Hivemind: Crypto Is Dead with Dougie DeLuca

Transcript

This is the first time I've really seen cryptonnative startups and builders and investors get challenged by the outside world and I don't expect that to change. We need to accept where the puck is moving and kind of realize is a much bigger pie beyond like our little world and the people who actually bridge that gap really well are going to do very well. Nothing said on the hive mind is a recommendation to buy or sell securities or tokens. This podcast is strictly forformational purposes only and any views expressed by anyone on the show are solely our own opinions, not financial advice.

[music] Hi everyone and welcome to another episode of the hivemind podcast. goal of the podcast is to provide an inside look into what we like to call the deli hive mind. Bringing together some of our brightest minds from each of the divisions to share insights alpha and ship posts. Today with us we have a special guest Douggee who wrote a viral post uh that we'll discuss and called crypto is dead which uh we'll discuss during this episode. And then we have Yan Lieberman, managing partner of Delphi Ventures. We have Jason uh who's the head of markets at at Deli Digital.

and myself um who split my time between Deli Labs and Deli Ventures. So Douggee, you wrote this this article on Twitter that um got a surprising amount of love considering uh how depressing at least the title was. I think the title was more depressing than the than the article itself to be honest. But um it it was called it's crypto is dead and I've actually been working on a similar draft which which is phrases a question is crypto dead? So, we wanted to invite you on to just discuss the the discuss this, discuss the sentiment. Maybe to maybe to start with, you could just summarize your article for us. Like what what are you saying in that article? Um, what is dead? Yeah, definitely a more probably aggressive title and like

depressing title than what the article is actually saying. Um, but it's kind of talking about how like I've been in the industry, I don't know, better part of the last like seven, eight years more or less. Um, and like since I've gotten in the space, it's been like a super insular space. Like you either are cryptonative and you get it, or you are not cryptonative and you don't get it. And things have basically been built for cryptonatives. Founders go out and like think about how to get in front of cryptonatives, how to get cryptonative users to use their things. And that's kind of just been the prevailing mindset for the most part since I've been in the space. Um, and you know, things are labeled as crypto and not crypto. And there's a pretty thick divide between

those like two worlds. And the article is basically saying that like I think we are moving towards a future um pretty quickly where like that divide really no longer exists and what's crypto and not crypto becomes like almost impossible to tell because going forward the majority of people who are building using the tech are just building products they want everyday people to use. They're solving real problems, making things better, creating new things that couldn't exist before. Um, but it's not like you have people who are using it because they love crypto and they just want to be a crypto user. It's just like I like this product. I want to use this thing and I'm building this because I want to build this product and it just needs happens to need to be on a blockchain. Um, and so yeah, that's like what the main point of the article is.

It's not really saying like we've all been wasting our time like go work in AI now. Uh, it's quite the opposite. It's just like the people who realize this shift uh whether you're a builder, investor, anything in between, um will do very well, I think, but those who refuse to accept it, I think for the most part will be left behind. Um and I'm also like just not saying like the casino speculative whatever part of crypto is dead either. I think like that's also just going to merge into the rest of finance. Like if you look at equities, there's certainly that component at play there. And so I think like you don't have to be crypto native to want to gamble or speculate. that's still going to be a big part of the space. It's just not going to be the only thing. Um, and so it's a long

article. That's like kind of really what it's about. Um, and I just like the reason why I wrote it was like I had a lot of conversations last week with people. Uh, because I've been thinking about this for a while. I think a lot of us have quite frankly. And I just started saying it because I was like, you know what? Like I'm just going to start saying the quiet part out loud and see how this is received. And everyone I spoke to was like, yeah, we've been thinking the same thing. Um, and then I was like, well, if everyone's already thinking this and like clearly people aren't talking about it enough, like I should just write an article on this and see how that's received. And surprisingly, yeah, I was not dunked on nearly to the extent I thought I would be. Uh, and so clearly I did just like

kind of say the quiet part out loud. And it wasn't that original thinking or anything. I think just like sometimes you need to put words to it, people to be like, "Yes, like that's the thing I've been struggling with for the better part of the last year." But to to what extent isn't this just a a cyclical thing, right? Like you had you sort of had like Bitcoin and then you had a bunch of like weird odds that that got crushed. Uh and then you went back to Bitcoin and then there was like the blockchain not Bitcoin phase, right, of like 2017 and all that mania. Uh you know, Bitcoin doesn't really matter, but like it's the blockchain thing. That's cool. Um, and then you had like obviously that crashed. Uh, and then you had the institutional blockchain phases

and and kind of a Bitcoin maxi renaissance and like 2018 and 2019 where it was, you know, all also trash. And then obviously in 2021 that all went out the window, 2020 2021, we had the bull market again and and it everyone was very bullish on on blockchain and cryptonatives. Um, and and obviously now with with sort of the the the price performance of alts, we're kind of uh toggling back into we need to solve real problems. I wonder like would you say that what what's different this time? Because I do think this time is different, but I'm I'm I'm curious what you think.

