Retail's Last Hope in the Bear | Weekly Roundup

Transcript

this episode is brought to you by bitmex the og crypto exchange that is back and better than ever you'll hear more about bitmex later in the show by the way speaking of inflation just as an aside like can you believe coffee like is the inflation on coffee's off the rails uh i mean we always know that if you live in new york like you get totally ripped off by you know a cup of joe anywhere you go but like the coffee bean itself has been on this massive rant a massive rally uh you know so i'm feeling the pain sir because i drink more coffee than i care to admit [Music] [Applause] all right all right everyone welcome back to another uh episode of empire today's

roundup we are talking about the market puking and uh santiago was nearly in tears i couldn't tell if it was like happy tears crying tears or what was going on so asante how you feeling today man the dow is down like four percent nasdaq is puking down five percent i know uh one of your investments step in is down like 15 salon is down 15 bitcoins down 8 uh how you feeling today my friend well uh unbothered what is it in my lane moisturized moisturized yeah you know just uh speaking of stepping you know what's also down is probably a lot a lot of folks are also losing weight as a result so you know

uh there's always positive honestly i'm i'm on i'm on i mean i i don't think about near-term movements uh as much these days um it is interesting to observe but you know it's like we all know this to be true the more you check your portfolio the more you're going to do dumb stuff and so i know i'm very prone to doing dumb stuff and so i'd rather just not check my portfolio constantly and so i on the flip side i had a really good last couple days i i spoke with it's always nice when you i spoke with a founder who's been on stealth for five months has a team of 40 unity developers self-funded he was a surgeon left started his own company and like i'm like

fired up about investing behind this guy and this team and so to me like as long as i keep seeing that that's the only thing that matters really like really good talent building in the space and excited all right so you've been you've been saying this for six months right so the market tops out in november you've been saying this for six months like i don't pay attention to short-term price movements and i completely agree i'm also not waking up and checking the prices of crypto every single day but here's where i push back on you as you're a very prominent angel right i'm assuming you've got a lot of portfolio companies who are now coming to you saying oh we might actually be sliding for quite a while what is the kind of advice that you're giving to founders today is it button down the

hatches is it stop hiring is it extend your runway is it raised at any terms possible what is the kind of advice that you're giving right now i always tell founders you want to raise when you can not when you must and sometimes like i was very critical of these massive rounds in 2017 but at the end of the day like my key learning was i mean it served them well to have that war chest to weather through a what felt like a brutal bear market you know folks like you know companies like file coin even like hashgraph definities of the world you know like these are like eye-catching raises and they they're well capitalized and you know in this increasingly competitive environment you want to have resources to be able to hire the best talent and to to pay them

well and so actually my my advice to founders is don't do anything stupid keep your burn rate low um hire really good talent like one engineer one really good engineer can make up for 17 crappy ones and so in order to find that really good engineer sometimes they're risk-averse and so it helps to be well capitalized it helps to have hr currency meaning raising around from notable investors like these are things that you know crypto twitter sometimes takes object to and saying oh you know it's a vc coin but it matters right psychological like consciously or subconsciously if you are someone that is working at a prominent web 2 comfortable job you have kids you're married or you have like a high opportunity cost let's be honest it's going to help when when he sees oh wow protocol x or y

raised from you know an andreessen horowitz or a paradigm or a tiger or like these things do matter and so you know that's kind of like i always tell founders like you know if you can get away with it raise it and not have to think about it um assuming the terms are okay and the dilution is okay and so you know you don't know if we're gonna be in two three five years of you know pretty brutal conditions or not and so it's always good to have enough runway at least two years of runway is kind of my my barometer yeah yeah i mean it feels like these like just low interest rates flood of like fast uh you could maybe say dumb late stage capital really what happened is it just jacked up these artificial

