Legion & Cookie3: Evolution of Onchain Fundraising

Transcript

You're now plugged in to the Deli podcast. >> Hi everyone and welcome to another episode of the Deli Podcast. I'm Jose Marie Medu. Uh I head up Deli Labs and today I'll be co-hosting an episode I'm really excited about with Mati from from Legion. um a project that we that we incubated at Labs and that just announced their their big round and Philip from from Cookie um Cookie 3 who's been working together really closely with with Legion to build what they're calling attention capital markets. So, first of all, congrats Maddie on the on the round. Huge huge win bringing in the big tradey names

Brevin Howard and and and and Vanek. It feels like yesterday that we were kind of brainstorming on this in Portugal like whatever it was two years ago. So, it's awesome to see how far you guys have come and how you've how you've executed on it. Um, so maybe as we start you you can just intro yourselves and talk about Legion and and Cookie3 separately and then we can go into the ACM vision. >> Cool. Yeah, thanks for having us Jose. Um, maybe I'll dive in and yeah, happy to hand it off to Philip. Uh on my side, super brief personal background, you know, Trafi background, data scientist, machine learning, started getting into crypto in 2016, 2017, ICO craze originally. I've been in full-time in the industry last four years or so. And

with that lens kind of uh came into the space and parameter optimization, token design type of roles and so kept seeing founders make dumb decisions about distributing their token. And so started thinking about how is there a way you know we can align incentives get back to some of the elements of 2017 get uh smarter more data driven right uh token distributions and that kind of led me to meeting Fabio my co-founder right and and the and the deli guys and just uh brainstorming around these concepts as as you mentioned Jose that was coming up on two years ago and obviously now we've uh just announced our our seed round raised from VANC and Brevin Howard Digital and also married that with some of the some of the the exchanges um and

some of the you know n more native uh DeFi you know players uh Coinbase Ventures Kraken Crypto.com Bitscale uh blockchain builders fund etc. So we're super excited. We see kind of the future of IPOs, right? the stock market and ICOs as being one and the same thing. And that's ultimately what the world that we're building for is when uh community formation, capital formation, onchain fundraising is all happening uh on chain, right? Instead of these instead of these legacy type of systems um that that we've seen today for that to happen. Obviously, there's a regulatory piece that needs to evolve which we're, you know, participating in, but there's also a bunch of incentives and mechanisms that need to be improved and that speaks a lot to what we've done

with with cookie on the attention capital market side. >> Phillip, go ahead. Give us give us an intro to cookie 3 as well and and also just your your quick background. >> Of course. Yeah, thank you Joseph and yeah, congrats Matthew as well. Big deal with the recent round. So um I'm CEO and co-founder of cookiefree. Uh in terms of my background, I'm coming from a marketing and data side of things. Uh both professionally and um uh I was uh studying that both uh fields. Uh so was working mainly in marketing startups and deoid digital.

um implementing different uh solutions into financial trai systems. Um involved in crypto from the investment side of things since late 2017 uh since late 2021 building cookiefree. Um so we were coming up with cookiefree uh at the very beginning from the pretty straightforward goal to uh track the capital attribution in web 3 which was and still is quite challenging uh because like as in web 2 we have uh pretty battle tested ways of doing so. We have

only offchain data. So we can do some referral links. We can do some UTM links. Uh we can measure uh specifically in local systems uh what kind of like conversions are happening in >> what what do you what do you mean by capital attribution exactly? >> Yeah. So basically like uh in web two you can measure the the attribution itself by using um known solutions like Google Analytics for example or any other analytics provider that is actually measuring the flow and the conversions of your user base and then retention churn rate but it's only limited to your local system uh where you are actually integrating it in kind

of like limited uh environment whereas In web three we have this like onchain data onchain word where like we have open ledgers of public blockchains which are like plenty of them. So basically you cannot measure everything within your internal system but you have to actually take into account what's going on outside of it on the blockchain simply and this is why we like came up with uh solving that by um merging this like two words of like off-chain data coming from in platform data from social data with onchain data because like you cannot live without any of those uh words if you are running a company in web three because you simply providing uh like you you have uh your own website

and platform, you have your own social media but on the other hand you have your own protocol that is uh running on chain. So you have to actually merge those two words in terms of like understanding what's going on in terms of like um user base um funnel. So this is like what was like initially as a as a goal and actually right now with ACM it uh it correlates a lot because like uh we found out that actually it's still not solved in terms of um measuring the capital influence of the creators. So along the way we came uh to the point where we are already providing uh very sophisticated solutions for uh measuring attribution within um um web3 protocols.

Uh but then we also came up with few solutions of actually uh activizing um creators to actually um provide the value in terms of creating quality insightful content about specific projects uh that are uh incentivizing those creators. So we are kind of an oracle that is providing um scores and points based on the value that is provided by the specific creators and this is quite challenging. uh we can dig deeper uh uh along the conversation but generally uh that was also the reason why we came up uh together with Legion with attention capital markets to

actually link the capital element to the attention because like we believe that the measuring pure attention is um ultimately a vanity metric and can be gained easily pretty easily. >> Okay. Interesting. Yeah, I'd love to dig dig into that more. So maybe to start with what's what is attention capital markets and kind of why did you guys come up with this term and what's what's the vision behind it? >> Yeah, sure. I can I can take it. So basically like uh ACM is uh a market where attention clears if it's baked by direct or indirect capital inflow. So basically we turn mind share um into

like probable signal of influence uh by linking attention uh with the like real financial commitment. So we are not only measuring the um engagement metrics views uh smart engagement uh and so like every element of the mind share but we are also trying uh as much as possible to link it with the capital influence. So like how uh how big the influence of the specific creator is uh uh actually impacting the decisions and the money flows of their audience of their uh followers. And this is like what we are trying to achieve here because this is we believe the

ultimate the most effective uh metric to actually um like calculate the quality and the value coming from those creators. Mati if you wanna >> yeah from our perspective you know attention capital markets is all about um combining those those two things right people people paying attention to the project speaking about the project and also putting their in layman's terms putting their money where their mouth is right you have kind of as we know anything that is kind of incentivized in crypto oftentimes gets botted gets you know civil and you have um these kind of protocols rolling out at the same time that AI has made it super cheap, right,