>> Yeah, I mean that's definitely one of the things I've been thinking a lot about because like people have said this before. This isn't I'm not the first person to actually say this. like far from it quite frankly. Um I think there's a few things that are different. I think like in the past honestly like it wasn't really possible for crypto to get in the hands of like quote unquote non-crypto natives. uh whether it was like UX barriers that existed like things that were super hard to actually abstract from people, regulatory stuff obviously as well like it was virtually impossible for non-crypto natives uh at least on the business and enterprise side to like or institutional side even to like really meaningfully interact on chain. Um and I think that's all starting to change uh kind of at around

the same time. And so now that we're actually seeing like the rest of the world have the opportunity and ability to actually come on chain, that's where like this becomes I think so impactful because like it's the first time like in my opinion that our insular world is like meaningfully colliding with the rest of the world where like we have institutions like Black Rockck, you know, getting very involved on chain and like you see all these companies like moving in the stable coin direction and so I think like this is the first time I've really seen cryptonative startups and builders and investors get challenged by the outside world. And I don't expect that to change. I think it's just going to keep on picking up.

And I'm not saying like we're going to lose, they're going to win. It's just like I think for us to win and there's no really no us and them, but like kind of feels like it sometimes. Um we need to accept where the puck is moving and kind of realize there's a much bigger pie beyond like our little world. And the people who actually bridge that gap really well are going to do very well. And so yeah, like there's a chance that, you know, the macro's crazy in the next year. And like I kind of eat my words because like all of the stuff that you know has dominated the past several years of our space comes back. But I still think over a longterm time horizon like this is the future we're moving towards and there'll always be like peaks and valleys towards it. But I

think like in 10 years like what I'm saying is going to hold true. >> Yeah. No, I mean I think looking back you needed the so in the uh right after 2020 and and and that whole DeFi phase I think that was necessary in order to build all the primitives to allow all this other stuff to exist, right? you needed exchanges and money markets and all these things to flow and and and those made a lot of sense because it was a very zero to one moment in terms of you know opening up the the surface area for what can be built on top and I think the capital flowed in and and everything was exciting. Um, and so at that point I think it made a lot of sense to build for crypton natives because you you you had a lot of capital flowing in and you

you needed to to immediately show like it was still going from zero to one. So there needed to be outside uh perception of there being you know massive adoption and and the way to do that is to cater to the audience that exists and and that audience was massively growing. Um and and you know I think we gradually shifted towards more and more casinoy type setups. I think one, you know, potential issue with the dynamics of the current casino is that uh across both per memes, I it's the you have a very power law distribution in terms of who wins and who who doesn't, right? And so if you kind of have have this grinder that exists, it is difficult to sustain

it on this pure, you know, two to 10% um of of users win and everyone else kind of gets gets blown out over time. I think you you tend to to turn through and and that creates a lot of uh knock-on effects in terms of you know both the existing users in the space and the appetite of new people to move in. you know, people what what got really everyone really excited is it is it felt like a great place to to to take risk and and and make money on on various opportunities. >> But I don't think it's I don't think because it's it's just that before you people believed in the assets, right?

they believed in a much bigger story and so the casino it was there was a casino element but it was like you're building the rails of a new financial system and everything is going to be an NFT and like you know Tasha's 2021 like if you have a diamond on the blockchain and you lose the diamond you don't actually lose the the d you know like that's that to me is like peak 2022 2021 energy like your NFT of the diamond's worth more than the diamond there was all these stories that people believed in so it you weren't it wasn't a casino because it was like positive sum right it's like we're creating casino came later for sure. I'm not saying that that was the casino then. Um but I think you needed to to build those primitives then and and at that point, you know, like you mentioned, everyone's

imaginations were going wild um in terms of what the actual potential of everything can be. And then as there were elements of disappointment in in some areas in terms of what can actually come to fruition, I think it naturally shifted towards casino because it it's just I think the way it works, right? It's it's like a lot of people are here purely to to make money and so you you kind of try and cater to them and and so you have some kind of reflexivity where the building was happening for the the casino users. Um so I think now you know you're at a point where some of these so like you know looking at some of the successful apps I I think Athena right as a as a yield product has a lot of

appeal outside of pure crypto. I think um memes are are you know they're an element in crypto that I think will kind of continue to do so betting on on kind of social sentiment and and and and attention and so I think pump you know made sense as a way to both try and cater towards existing users but also a way to bring on others whether it's through streaming or other forms. So I think you know you need to basically try and I agree with these apps need to be useful to outside users but I think it's it's hard to purely build for them.

