Is Lido's Monopoly a Threat to Ethereum? | Roundup

Transcript

[Applause] all right everyone uh we are live we've got Santi coming from his parents basement uh how you doing Santi I'm doing great yeah I've been I've been uh visiting my my family uh down in Mexico and I've been here for a few weeks and in true crypto fashion I'm literally living in my parents basement uh and so uh part of the good thing of visiting them is I do have some of my stuff here uh so old crypto memorabilia and merch and this this shirt is one of my true coveted possessions which is DEFCON 5 uh sure is that when you met met Stoney for the first time I remember yeah I think

people have heard me say yeah that's right I stopped this is 20 29 19 I think 2019. and this was the last Devcon before covet hit um and then and I remember seeing the booth you know we're still in kind of like Dorman prices crypto isn't doing much um and I remember seeing the the Ave Booth uh lend I guess at the time was known and I just thought their gear was their merch like the little funky ghost was really nice so that captivated my attention and then I went out and ended up talking stunni and then the rest really is history um I ended up joining purify reached out to stani really convinced him to work with us and then defy just kind of took

the World by storm and everything after that was a blur but uh yeah it's uh it's interesting how you never know which conferences are going to be good or not but that one definitely for me was very special you know the real takeaway there though the real takeaways you've got to create is you've got to have good swag I remember absolutely at permissionless which by the way I think permissionless tickets either just went up or about are about to go up but we just launched new speakers hold on I actually haven't even seen hold on I'm about to plug all right check out these the first Speaker lineup we got Zaki from uh from sommelier that for talking about Cosmos we've got Justin Drake the Youth Foundation we've

got uh married the CEO at uniswap Eric Voorhees uh stani is speaking Kevin owaki maltum Ben Foreman tarun Colleen Sullivan hasu haseeb uh mihalo the polygon co-founder Ben Jones at optimism Vanessa um from aglo Adventures it's a good squad good lineup shout out to the Black Ops Team so there's there's a permissionless plug but I remember at permissionless uh Dune had these socks that they give away but they treat socks like really um it's like coveted swag and I think they do like unique swag drops at different conferences I'm pretty sure is how they do it and actually if you go on the Dune site they uh they have a lookbook for all their

best swag and I love looking at it because I'm like oh that's just like attention to detail and caring about things that like on a balance sheet don't necessarily matter but get your community fired up yeah definitely it's not the most expensive swag it's it's sometimes just a really cool funky swag exactly exactly so what's the best conference you've ever been to crypto or just generally uh you tell me well just generally or both well crypto pretty up there I think Dev this Defcon was was great from meeting people but it was terrible from an organization standpoint like think about this it was true to

ethereum like a few times yeah well you temper is really good I actually haven't been to that one um but uh this one was great quality because it was a time where like we were talking about scalability and you know it was a huge discussion around that and so a lot of the talks were high quality but now imagine that we were talking about scalability and congestion in the ethereum network the conference itself you had one or two elevators for the entire conference which was incredibly slow and so it was just like very true too it was just funny because we were all complaining about the same thing which is this of course like you know you talk about like bottlenecks and congestion and like the conference itself is like a [ __ ] and so

um yeah and of course I love Japan Osaka was just uh it's just a great place so that one was probably one of the best um I've heard I was going to go about the um uh zero what is it uh Z Cash's conference uh the first one was in Toronto and then in Croatia but the first one was very good um like and I think you can listen to some of the some of the toxic much smaller really high quality technical but really high quality what's yours I mean if I don't plug a blockworks event I think I think I'm out of my job foreign

yeah I mean permissionless is we so we've hosted Das for years right but permissionless was like another lot I think permissionless I'm I'm as biased as you can get but permissionless was like on another level of a conference that I don't think any crypto conference has been able to achieve uh but I also do think some of the like more Grassroots events like I would give a huge shout out to yeah Devcon and East Denver are the two most like crypto native events uh I think they can use some Operational Support um but yeah like in terms of content and uh kind of seeing what's coming in the next like eight to 18 months from now I think those two events do a really good job so what I've heard because I miss permissionless but what I'd heard was that you guys the diversity of the crowd

was there because you had a lot of crypto natives a lot of crypto projects but also kind of Institutions and people coming down from New York and San Francisco and other places to like meet a lot of these people so it's a good Gathering I guess yeah yeah um yeah I think it's the largest crypto native conference like I think probably coined just consensus is probably a larger event but that's like I wouldn't say it's as crypto native um anywho prices are ripping we got the the January effect is in full order um January fact by the way for I I don't think this is just a crypto thing but I think markets in general uh basically attack you have tax loss harvesting in December followed by repurchasing in the

year usually leads to positive price action so just looking at the markets today Lido's up almost 100 on the year Solana ripping up 70 uh eth is up like 10 to 15 Bitcoins up like five percent uh if you look at funding rates funding rates across most of the major tokens have increased this year marking what like could be a change in sentiment from from perps Traders we just found five billion of uh tokens from FTX who originally thought they only had 1 billion that they could find funny how that stuff turns out um yeah market caps back above 900 billion we're looking good we're looking good how you feeling obviously it's it's nice to see some life in the market and some you know uh

I mean yeah like uh who am I kidding of course it's great to see you know a lot of the market up um interesting some of these narratives informing really quickly um but uh but yeah I think uh you know what's not what's not to love when you you see across your portfolio you know in the green so uh someone you know some of these chats are just pure entertainment you know like you start getting like a lot of these groups just start coming back to life and oh yeah we're back a lot of g a lot of GM's in the chats today a lot of lives been MIA for last month like you know how are you doing guys like so that and then one person said so so meat is back on the

table you know like not just Robin and so I don't know I just love the banter in some of these groups uh but uh yeah it's great yeah uh all right so here's uh by the way I would not be pulling out the leveraged lungs right now I know there's some excitement but uh might be short-lived yeah so here's to be fair go ahead well anyway no I was just going to be fair like you know you still have like macro in the front seat and you have you know a lot of people like the the World Bank like declaring that this year is going to be a recession across the board consensus and people the big question that I'm starting to get asked is so what happens if Equity markets continue to go down what does that do to crypto and like everyone's kind of