to create a bunch of content. And so we have kind of higher noise to signal ratio. I think people have noticed this on their timelines, right, on crypto, Twitter, there's less signal relative to noise these days in some of these feeds. And so Attention Capital Markets is a tool for getting back to some of the golden age, right? and finding who is putting their money where their mouth is, who's depositing TVL, for instance, as they support a project, who's referring others who who deposit TVL, who's investing in their early rounds or their their ICO, you know, TGE sale. And so, it's not just about tweeting about every project out there and farming airdrops. It's about supporting projects you actually believe in, putting your money where your mouth is, even doing other off-chain actions like inputting

code, making introductions, right? I think the evolution of attention capital markets is all about distributing tokens or enabling projects to distribute tokens to value ad supporters and investors. Yeah. >> Yeah. I think a good good analogy and like good example of that could be even like Micro Strategy with their like Bitcoin um uh like belief because like they are putting billions on the table and this is why they have pretty like outside voice on the market because everyone knows that that they are actually putting those billions on the table. So they are very credible in terms of their opinions on u this specific issue.

Yeah, makes sense. And it kind of goes to the core of I think what uh Legion is also trying to solve, which is this idea that um I think capital is is abundant in this world. There's sort of more capital chasing opportunities than ever. And the key is really finding out who is the value ad capital. And I guess that's where where cookie 3 comes in with the the attribution technology that links like all the offchain stuff with with with this. That makes sense. And so it's kind of like yeah identifying being able to identify who who's the value. Yeah.

How how does it work? Maybe that's the best way to start like what's the what's the implementation right now? You you kind of gave us the high level and then maybe we can go into stuff you want to do in the future too. >> Sure. Yeah. Philip, do you want to maybe just give a brief overview and then I can also talk about the way that ties into some of the alleged score stuff we do? >> Yeah, of course. Yeah. So basically to put it very straightforward we are measuring this mind share so engagement rates like social rates and metrics and they are being boosted by the capital um like element uh in uh different ways. So either so let's say let's let's make it on on an example. So there's like the first campaign that is right now running

which is uh Almanac uh that actually successfully raised 2.5 mil with uh 400 uh% over subscription uh recently. So right now before the pre-sale happened uh people were able to actually um snap so like create insightful uh quality content about the almanac to get eligibility uh to invest in the pre-sale on uh more attractive terms and to have this guarantee that they will be able to actually invest. So they were like kind of competing of uh eligibility to invest and then once they invest

uh their their like content scores are being boosted by this commitment because they are like proving with their own capital that they are actually believing in the project and they are putting their money where the mouth is. So basically this is exactly um how it works. So it works like in both uh directions either boosting uh the content scores by the capital commitment or giving you uh kind of like new opportunity new capital opportunities by providing uh quality attention to the project.

>> Yeah. Yeah. So so I mean I guess there's there's you know there's a few different ways to answer this question. There's kind of like how are things measured there or how it ties into a specific sale. there's how you know projects can can use all these metrics to kind of select the right the right investors in their sales. So as Philip touched on, yes, we have this, you know, Cookie has this great representation of kind of who is uh moving the project forward in terms of awareness, in terms of engagement. We can marry that with onchain data, right, about who's putting their money where their mouth is. As as I've been saying, this creates like leaderboards and rankings that can tie into Monolmanac's case for instance, right? Access to a discounted uh pre-sale or portion, you know, kind of a discounted um portion of the sale. So

they looked to raise 2 million in total, ended up with 8 million uh in total allocation requested and then the top um the top 50 people based on kind of their activity, you know, supporting the project, engaging uh talking about it and combined with their capital contributions got access to to a discounted round that was also, you know, oversubscribed. So, um, these users are getting access to sales, getting access to discounts even potentially of things that they're actually supporting in both word and action. And then also of course that marries with some of the stuff we're doing uh on the Legion score side of things that we're increasingly you know integrating with uh with with Cookie on but things like their developer

contributions right and certain onchain achievements and all these scores and attributes that the founders of the project can then go through on Legion and if they wanted to literally go one by one through everyone who's applied read their cover letter look at what they've committed to look at their scores across these aspects look at their look at their achieve achievements um and then select right hand select who they want to be their backers customizing support uh customizing allocations discounts etc. So, the future of attention capital markets, the future of both Cookie, you know, and Legion is continuing just get smarter and smarter and more holistic and, you know, in-depth representations of who are these people. Uh, how do we have a sliding scale of confidence that

they're, you know, unique people, they're not bots, they're not sibbles, and that they're the right people for each project. And I think the key thing to keep in mind, right, is that what's right for an L1 might not be what's right for, you know, a DeFi AI, you know, farming farming protocol, right? It's up to the project to select kind of who's the best uh supporter for them, rather than just dictating, okay, now you're going to distribute your token to, you know, 5,000 random addresses that just trust us. These are these are the right addresses to distribute to. Like the future is smarter, more targeted token distributions.

>> Yeah. makes a lot of sense in a way. It's kind of crazy that the standard method for doing ICOs was just like whoever pays the most, right? Just some kind of auction or or or even worse. >> Yeah. >> Yeah. >> Because you're literally picking your first community members and like a lot of ICO projects find that out the hard way, right? When you have like two years of just these these annoying like whiners on your on your Telegram just hassling you all day. That makes sense. Are there so in in future the idea is like um I'm on Legion I can I can have this merit-based investing where based on my contributions based on who I am based on how I'm talking about a project um and and and my and all that's tracked

via via cookie 3 I can I can sort of um have access to projects uh both in terms of investing and maybe eventually also like TVL and and participation right like maybe having some discounted vaults or something like this. Are there other ways that you can see to link this up? Like maybe describe as you see it right now like the ultimate vision for for attention capital markets like what what what do you how do you see this working out? >> Yeah. Yeah. So that's a great question and obviously something Philip and I and you know Cookie and and Legion are already kind of collaborating on. I mean obviously as we've touched on incentives are everything and so we've started to lay the groundwork. I think we'll lean into this more. But even in Almanac's case, you know, what happens after the sale also governs, you know, people

earning kind of retroactive airdrops, right? That kind of effectively reduce their FTV. And so I think too much in the space currently is just about uh farming farming, right? What what do you do before a token is distributed and launched and then not really tracking the accountability angle, right? Do you keep talking about a project? Do you keep supporting it? Do you keep using it? Do you keep contributing code after the token is launched and you've got your payout or were you just an airdrop farmer and you've already moved on to the next thing, right? And so we kind of track like what do people do afterwards?