There needs to be some degree of of overlap and so I you know prediction markets I trying to create better margins out of sports betting I think makes a lot of sense and and ideally that could be a way to bring users on. Now, I fully agree that apps need to be built and and kind of compete with their non-crypto components uh or or kind of uh opponents or or comparisons rather than purely growing the pie from within the existing user base. >> Real quick, Douggee, um it kind like [clears throat] so how much of this do you feel like this like it kind of like dubtales a little bit to to Z's initial question, right? Like if I was to like gauge sentiment in crypto right now,

like it's like FTX level. >> Yeah. >> Like it it feels like >> I think it's worse. It could be worse. >> I think it's worse actually. >> So it's somewhere it's somewhere around there, right? We can agree on that. >> Um and that's like despite all of the actual like clear signs of maturation in the industry, right, with institutionalization, all that stuff, right? Is it do you think it's just like mostly price driven because people in crypto are simply just they just don't own the assets that haven't gone down 90%. Do you think it's or is it like more of a deeper kind of like exhaustion or fatigue with these casino style speculative elements that we've been discussing? Or is it kind of a mixture of the two? Because when I was reading this article uh it actually reminded me

a lot of our conversations in in Montenegro Jose about like it was like kind of like a trying to bear hole you, >> right? Yeah. It it's it's kind of like a core. It's it's like adjacent to it. It's not exactly the same. It's kind of attacking it from like a different angle. And like when you like look at this cycle, right? Like prior cycles like bull markets when you know liquidity is going up, everything's risk. Like crypto is like the very clear place for speculative capital to flow and like it's not really the case anymore. there are other viable very cool tech pioneer sectors that are effectively vampire attacking that speculative bid that would have otherwise flown into crypto. And this is something we wrote about in our year- ahead report as well. So, I'm kind of

curious like where you like kind of gauge gauge it. Is it just like a price driven sentiment thing or is it more of a deeper exhaustion in in all of these things we've talked about kind of? >> Yeah, it's a really good question. Um, I think what Yan started to touch on is like something I actually think a lot about in terms of like tech adoption cycles and how markets tend to respond to them. Um, I I label them as like the imagination phase and the post imagination phase. And very clearly like 2020 to probably sometime in 2024, we were in the imagination phase.

Everyone literally thought like crypto was going to disrupt and change the entire world. uh whether it was everything's going to be an NFT, whether we thought corporate structures were going to be revised to like decentralized governance structures, like the list just goes on and on. People's imaginations were running wild in terms of like how much impact they believe that this technology would have in the world and because they were early, they were going to profit enormously due to that. Um, and then I think like, you know, some point in 2024, 2025, like that phase came to an abrupt end and we're now currently in the post- imagination phase. It's where reality sets in. And you look around you and you're like, have we actually accomplished any of the things that I

believe this industry would? And honestly, I think the answer to most of those questions, there's perhaps some exceptions, is a resounding no. And the result of that is people start to lose conviction, lose faith. They believe that like some of the things they thought would happen are not going to happen. And everyone starts to get very uneasy and nervous. They start to be like, am I just like moving in the wrong direction? And it's especially hard when you look around and you see AI, for example, in its imagination phase. People are making extreme amounts of money just like they used to crypto. And you're like, "Wow, like am I swimming in the wrong ocean right now?" Pretty much is the question. And I think like that is how I best describe like what the

industry is feeling right now and why I don't think it's just prices. I think prices are a symptom of it. But Josie, I think you want to say something, so I'm gonna give you the floor. >> Yeah, I think that's that's the biggest difference to me between now and it's like in in 2021, people believed in all these crazy stories, right? That Tasha tweet to me is like the pinnacle of of of that sentiment. But people believed in and all all these things, right? the ownership economy, web 3, we're going to reinvent social media, Dows are going to take over corporate governance. Um, yeah, crypto was going to impact everything. And it was the biggest story in tech. And and like the background to that, I think, is that tech was in a pretty dire uh like VC was in was was in sort of like a local bottom two because

it was just everything was was the latest like unimaginative SAS app, you know, or like frivolous consumer app, you know, dog walking or whatever was was the meme, right? right like Silicon Valley was was was in a crisis of meaning and when crypto came along and had all these big promises it like just captured the imagination it was it was the most exciting sector to be in and I think nowadays uh it's totally different where there's there's AI is taking off like robotics is taking off uh bio sort of powered by AI and also by just China deregulating and forcing the US to move faster is taking off like defense tech is is a whole new sector like venture capital is in kind of a golden age there are so interesting narratives to capture that speculative sentiment that I think

even if we have a coordinated global central bank liquidity expansion. I just don't think we see another alt season like 2021 because people just don't believe in in these stories anymore and there are no there there aren't new stories. I guess the the thing I would say that people are throwing out the baby with the bathwater is that there are we kind of know what crypto is good for to some extent. like at least we know the things that people are willing to pay for, right? Um, and I think there are basically three things that that people have shown a willingness to pay for to the tune of like billions or tens of billions of dollars a year and and those are in addition to the store of value, right? Which which we can kind of say is is is like the first killer app.