focused on that so you know one week of price act for positive price action is is is a small data point but I wouldn't uh as you said I wouldn't uh the Practical advice is uh yeah you probably shouldn't go like 10x levered or or just leverage kids that usually doesn't end well yeah so here's what I want to talk about today we've got uh we've got this battle between uh Gemini and dcg going on really kind of this kind of fun public debate between or or not a debate but battle between billionaires with uh Cameron Winklevoss representing the left corner and Barry Silver representing the right corner so I want to talk about that um FTX recovery spend a little bit of time on that um maybe a little more crypto native

conversations lsds in Shanghai it's on track so we can talk about that um some interesting announcements like coinbase did layoffs Avalanche partnered with AWS um ondo Finance uh brought treasuries on chain I think it was so where do you want to start you want to start with Gemini yeah cool reminder of the situation for folks who have not been paying attention um basically Gemini lent uh lent almost a billion dollars of funds from over 300 000 users to Genesis uh from the Gemini earned program that Capital has been frozen for almost two months now um there was there's there there's been two letters on Twitter so there's a

first letter from Cameron Winklevoss kind of explaining the situation the second heat and Cameron just published his second open letter on Twitter this week uh basically addressing the board of dcg demanding that Barry silbert be let go and replaced his CEO there are a couple interesting points in the letter the first is that Genesis was left with a uh 1.2 billion dollar hole after the collateral liquidation from a loan that they made to 3ac for 2.36 billion um also according to Cameron Genesis only accepted this is his claim this is I don't know if you can find facts to back this up but Cameron claims that uh Genesis only accepted this kind of subpar collateral loan because 3ac was using the borrowed money to actually

ape into GB into the gbtc spread trade right increasing the AUM and their sister company grayscales profits um he also kind of talks about just like continues on this gbtc trade um explaining that as gbtc switch from a premium to uh premium to nav to a discount Genesis continued to lend to three Arrows with gbtc as collateral to mitigate it from being sold on the open market and furthering the Gap dcg announced it would assume genesis's liability but in reality offered a 10-year promissory note with a one percent interest which did not help fill the hole uh Barry so that was released at like 8 A.M and then Barry returned

with a letter to shareholders I don't know if you read that later in the afternoon it was kind of bear Market hopium it didn't have like any it was just like well you know we'll get through this uh trust me um what do you make of this situation well I don't have any particular like uh Insight um into the situation other than what's being publicly discussed between these two folks but uh the fact that Barry is what I'm reading into it is Barry's being you know uh at this point lawyers have taken over the communications of both parties very historically he's been someone who's tweeted uh at will if you will like he's just you know tweets like we just acquired a

master bag of Z cash and you know it's going to be a big week and like when you look at like a change in the way that he's tweeted uh I think is pretty indicative of the situation of how dire it is and and you know um lawyers are probably like heavily uh you know monitoring what he's tweeting now um and and also the the language the Cameron's letter had if you look at the prior one versus this one is I think it's pretty indicative uh I mean not only in the in the last one you use certain like keywords and there's some good tweet like threads of like lawyers kind of nice I think like some of these reminder folks you know some of the keywords are have like a very clear

like um I guess legal uh implications if you will and in this case he he didn't really hold back I mean he just sort of said this is fraud and Barry should step down and um I think uh I tend to I tend to believe more of the uh uh I mean the the amount of information and kind of position that the letter of Cameron had I think was pretty insightful to see for the first time um but uh but yeah I don't know where this ends I mean we've talked about this in Prior episodes um of of sort of a coordinated action between uh creditors and kind of trying to

resolve that situation there was another um Genesis counterparty I think it was an exchange that uh refused their plan for repayment that was also announced this week or in the last couple of days and so I would be really interested to understand what that was to extend um you know and and and and and how that is being worked out because at the moment it just seems like it's pretty uh dispersed I mean there's a number of creditors I don't know the number but you got to believe it's it's in um um you know I don't know 20 40 50 100 uh and I'm not sure how coordinated they

are but I think it would be probably interesting to see how that's shaping up yeah we talked a lot about this in the episode with uh fubar yeah um I mean so I think we knew that this was happening and like genesis was lending into three hours it's just funny to see uh Cameron lay it out like this because when you actually just zoom out I mean Genesis it's pretty bad risk return trade here right so like genesis was lending money to three arrows so that three arrows could recursively buy Bitcoin swap it for gbtc host the gbtc as collateral with Genesis to buy more Bitcoin and swap it for more gbtc which you know obviously pretty risky three hours was

on the wrong end of that trade and blew up but it also left Genesis with kind of all of the downside of this gbtc orb and none of the upside right like they're squeaking out what five percent or something and lending to a really risky borrower so I don't know just like seeing Cameron lay out the trade like that I'm like man you this was not you were taking a pretty zero-sum trade and turning it into what quickly obviously became a negative sum trade so I don't know uh but I don't know if you read Byron's newsletter this week but he had a good point on like thinking in probabilities and it seems like dcg kind of and Genesis kind of put this like 100 probability on bitcoin continuing to Trend higher uh

because it all unraveled really quickly but anyways seeing Cameron lay it out like this I was like man that was a pretty poor risk reward trade for Genesis here yeah uh because reminder folks I mean most of my understanding is most of the um cash flow most of the profitability of dcg comes from grayscale which is the management fees that they're charging on these products like gbpc ethi and some of the other um trusts and so from that perspective you almost wonder like they just kind of melt you know everything was at the focus was let's just continue to milk this business and at all costs and it sounds like they uh they were willing

to from the very not the very beginning but for a while now just continued to you know use Genesis as as part of that objective at all costs it seems yeah and so kind of at this point from a probabilistic standpoint is they're probably you know we're having this discussion in the prior episode which is are they going to let Genesis go and how much value is there in Genesis and I think uh it's starting to probably uh become clear by the day that there will let just Genesis go and and the real Focus here is protecting at all cause grayscale is uh continues to be I read recently they're obviously now looking to probably divest some of their Venture

portfolio which is vast I mean it is I would probably it's vast on all right so it's vast they have more than 200 Investments biggest exchange like exchanges Banks custodians 35 different countries they've invested in the financial times reported that the total value of dcg's venture portfolio is 500 million dollars that is that is so wildly off by like an order of magnitude there yeah you were thought it would be much larger far larger I mean let me read you some MTX FTX Ventures was much you know yeah I mean they've been investing let me

