a compute Network so we were limited we we saw the this was a huge opportunity early but we were limit

on the liquid side on uh on how we could engage and found names that that we really like um on the liquid side and then on the Venture side we're we're seeing more and more sub verticals within Ai and crypto really start to have um teams come together and uh interesting paths to uh to to protocol launches and monetization emerge this episode is brought to you by monad mad's thesis is simple the evm is here to stay similar to JavaScript in web 2 but unfortunately today's evm lacks the high performance and the scalability that developers need to make certain applications possible Monet

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Empire hey everyone Santi and I have been talking about salana a lot recently and we're excited to have a salana sponsor of Empire marinade is a staking protocol in salana I remember when they launched I think it was back at a salana hackathon and they were funded with this 80k grant it's super cool to see how far they've come they're the only Stak pool today that delivers Auto rebalancing me rewards and automatic downside protection with their new protected staking rewards you can stake natively or liquid steak with marinade and get the same high performance delegation strategy that thousands are using already to stake your soul to over a 100 of the best Salon of validators marinade has been live for over two years and

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essentially like ethereum scalability and interoperability right like if you rewind if you rewind Jake back to you know 20 2013 thinking about the future of blockchains you know he would say um I think there's going to be thousands or or even millions of blockchains in the long term and they're all going to be um interoperating together in a very seamless uh fashion right and that uh there's a lot of people back in 2013 who were like not on that page they were like no no no there's only going to be one blockchain and it's going to be Bitcoin and you don't really need anything else and I think I think my view um pretty clearly sort of one out o over over time and we do see like thousands and even

tens of thousands of blockchains in the market and we see a ton of um rollups on ethereum and we see a lot of uh interoperability technology that's connecting them together now what's now where we're at with that is I think we've figured out um a number of technologies that have dramatically scaled ethereum already like if you want cheap high throughput rollups and stuff like that you have that today what we're still kind of bad at is the inter operability part there's a lot of you know Bridges there's message passing um protocols but I don't think we've like achieved um sort of the the long-term state-of-the-art of this which is essentially abstraction it's like it's

like when you are a smart contract developer you just kind of like write your solidity and then you just deploy to all of the evm and like kind of like no matter which evm network you're on you're going to be able to interact with this with the smart contract another way of thinking it is you're turning the ethereum sort of Highly uh segmented Market of rollups into something that really like to the developer feels like a monolithic chain at the end of the day um and I think that's kind of happening this year like we're seeing a lot of interoperability technology make uh progress there's there zero there's hyperlane um there's others they're doing very compelling things and the

reason that that's related to across protocol is I think that these relayer networks are finding a lot of um applications in things like bridging in things like interoperability networks right these are all related Concepts that ultimately will create this like very optimal uh layer uh that at the end of the day just makes blockchains really easy to use for developers abstracts kind of the backend abstracts fees abstracts accounts and then we're in a world where uh basically we have the web two experience but with all of the advantages of web 3 decentralization

permissionless trustless efficiency lower counterparty risks um you know things like that so that's one area that we have been investing in and have been looking at and is moving you know very very quickly uh that's that's one thing and then the other thing that um I like to mention and especially this year is that 2024 is really the first year where blockchain is truly converging with the with the traditional world it's sort of funny to say because blockchain started in 2009 it's 2024 it's been like 15 years but really like the we're so early and the adoption is just starting now and like historically

if you look at kind of crypto investors there's been these two ends of the spectrum there's been crypto investors who um have taken a very like Trad approach and they're like discounting digital assets and saying this is not real and this is not really going to go anywhere and that has turned out to be very Incorrect and you have these the other end of the spectrum are saying like everything has to be decentralized everything is like a crypto Anarchist uh approach or or it will fail and that has turned not to be fairly incorrect as well and I think where coin fund has done a good job is being realist about the fact that you know this is a technology and for the technology to succeed it has to converge with the

existing world like like digital assets and blockchains they have to deal with governments and regulators and the SEC um and the incumbents and competition from from those uh types of folks and that's what's actually happening this year like we we got the bit ETF on J we you know we've heard Larry finin say these are all Stepping Stones on the way to tokenization we've had our portfolio company superstate launch uh their tokenization products we're seeing a ton of rwa projects in the market and what's happening is that like the more traditional people get access to blockchain technology through these traditional tokenization processes the