Um I think there there are three others and it's basically like token issuance which you can say like L1's are part of that pump is part of that memes like altcoins ICOs like tokenization I would put as part of this like clearly that's something that and you can measure this with with in a bunch of different ways um stable coins and then and then per I would say are sort of the three things that that really have have achieved some form of product market fit and like not just some form like they've literally spawned some of the most profitable companies in the history of the world by employee, right? Whether it's it's Tether or or Pump Fund and also some of the fastest revenue trajectory ramps in the history of the world. So, I do think

like within those three sectors, it's it's and I agree with Yan. It's like you kind of want to want to like the way I'm playing it personally is owning the winners in in in in those three sectors and and um but and then of course there's like a lot of sectors that have potential but they haven't shown uh product market fit yet. I think those are the those are the three that that have I think prediction markets obviously have potential. I mean we've been uh like excited about crypto gaming for ages. is I think privacy should eventually like catch catch a bid but like realistically these are the things that people are willing to pay for now and I think the issue with that is first of all it's very different from the crypto premise of everything being decentralized and you have like uh a

censorship resistant you know permissionless financial system because the winners in these sectors are are pretty much like centralized companies you know like tether is literally an IOU for a dollar in a bank account an alleged dollar in a bank account because we still don't have reserves you know this many years later, uh, you know, Pump Fun, you know, is is is is like a front end for for creating creating memecoins. Um, you know, when when you look across like even even Athena, which I'm incredibly bullish on, it's it's not like the the die maker dow like decentralized money vision from back in the day, right? It's something something very different. And I think that pragmatism is something that's really hard for a lot of crypto. It's the combination of all a lot of the stories we believed in didn't work out and the

ones that did work out are nothing like what was promised in the sense that they had to make so many trade-offs to the ideals of decentralization and stuff that actually make this this space interesting but I think people get are very jaded and throwing out the baby with the bath water and I think in these three sectors there are going to be winners but they're competing with the giants of tradfire right like Stripe is going to come after the stable coin market Robin Hood is coming after per you know and and token issuance so that that's al also the issue is you can get exposure to these sectors without actually touching any any crypto coins. Um yeah.

>> Yeah. I mean I think it's all a spectrum. Like I'm not willing to be like oh privacy has failed. Censorship resistance has failed. Like the founding principles of our space have completely failed. Like I just think they're not for everyone and that's okay. Like I think there is a crowd out there who like do genuinely I mean clearly our space exists like who does clearly care about and is willing to pay for these things. I think like people just often mistake like that crowd for the entire world. And like the whole point of my article was like it's time to start like going to the world instead of expecting the world to come to us. And that's like the central problem I think I've identified in our space is we just expected the whole world to become cryptonative. And that's never going to happen. And that's fine. Like we're

going to have things that are super cryptonative that carry on for a long time and are valuable. And then we're going to have things that are built on chain that are not cryptonative in any way, which is exactly what you're saying, Jose. It's also fine. So, I think like it's time to start like identifying who is your customer, what problems are you solving for them, why do you need to exist, and then go win that customer. Whereas in the past like we just been like we're going to build for cryptonatives and that's going to soon be the entire world and that's the end of your plan. And like that is not how in my opinion like the next generational companies in our space will be built.

>> Yeah. And I mean, I think that the decentralization element is not really that big of an issue anymore in in the sense that I think the the idea that max decentralization is the optimal path went out the window a while ago, right? It's there's there's trade-offs and and ultimately um a bunch of the elements of decentralization don't really matter that much, particularly when you you need to sacrifice quite a bit on the on the performance and and and UX side to to make them a reality. So, we've seen the kind of the the the the winning of CDI. Um, but and and I think that's kind of going to be the case going forward.

uh when you know there's enough kind of uh enough elements built in to help you avoid an FTX type scenario but but you're not obviously going you know die uh DAI D uh maxi where you know you have uh trust or decentralized collateral to to create to back a decentralized stable although that kind of went out the window with USDC that was you know uh backing a bunch of dive that was back in the early days. Yeah, I mean everyone kind of wants I think everyone wants to see apps, right, that that that kind of exist and and so part of, you know, what we've always tried to what we've recently recently in the past years tried to look for in these apps is, you

know, obuscating the crypto element and and only making it something that that exists if you want to interact with it or if you want to touch on certain benefits. I think um we haven't really seen too much of that happen. Um, you know, there there's been kind of some of these viral apps that that had uh unsustainable loops and and and unfortunately, you know, they just kind of get uh speedrun and then unwind pretty aggressively. So, yeah, the the tricky I think the the bigger risk is that are are the best founders going to keep building in DeFi? I think you you or in crypto. I think you had that for a while where you had really uh compelling kind of uh people trying to build because