just read you some of their Investments they have substantial stakes in chain analysis bitgoblockchain.com Brave browser Circle coinbase coinmetrics Dune the graph Silver Gate shapeshift Ledger Kraken paxos fire blocks ether scan I think wire although wires now zero like the list goes on I mean nearly every company it's just like dcg is just like an automatic into their cap table they're never leading these rounds though they're never late they don't lead yeah but you know they they do pretty early deals too um I just think that's wildly I mean what would you if you had to put a number on it

what do you think this goes into the the I'm not sure if that number is deployed capital or marked to Market in some way shape or form because if they're trying to assess the current value of that portfolio then you know based on valuation methodologies and illiquidity discounts then maybe you get to 500 like if you're applying a very steep illiquidity discount uh unlock tokens or some like illiquid positions and maybe that's how you get to 500. um or maybe that's just employed Capital like they've invested 500 million which seems reasonable in my mind like that's still a lot of money to deploy in early stage series you know seed and a b um you know over the years uh it's

probably correct I think Hmm all right all right I might be wrong there but it feels low for me yeah again like the the key is like you never are marking a say that you invested in I don't know the graph in some of the earlier rounds and then the token launches you're still locked for like a year at least and so you can't uh you can't just say oh look this is you're not marking that position Mark the market because it's illiquid and locked and so you're applying at least this is what I think you should do is you're applying a a pretty hefty discount to that position like upwards of 50 60 70 up to 90 percent uh because some of these tokens are low

float and so yeah you know on paper you would say wow they made a killing on the graph but they haven't really like as an example okay all right I might be wrong there um let's get into FTX so yeah there was an announcement uh by leadership I think it was the second to last the week before Christmas I think it was like December 19th or 20th that they had that they could only find a billion dollars and I think a lot of us on the other end were like only a billion like that feels small I thought you had eight billion um now that's across the Venture portfolio no liquid tokens and stuff but okay well where's the rest of the 7

billion uh it just came out that FTX has now found five billion which is much closer to the number that both Sam and the guy who took over whatever his name is Ray I think it is they've both said the number the the total numbers are on 8 billion that FTX has now they've located here's here's the quote we have located over 5 billion of cash liquid crypto liquid investment Securities measured at petition day value it does not ascribe any value to Holdings of dozens of illiquid crypto tokens where our Holdings are so large relative to the total supply of our positions uh that we cannot they cannot be sold without substantial effect doing the market for the token so I would say this is a good announcement this is a pretty

positive announcement that we've we've we've located more of the money so it's good to see this um yeah yeah I mean I think there's uh there were I was not sure there's some this there's some trading or like they're pegging like the price of recovery uh I think there's a market for that and it's trading at like 17 cents on the dollar I think it went all the way down to 8 10. for what presumably um if you have if you're owed capital and it's like money there uh you could sell your position or at least people are pricing it this way in terms of how

much you're going to recover for every dollar that you have stuck in FDX and at the moment it's it's being priced at like 17 cents yeah um so if you have a hundred dollars You're Gonna Get You Know 17 back uh now I think for the which is which is people are saying it was probably lower than that like it got all the way down to eight eight cents um and like eight cents for every dollar uh not eight cents for a hundred dollars yeah um and yeah the the interesting thing is like you're comparing it I think one of the interesting things like in that I didn't know but I learned during this process is that um the Madoff trustees I think ended up recovering years like 10 years later

like 75 cents I think you were the one that said it's like 75 85 cents on the dollar which is pretty good um I mean of course it took you know time value money and opportunity cost but still it's really good I guess um you know considering even Mount gox people that have that were affected by monogs haven't even seen a single Bitcoin back and so uh you know this is is fairly positive if you're getting some Capital back and and I wonder how much time it's going to take but uh but yeah it's it's looking a little bit more uh promising than what it initially started yeah some people are saying so I just looked up the five

million or 5 billion of what they're saying is worth 5 billion uh now I'm not so positive on this let me read it to you 700 million of Solana most of that is locked 575 million of ftt 371 of maps 127 of oxy 90 million of rap Bitcoin 82 million of Bona and about 500 million in random other like SPL tokens that is not a liquid 5 billion that is uh I don't know who's taking 575 million off the market right now yeah uh no no the the uh we talked about this in a great episode with uh uh on terror situation one of the more interesting things that you've got to think about is when whenever you're thinking about like

say you have a large position in a particular project like you can't take spot and then multiply by the number of tokens you have it's like what is the transacted value that you can actually exit this position in a graceful Manner and that that is more as you said like you can't really sell some of these random tokens and and get that uh principle you know that amount back and so um yeah um did you read Sam's substack I was trying to get through it uh I assume you did uh yeah I did I uh I want to save you guys the uh the hassle of reading because you should not go read you should not spend another second uh

reading what Sam has to say so here's some of the takeaways uh basically when the when the bankruptcy was filed FTX there was a decent bit of talk about like FTX us so FTX us had excess liquidity which is above like what that means is like above one-to-one coverage of customer assets um in the in the range of like I think it was 350 million they said that he said that FTX us held I think it was like 500 million in customer asset I forget if the number is 350 or 500 and also said that FTX us was completely solvent with a significant buffer I think what he was trying to show by talking about FTX us was that um foreign tyx us would have been fine if it didn't get looped into all of this that they

could have basically just severed FTX us like the day all this went down and like pushed FTX us to the side FTX us would have been totally fine but FTX the the normal FTX would have gone down I think that's what he was trying to show by doing that um he also mentioned FTX trading had about 8 billion in assets when Ray took over that's like in the ballpark of of what the Ray and his team have said um so that was good a lot of rehashing of like how and why Alameda went under they're just another Domino victim of crypto winter this is a czpr campaign this all actually would have been fine if but like I got the like the lawyers pushed me out I had a plan to fix this uh he said that no funds were stolen this is where it got kind of wild it's

like no funds were stolen um he's like we had a clean Gap audit for 2020 and 2021 he's like billions in funding offers were coming in when Ray took over that's where I was like all right all right buddy you should you should probably sit down here so uh yeah I think there's still this like glaring Omission in from both Sam and from Rey which is that there's no indication of what the total customer deposits at FTX trading were so while the there are there are estimates of assets that seem to be kind of coalescing around the eight to ten billion dollar number we we still really don't know the size of the hole mm-hmm yeah speaking of uh I'm not sure if we're going to talk about this but a few hours