the more like our life becomes easier right because now Google is running um ads for Bitcoin ETFs huh I wonder how that happened could it be that you know black rock called up Google and use their influence to you know democratize their their ad process right and so we're going to see much more of that in different areas like the more traditional people are holding digital assets the more it becomes in their interest to um get them installed right and and we're going to see uh more adoption faster uh starting this year I had even thought of the fact that yeah now you can just run Google ads for these Bitcoin ETFs I'm like we've been trying to do that like if we ran a Google ad that was like Bitcoin

conference shut down for months shut down for months exactly and then it it just takes the but now there's an investment product that you can okay but you can't buy a ticket to this conference okay okay sorry Seth what were we were saying no I I was going to say I kind kind of adjacent to that when you look at the Avenues for mainstream engagement right I I remember after ECC last year everyone was like awesome like another great conference for infrastructure but where are the applications right and and it was like well we're leaving them we're saying the teex stack is more mature than it's ever been and what does a more mature Tech stack means it me it means it means you can put traditional

web to developers out there they can more easily develop applications and and you can actually like start throwing that spaghetti at the wall and seeing which applications are actually going to get mainstream adoption it started um I I think in um September October um what when I was out at 2049 we were seeing in Singapore we were seeing um a lot of mainstream web to developers come into um to Hong Kong come down to Singapore with the view that like now it was okay for them to come and develop um in web 3 um it it was kind of the green light and we've

had continued progress there we we now have a lot of talk of getting um a Bitcoin and an e spot ETF launched in Hong Kong imminently um which I think is going to be another big Catalyst there and then when we think about base right so coinbase is base 110 plus million kyc users another great Avenue for for bringing mainstream users um across into more Crypton native applications and then even even the ton ecosystem right you you have 900 million monthly active users uh 200 million daily um a a great resource for driving

crossover engagement um between the the telegram app those were the stats for telegram and and drive more penetration for um uh for for the ton blockchain itself is actually maybe a good transition into this other topic I want to talk to you guys about which is just Market cycle um yeah just Market cycle and like Jake you've seen more Cycles than than most so I'd be curious maybe the first question here is like how will this cycle look different than others and specifically related to this idea of the fouryear cycle well this is a very interesting question because this is one this is like the one cycle where I'm actually seeing a lot of disagreement and like

bifurcation of views on how it will go so for some reason like you're saying you didn't listen to the the suzu Zer cycle idea last time is a well I I kind of had the thought that well first of all when did the bull market start I think a lot of people would say it started in November or maybe maybe some people would start counting on J when the Bitcoin ETF gets Pro if you look the if you look at the technical charts it's probably like like November um and then I had this idea I'm not sure why exactly but I had this thought that maybe it would be like a 12 month shorter bull cycle this time and I was on a um I was on a spaces with Kathy Wood where she was talking about

compressed cycle this time around and then I did a Twitter poll and a lot of my followers on Twitter like more than 60% of them I think said you know this is going to be a 12 not an 18 or 24 month cycle but then I was talking to like other people and other people are like well hold on like what's the best analogy to this year this is an election year the last election year was 2020 it kind of came after a two-year bare Market just like just like this year and then what happened is it started to go up in 2020 and then mostly sideways and then the real inflection happened in February of 2021 which I like to remember as the time when uh nfts went on uh Saturday Night Live so maybe

there's an analogy to this election year where we're kind of like also you know seem to be going a little bit sideways now then there's some election uncertainty and then once we get through that maybe like we inflect in 2025 but I don't know the best person on this call to ask that is really Seth what do you think Seth well had some was trying to time these markets here yeah exactly no look I for me base case is looking at prior Cycles and and prior Cycles would say you have a good year the year before the having which happened last year you have a good year the Year of the having and then you have a blowoff like massive year the year after the having right that that's kind of like history repeats but the interesting thing is those

having Cycles have always lined up with u with macro cycles and I think from a macro liquidity perspective it's really unlikely so real yield spiking up in November of 21 was what killed the cycle and I think it's it's really unlikely sitting here today with the FED saying in a bunch of different ways that they don't want real yields to go any higher they want real yields to come down I I think there there's an interesting setup where you combine the fact that real yields are probably not going to spike higher again the fact that we're on the path toward Regulatory normalization and that's something that like happens once in the life cycle of crypto right