yeah the promise was huge and the opportunity set was massive and and and it was kind of the wild west and so the the risk is that you have this kind of uh uh euthanasia roller coaster element um happening because you just don't really have compelling builders that want to want to go here. I think you know AI is a very building an AI is a very specific skill set right so you it's not as if you can have people going to build there it's it's not as if everyone is you know well equipped >> you can there's loads of application companies and like consumer companies build on top of that there's like a whole you don't have to build foundational models there's just like so much stuff happening >> like it it also doesn't have to bifrocate where it's like AI only I think you can like take on some elements

of crypto whether it's ownership of of assets or or or trying to pick on on smaller elements of crypto. Like you don't need to go full crypto, right? There are there are worlds where users don't interact with the crypto side at all and then there's there worlds where if they want to, they can tap into that and and and actually dive in and then, you know, the two kind of feed off each other. Um but yeah, I think viral apps are are what we really need because it's hard to really iterate on these successful primitives um at this point, right? We've seen de I'm sure there will be new dexes that come up with novel methods and the question is basically will existing ones implement what makes them can existing ones implement what makes them novel since they kind of

control the user or or is it is it going to be limited? Um yeah. Yeah. I mean I think Y what you said is like exactly what I hope is the case. Like my goal for our space is that like people just build on chain because it genuinely enables them to build things that they couldn't otherwise or makes their products better than they would be on using other tech. Um, and you don't have to be forced with this like big do I want to be in crypto or not. It's just like I'm going to build using the tech stack that best enables whatever thing I want to build. And I think that is very much possible. And we're already I think kind of starting to see that phase start to happen. Um and so I hope that is the case and that

there are founders who identify blockchain technology and you know the benefits of building onchain and these things and do so but are very quiet about the fact that like they are in crypto quote unquote that it doesn't matter to them. They just want to build the best thing they can. I I just think in that world like if people are just really just using like stable coins and and and and like yeah making use of crypto in in that way crypto is just worth so much less than it is now though. Um, and I don't and that's why like I don't know I I I kind of partially take the other side of of that too in the sense that I think our rails the crypto rails have proven to be insanely good. And I think when people

look at at crypto a lot of the time they say like you know look at all the the like billions or or like tens of billions of dollars people trade this this crap like it's what a what a scam. But actually it's like you can say like look at what people are look at how much people are trading like stuff that's that's literally valueless. Imagine if there was there was assets with real value behind them being traded on these rails. And I think that's also what we're seeing now is people like Superstate and and like Metal X and and and others bringing on like real world assets or like just tokenized chairs and all these things on onto crypto rails.

And I think that's like the other side is maybe the world does come to us in the sense of we've built really good rails. We just need like we have an asset problem, right? There aren't enough interesting assets to trade on this and maybe like bringing on real assets actually makes these rails uh like way more useful. And I think that world does result in a much bigger uh because I think if crypto is just in the background and being used is like the the stable coins or the the way that people which is like the main use case I think people talk about when it's like using crypto I don't think uh it justifies like a half a trillion dollar Ethereum or a you know $200 billion salon or whatever.

>> Yeah. It all kind of feeds off each other, right? is like if you bring those assets on chain increases activity and and makes the one the other base primitives as in the financial primitives more valuable because it it obviously leads to more volume and activity. But I think it also opens up the surface area of of kind of new applications that can be made because you have a variety of users that are interested in a lot of different things um available on on on chain like that you you no longer have to move them on chain. they're already here and and are much more willing to to try the next thing rather than going from like no chain to onchain.

>> I mean, from where I stand, it seems like [cough] it seems more likely we're heading in in in this direction versus like crypto just kind of being in the back. Like I don't know like everything you see with with like the the build fun uh the the build fund uh like everybody's moving towards this, right? Obviously, you have like the more cryptonative type equity companies like Galaxy, you know, kind of pioneering it with like Galaxy onchain and stuff, but like to me it seems way more likely like that is probably closer to what the end state looks like than crypto just being like a a passive facilitation of value in in the background. like it I don't know like like it it's very like it's

it's very clear like to to to to Zay's point that like it is way better to trade onchain like with with these rails than it is like anybody who's traded with interactive brokers or in Tradfi or with bonds like via Bloomberg terminals compared to the experience you have transacting on chain using you know cryptonative rails. It's it's night and day. It's it's infinitely better in in so many ways. And I just can't see a world in which Tradfi doesn't just use it. It's so much better for all of their purposes as well. So like I don't know.