Um and that feed and there's a feedback mechanism right into kind of their scores and their reputation as well as being able to qualify for some of these airdrops after the sale after the token distribution which again effectively reduces someone's FTV buying into the sale. So I think that's the ultimate vision is tracking holistically everything that someone's doing, understanding the ecosystems they belong to. You know, not just how many followers do they have, but really as as Philip mentioned, how much mind share do they have, how much mind share do they have in a given ecosystem or among a certain type of follower, right? uh or topic domain, what type of developer they are, um you know, all their social media presences, what type of onchain

user are they, and really getting into this datadriven approach of like Philip started with this, you know, this marketing web 2 background of finding the right people um to uh to hold your token, right? Like we spend all this money and time building all these fancy algorithms in web 2 just to optimize click-through rates, right? And conversion rates by a tiny tiny amount. And then in web 3 we hand out tens of millions of dollars blindly and hope for the best. Like that's insanity. Like so the future will look something more like um what web 2 marketing looks like today where we have these super datadriven algorithms kind of predicting lifetime value of a customer and then customizing the token distributions and the token

offers to to match that essentially so that you're best allocating your scarce resource of your token emission. I don't know, Philip, if there's anything you want to add to that. >> Yeah, I mean like it you you summarize it pretty pretty well. So I I I don't have anything on top of that. I can only agree and I'm that's why I'm pretty bullish on on the vision we are building together because this is kind of a no-brainer to to provide that kind of solutions uh which are already battle tested and which are already uh like um earning billions of dollars in web two and what like as we are right now kind of like tokenizing every single try

asset ultimately uh we will merge those like two words of like web three and web two and we will be the ones uh that are already uh having the battle tested working solutions for both um words that will be merging the ones. So I believe this is pretty exciting moment to uh to provide that kind of innovations and experiments because like still it's kind of like we are the first one that are providing such solutions. So, we are still learning how to improve them, how to make them better. But, yeah, pretty excited about that.

>> Yeah, I'm I'm really excited about that that vision, too. And maybe if we zoom out a little bit more and then then I want to dig into some some some other stuff, but if we zoom out a bit, what do you see as the future of just capital markets generally then? Like if let's say five years from now and maybe uh your your your most bullish case for like uh both for Legion and for just for your vision of the world like how do capital markets work? Like do we still are projects still raising private rounds from VCs and angels? Are they doing that but doing it through through Legion? Do you still have uh IPOs? Like do you still have kind of growth rounds?

like what's the how do you see the the future of of of like internet attention capital markets sort of sort of working out? >> Yeah, it's a great question and you have one of the exciting things is you have the convergence of like so many different trends right when you when you start talking about this. So I think in a in a nutshell um you'll have uh I think earlier and earlier rounds but more closely curated and less arbitrary access where for instance today we have these relatively archaic like accredited investor rules right where only people who are are above arbitrary wealth cut offs can get access to early investments instead of it being more contextual knowledge based or expertise right and so you can imagine in the future right

now we have tokens we have equity in the near future we'll have tokenized equity on chain of course Galaxy right just tokenizing their equity we'll also though have even creators you'll see like Mr. beast, right? Like tokenizing himself, saying, you know, you can buy this token and get a revenue distribution of 10% of like my lifetime earning. Like we'll have crazy stuff like that in the future, right? Where everything is tokenized, everything is on chain and the early distributions of those things absolutely will be sales uh public sales um happening on chain because of the because of the permissionless nature, because of the composability. And what will matter the most is that those tokens are obviously going to the early supporters, the early backers, the early, you know, people who are passionate about growing that

community. Um, and that that requires a bit of technical change. It requires a bit of regulatory change. But that's how I kind of see the world playing out where the future of IPOs, right, a public offering in the stock market and the future of ICOs kind of converge. Um, and you have these onchain big fundraisings led up to by a lot of smaller fundraisings from very targeted small groups. It's not private in the sense that no one can join. It's public in the sense it's accessible to anyone, but it's private in the sense that, you know, it's not kind of broadcast or widely advertised beyond that group. And so I think it's increasingly about finding these niche supporters, distributing your tokens to them, raising funds early on, and then leading up to a bigger, you know, liquidity TGE

conceptually. I think that trend will continue to play out. You'll have the long tale of VC funds, the tier 2s, you know, tier 3es plus dying out uh versus, you know, competition from smarter kind of retail for lack of a better term. But you'll of course still have tier one VCs around. So I think the future is more datadriven retail, you know, passionate early community regardless of their wealth. It's about, you know, their heart, not not the size of their wallet, and tier one VCs that can still provide expertise because they've seen these problems a million times before with their portfolio companies, introductions to, you know, B2B partners, exchange listings, all that stuff that a tier one can provide. So I think it's an exciting future. Um, if you think about it, not to get dystopian, but if you think about

some of the effects of AI, right? like on the surface they can be wealth concentrating and so we need earlier access to investment opportunities. You know if IPOs have been the wealth creation engine for the middle class as companies are bought earlier by acquisition and as they kind of IPO later all else equal people are missing those opportunities to make investment returns. And so we need technology and regulation to keep up and make sure that people have you know these these responsible access to to early stage investments. Um yeah, I mean I'm super excited about that vision. Philip, I'm sure you see a similar a similar future.