actually having the definition of a regulatory regime over the next two three years and then add into the fact that everyone has PTSD right everyone is like oh my gosh we're at 69k at 70k is this the peak right do I need to sell everything right like you're gonna have this Great Wall of worry where every step up they're going to be a lot of people who want to sell on The View that like that's been too much too fast but then you have these immense flows coming from the the ETF world that that are only just starting to kick off right you you have um a a bunch of um Financial advisory houses that have only just

started to uh to put on the ETFs they put a bunch of restrictions like you need 10 million net worth uh liquid net worth to be able to buy them and that's all going to ease over time and as that's easing you're also going to have advisor saying well I put a half a percent of my my client sence Assets in now I'm comfortable putting a point putting a point and a half so I I think there's actually the um the the ingredients here for this to be an extended cycle there's a enough skepticism for sure and you have that regulatory Dynamic the flows Dynamic and the macro dnamic liquidity so I I think there there are a lot of really

intriguing ingredients for an extended cycle but but say like base case we have through next year still looking good um but but there's like there's a really compelling case for that extended cycle coming coming together so Chris berisi tweeted his little crystal ball says October 2025 is kind of equivalent to November 2021 thoughts on that but again November November 21 I would Define no November 21 as that was the moment that pal said uh inflation is transitory and then

shifted that to no it's not transitory and we're going to start raising rates so think about what when he was saying inflation is transitory but inflation was accelerating up that was Max negative real yields right real yields are nominal yields minus inflation right so you had real you had nominal yields at zero and inflation accelerating up that gave you Max negative real yields so the moment that he pivoted and said no we're actually going to have to fight inflation that was when real yields started moving higher and then they ended up spiking higher so so I look at that that analogy and it's like it it's analogous when when you're working from a um positioning uh temporal positioning

after the having but it's like night and day versus um real yields at least as far things look now I mean we haven't even done the first cut November 21 is the the peak of the last bll right that's what you're saying November 2021 was uh the first breakpoint soana in Lisbon when nobody could lose money if they if they tried and then it and then everyone could and then we all lost a lot of money yeah yeah right but no like the the yield environment at least as it looks today is totally different now gosh if we're if we're at like 500k

Bitcoin a million Bitcoin and inflation is accelerating wildly and we have a new regime we have a a new government in place and they're like look like we need to start in fighting inflation again and they start like maybe that does create the the same setup but but that's not where things uh what what things look like right now do you is do you think there'll be a time in the next like so how do you how does this then impact your um strategy on the liquid book because let's say you're retail like let's let's say inside of Jason's head there's a thought that okay I've seen a couple of these Cycles before maybe it makes sense like historically I've just never sold my

like I've just been like I'm never selling my Bitcoin or eth like that's just a ridiculous thing to sell it and I'm like maybe you try to time it um and maybe that's a Fool's game but maybe you try to time it a little bit um so that you don't have to experience these nasty 90% draw Downs um but you're saying but you're saying you're saying that now because of the nasty draw down that we went through in 22 the nasty draw down in 202 in 22 and in 18 and 19 yeah exactly so so that's like that PTSD that I was talking about where it's like everyone is now so condition like maybe I will sell some right maybe I will like try to like take some of that off the table so that I don't have to I went through that pain

in 18 I went through that pain in 22 like maybe and and that's what that's what actually creates that wall of worry right that creates the I I mean one of my one of my really good friends my mentor um I remember in late 16 early 17 at one point he was like man like bitcoin's actually come back I'm gonna sell right and like he sold the maximum amount that he could withdraw from uh from coinbase at the time I think it was like 20 ,000 or something right so he sold that and he withdrew it and then the next day his account was back up to the the same amount pre- withdraw from from the day before and he was like all right I'm gonna sell again and like withdraw it and did the same thing the

next day and then he was like [ __ ] I need to be buying not selling right and he he put it all back in and that's kind of that's the wall of worry in like a a really like tangible example right it's people selling it keeps going up and then those people coming back in and realizing no I shouldn't be selling I should be buying that's what creates that continued climb in the market it it's when you you don't have exuberance you have fear and that fear is what's causing people to sell prematurely so again like we're still far off from that but I get I know we're so far off from that I would agree with that do you what I'm trying to get out is this question of will will this cycle look the same or