It seems way more likely that the outcome is is is that world to me than or something close to that world than not. >> Yeah. I mean I agree. Uh, I don't think it's going to be like people just forget that these chains exist and that like these companies are using them. I think it's just going to be less of the focal point. Uh, >> yeah. And I mean like you you also have to like and this is something LTR wrote a lot about in the in the in the year ahead, right? Like most companies probably coming in aren't going to use existing blockchains in the way that we think they are. Like there's no reason for them to pay rent to existing, you know, L1's. Like they have all the users. They might as well just build their own things, right? So like things

are going to look different and maybe that compresses value in in in in the short term because like again like I don't think a lot of these corporate chains are also going to be like really great investments either, right? Like um again LTR I think everybody should read this. He he kind of like looked at like World Chain as like a case study and kind of looked at it from like the their token as like a CAC token or a customer acquisition cost token, right? And effectively what they do is like it's not like a great investment obviously, but what it is is they are effectively able to onboard billions of users without having to really pay any cost outside of you know the token. And most of that cost is is bared by by uh you

know users via in inflation. And when you look at like the chart of right like user growth right it's up and to the right. When you look at the chart of coin price it's down and to the right. But when you look at market cap, it's effectively like flatish for the most part, right? And like Seeker Mobile came out with like their tokconomics, right? It's pretty much the same type of model where it's like they pay people to use their phone, right? You see this throughout Trady, like that was like the big PayPal thing, right? Pay, you know, pay everybody $10 to sign up to PayPal originally. Base is probably going to do something similar, right? I would imagine. I can't imagine it's going to be something that really siphons value away from equity holders. It might be a way that they, you know, use it to

acquire that, you know, additional customer down the line, right? Uh Kraken Inkchain probably something similar because they're going to IPO. So they have to balance that with their equity. So you have all of these things, right? And I think we're just kind of moving in this new direction. You just have to like to your point just like kind of accept where we're moving like what these new dynamics are and then just there will be value and opportunities there. uh and if and if there isn't at the very least it it helps you avoid a lot of things as well which is equally important.

>> Yeah, I think you touched upon like the three probably biggest debates happening uh at the same time and like all spot on. It's like L1 valuations are they, you know, fairly valued or not? Should we expect like a massive correction due to kind of what you just said? Um two, what should be the role of the chain going forward? Should these chains vertically integrate more or should they just sit in the way that like Salana and Ethereum do right now just like kind of bottom of the stack backend things? Um I forget what the third thing you said was but like spot on like oh in terms of equity token split like in a world where these companies have equity investors and they're launching a token how do you make that work? Should there only be one

vehicle equity or token or can you actually have both coexist? And for me, like those are the three biggest questions that like I'm consistently thinking through and challenging myself on cuz I think like those answers will be extremely impactful to like how this space evolves uh going forward. And like I don't have I think firm beliefs yet in in any of these areas. >> Yeah, absolutely. Um and like I said, we I mean quick plug, right? Obviously we're in the process of publishing all of our year ahead. So, the markets one was published on Thursday. We talk a lot about stuff like this to to Dougy's point, right? It's been a a topic on a lot of people's minds for for a while now. Um, the apps one, I think, went

live yesterday and I think infra goes live today, right? So, just quick plug for people who are still listening uh that all those reports are live. >> And how how are you positioned, Douggee, for the like for this? How how does one position if you have this thesis? because seems like there aren't many tokens that benefit from from this. >> Yeah. Are you speaking like personally or as like my I'm a VC by trade, I guess. Uh >> yeah, my day my my actual job and what I spend most of my time doing is like investing early stage. So I guess like I'll answer both. uh early stage wise I'm looking for just like teams building things that actually I think solve real problems and can access like real people

in the world not just like this very small pie. I'm totally down for someone who's like, "Hey, I'm going to dominate crypto first and then like transcend the industry and this is how I'm going to do it." And I'm seeing actually teams have a lot more thoughtful ways to get in front of the rest of the world. Like more teams who are thinking through like viral marketing on Tik Tok and things like that. Uh and like that was something that was very unpopular uh a few years ago in crypto. Um or you know if you did it you kind of look like Morad sometimes who you know did an okay job of it. Long story short, but um so like I I do think like in terms of my what I'm investing in for the fund like it is way more focused on like exactly

what I'm saying in the article. Um and there's still this infrastructure that I think like needs to exist like but my perspective in infrastructure is like what problem is this infravolving for application builders and if I identify a clear problem that's like preventing applications that I think should exist from being able to exist and like that's a great investment. Um, but I don't think there's like a huge appetite anymore for like a new general purpose L1 or L2. Like I think there definitely will be exceptions, but like as a whole, like that was like the VC game for a long time. And I think like that game is mostly come to an end at this point, unless there's like a damn good reason for you to exist. Um, so that's kind of how I think about it through like the, you know, VC investor angle. Personally,