>> Yeah, it it's indeed exciting. And on the other hand, put this car in terms of like AI. I agree. Uh but yeah, I I believe that like the ultimately the market will be much more effective um including like running 24/7 with like tokenized all Trafy um assets, commodities and so on that will have permissionless access to everyone uh globally uh with like trustless uh like blockchain way. So this this kind of like web three ethos and crypto ethos that we were all starting with uh like years ago I believe this is exactly why this like market effectiveness will be

uh very very high much higher like exponentially higher than than right now. Um on the other hand uh I agree that this like kind of like marketing or informationational information market will also uh get much more um effective in terms of uh having more information about specific influences. So um there is this like known shift from um switching from these traditional ad networks to more decentralized ones including creators. So we are strongly strong believers that the creators are the future kind of like or even current ad networks the most effective ones. We believe that that the trust to the

people to the key opinion leaders like the real key opinion leaders are much um uh more valuable than any other form of um uh ad basically. And once we get to the point where we'll be able to actually measure this influence, the trust, the reputation um of those people, I think this is where um like having in mind this effectiveness of the market, the informationational market will also um like put a lot of impact on that because we will be able and like all of the market participants simply will be able to actually get this information and uh

make some money on that. So either it will be like humans or AI agents but uh the the access to the information will be uh much more open than it is right now and uh that will determine the effectiveness of the whole economy because uh people and u and like AI automated bots and so on will be able to uh make very quick decisions uh based on that and um to actually for example decide about go to market strategy in a much more effective way than they they can right now because they are just lacking of the information what kind of ways are uh the most productive for

their specific case for their specific uh certain needs they have um for the target group they are targeting and so forth. So I believe we are still lacking a lot of effectiveness in in terms of like information and in terms of the whole market like processes in terms of like tokenizing them. I believe this is where the whole economy uh moving forward will get much bigger effectiveness in all of that sense. >> Interesting. Yeah. I'm not sure if so so what's the what do you mean by that exactly like the information being yeah maybe can you expand a bit >> yeah sure so basically right now uh as a

as a project you're kind of blind in terms of like who is providing you the real value in terms of like for example running some like creators campaigns >> so ultimately you will know everything and you will know exactly who provided you how much value at the end uh at the beginning >> views capital um >> like starting from the top uh of the funnel. So like the awareness which is kind of measurable right now. So we can see what like how many views you get and so on. But then there's like uh consideration conversion uh loyalty. So like this uh ret retention churn that you have to actually measure. And there

is uh like as we are switching from this like traditional ad networks to the creators economy. We believe this is where our focus in terms of like measuring this attribution should uh be puted on because uh there are no uh effective ways of actually measuring the effectiveness of those like creators uh efforts and their uh outcomes of those um like like um creators um like content they are creating. So basically >> Mhm.

>> it's quite it's quite funny because even those creators don't have any clue what kind of capital they are backing behind. So like they have no clue about their network uh capital that they are moving. So it's kind of like unknown word uh right now and we believe by providing this information to the market it would be it will be much more effective because uh projects uh will stop wasting money on uh irrelevant um campaigns and in irrelevant marketing activities uh because they will finally know what is actually providing the real uh tangible value. makes sense and and I

agree with with what both you guys said. This is the culmination of of so many trends that that it sort of needs to happen. I mean even like public markets have obviously kind of ground to a to a halt. There's been I mean this year has been better but but there's been way less IPOs. Most of the wealth creation is happening in private markets. The exception to this is obviously crypto which was where the most sort of retail wealth was created in the last maybe in the history of humanity actually but but definitely in the last decade u with with you know Bitcoin Ethereum ICO even like the the the Salana sale and a bunch of others and also even this this trend you you you can see that people want access to these private deals right there's sort of this like SPV inception with like SPVS on SPVS on SPVS like

doing uh like investments into open AI or anthropy IC or whatever. And you're kind of seeing like Robin Hood start to lean into this, right? Um and and want to tap into this to this thesis, offer these these privates to their to their users. Yeah. Where do you think the role is for for Trafi? And maybe you can include like Robin Hood in that, but just generally, I mean, with IPOs, we have these these regulations around around disclosures which have criminal penalties, and there there's a lot of burdens to to going public. Um, and and that's sort of what we defined as a as a society to be the necessary burdens that that we need to impose on these companies in order to preserve like

investor protections or whatever. Um, I think Vlad from from Robin Hood and and I definitely agree argues this has been like pretty perverted over time that there's just no uh, you know, basically the accredited investor test is is very old, right? Like the there's nothing in there that that that implies skill. It's just a pure net worth test. It's kind of ends up gatekeeping the best opportunities. But I'm curious like yeah what you said IPO and and and ICOs merge. What does that look like? Like ICOs will have the same requirements as IPOs or the IPO requirements themselves will contract or there will be like kind of a preIPO thing which is a bit less burdensome. What what do you think the right way is to do this?

>> Yeah, it's a good question. I mean I think you'll have you'll have uh both both aspects both IPOs becoming a bit less burdensome and ICOs becoming you know more grown up and more like IPOs and so the way that will play out is on the IPO side of things obviously some of this activity starting to move onchain in the first place right so you have onchain being the actual rails for these instruments being issued for ownership being tracked for you know um for um transferability for purch purchasing and so crypto will be kind of the place that some of these investments and and activities are moving to. Anyway, um as well as some cleaning up and some streamlining of the regulation and the

disclosures, like you already have what's called regulation A, which is basically like a crowdfunding type of of approach in um in the US. And it's it's colloially called like the mini IPO. And so it's kind of, you know, you can sell to a bunch of people. the the token or the asset can be traded immediately afterwards in a reggae offering and there's a bunch of disclosures teams have to make but much less drastic uh bar of disclosures than than an IPO and so I think you'll see that trend continue where IPOs move on chain they're kind of uh less and less burdensome there's some intermediate steps that teams can choose to access like a mini IPO and at the same time you're already seeing right ICOs become

more buttoned up you're seeing um you know ma markets and crypto assets regulation in Europe which basically laid laid out for the very first time in a major jurisdiction here are these things called token offerings right they're distinct from a securities offering but here's the disclosures you need to make to do it in a in a compliant way right and you're seeing the US whether it's the clarity act or whether it's some of the guidance that the SEC has kind of been hinting at moving in a similar direction where they're saying look there's going to be a compliant way to do token issuance token distribution to Americans, but that doesn't mean you can just do anything you want and ramp and fraud as possible. You still need to disclose like basic facts, right, about who controls the supply and these sorts of