different and in my mind there's like the same would be like Big blowoff Top in 2025 basically like some ridiculous like newcomers can't even fathom what this thing looks like some ridiculous blowoff top in 2025 followed by like a pretty nasty draw down in 26 into like you know just Peak apathy in 2027 that's like if this follows all the last Cycles in your mind SE do we do we get that really nasty draw down like or is there or is there a chance that we just we out of this four-year cycle period so so my base case is is that we get that right because I I think in crypto in particular history repeats which by the way like we we should spend a minute on

what December 2020 would say about the the current setup right now because December 2020 was when we went through 20,000 and and when we decisively broke 20,000 we went to 40K in three weeks right we doubled in three weeks so I I like thinking about um historical uh experiences in crypto I think it's really important and that would definitely say like be prepared for a blowoff move higher in the back half of 25 and then downside but you always want to think about what the counter could be what are the what are the emerging cases and without a doubt the the emerging case

with regulatory normalization with liquidity dynamics that look different today and with all all of these new investors that can come in through through the ETF um there's a growing case that this could actually be the the super cycle in fact I I'd say if it weren't for pal raising rates aggressively now we had inflation right so so he he felt he had to take action but if it weren't for pal raising rates aggressively I I think we would have actually had that that super cycle play out and and that was wasn't crypto specific right that wasn't a crypto driven cycle but in some ways it was

right because why was crypto going up so much because real yields were so negative so I I keep coming back to like this macro question and what's happening with liquidity what's happening with real yields it's the same thing for for unprofitable tech stocks it's the same thing for um the the mag 7 except for maybe um the the ones that that are like most closely t to direct AI um participation it's so kind of a non-answer but like I I think no it's an yeah like that you you always want to think about liquid markets in like a probabilistic way right like because we we we don't predict the future right you're you're kind of thinking about

what are the probabilities of different outcomes playing out and I would say base case is like that cycle has been consistent obviously the N isn't that big but that cycle has been consistent so you're going to assume that that cycle continues but at the same time they're all of these compelling reasons to say maybe it doesn't right and we're going to be like hyper Vigilant around the potential for it to uh to not play out the same way that that it has in the past yeah Jake maybe we can move on to the next Topic in a sec but um just to round out this conversation on the cycle like any any other thoughts on just like how how this looks the same Andor different and these four years you know fouryear cycles and what you what you

plan on doing personally and yeah I guess any thoughts on that yeah I I mean I think this is going to be different in the sense that it'll like I believe this is going to be the biggest sort of Bowl cycle we've had in crypto and part of the reason is just natural growth um more and more and more people um are sort of onboarding to the space you know worldcoin is doing 8 to 10 million uh signups uh and ual run rate right now um obviously Bitcoin is enjoying tokenization ETFs convergence with with uh the traditional world as we've discussed and so um I think that's not to be underestimated I think we're

going to be more more mainstream than we've ever uh we've ever gone what am I doing personally I'm not I'm not trading meme coins and spreading my Capital across many different tiny things I'm I'm actually um I think most of my PA is concentrated in something like 11 uh positions that are high conviction long-term oriented and and and larger um and of course some of those are Bitcoin ether um and so forth so that's what I'm doing I'm not trading meme coins this cycle but by the way one one thing that I would point out if you think about that regulatory normalization right like we're all talking about the potential for that to

to drive things higher on a a secular basis think about like your DCF model right and you have your discount rate well when you start to get regulatory normalization when you get a regulatory regime what does that mean it's the the space becomes lower risk as an investment right so that means that the discount rate that you would use for the space is going down so that's like a one-time step up in in valuations across the space and that's like an interesting way like I don't use DCFS I'm a growth investor but it's an interesting like traditional Financial way of thinking about what a regulatory regime what Diversified end markets what more

convergence with traditional Finance how all of that flows into um actually justifying higher valuations for for the space and lower volatility over time yeah maybe we can pivot to talking about Ai and crypto a little bit more um so Jake you when I think about people who have been calling for AI the kind of convergence of AI and crypto there's uh earlier than anyone else there's a few names three to five names that come to mind right folks like Ilia near other people and and and you're one of those we' have gone from at least personally in my head being like oh we're slapping these two things together now this is ridiculous to it is now one of the AI and crypto is now one of the five big