paper venture returns right and this has had a bunch of like secondary effects right one is it kind of convinced lps to just flood into the market with capital in search of kind of unsa sustainable returns and i think it convinced gps that like they maybe were better than they actually thought they might have been at investing or just that returns can be compressed into a shorter time horizon than is actually possible so where do you see um you know you've got a lot of companies i don't want to call anyone out by name but who have raised on 100x revenue right who have raised at a 7 billion valuation when maybe it should have been a one billion dollar valuation some companies have raised at a 13 billion valuation when their revenue is like 40 million dollars right so what are what are your

for these kind of later stage uh already unicorn companies what's what happens to these folks in the next 12 months that's a really good question um look the problem that you have in crypto is that you have liquid venture in true price discovery so you have a really low float on some of these tokens that if you look at the circulating supply and the fully diluted supply it's a huge like you have less than 5 10 of the entire token supply in circulation and so it creates this weird dynamic where the price of the unit price of the token is such that it has this massive fully diluted valuation in the billions uh look at one point like file coin is worth like point five percent of all the world's gdp you're like there's no way that this coin should be

worth as much and so as tokens are minted and are come into circulation it it creates this downward pressure on the token what i'm trying to say about where i'm going with all this is it is very difficult and i've had this conversation with founder and say wow like we are both they're both anxious when the price of the token is such where this fully diluted valuation is like it's not sustainable but it's also not nice when the token collapses 90 because it's demoralizing it's really demoralizing for for new hires for the community um and so anytime you see something go up to 100 and then down to two you know it really it's difficult um and unfortunately like there's no perfect answer or solution to this like

you're always going to have long like inflation curves some longer than others and you know it is what it is right the best you can do as a founder is you know keep building and prove out and and walk your way up to that valuation um perhaps he the only like sound advice that i am i don't like to give advice but like i think strategically i think some more sensible founders and saying look i don't feel the need to launch a token i mean in a true raging bull market everyone wants to launch a token most founders um except the really exceptional ones i think hold off and want to just truly build a great product um look at unisop right they they kind of didn't want to raise they didn't want to launch the token and you know kind of sushi but under their heads

and so it just became level stakes but i think now what's nice about this market condition which is really choppy feels like kind of bearish and so founders and the community is less eager to launch a token and so it puts more focus on building a really solid product before launching a token which is kind of nice to be honest i think most most token launches are really premature in nature um and i get it sometimes you have to do it for competitive reasons but yeah yeah yeah i think so there's an interesting dynamic in crypto where the token uh is live like the company's equity is live much earlier than in traditional markets right because you have a token instead of just waiting to go public one

thing that's happened is um there are these like red hot valuations in private markets and private market valuations are running so far ahead of the public markets that i do wonder if this makes sense for like some of these new funds like shout out to um who was it ryan watkins x missouri analyst you just launched pangaea and they're taking very concentrated bets on like three to seven high conviction maybe even leveraged like liquid token investments with the thought that private market market valuations have run so far ahead of public that maybe some of these new funds will start investing exclusively in public market opportunities and just the second point there is that jeff dorman i think jeff dorman a couple weeks ago had a really good point which is that

um a lot of venture funds don't actually buy the publicly traded coins even if it uh tokens even if it's actually cheaper than where they bought privately because they don't want to mark to market right so if you're buying if you're investing in the in the uh equity round or just in the private rounds you don't have to mark anything to market if you're buying liquid tokens well now you have a business where you have to mark to market um and so i'd love to get your take on that uh jeff is partially correct because as you unlock these tokens you apply some sort of discount so you have to i'm not sure if all funds do this depending on how they're structured but for the most part as you start unlocking these tokens you have to mark them at some sort of you know once once you have an equity

investment that has a token you have a position that i think most funds apply some sort of discount but don't hold it at cost now i may be wrong here but like the accounting on this is very difficult and sometimes you just have to apply some sort of rubric by which you say there's a token that so say you invest in uniswap and and you have this massive bag but it's locked because investors typically are locked for at least a year um and so some funds might hold at a cost until the tokens are fully unlocked or they're just marking the position and some sort of big discount it's not perfect science and then but but still i mean i think the point is