um, I was talking about this before the show. There's like a very short list of tokens out there that I think like do meaningfully capture value and like are building things that I think will you know hold up well over time and will grow in terms of you know uses usage and importance and impact and stuff and so like those are the things that I'm pretty much concentrated on. Um, I used to be someone who thought, >> and what are those? >> Tickers, sir. >> Tickers are tough. >> Stop loss, [laughter] >> not financial advice. Uh, I'll answer it this way. The things that like you go on chain and you actually use because like you think they meaningfully uh impact your life. Like you want yield in your stable coins, you go here. Uh, you want

to trade something, you go here. You want to go levered long somewhere, you go here. uh the things that you actually use uh and think you will continue using. I think those are usually the best bets to make if like you're a personal investor who wants to buy a liquid asset. Um because I was going to say like I used to think I was someone who was like super savvy from the macro lens. Uh I don't really think I have a good take on like the macro right now. And so what that pushes me to do is like be ultra high conviction in the things I have exposure to because in the event that they go down, I want to make sure I have enough conviction to buy more or hold through it. in the event that they go up, okay, like do I think this this

business can grow more and by how much and should that influence like how I manage this position? Uh, and so it's way more like looking for quality. I used to be way more thinking about like the, you know, narrative plays, the metag games being played, where we're at in the cycle, uh, how many more marginal buyers I think are going to come in. Like that game I don't really play anymore. I also just don't have the time for it. But I think like, you know, we're seeing a rush towards quality and that's like ultimately the sign of a maturing industry. >> No, I echo the same things as somebody who used to love the trenches and the narratives and the metag games. Um, and it's not the market for it. So, >> yeah.

>> Yeah. Exactly. That's the thing is is like there will be pockets of that, right? The whole alt season, it's no longer just this broad-based alt season. you have pockets of outperformance and usually >> and and it kind of rotates over time because everyone kind of looks at what happened before and then they try to speedrun it and and and obviously the same strategy can't work over and over again. So there is some element of trying to to uh frontr run or get ahead of of narratives but um at a period when there isn't new capital flowing in it it it boils down to like the EV is just much higher on trying to play higher conviction bets with larger percentages rather than >> um these other games that's more kind of

>> uh blowoff toppy or or when everything else has run up right you have the the the final rotations into the the the purely speculative stuff but it seems like yeah there's going to be just kind of a coalesing around um and then [clears throat] it's also trying to understand you know all these things like in trady trade at different multiples based on the the conviction of and the defensibility of those earnings and and the perceived growth rate. Yeah, I mean [snorts] it's it's kind of like Tradfi, right? Like I mean when you look at Tradfi, right, you could own the index and and do well, but like if you if you go out and try to like pick names, right, the v the vast majority of the outperformance is is is siloed to a handful of of equities as well. It's not

really that much different over there, but the I guess you know the main difference is the volatility and and the names that don't go up don't also go down 90% like in crypto. But like from the like disparity of returns, it's it's very similar, right? Like I kind of have likened crypto at this point like absent some major shift in like liquidity, risk on appetite, whatever it is, right? to just like get people buying again like stmmies whatever you know SBR whatever absent things like that right like crypto has effectively become like a stock pickers market like you can't it's not like prior cycles you can't just like look at like oh throw a dart okay I'm up 15%

like 2020 2021 2020 it was amazing like you could like be the worst investor ever and worst trader ever and just do amazing because everything would do Well, right. Like um and maybe that environment does come back at some point in the future when the bazooka of money gets unloaded and you go or something. Who knows? But like it's clearly not here, hasn't been here for years and it clearly isn't going to be here until something big changes and it'll be pretty obvious I think if that is going to happen. So, like it's a stock pickers market and you just have to pick the five to 10 names that are going to go up. Uh, and it just like just is

what it is. Um, I'm curious though, Jose, do you actually have liquid crypto exposure still? >> Me? >> No, Jose. >> Oh, [laughter] >> I you do. I know you do. >> Yeah. Um, I have I don't have much like uh I have less than ever before by by quite a lot, but I still do have some. Yeah, it's just hard to to >> get excited. >> It's just >> but it's also hard to just sell all your crypto. I don't know. I find that I find that uh >> agree >> challenging challenging thing to do. Um yeah, >> I mean the tricky thing with the environment right now is that you kind of need multiple things to go right.