ago I just announced that nexo's offices in Bulgaria and Sophia the capital city got rated um I don't know if you saw that yeah well I mean look uh an EXO came out with a communication apparently it's tied the investigation has been going on for a couple months and um you know next employed over 30 like compliance folks and uh apparently it's tied to some sort of breaching of kyc ml like sanction like uh laws and so uh yeah they're being investigated now I will just say when something like this comes out in the like an agency is like oh we're investigating because of kyc AML oftentimes that's not the reason the

it's like a that's their door in they're like they need a reason to investigate a company so they'll be like uh they probably found that they broke a kyc AML thing so they're like boom that's our reason to go look under the hood um I see um it's it's probably the easiest way to get a search warrant look I don't know what's going on with nexo let me just say this block buys down Genesis is down every single other competitor who runs a business just like nexo is down they continued offering like not just like three percent yields or five percent yields but these like ludicrous eight to twelve percent yields until like a month or two ago so I don't know anything I never I hope that nexo

is fine I hope that that especially the users and customers of nexo are fine if you still have money on next side I probably recommend you you know you you kind of keep that stuff safe but um I'm just skeptical of like how can one business only one business make it and every single other one of your competitors fail uh that's I'm just questioning okay yeah let me ask you like a like take a pause and I'll ask you a question because this goes back to what you asked me at the very beginning like how you are feeling generally about crypto but like how hard has it been for you to see all of this go down and like have you lost faith a in crypto B of the people working crypto

and how does that compare it to like there have always been like scams not just in crypto you just see them more visibly in crypto I think um but has how hard has it been to just see the amount of like destruction and I guess this just felt like you know every single poster child of crypto that was glorified by the media is some way shape or form just got too caught up and and too greedy and is blown up hmm let's see I think does that weigh down on you your team morale no so no so no no no it does it doesn't weigh down on me at all actually it doesn't like I

don't um I think there's actually a feeling of embarrassment there's not a feeling of disheartenment I'm not disheart I'm not um I think there's an initial feeling of like actually anger and like being really pissed off with folks like doe and machinsky and uh Sue Sam like those folks like an initial feeling of like pissed off and anger because you and I know so many people who lost so much money right like we have we've invested in companies and they've gotten hurt like we have I have friends who you know came into the industry at the exact same time as me they lost 99 of the crypto that they have and there

I'm getting messages being like look I don't really know what the last six years of of my life were for like I don't have anything that I've all the all the things I've built up over the last six years the company I've built and the people the company I worked at that I helped build and the the money that I've made I have none of it so what was I just doing with so that's really really upsetting to see um and then it's embarrassing it's embarrassing when I'm out like a dinner and I've been I'm the crypto person obviously and I've been talking about these great companies and then the what the people see in the headlines is like FTX and and blockfi and Genesis and dcg and these billionaires fighting on Twitter it looks like a joke it looks like a joke but what oh what overpowers

all of that by an order of magnitude is seeing things like the Friday ethereum all core devs call talking about the Shanghai upgrade being on track for a March activation and talking to Chao about the future of like wallets and seeing Brands continuing to push into crypto and having that call with eigenlayer that you and I were on um just being like look I don't know if eigenlayer is going to make it but like what but I don't have a conviction there but like just seeing that there are amazing Founders and Builders building this stuff and yeah that optimism like way overpowers and overweights this feeling of like disenchantment and embarrassment

yeah yeah I feel the same way uh it's something that's hard uh to see how many people have been affected this time and the sheer like number of wealth destruction I guess but uh I think it's different than price going down it's a whole game where you have been defrauded and so yeah it's it's tough but uh but no I agree with you I also think every industry I think reading history helps with this like reading about early days of the railroad industry reading about the early days of the internet right and then like in the 90s uh when the internet was starting to get like become more corporate uh reading about the early days of like the oil

industry like there were pretty like raging scams in all of these industries and these huge frauds but less money associated with it because those industries were like basically there was a harder asset and the money was one step removed so like you have oil oil is not directly money but it but it so the money is one step removed or like railroad same thing a lot of money but like where the railroad's not money even the internet the core asset of the internet is information and money is one step removed the core asset inside of crypto is money so when you have a fraud it like it money touches everything in crypto so um yeah these fraud people end up like there's just more money at risk earlier

on in an industry so every industry this early on has frauds but because this is a money driven industry yeah so anyways I think uh my last takeaway from this is like if you look at most of the crypto collapses 9 out of 10 or all of them have been a rejection of the old system trying to work within the confines of what is crypto um you know you look at businesses that were not transparent that were heavily centralized that had you know back doors and you know that's not the ethos that's not crypto that's a crypto service provider

um and so I think it's it's pretty I think we'll we'll be very symbolic we'll look back and say yeah this is a time where we try to implement all practices that go counter to the ethos of decentralization of what crypto really stands for of self-custody and your assets of managing um and being in control and fully transparent smart contracts that execute a certain logic that you're you kind of you're just trusting what is in the code and not necessarily where you're depositing and whoever's customing your assets and I think uh you know in many ways if this industry is really going to grow by orders of magnitude then you better off happen that now we learn this

kind of lesson which I think has been more and more I think people even in traditional mainstream media and people are starting to appreciate what decentralization actually means and putting a finer point on that so I think that's the kind of positive of all this which which I think is uh and will set us up nice nicely for continued growth over the years um yeah you know I really do like build yeah here's where I would be disheartened something is if Ave went down or make or failed to continue producing dye or uniswap couldn't operate in the U.S or like uh if actually that could happen but like

if uniswap went down or something like that like that then then I'm like oh man I I don't trust I I don't trust the block flies and Nexus of the world but you know I do trust Ave and then I don't shoot well now I can't trust Ave it's well then it's like okay well what are we what are we doing here so anyways well I I guess the the Senate could say Hey listen there's been like five billion or like I think it's between four or five billion of hacks uh a lot of them happened last year you know the Ronan Bridge Act was 600 million and uh a few others that were you know uh and so you know that that to me is where I tend to focus a lot of my attention which is hey we really need to get security and and come up with better

standards services that can help people uh just if everyone's going to move on chain if there's a version of this world where that happens then we need to have better uh Solutions in place so agree but uh something like the Ronin hack was like those bridges were like six months old or like 12 months old Max and that's when I'm like right I know what it's like to build a startup that's like six six months after launch it is a total [ __ ] show um so it's like that's what I'm that's where I'm going to in crypto in every other world every other industry every point in history when you have a startup that's six months old if something goes wrong something fails a product breaks maybe