things. Um, focused on kind of investor education. And so I think we'll see ICOs increasingly need kind of the right disclosures and the right, you know, um, education to make sure people are aware of what they're getting into, the right controls to prevent people from getting defrauded, you know, outright. And at the same time, IPOs becoming a bit more lightweight and moving on chain. And you know, the inevitable result of that in my opinion seems to be that they eventually merge and become more or less indistinguishable. The same thing, you know, what we call an ICO today would be, you know, tokenized equity offering uh two, five, 10 years from now. Um, you know, the tokenized creator offerings that I mentioned. So that's kind of what I mean when I when I talk about that that world that these these these worlds

converge and that and onchain rails becomes kind of the tools that we use to do this. >> Yeah, that makes a lot of sense to me. Um and because you're also seeing I think the other incentive is that you have all these like local stock markets like even the footsie but the the the Portuguese stock market and stuff that are just terrible places to go public as a especially as a as a tech company or a startup like the >> even the London stock exchange is kind of dying out, right? like yeah >> everything other than the NASDAQ pretty much is going to is going to cost you a lot in terms of valuation right there like studies done on this of like the the delta between going public on one of these exchanges and so I think for for these for anyone other than the US it

seems like adopting this kind of standard is is a no-brainer like where you you can have a an an actual like global IPO right where you can access anyone that's on chain with it rather than just the people in your local jurisdiction because you're already losing out like every single I mean in in in in Europe like every successful company ends up going to the US and and IPOing there and then because they IPO there then they have headquarters there and like there's more VCs there and stuff and it just builds this network effect where it seems like even for for for countries for for for Europe for uh for LAM it makes sense to to just adopt this first and give your your your companies a way to actually go public to the entire world without having to leave your without having to go to the US

basically. >> That's a great point. I mean yeah you get the better liquidity higher valuation premiums right in the US and uh and you and if there were this alternative of onchain you would maximize your distribution you'd have of course all the composability benefits right so you could start like borrowing against your your stock positions right and deploying that capital so yeah it's all it's all coming and I think sooner than most people most people expect. Yeah. And now now let's Sorry, Philip. Do you want to add anything there? Otherwise, I'm gonna move into just some of the You're good. Cool. So, some of the concerns people have with this uh and there's I don't know if you saw the the Vlad and and uh Patrick Collison podcast where uh >> yeah, he or not Patrick actually, John

Collison, the this Stripe co-founder, he does like this these podcasts where people drink allegedly drink beers, but like no one ever finishes their beer. classic SF uh thing, but uh they they talk about uh they talk a lot about this. Obviously Vlad's a huge bull and John is a bit more uh skeptical. Um and and there's a lot of people in that in in that believe that for different reasons right? >> Um and I think I think one the re one reason that we covered is just this regulatory reason that you're just that isn't this just a way to sidestep the regulations we have around around going public? And I think yeah, I'm curious what your response is is to that and then I'll go through some of the others too.

>> Yeah. Yeah. Fair. I mean, so to the question of isn't you know crypto or isn't just this this specifically what we're doing kind of a way to sidestep regulation. I would say there's the way I kind of think about it is crypto as a whole I could I increasingly see as the benefit of it is that it is this global kind of sandbox, right? you have composable money, you have things that, you know, arguably, yes, you're going to have fraud at the edges that does need to be reigned in, but you don't need to go and ask permission from, you know, a bank's API to build a proof of concept or an MVP, right? You don't need to go and like register with a with a with a government, you know,

body that will spend literally years processing paperwork before you can even make your first dollar in revenue, right? So I I increasingly think of crypto's biggest benefit in addition to composability as this permissionless sandbox to try new concepts and like yes that's going to mean sometimes there's gray area of teams doing things that like you know maybe seems like it's circumventing existing regulations but I think it's very much a necessary component if we're going to move forward and if we're going to improve these systems that are sometimes getting in their getting in their own way. I'm by no means saying like, you know, we should intentionally circumvent regulation or that, you know, uh people don't need to be, you know, protected and and and u educated, but I I think

it's >> it's great what crypto has done. Like look look at all everything that's happening now in traditional finance, right, with with the with you know streamlining activities and cleaning that up. would any of that happened had all this innovation in crypto not been this not applying this pressure to actually innovate on an industry that you know has been somewhat stagnant. So I like even in the US making a payment on an a network right was taking days. Now finally in recent years it's it's kind of advanced a bit and become quicker. So >> um >> yeah that's how I I think about it.

>> Yeah. Philip do you want to add anything there? I mean like uh we are kind of on the other hand looking on the market that is not like we are like we believe that the of course like regula regulations are kind of uh limiting everything which is kind of obvious. Uh that's why we also decided to work with Legion because those guys are actually like knows uh everything about that and have a pretty complex and sophisticated plan for that uh for actually making it happen and we believe this is the only way. there is um uh there is no other way to actually provide such uh

comprehensive solution for the global market than just aligning with the regulators starting from the probably the the biggest economies h and this is exactly how we are approaching that. So we are not the the ones that are working on that but more interested to integrate and um be interoperable with the projects and brands that are actually uh already working on that. >> Yeah. No, I I I agree with with uh with all of what you guys said. I would also say that I just think in g I mean I'm a big believer in regulation generally and that we do need uh the state and and protections but I think the investor protection regulations have have have

mostly protected them from from profits like and mostly protected them from and and we kind of saw this with crypto because I mean I've been a a beneficiary of this but so have many others who would have been locked out of the traditional system right you wouldn't have been able to to to invest in projects uh that wouldn't be projects to invest in because they're all like gatekeep by SFVC firms. Uh, and you saw in crypto there's like incredibly smart investors that came out of all over the world like um that would never have had the the opportunity to to to do this if it wasn't for for crypto. So, I don't know. My my view is that you should just have disclosure like very strong disclosure regime with with fraud consequences for for lying on those disclosures and then let investors opt