themes of permission list this year so I have completely turned on that all say and I'm looking at some really interesting stuff and now more and more Empire content is AI I'm like wow all right so this is this is how it happens I'd be curious to get your kind of lay of the land I know I think sethy mentioned proof of humanity and one other thing what is the um like if you were talking to someone who maybe didn't know too much about crypto and didn't know too much about AI how would you lay out like why these two why we need these two things to come together and like how these two worlds will converge well imagine that you I guess like the thorough experiment like imagine if you let AI just be developed by uh by big Tech which is kind of the

default path right what does that world look like it looks like a world where all the models are proprietary and monetized to the satisfaction of those companies it looks like a world where um GPT excuse me GPU and other compute um Supply is totally constrained and bottlenecked by companies like Nvidia meta you know open Ai and are not really like accessible to anybody else it looks like a world where um there's some really irresponsible regulation or legislation passed around licensing which I think in effect makes the models like more um opaque uh not as transparent as as you'd want them to be

for for safety reasons it's a world where data Providence is not really taken into account and these big techs are you know profit profiting from training models out of you know of out of copyrighted material and uh and you know kind of Originators and creators aren't getting compensated fairly um and on and on and on so I think like you know not you don't need specifically web3 to solve that problem but it feels like web 3 is the best technology um to to solve that uh that problem today and so what does what does that intersection look like at least from coin funds perspective well there's this pipeline that creates AI products it's basically the talent the data the compute um and

the productization uh like of AI models and I think what web 3 adds to to that picture is that it democratizes and opens every single one of those stages in the pipeline so for example we now have the centralized Network to networks today that are serving um GPU capacity for things like training and inference of models and in fact um there are real AI apps like web 2 AI apps today are running on decentralized web 3 uh compute which is really really cool um we have um like why should a scientist have to work at Google if they have an

idea for a new model framework and they need some compute in order to test it out why can't we have models that are like crowdfunded and owned by token holders that rival the state-of-the-art models like GPT 4 or five as it's about to come out um you know and and then finally um like the safety issue for me is is Paramount like I think that um if you want AI to be safe then absolutely the wrong approach is to say only like a few proprietary closed opaque things can develop I the correct approach is to make it transparent like if if I were

the you know the president or whatever and I could issue an executive order my executive order would be that whenever open AI um creates a new model they have to open source the weights because that's going to be like the best way to actually get transparency into you know into play and to actually know um that what open AI is creating is not is not dangerous and when open AI says that or or other uh you know AI companies for that matter when they say like we're going to solve the safety problem internally what they're really saying is that like you know 10 50 100 people are going to be working on this problem and we know they're really saying we're gonna put our own San Francisco bias on whatever uh right on whatever this

algorithm should be yeah it's it's just so clear that um that llms for example in the long term have to be localized because they have to take into account local language local culture uh local biases right and you know it just it's not realistic to have these like monolithic amms that are trained in San Francisco and then applied and and sort of thrust upon the rest of the world that's just not how the world is going to work it's not realistic and that's what web 3 enables is a world where that whole pipeline can be used in a democratic manner do you think it's uh tell me if I'm stretching the uh comparison too far here which I very very well might be but

do you think it's fair to say people used to think you were mentioning there there used to only be one chain like it was all going to get built on bitcoin and then you know Jake and coin fund had this idea that there'd be thousands of chains and now that this is has kind of played out and there's thousands of chains now there I feel like uh you talk to folks in AI land and they're like all AI is going to be controlled by like three or four people there's like the Microsoft AI Alibaba AI Apple AI Google AI That's it and to me it's starting to be come like just hearing you and talking to other folks who are smarter than I am uh it feels increasingly obvious that there will ultimately be thousands and probably millions and tens of millions of AIS as well uh of of

these yeah I guess localized llms like you called them is that a maybe I'm trying to draw the comparison too far but what do you think of that I I think it's inevitable there's this great like if you know Yan laon who's the head of AI over at meta he had this recent episode on Lex Freedman and he has this great quote I'll read it to you now it says the French government will not accept that the digital diet of all of their citizens uh will be controlled by three companies in the west coast of the US that is just not acceptable it's a danger to democracy regardless of how well intention those companies are and it's also danger to local culture to values into language right so I just I and and the fact that like coupled with the fact that we actually see in the