people have to get laid off something but you don't lose money necessarily like it's not directly losing money in this situation if a bridge goes down yeah you could lose 100 there's 100 million on the bridge but like crypto is weird in that way so yeah yeah we could probably do a better job of like not putting half a billion onto something that's a year old so let's talk about something optimistic though which is um yeah the Friday all core devs call um that gave us further evidence that the Shanghai upgrade is on track for March activation which is super exciting um basically Shanghai and in like tldr on Shanghai is that it allows withdrawals from the Ethan uh the Ethan the uh

ethereum Beacon chain um and I think the the like why behind this event is everyone's looking at how much basically about what's going to happen with with staking right like given that there's a large amount of eat that will become liquid like what basically happens with withdrawals um is there going to be short-term cell pressure there's there's two there's two ways this could go right there's either going to be like short-term cell pressure um but a greater incentive to stake there's either gonna be like less money staked or everyone's gonna say oh crap now this is liquid let me let me stake more assets so I'm really curious to hear what I don't know if you have a take on this yet but do you think this will in the short term like

drive more amount of staking less staking what do you think here um I mean it's difficult to I can't pretend to understand where crypto is going to be in the short term but I think it's quite positive to finally it's another further step in this transition to perform work and uh freeing up like the locked the eat deposits and the beacon chain and then you have a I think a net very positive um what it will do in the short term TBD I've seen some analysis that you know now you're going to have a true staking yield which might be quite interesting how that Dynamic plays out uh one of the things that I would be looking at is the

amount of eat state uh and the yield and relative to other opportunities you can get in within crypto and outside of crypto um for instance you know people are comparing the e-staking yield with treasuries and you know it's kind of a irrelevant comparison so it's not but it's it's it's it's uh you probably shouldn't be comparing it to risk-free rate but um but yeah I I think it will drive probably now that you have like a more liquid Market um and more fluid uh staking and unstaking I think it is it is very positive for just the ethereum's Network um and so yeah

I mean you could be in a situation where a lot of the eat that continues to be staked and the float will combined with the deflationary pressures that you probably have seen uh um just creates a situation where there's far less eth uh circulating and that is not being staked which uh forever incremental dollar that comes into this space is like the sensitivity uh so you might have just a more volatile asset you know what I mean um so that could create short-term volatility I love this Ryan Watkins tweet uh he said it's undeniable that ethereum upgrades and Innovation Cycles are the leading drivers of crypto

markets now far more than Bitcoin havings if you're not paying attention to ethereum you'll have a hard time understanding where we're going and as more and more the industry gets built on top of ethereum um and I I just think like that becomes the driver it's going to be interesting you and I have talked about this I think offline but Bitcoin having is has always been the Big Driver right it's like oh he's one of the big things that ends up kicking off this usually a delayed bull market maybe six to 12 months later but I think that this could be uh I think I think he's got a point here yeah yeah it's uh one is just like oh like it's it's a so what event the other one is more far more interesting from an innovation perspective

also uh I think we've been writing on bitcoin too much recently we're gonna we'll give it a break in this episode well no I don't even say like the amount of tweets is flipped right uh you know there's a great chart showing a number of tweets Bitcoin relative to ethereum it's flipped uh recently I think it's the first time it's actually crossed and there are more uh there are more East related tweets and there are Bitcoin and so again I'm not like entirely sure how the calculation goes behind the scenes uh but not surprising right there's just so much to talk about in ethereum land uh and everything going on the ecosystem relative to what's going on in Bitcoin yeah not to dismiss anything that's going on we uh some of the some of the

updates to liquid staking are a little out of my realm of understanding honestly like there was a like rocket pool just added rockable is another liquid staking uh derivative provider they just added coinbase Ventures to their odow my understanding the odao is like it's a bunch of community members who run these special Oracle nodes that transmit data from the beacon chain to eth1 in order for the protocol to function properly and safely some of that stuff is definitely out of my league of understanding so actually uh shout out to our producer Garrett he's lining up a couple of liquid staking episodes where we're gonna get a little deeper instead of you and you and me pontificating on things that I at least don't fully I'm not fully able to talk about yeah

yeah I mean I I was running a validator um way back in the day uh when Taylor launched and a few others yeah yeah is it like an elevator a baker a baker yeah um and then yeah that got me thinking uh into like how liquid state can derivatives working at this was like three years ago more than three years ago when yeah when when did you spin up your first uh when did you start doing this uh end of 2018 uh 2019. um we try to meet a couple other uh folks that I know in the in the space um we didn't feel comfortable delegating until we wanted to spin up our own um and that got us into a pretty

interesting Journey thinking about like the regulatory implications of staking versus Mining and um and one of the best things that came out of that was the proof of stake Alliance which Evan who then ended up going to bison trails and then um now got acquired by coinbase uh that organization really to advocate for staking and Clarity on the tax side of things on the kind of money transmitter side of things um yeah it was pretty interesting uh back then it was my Ops like back then it was like a few people thinking talking about it but uh we're just too early in the game a lot of the folks that continued in this path like figments and bison trails and state have done exceptionally well it's a

great business I think uh and then but the good thing of that is I ended up like doing the seed run for lighter when I was terrified so that was uh that was pretty good not too shabby huh let me ask you this okay so if you what you don't have to say your specific numbers but like what range did parify get that Lido token at uh uh sure it's public but it was probably one of the best deals that I did by far like it was it was a small round and it was a very well constructed round and a lot of people ended up passing on that I just thought it was uh you know it got a lot of the large

theorem holders involved a lot of angels a lot of like other projects and um we were one of the few funds that like probably committed if not the largest the second largest check but it was you know um I I had um known the team for my days when I started staking and these guys were the best they were winning like the game of stakes competition which is the cosmos like incentivized testnet to like attack basically the network and and that's how I knew the correlito team because I just thought they were the smartest guys to spin-up validators and had a very deep understanding of how to run like

proper infrastructure um and then like Constantine I'm not sure if we've had him on this podcast I think we may have all right I've been on a certain podcast a few podcasts with Constantine he's just a very one of the smartest guys out there he's one of the co-founders of Lido um and early in ethereum early in Solana like very open-minded uh and has been involved in a lot of networks and so that to me again it's always a team bet and so these guys are probably we're the smartest and that's what gave me a lot of conviction to to back them at the time nice um so what is a fund like parified do how do you think about we don't have to talk about parify but like uh maybe