in to say like I am comfortable that I may lose all my money that these are high-risisk investments but I want to participate because otherwise I think what you what you have is just uh like this then what often happens with regulations which is they have good intentions but they end up having a completely the opposite of what you wanted, right? Which you actually basically meant that the rich got richer. The people who are already accredited, who have the net worth, whatever, just had access to the opportunities and got richer. The VC funds um were able to to basically get a monopoly on this. And so, I don't know. I I I think crypto is the proof and and I think crypto is also kind of at least partly responsible for catalyzing this change at the SEC that's actually taking

like a forward um thinking approach to this. So yeah, I I think just because some Yeah, that that's that's kind of my my take on it. And then some of the other concerns people have is that historically there has been some some sort of negative selection in terms of the projects that do ICOs, right? Which is like uh I mean maybe the the bluntest way to put it is if you can get money from a tier one VC, you do that. If you can't, you get money from tier two or tier three VCs. If you can't, you go to like friends and family, depending how how much you you you love them, I guess.

Um, and then if you can't, you you go to the you go to the public, right? That's been like the traditional sort of uh negative view on on on ICOs. H how do you and and obviously this hasn't been true for for everything like look at Ethereum and and things like this, but how do you come out? Do you think that there's still this that this still happens or or and how do you combat this if so? >> Yeah, 100% it still happens. I think there's definitely a degree of truth to that. But that let's break that down. Like why is that true? You were describing a waterfall of like value ad investor basically, right? Like first I go to the most value ad investors, then I go to the next ones who are only going to write a check but not really do much.

Then I go to friends and family who are like, you know, gonna give me money but not really be able to do literally anything because they don't understand my business and my industry, right? So what that is is basically a proxy for value ad. And so the solution is building these tools that cookie and legion are building where you can sort through anybody around the globe, whether they're a VC or an individual and find the value ad people, you know, from from that audience, right? I think we all can agree in crypto. We've all seen it how this random pseudonmous account, right, can be this actual like gigabrain genius guy who can just do so much for your project. And being able to discover that person, right, find that

person is what can make a difference between a really, really strong, you know, fund raise, angel round, whatever you want to call it, and just distributing to a bunch of people who show up in your Discord and ask when token. So that's how I kind of see it is like we're we're solving that exact problem. Philip, I don't know if you want to add. >> Um yeah, I agree like you you are the experts here. So I can only agree and I can uh add on top of that that there are plenty ways of actually um kind of like measuring reputation or the the potential value at uh coming from those investors. And this is where we comes in and we we can uh like help and ultimately we want to like measure uh

probabilistic uh value ad um from everyone that is publicly known in terms of their socials uh or their wallets. So like taking into account this onchain and social data, we want to be this kind of like oracle telling the projects, yeah, this this guy is pretty valuable. he's actually a strongholder. He's having very strong network that is actually trusting him and so on and so forth because like these pretty detailed elements uh are uh ultimately game changers for the project to to know that actually.

>> Yeah. And I mean in in crypto as all the proof is in the pudding, right? You have so many examples of non-institutional VCs adding ridiculous amounts of value to a project, right? Whether it's like chain link god at at at chain link or you know shoku I guess he's kind of institution sized but at at hyperlquid but there's like every community has these people that have just been crucial to to to the project success and really got no benefit from that other than the coins that they bought you know like everyone else going up right there was no way to to to discriminate and that's really what I see with like what you guys are doing is is like there's not this concept of a private sale and a public sale everything is kind of public private it, right? You apply and then

the the project chooses who they who they want on their cap table just as you would like hire people, you choose who you allow to to invest into into your project. Um, and and that I see is like cuz cuz right now in in in Trafi, this is such a a problem because even the companies that try and control their cap tables still get these people putting together SPVS um where some random uh people end up investing and then there's a lot of fraud with these SPVS. There's like fees on top. It's not transparent. it makes so much more sense to just, you know, uh, enable anyone who wants to come in and add a bunch of value to to to do so, right?

>> Yeah. Yeah. I mean, I think you touched briefly on like SPVS, like that's obviously another point of where moving these things on chain is just going to be much more beneficial. Some of these early attempts at like tokenized equity still have these embedded SVs and these embedded like hidden counterparty risks, right, that aren't really expressed. the more the more natively these things can be expressed on chain where the the proof of ownership right the chain of ownership is kind of transparent and just uh and just available for everyone to see the better off you know everyone will be projects and investors and regulators they should be happier because uh people are being protected.

Yeah. What about I mean I think those are the best ones but some people also say that investors only professionals can do this right like investors like uh retail is just going to get wrecked as they have like every cycle these people argue you know and and and and so it's going to basically end up um causing a lot more damage than than than good. How do you think of of that argument? I mean, let's let's set the hypocrisy aside that like people can go on a betting site, right, and play these like strictly negative uh negative expected value games.

>> Lotteryies in Portugal, we have a staterun lottery system. >> Yeah. >> Like, you know, good. >> So, let's set the negative value, you know, hypocrisy argument aside and just look at kind of out outright. I mean, I I reject the premise kind of or you have to have a scary premise that, you know, there should be this nanny state that is um telling you what you're smart enough to to invest in, right? I think I'm all for preventing fraud. Can't stand the fraudsters in this space, right? Give people like common common language disclosures that they can understand that makes them aware of the risks, right? make them sure that they're maybe there's a maybe there's a quiz that evaluates their knowledge like they say they understand the risks of blockchain

but do they actually even understand you know the basics the difference between private keys and public keys for instance um that that would be necessary to to know to not you know get get your face ripped off. So, I'm all for that that aspect of like validate that people understand the risks they're getting into. And then at the end of the day, if they really want this, you've got to step back and let them do it. The alternative is basically this nanny state that tells people, "Oh, nope. Sorry, you're not rich enough or you're not smart enough to get into this." You have no idea, right? It could be someone who really knows that space and like this is their, you know, their first investment they're making, but like they know the team or they know the space or they've been working as in the industry

as like a hobby project and they feel like they have an edge. Just let them be educated and protect them from fraud, but let people make their own decisions. I think we have to go that route. And I think on a quick final note, like given how blockchain works and the permissionless system and then the convergence of that with AI, uh, creative AI spinning up just new content and new ideas and new projects so quickly, like there's no way for regulation to keep up even if you try to take the framework of we've got to rubber stamp, you know, every single every single investment. Like realistically, regulators are going to have to adapt to a disclosure focused type of regime and then just go after the outright fraud. There's no way you can control all the stuff that that's spinning up that could be invested in.