correct which is traditional venture and some traditional venture funds investing in crypto would much rather invest in equity because it's great to not have to mark to market um and i've always felt that back going to ryan's strategy there's a few other funds xltimeter guys also launching a fund that i'm excited about uh i felt that like it is a neglected part of the market everyone is chasing private deals the valuations are not as cheap as back in the day i mean i love investing sub 20 million anything above that is like i don't know like unless it's an exceptional team that can get away with 50 million um but those 100 200 million dollar private rounds you're like it makes me really uneasy i'd rather go and like wait for them to launch

and a lot of these i tweeted about this to you two weeks ago a lot of the projects that i saw in the private rounds their token is trading below and so that's when i scoop it up uh has less execution risk you have liquidity you can stake these tokens you can use them as collateral like and it just becomes earn a yield it just becomes a better strategy and if you're a fund it's a much more scalable strategy it's a much more scalable uh like you can deploy billions of dollars in the public markets not just in ethereum but like you know like d5 and some sort of other other stuff like top 20 top 50 tokens you could probably deploy billion dollars it's really hard to do that in the private private um private side

yeah yeah i know you've loved investing in the private markets right and that's been your kind of mo it's like oh pretty very exposed on the venture side of things it's starting to feel like i mean i know you always push back when i bring up bear market vibes or like crypto winter right but you know we're six months into kind of down sliding prices i would say and you're starting to see just like these takes on twitter here here's here or two for example i love melton i love melting to death she said controversial take aetherium should stay proof of work right you've got sandeep from polygon also loves on deep love polygon but he's like really coming at the avalanche team on twitter and like these are things that i've just seen in 2018 and 2019 is like when you start to slide into this bear

market people start to get kind of upset with how things are going and like people start to get a little angry and people start to get just kind of frustrated with how things are working and i you know cooper turley shout out to cooper one of the biggest enthusiasts for dows tweeted out i think was yesterday or the day before saying like all right it feels like daos we've kind of maxed out our capacity for dows right now and so kind of then you you start to feel the narrative shifting a little bit tying it back to the beginning of this question you are this you love investing in the privates and an adventure how does that shift how does that strategy shift for you do you start saying all right i'm going to slow down the private investing and maybe start to scoop up some of

these tokens that that are cheap or what's your strategy look like uh some of my best strategies has been like investing in so i i will probably not slow down my pace of private unless i see valuations it'd have some flows i will continue to always do privates i felt to that episode bill thai i totally agree with him i felt i feel just really comfortable that's my edge investing in teams that are teams of two or three at a really sensible valuation with huge upside in markets that have huge upside i want to wait 5 10 years i've done it before and that's it and so in order to do that you have to have other sources of of of cash flow um and so i have a public portfolio that i earn yield on and i'm you know you know i i love yield farming and i

love running yield on chain it could be as stable as we spoke with mr travis from ikeguy you know you could have a portfolio of 80 like bitcoin eth pick your whatever other l2 of choice stake that earn 8 whatever have 20 on stables earn 10 15 yield on stables and then deploy that into privates you can outperform 90 of all funds doing that now assuming the privates takes two or three to really have an outsized return uh paradigm has done that well i think you know in the bear market they were mostly invested in bitcoin and then they selectively funded a few deals like uniswap

that kind of like returned their fund and so you know i think they're in the top quartile of funds out there um return wise i i think uh is my sense and so i mean back to my my thesis is i don't feel i always like to remind myself like whenever i feel that the market is is run away from me i always kind of say to myself there's probably going to be a state in the future where i'm going to be able to pick up this coin at this price again just be patient like don't don't chase the market let the market come to you for the last six months since november i've felt i i i haven't deployed new capital