we'll generalize crypto funds so how do you think about selling that Lido foreign yeah it's very like it's a very good question you know risk management and crypto and managing portfolio is is quite difficult in the sense that you know there could be a time where a token just grows to a certain threshold where it becomes just prudent to size it down you know when you have a position that ends up becoming greater than 10 of your 5 10 20 of your fund then I think you have to at that point think more systematically of saying

you know it's probably prudent to size down that position some funds do it some others don't uh in Venture it's it's different because say that you were Benchmark you did the seed round of uber and you had a you kind of could wait 10 years um maybe try to sell in the secondary Market but once at IPOs you have like this lockup and you can sell after that uh so obviously there's like lockup considerations that you know you have to you know there just exists similar like in traditional markets at least a year you're investing over multiple years three five seven years so that's the more practical consideration um

but uh but yeah it's it's very it is the hardest thing to do to be to be fair like managing that relationship with the team and saying hey look I've had difficult conversations where I say listen like it's not that I don't like the project it's just that it's grown up a point where it's just too big of a position and at that point it's like okay can you find like a natural seller and and the way to do that sometimes the team wants to buy it back other times you find another fund that's going to take over the position and so um yeah it just depends on your strategy but it's really hard I don't have a good answer to that yeah Lido when like I don't know what you like the live token price was in January

of 2021 um I think I like two bucks and now it's back to two bucks I'm curious just I obviously not Financial advice et cetera et cetera wild swings yeah I mean yeah ran up to six or seven bucks and then fell down to like 50 cents and now it's back up to two bucks um how do you think about allocating to an asset like like Lido right now uh uh well Lido specifically like in terms of like category liquid staking or just generally an asset that has that amount of volatility basically do you like Lido right now at

two bucks I don't have a view on that uh like no cool on the uh not investment uh not investment no listen like it's like you use this question all the time right responses why you asked me this question and the and it's what's your investment prize is it three months is it one day is it three years is it ten years and so I tweeted about this earlier this week it's like it's again impossible to understand where even the majors are going to be in three months three months uh where is Bitcoin going to be my question because I'm not

actually worried about the I'm not really asking about the price of Lido here's here's my here's a better question Lido is the dominant liquid staking provider if you want to go long liquid staking providers right now and you think liquid lsds are going to be a bigger thing in the future like Lido feels like a pretty good play however they're starting to face a lot of competition like CBE and like rocket rocket pool and things like that and there's going to be more and more how do you think Lido fares versus other competitors in in the future I think the team as I said earlier is is the strongest yeah um I I haven't looked as closely into rocket pool they've had some issues um as is Lido to be fair like the the

question that has come up over and over is the amount of concentration the power that Lido has in terms of like it's become the second largest or the largest large decentralized um and the question is should I I I'm of the mind that competition in the staking as a service space is very positive and healthy for a network because you never want it's like a favorite Victory if Lido captures 100 of the market that would be a terrible outcome you never want that to happen purely for decentralization reasons and so for that reason I want to see other providers succeed and I want there to be variety because that it creates a very healthy

competitive market now Peter Thia might look at me and laugh and say what an idiot you want to invest in monopolies but not in crypto I think you always want to have these like a few Alternatives um and just to distributed a distributed set of options and and like percentage of each stake and Lido should never be above I don't know 40 50 definitely not 50 but like and so I think uh there could be a smart contract bogging light or there could be a smart contract bike in rocket pool and so I think for that reason you never want to have too much a single player capture a disproportionate around the market like it's it's different like if it's like uniswap command market share a lot of market share is probably the protocol

that has the most amount of market share across any category like a number of swaps that unit swap is capturing is just continue to dominate like just people trade through even swap it's the best liquidity if your smoke goes down you can find alternate places right like of course like if there's like a bog and some of these liquidity pools get drained it would be devastating but not nearly enough as if there's a smart contract that for whatever reason truly locks up a lot that state beef and some of all the validators get compromised whatever that is but like the like when you think about the relative like risk of some of these liquid staking providers going down versus another protocol in the whole entire crypto

ecosystem this is these are one perhaps the most important pieces um that you you want to really monitor yeah um let's get into more news but that being said yeah that being it's a very valuable service yeah um Avalanche so we have an avalanche podcast dropping Monday maybe I think it I think I think it drops one day we'll see either Monday or Friday um but we have an avalanche episode we did it with the two uh the founder edmon goon gun uh and then also uh John Wu who's the president of Ava Labs um pretty interesting episode um so that drops on Monday they just had

a big announcement which actually they did they announced it right after we stopped recording so oh well so we couldn't talk about it with them but they announced on Wednesday that they've partnered with AWS to accelerate Enterprise institutional and government adoption of blockchain AWS supports avalanche's infrastructure and dap ecosystem including one-click node deployment it's pretty interesting through the AWS Marketplace avax pop 20 on the news of a partnership with AWS for deploying subnets um super interesting to see this because people still underestimate the power of BD in crypto and I think we've all been kind of surprised by polygon success in 2022 and what polygon did is they said

we're going to own a niche and the niche that they chose was big Brands getting into crypto and the big brands that they wanted to capture were like I don't know how to describe this but like the cool like the web 2 Brands like the Disney's and Facebooks and things like that of the world I think Avalanche is starting to carve out their own Niche which is like the large corporates who are maybe less sexy so the way that they're doing this is by these Partnerships with the with AWS they also have a huge partnership with Deloitte actually and I think you could see Avalanche in this bear Market try to win the oh also KKR like they could try to win this like the big corporates playing in crypto game which