>> Yeah, that's that's pretty much my my take on it too. I'm curious, Philip, if you have anything to to to add there. Uh yeah actually actually not not not so much because like um we are not uh the ones that are actually that have to care about that fortunately. So as I said like we are kind of like utilizing uh the knowledge and knowhow of our friends from Legion and this is why we are also bullish on this and uh this kind of like approach because we believe that uh you have to focus on your own niche and uh to be kind of like um like the best in

it. Uh and this is what we are trying to do with like creators economy >> uh ultimately uh making this like information market very effective. Maybe uh in the future also tokenizing um creators as Matthew said previously because like this is probably the the way of making the creators economy market even like more effective to to like tokenize creators and let the market decide uh about their value as well. >> Yeah. Yeah, I'm always skeptical of these arguments that only professionals should be should be allowed to do this, whatever. I think with the internet, uh, they've been proven completely wrong and in in the sense that there's been

countless examples where some random person on the internet knew a lot more than than the professionals and was kind of told to to shut up. You're not you're not an expert in this. Um, and and turned out to be to be right. And I think that's kind of the history of the internet, too, is you know, whether it's Airbnb, like Uber, right? like, >> oh yeah, exactly. Co like there's there's so many examples of this and I think crypto itself is is the litmus test for this where you you kind of saw these these people that weren't professional investors, the Arthur Chungs of the world that came up through these communities and ended up becoming some of the best investors and I will be uh we'll have some of the best investors of of like this generation will have either started off or be crypto

investors um and and have no formal training. And with AI, that's even going to be more the case, right? You can learn anything so much quicker. Um I'm I'm very yeah very very skeptical of this. I had another question. Oh yeah and I also thought it was interesting like because to some like what you said the waterfall of value ad made a lot of sense to me. I think it's a great metaphor. Um and in a sense people are using like proxies for the value ad, right? Like um this tier one VC has a brand name like A6Z. We know them. They they've invested in in in huge projects. They must be good. um or this this person, you know, uh is referred by this person. And and in a sense, what like cookie3 allows you to do is is get to the raw data rather than

have to use proxies, right? Like you don't you don't need to rely on reputation or or brand name or anything like this. You can actually see the raw value ad data of who this person is and whether they can add value or not. And like we we said when we've been saying this whole time that there there's many individuals who add way more value than than actual firms and and and well-known firms, but just because of the dynamics, right? And like a a VC firm like we have nearly 200 portfolio companies at this point. Um and and then your incentives are always to to be on the lookout for the next one rather than the the the existing ones. So necessarily if someone's coming up and it's their first investment, they're going to treat it like um like it's life or death, right?

They're gonna they're going to be on it all the time and stuff. And so I'm just yeah, I'm so excited about what you guys are are building. I think it's one of the most important things in in that's happening in crypto. It's actually the reason I originally got into crypto was ICOs was the thing that that really got me excited. So yeah, really cool that you guys are are kind of bringing it back. Maybe the the the last uh or I always say last and end up asking more. So I'll just say one more question is uh on the SEC they've this SEC seems very progressive towards um this vision of the world generally um obviously Hester Pierce has been has been huge on this what do you think maybe what's the

latest out of them like I I've read a few of the papers but I'm not catch you know fully up to date with it and then what do you think they should do? Yeah. So to set a little bit of the context, right, like they have the clar the genius act is passed in in the US, right? And then they have the clarity act. Um there's a version in the house and a version in the senate that might go through. There's a lot of implications, but the tlddr is that uh both of them set some kind of rules for doing token distributions to Americans, right?

Both of them have different frameworks largely around like decentralization or like or the the rights granted by by the token. Um Senate one being a bit simpler in in those criteria. Um so the SEC is in a position where the there might be an act that passes from the house and the senate or there might not. So there it's kind of a difficult position to be in because you can imagine they don't want to just like release guidance and like end up contradicting or frontr running um um you know the Senate for instance but I think they also have to realize and the language you know coming out from the SEC and from the chairman does reflect like the urgency like companies are waiting on this right the market is waiting on this uh individual investors as you mentioned Jose are

getting screwed out of you know missing airdrops and like getting protected out of profits right so um this is having a material impact And so they've increasingly kind of ramped up the verbiage they're using in the language around um token distributions and we're going to we're going to you know lean into as the SEC like exemptive relief and like taking more active stance. None of the rules have yet changed, but even the even just Gary's departure, right, drastically changed the practical risk uh of the of the SEC going out of its way to go after projects on minor technicalities, right? And that alone just means that people can do a lot more, have to worry less about, you know, did I did I cross my tees and dot

my eyes? Like, yes, of course, they should be doing that, but um you know, less adversarial. So I I would it would be my hope that and the SEC's latest language is more around you know tokens as applying common sense similar to ma they're not granting you equity ownership rights right they're not granting you dividend rights they're not represented or marketed as if they were these equity stakes and companies they are not securities by nature of what they the the rights they kind of grant you and then all these you know decentralization complex metrics might be relevant to disclosures but are not necessarily relevant to whether it's a security or not. And so the direction they're kind of leaning is like let's

not over complicate it. This is literally not a security. It's not, you know, entitling you to any legal protections or promises. Um it's it's it's more akin to like a collectible. Let projects distribute those things and then there's disclosures to make. And the SEC seems to be indicating that if if you know clarity doesn't come from uh the House or the Senate, they will be providing guidance to this effect themselves. So time-wise, who knows, right? Regulators always move more slowly than we as an industry would like, but definitely promising type of language coming out of the SEC.