market real Innovation and in fact most inov um really happening in open source now the the big tech companies they still control like right at this moment they still control a lot of the compute and they kind of have the power to create like the biggest you know Foundation models but the secondary waves of innovation of how to like how to compress those models how to make them more efficient how to um you know fine-tune them you know in tractable ways how to put them on commodity Hardware how to put them on quantum computers like a lot of those um Innovations are happening out in in open source and I think that there's a point where once we Source enough compute in

web 3 Once We once we start to do like crowdfunding of uh you know of training uh we're going to see like an inflection point where we're going to actually surpass uh proprietary Tech Will your so one of the so AI has impacted White Collar more than people thought it impact Blue Collar like Andrew yang and stuff was like blue collar is going away AI but really it's impacted White Collar um more than blue collar I'd say have you thought about how your job could ultimately replace be replaced I guess Seth and Jake I mean listen I play around with a lot of uh like state-of-the-art AI most recently that's been uh generating music

on sunno which is really really fun crazy experience so Gooding so good yeah yeah and I the distinct sense that you know at least for a while these are going to be tools that augment what we do you know I think um there might come a point where there's AGI I don't think we're like anywhere close to that right now and if you actually listen to Yan laon on Lex he goes into some really compelling reasons like why we're not really that close and that's someone that you should like listen to on this topic I it it's interesting I think there's some really um there there's some really when I think about liquid markets and

the ability of AI to take over uh liquid portfolio manager roles um there are some really interesting nuances that that one has to Think Through basically like it it's kind of the biases and the foibles of humans that create the market right imperfect information that creat the the mispricings and how that kind of feeds into like if if there is an answer out there and a whole bunch of different AI Bots are able to come to that answer then what does that mean for for liquid markets that they just like price in

like to to Perfection what's happening today immediately like there there's always going to be the room for um multiple Market participants so it's it's something that I spend a lot of time thinking about but it's like a very like non-trivial um Dynamic like how AI interacts with market pricing um but there is like a really interesting you know when you talk about like Jake and and you're talking about AI augmenting um I think a big thing that the FED is focused on a a big thing that will impact Global economies just in the next year forget like five years out is the product tivity gains and the

disinflationary impact from AI I think it's going to come way faster than people realize and that's kind of why the F like that could drive the super cycle because if you're the fed and you're saying look last decade we couldn't get any inflation despite QE and zero rates and now we're GNA have like potentially the most productivity generating I mean Jamie Diamond today was saying this is as important as the steam engine right like the most productivity generating technology in Generations coming in an accelerating way over the next year or two like is your bias going to be that like this could like that that we could get into like an inflationary environment again

really quickly and you need to like be tight on rates or is it going to be man like we could have a big disinflationary Dynamic coming into play really quickly and and we need to like keep liquidity out there keep things uh Financial conditions loose uh um like I I think that's probably going to be the way that the FED thinks about it by the way it's so cool watching everything get dark outside while we're talking the eclipse it is cool it is cool I'm in uh I'm in San Francisco today so you can see you can see a little bit of it um that's cool uh Seth I think you're fa you have a good face for uh the future of the super cycle like I think Seth Seth gin super cycle Guy this

is the first podcast I've heard super cycle I like it I like it when this happens I'm be like Seth told um yeah with AI actually it was Ilia from near and then uh run uh run from maker um I was talking to him about at D about this and then Illy on another podcast a couple months ago about like this idea of for for me at least and at blockworks like I really do think that having an like an AI coo internally would be incredible for the company and for for all companies and I'm just kind of waiting for someone to build this where you know be up to the founder to the exec team or whatever to like do you want to opt in or do you not want to opt in but if you opt it in like imagine something that sucks in all the slack

conversations around the company every email around the company and someone before they go to someone can basically say hey look I'm trying to do X like should I do you know it's it's I don't I I just think that there's something I could see it being a very cool B2B thing Jake Seth I know we time this has been awesome guys I appreciate it uh a lot more that we could have discussed a lot more that we wanted to discuss so we'll have to have you guys on again soon and yeah we'll see you uh Jake I think you're already scheduled to speak at permissionless maybe or Seth you are or can't can't remember which one of you guys but as always we'll get the coin fund folks involved so look forward to see there so much for thanks Jason [Music]