I don't even know what big corporates would do in crypto but like that I think it's interesting to see them try to carve out this nation tokenized funds if you're here yeah yeah it's Apollo I think it's interesting because Amir uh comes from an academic background he was a Cornell for a long time um and and then John I think I always see him on Bloomberg like he's he's like a frequent post that gets invited there to talk about crypto and what they're doing so yeah it's interesting they're carving out much more of that like were the people should listen to the podcast but a lot of things we talked about there is how they're subnets and it gives like a flexible kind of architecture for some

of these players to like grow into and have like a Sandbox environment baby steps to get into this wild world of crypto and so from that they kept emphasizing over and over in the podcast like we're we're a lot this this is very good from a regulatory perspective and Regulatory Compliance a lot of these folks are really focused on that and so you know whether you believe that to be true or not you know go listen to the podcast and let us know what you think yeah so um yeah it's interesting because Cosmos right we had Zacky and uh Jack on and they take a totally different approach they're like no similarity to generate the deals no BD I think that's philosophically good but tactically bad like we had a there's a company I invested in and uh they're like I was

like something just happened in the news that means that it's a huge opportunity for them I was like guys like turn on the fire time to go they're like we don't really have a BD I was like let me help you set up your like get the sales team going like I'll I can help you guys out um and they're like we don't really have a sales team like we do things more Grassroots and I was like all right let me just Line in the Sand like that is an old school strategy in crypto I'm sorry but get a CRM Salesforce or HubSpot get a marketing team if you're they're B2B like they yeah they're not really a consumer company I'd like get a a CRM HubSpot or Salesforce get a marketer Drive the leads to your sales team go

hire a bdr and SDR to go outbound set up leads for your account Executives if the lead is good you flip it from a marketing qualified lead into a sales qualified lead you push it down the pipeline you close it once the deal is close you've got an account manager I was like come on folks like it's a tried and true uh this is uh Enterprise software uh Playbook here tried and true model yeah yeah it's difficult right because it depends right it'd be BD and crypto historically like okay ethereum like what's the BD of ethereum it was like icos I think it's made people a lot of money and then everyone became really vested in ethereum uh but I think that as you're right you point out it's different if you're a competing L1 it's an uphill battle and so you need to have a lot of resources that's why a lot

of these funds are a lot of these layer ones raise a bunch of capital to hire a BD team to to have incentives to attract developers to come over and build um but yeah it's also tricky right because you if you're a front-facing crypto protocol if you like you can't really advertise I mean it's quite difficult uh to advertise in Google and some of these other platforms like they make it you can you can imagine advertise your crypto price so like Avalanche took over ads on the New York subway but it was like come build on Avalanche and right my theory would be that they didn't actually use those to drive leads it's that they then used those to then put

that in a deck that they're pitching to Deloitte in AWS seeing being like look how real we are we advertise on the New York subway it's a psychology thing so I just I think I remember watching uh Gemini uh buses around New York exactly exactly um anyways I think that's something that changes this Market is like you have a product you have a B2B product go go build that there's a tried and true model here folks like go Salesforce created it and thousands of other companies have implemented it go run the Playbook okay so let me let me ask you a question have you ever thought about building a CRM like we've like you have all the a lot of information from

subscribers people that are interested in crypto you put on a conference you have a research portal like what's to stop you from adding and plugging in another service it says hey let me connect leads here so we I mean we use a CRM internally for like our sales we have there are two different CRM type things in Block works there's the sales CRM so like our sales team reaches out to coinbase or trying to sell them a sponsorship or something at a conference and that like that's all tracked in a CRM and then there's a the CRM for like content basically which we don't have but we're talking about building which is you know Garrett on the podcast side might reach out to Constantine you said from Lido to get

him on the show well he has no way of seeing that someone else on the editorial team has just invited him or had just did a story on Lido and has a relationship and that someone on the events team has already reached out to him two days ago to invite him to speak a permissionless so that's the CRM but it sounds like maybe you're talking about something different we're more offering like this you have like the guide points of the world and some of these like like research allowing people to connect with experts like uh yeah I don't know was this thought maybe it's a dumb idea but um yeah yeah I guess you're at the Hub of like reporting they're like first party data and like

information on your subscribers and audiences like is a huge Trend in uh in like the media world is like what everyone talks about and it's funny we've been hiring a VP of sales and uh there are two types of vpa sales we've been talking to they're like crypto people who are maybe a VP of sales at another crypto company they'd come over but they don't know Media or there's media people who maybe they're the head of sales at like Barstool or axios or uh Huffington Post or something and they like really get media and but they don't know crypto and the media people are like here's how you how your study scale block works you sell into the agencies you get like first party data it's like it's very different world of media it's funny yeah yeah so

anyhow um talk about l1s and the strategies I was talking to someone in um who's pretty deep in the Japan uh Japanese uh crypto world you ever heard of something called Aster a-s-t-a-r no so I go what do people build on in Japan like what's what's hot like are people building on eth are they building on polygon Solana he goes oh he goes oh everyone Builds on Aster I was like come again like did I hear you correctly he's like yeah everyone built an aster the L1 asked her I was like sorry what and he's like yeah everyone built on after he goes Avalanche and polygon are the two like second best and third bet like they're

they're fighting for that second spot right now but he goes after super popular I was like all right so I go it's astro.network the website the future of smart contracts for the multi-chain world as there's a scalable decentralized blockchain for the next big web 3 Innovations uh we provide infrastructure for building dabs with evm and wasm smart contracts offering developers true interoperability with cross-consensus messaging and a cross-virtual machine I was like so I pull up their Twitter like half a million followers 50 dapps are already built on it talking about multi-chained world how they do they're staking I was like man that is nuts let's listen to the backers polychain coinbase Ventures fenbushi hash key hobby Ventures DFG

um GSR crypt.com Capital it's the big names in Asia um yeah very interesting well whoever's listening out there from the Astro team if you are Japan's a very like insular market like they uh you know it's uh it's pretty interesting yeah well here so we have a research analyst who just joined the team his name is Ren and we're talking about it in slack and he goes my Japanese friend says it's by far the biggest blockchain in Japan huge government support and another person goes asked her question mark and ren goes yeah Astor found Founders Japanese they're pretty big in the crypto community in Japan so it's

interesting seeing like where the founders are from like Avalanche actually their biggest uh area of retail Community the biggest retail area for Avalanche is in Turkey why because Emin is from Japan yeah I mean I still can't pronounce his name but anyways there's your there's your Alpha about a Aster um I'll have to go check that out all right we got some layoffs from The Exchange space Tuesday morning Brian Armstrong announced a 20 layoff it's about a thousand employees as part of a restructuring effort uh payroll biggest cost to any company uh coinbase noted that this would cut operating expenses by 25 which comes eight months after coinbase's first round of layoffs which was about 18 of the staff which back at