>> Yeah, that was that's that's promising for sure. Yeah. I mean, for me, I would love just the the disclosures and let people price the the different levels of trust, right? And let's see what the market thinks. I think eventually um we will settle on on the structures that make sense, which you know, for some things will be securities with legally enforceable rights. For other things, they might just be smart contracts with with smart contract enforced rights and people may end up uh having faith in those even more than more so than they have in in in securities in some cases.

So, I don't know. That's that's what I what I hope to see. Yeah, I think the mental model that I recently uh heard was like securities are kind of like ownership of a of a company, right? And maybe there's this new asset class thing called a token which is ownership of of a product line, right? Of the smart contract, not the whole entire company, not a team, but of a product. So, um that would be an interesting thing to see codified into law, that kind of distinction. >> Yeah. I don't know about product line. Yeah. Anyway, I see it more as a network because some some like there's you're you're buying varying levels of trust with different systems, right? And some in some systems you're really depending on the team uh choosing to buy back the token like pump fun or whatever like um

you have no really even contractual rights or or smart contract rights to them. In other systems, um, that's not like Maker or something or or Hyperlquid. You actually have a smart contract, >> you know, curve. It's it's encoded in and that arguably assuming that the governance is is fairly distributed and stuff is arguably even a stronger right than than than securities in most countries. Maybe not in the US, but but but probably in most countries, you'd rather have that than uh than than be rely on that country's legal system. Um, and I think these all all these different trust like levels of trust will just get priced by the market if we if we have disclosures and people know, oh, it's a multi-IG that that's that's actually running this whole system or

it's or it's a single admin key um or it's a a security, you know, like all this stuff I think could just get priced appropriately. But, um, >> yeah. >> Yeah. Standardization of terminology and disclosures is all is all key to to that, you know, maturing. >> Awesome. We we've just cleared the the one hour mark. This has been uh really interesting. Got me even more bowled up on on what you guys are are doing than that than than I was before. It's nice to have an hour to to to chat about it. Is is there anything I missed? Anything you guys want to touch on that that that I didn't?

>> Um I think you know, Philip, I'd love to hear more about kind of what's next for for Cookie. Um I think we want to want to touch on that. >> Yeah, sure. Of course. So basically I believe that the next uh few phases will be including um like digging deeper in terms of understanding the individuals also like participating in the pre-sales on legion to not only be limited to their own uh kind of um representatives but also to the audience they are uh actually that is actually backing them.

So I believe that the um reputation should not only include the direct components and direct uh characteristics of the specific people that are participating in the pre-sales but also their influence or the network and uh retrospectively we can actually measure that. So I believe this will be the next uh what kind of like implementations we will be uh aiming to provide uh in terms of like more sophisticated data points as well as um the like historical kind of behavior in terms of the loyalty in terms of the advocacy for something after the pre-sale because um once we start with

like more and more pre-sale and in attention capital markets will have more and more data to actually uh analyze and to come up with new ways of uh scoring the behaviors that like the quality behaviors of uh of ambassadors of true believers and this is uh I think very exciting for us that there is a ton of things to still discover uh in these data sets that we maybe didn't even come up with yet but I strongly believe that this is where uh many answers are actually waiting. Um so yeah, >> does that intersect with like does that intersect with proof of humanity at all

in your opinion? >> Uh sorry once again. >> Does that intersect with you know with these >> calls like prove you know you're unique human being. >> Yeah. uh it has to like uh it it will be uh kind of I guess mandatory to include that in the future like maybe not not not right now because we are not so swamped with AI agent yet but I guess uh in the coming months it has to be uh involved as well. >> Yeah. It's a brave new world we're headed into kind of condoned and you know unofficial AI agents uh running running everything.

>> Yeah. I mean, I think the the what's really coming into into the for me like listening to both you guys is just a full stack for for like doing your distribution, right? Which y >> I think raising money has has increasingly been been seen as part of distribution like getting the right partners and and investors on board. So being able to target the right people to participate in the project to talk about it to add TVL to use the strategies and then also the right people on the cap table and and hopefully making the overlap as big as possible. That was always another of the promises of crypto for me was that you'd have these kind of cooperative networks where they're owned by the by by the people who add the most value to them. And we've only found very kind of dumb ways to do that like just

you know TVL and your share of TVL is the share of tokens that you receive. And I think with what Cookie3 is building combined with with with you guys, you can really be very granular with this and and have these these networks that are entirely owned by their by by the highest value ad participants. Um, and that that could unlock some like really crazy I think growth flywheels and things. Like if I imagine some of the 2021 projects having like this kind of system um and and being able to use these tools, it I think it could have gotten even crazier like some of the some of the stuff we saw there. So yeah, it's it's it's exciting.

>> Yeah, I mean it's finally we're finally doing it evolving the space. Uh moving away from just you know airdropping which we know doesn't doesn't work and moving into these more uh smarter methods of token dist distribution. I think a sale component is just as much about a better mechanism for distribution as it is for raising funds. Right? You have a totally different cost basis, different psychological relationship, different tax implications for buying in versus an airdrop. So all of that matters to like does someone actually dump these tokens immediately when they receive them or do they hold on to them and then actually reinvest their their time and effort and capital into the project.

>> Yeah, skin in the game. >> Exactly. >> All right, guys. On on that note, I think we'll we'll wrap. This was an awesome chat. Really appreciate you both jumping on and maybe like where can people find more find out more about you or even sign up and and and start seeing like what what opportunities there are for them to to add value to these projects? >> Yeah. on on the Legion side of things, it's legion.cc is the website. That's also our exhandle, Legion doc. So that's that's an amazing place to start. And of course, you'll see cookie plugged in there if you if you're if you're watching for deals. But uh Philip, uh where where should people check out cookie?

>> Yeah. So there's like platform cookie. Where you can see all all like ACM pre-sales actually happening and the campaigns related to them. Uh and on X obviously um the same handle. So like cookie do fun. Uh so yeah, this is where you can find us. >> Awesome. Thanks very much, guys. And and I hope to chat to you soon in uh in a year and that we're closer to this to this utopian vision of uh the democratic capital markets and attention capital markets. Cheers.

>> Thanks, Jose. [Music]