Like the EV just isn't there right there. There's there's quite a few more negative surprises than there are positive ones in general and and you you need a lot of stars to align for things to go all right. We've had so many we multiple times where equities do well and Bitcoin doesn't. And so regardless of of your individual tokens performance, you're not really going to outside of really random pockets of like Zcash outperformance and something else. You're not going to do well when Bitcoin doesn't do well. So you you like first and foremost are making a bet on BTC and then after that you you like each bet has multiple bets baked in with their own probabilities of failure, right? So it's just one minus the probability of failure for all of these and and and

compounding that on on these individual bets which I think has kind of been a headwind and and that's very reflexive because if once people realize that then they're less inclined to to speculate and so um and and that just makes the the you know the value lower for everyone else. And so I think you kind of need this wash out period of apathy and then a gradual bid in the face of selling exhaustion and and kind of flows and then I think risk appetite can come back very quickly because when it does you do have these these massive moves.

So um yeah there's definitely still risk appetite that exists. It's just uh waiting for enough people to kind of deploy cash while selling evades. >> Anyway, Douggee, I know you had you had a goal. Do you have to can you [laughter] can you stay on? I don't >> at this point's too far gone. Uh I I got to bounce like five minutes, but yeah, I miss the days when uh underperforming was being up 2x versus 5x. That's what it felt like in 2021. It was like, oh, all my friends are up 5x, I'm up 2x. And now it's like, oh, I'm down 80%.

[laughter] Because I >> mean, the other thing with crypto is, and the reason I guess like I still have uh the crypto exposure is it's just really hard to I don't know. There's been so many times where sentiment was like, you know, maybe not as low as this. I I genuinely don't think sentiment has ever been as bad as this in terms of the number of people just completely checked out. It's actually the first time, you know, people always say like max pain is up. I actually think this is the first time in in the history of crypto where that's like close to true. I mean, it's never true. Obviously, Max Pain is always down, but like there's so many people sidelineed that I I actually think, you know, it's it's the closest it's ever been. But crypto can just rip in your face without

much reason and then the reasons come afterwards, right? Like, uh, this has happened so many times in I don't know. I I recall so many conversations between Yan and I over the years uh about this stuff and I don't know. So, so it's tough like and I also think a lot of the arguments people use against crypto and it's there was a point in the hib Santiago debate that I think made sense like Santiago was like all this stuff is like really overvalued and it's like and that's why price is down but it's like did people just realize this like you know two months ago you know like the the the stuff has been overvalued on any fundamental metric you can choose for for for years right and and so yeah that that's like I guess the

other side of things. I I just think it's the first time in that that I really see like meaningful opportunities outside of and meaningful narratives outside of crypto that people really want to be a part of. Um, yeah, and I think the big thing is going to be bringing those into crypto because the rails are still like unparalleled, you know, and anytime you interact with with Tradfi, with traditional, you know, buying assets, secondaries, anything like this, and you have to deal with a myriad of lawyers and banks and closing times and customer support, you kind of quickly realize just how good that the rails are in crypto. But yeah, um, just think we have an asset problem. I think to like end this on for me at least on a positive note uh I always believe that

like when conviction is the lowest opportunity is the highest um when people are giving up saying you know things are dead and it's all over is usually when you want to be looking for opportunities the most uh and I think most people as investors struggle because they do the opposite. Uh when everyone believes in something is when they're most actively involved versus like what I just said. Um, and so like I think like right now is when like you see opportunities like Salana at $10 and if you're someone who follows your convictions, does research on where you believe the puck is heading and position yourself accordingly. I strongly believe that like you're going to be rewarded down the road for that. The question is

like what are those things and are you willing to hold through the pain essentially? I'm not saying go all in now, uh, be responsible, but you should be spending all of your time like thinking about what the next thing is going to be and figuring out how to position yourself to benefit from it. Because I can tell you that has been as an investor, my most common success story is I've managed to invest when everyone basically said not to and I picked the things that actually rebounded the most and showed the most promise as things started to get better.

um certainly have been wrong as well in those picks. Like I'd recommend diversifying. Uh again, all this not financial advice, but just kind of anecdotal, you know, stuff that I have done. Uh and so I really do think like we are heading towards a better time. It might be painful for the next few months. I have no idea quite frankly. Um but I do think like the people who stick through and position themselves well right now will be rewarded when the time comes. >> Nice. That's a nice note to end on. Is there is there anything else we wanted to we wanted to chat about that happened over the last two weeks? Yan, Jason, Douggee, anything like pressing you guys wanted to discuss?

No, I think this was uh this covered most of it honestly. Like there hasn't really been too too much new in crypto over the last two weeks since we uh last did this. It's been pretty uh boring. to say the least. >> Yeah. >> But >> all right. >> Yeah, I really enjoyed the article, Douggee, and and thanks for joining. This was great. >> Yeah, appreciate for having me on, guys. >> Was totally worth missing my call for. I appreciate it. [laughter] >> Yeah, it was a good discussion. Thanks very much for joining and and thanks everyone for listening and we'll see you again in in two weeks for another episode. Oh, will we? I guess we will.

Yeah, we'll see you again in two weeks for a last episode of the year of the hive mind. Cheers everyone. See you guys. See you. >> [music]