the time is like 1100 or 1200 employees um uh what did coinbase's stock I think coinbase's stock went up on the news um it let's see yeah coinbase's stock went up like 12 to 15 on the news which just goes to show that investors do not want growth at all costs right now they want companies to tighten the belts and that profitability tightening the belt will sacrifice growth as long as you are working towards profitability is what investors are starting to Value uh we also saw the blockchain.com I don't know if you caught this news yet uh happened on Thursday blockchain.com just laid off 28 no surprise they had a huge lending business actually at one point they were

one of the three largest institutional lenders in crypto it was them block fine Genesis they owned the kind of lend to block uh to Bitcoin miner they like crushed that vertical and so obviously they've gotten hammered um yeah yeah what else happened on I think this is the last bit of news and then we can wrap it up as ondo Finance um I don't know if this was a pivot or a new thing but I remember them doing something different before this but anyways ondo Finance uh announced the other day that they're providing U.S treasuries and institutional grade Bonds on chain as security tokens only kyc parties can purchase them and they carry

a 100K minimum and a 15 basis point fee the team claims the product is going to be used to serve Dows uh interesting to even see them like maker right yeah exactly like maker would have probably used Hondo Mako yeah yeah make yes exactly exactly Mako there's your uh collaboration yeah um I was just funny to see them use the word security tokens I was like man that feels like a 2017 term [Music] yeah uh interesting this is the first uh I ended up looking at this because I said how did I miss this because I didn't look at the round and it was led by Pantera and uh it was the first public at least uh investment that Peter thiel's fun did

really uh yeah yeah at least a token project or a project that signaled that they were going to have a token and so and then they did like a public sale they raised like another 10 million or so but I think they raised like a 23 oh you know what series B and they did a public sale of 10 million I just searched for ondo in my in my email and I have a message from Paul from August of 2021 about ondo he's like yeah it's a new fixed income protocol that enables users to enter into both fixed yield and variable yield positions so I think this was a bit of a pivot but yeah good for them

yeah I've heard and seen decks a similar approach that people want to like tokenize treasuries and how to give people access to that so um yeah pretty interesting use case especially now where markets are and the rates are Pantera led a four million round for ondo we had participation from Genesis dcg which is Barry and Berry CMS and coin fund interesting that was the first and then they did another one I think where Peter Thiel participated yeah okey-doke that's that that's all you got from me this week I don't know if you uh if there's anything else on your mind no no

um fairly interesting good start of the year um that's really I I did read a really interesting book um now that you know rates and or all the rage and all the talk I read a couple of good books um the first one that I that I read was the price of time the real story of Interest by Edward chancel Chancellor Chancellor better Chancellor pretty good actually this guy has I love reading like you said something interesting earlier on like historical like just historical accounts with big movements like the oil industry and how that developed and like you know and so this one was just a history of of rates and you know of course at one point like

it was like Dean like I mean Sharia law for instance doesn't allow you to have like uh interests uh and historically interest has been pretty contentious thing so I found that book to be pretty refreshing it does also talk about this like obsession with targeting inflation of this two percent and how all like it's giving you background on how all of that has come into formation and it um and of course it claims that it's probably going to be one of the more destructive uh policies uh adopted by central banks obsession with like a two percent inflation number which I tend to agree with uh but uh yeah it was a good book that I read recently so I highly recommend folks [Applause]

did you ever use the platform refinitive when you worked in banking no all right so there were some big platforms that are like everyone uses Bloomberg terminal obviously but there's also like factset and cap IQ oh yeah thank you yeah so backside cap IQ refinitive is another big one they sold for 27 billion um they have a I'm doing research into just different data and research businesses because we have our research platform now and I was on their product set and let me read you these products it was to cook what is that Cooks which has like these like com like Islamic Korea law compliance oh yeah exactly so look at this

thing and I was like oh this is cool they have their target profiles like really baked out so let's listen to the sectors Asset Management central banks corporate treasury Investment Banking Market data risk compliance right no surprise so far technology trading wealth management and Islamic Finance I was like oh there we go so interesting so then I click it and it's like yeah discover our Islamic Finance services and solutions Islamic Market data research and intelligence Sharia compliant trading Islamic content events get data on so yeah to cook I don't know these like weird like work it's basically Sharia compliant bombs

super interesting so I never knew that was uh yeah Us in uni and I have actually a paper where I studied like the Islamic finance and and sukhooks and like uh yeah probably more more stuff that I you know it hasn't served me much but I was interesting to learn about it nonetheless I am reading it everyone wants a paper on so Cooks I can send you 28 28 page paper on I just started a new book which is like a fun read it's pretty short it's like 250 Pages it's called um uh what is it called it's called drugs in the Third Reich I don't know if you've heard of it but basically the thesis is that the Third Reich like Hitler and the Nazis was was basically an altered they were all yipped up

amphetamines yeah yeah exactly um and I'm I'm I just started it but basically I think the thesis is that like there's this drug called pervatin where which was like a low-dose uh methamphetamine which is like very similar to today's crystal meth and they in the book they're talking about like Hitler would take this thing called pervatin and uh supplement it with barbiturates coke uh even like steroids sex hormones and they also had an early form of Oxycontin so like oh man that is nuts in the well you know what they attribute there's a great if people don't want to read the book there's a History Channel I think episode on this and it's talks about like in the kit that they gave soldiers

of the Third Reich they had a methamphetamine and then when you and you compare accounts of like Western soldiers saying these guys like Blitzkrieg like this idea that like the Germans would just bulldozed through like battlefields and were more efficient yeah guys they were on meth like so why'd you win the why they do such a big advancement it's like uh well I could say we're on meth and like why did the West won the war well because like they ran out of meth and I'm kidding um as people like they're like why did we get into a crisis well there was an Adderall shortage in the Bahamas and so that's why FDX went down right that's like the plausible Theory right yeah 90 years later no difference so yeah it's

crazy they said millions of this drug perva 10 pills were shipped every week overseas I'm like that is wild that's crazy so yeah anyways that's what I'm reading not really this is this is advice please folks though do methamphetamines uh this is not an endorsement to go and do methamphetamines or Adderall or any substance small mind-altering substance for that matter all right thank you disclaimer yeah that is good of a place if we're gonna wrap it as we'll uh as we'll ever find guys thanks for uh thanks for listening um fun app Santi perus thanks for joining uh see you guys next week for the Avalanche episode foreign [Music]