into my portfolio meaning i i haven't i have only recycled within crypto and i just felt that i wanted to hold cash to buy pain i haven't seen true true pain what what is true what is true pain i want to see a forced seller i want to see the a bull a perma bull be chopped and just have to sell because he's being liquidated or he has redemptions or something and when i see that and i track wallets and i and i i'm looking at this stuff and when i see someone sell forcefully that's when i that that's when i'll hit the bid i'll lift that um and i haven't seen that

yeah you know it just has felt that we're still we like it's probably the early if if we are truly in like a bear market meaning macro wise you know inflation is not transitory we might geopolitical conflicts might continue to you know like my long-term thesis in crypto is very much unchanged it solidifies every day um and so i'm not gonna rush and i'm not eager to deploy i i wanna i wanna just be on the sidelines a little and you know it's think about it this way unlike traditional investing that you made this point earlier if you're a softbank you're doing dumb deals because you know you have to beat

the you know you you have pension money and pension funds need to be you know they need to be their hurdle and when record when it's record low rates like you're you're farther out in the risk spectrum but in crypto you have not okay crypt as a whole is far out in the risk spectrum but you have a stable coin like uscc and you can earn like 12 13 on that okay there are risks smart contract risk and a number of things you could buy insurance if you really wanted to like you're getting paid like above inflation rates to to have the market come to you and buy these dips like why not just do that like why not rotate 20 like i think berkshire hathaway is like having i was reading about this has record high per as a percentage of their

book like they have cash is at an all-time high i think it's like 20 25 percent there's some truth in that i mean i i like why not whole 20 30 of your portfolio in stables farm buy these dips when the market pukes in the things that you believe in five ten years down the road are going to be multiples of where they are today and that's what i've been doing for the last six months yeah yeah um let's talk about the last part of the market that has not started puking which is nfts so there was this big article in the um in the wall street journal nft sales are flatlining from the wall street journal and this article uh and the charts and data used in the article showed that nft sales are are theoretically crashing and they appear

so we our team looked into the data it appears to be based on kind of this incorrect data from nonfungible.com and i don't really know nonfungible.com and i'm sure it's a great team over there but it wrongly shows that nft sales are plunging started plunging in november 20 202 2021 and never recovered right this chart shows somewhere around 200 000 nfts sold daily in november down to what is this around 15 000 20 30 000 today right but when i pull up dune right if you look at dune which is just fully open sourced on chain data you can actually see that nfts sold are hitting these monthly all-time highs and every metric active traders total volume et

cetera seems to be actually at an all-time high so here's this chart of open c is pretty wild um you can see open c volume per day and that's that's the key right because the chart in the wall street journal is referencing n meaning number of the perhaps a unit of nfts whereas volume just talks about obviously the the notional value of nfts traded per day right exactly exactly so what so what's your take on this um what are your thoughts on this wall street journal article and and and maybe expanding out what are your thoughts on just the nft market in general right now it's just a reminder of like listen folks like you need to make independent analysis and it's just they skew the data right i mean the chart is terrible like who who cares about number of the

units it's just like to extrapolate based on that is like really dumb you have to look at the volume what i've observed is like you have these collections like azuki's and moon birds that their floor is pretty high out of the gate like you're talking about 20 30 east you know that's 50 60 000 per and per jpeg um and so i think there's been a consolidation in the market and meaning the the blue chip there there are more blue chip collections and people want to pay for that and so and that that to me is pretty healthy barometer um of of people that you know are perhaps are trying to replicate what board apes has done

um and seeing what's going to be i think today there was going to be an un like a an unveiling of beans which is related to azuki and right like we talked about this in prior episodes i think board apes are sort of charting the path of you have a land sale you have a token that has some confirm some governance rights to determine how this community is harnessed and you know i think like obviously there's a lot of speculation on this land sale for instance we can talk about later no one really knows how the game is going to look and yada yada yada but still i mean i think like uh the the the dune dashboard is more representative of what is going on in the market

uh but i do think that perhaps a number of of of mints and projects says slow down and this has been a consolidation in higher quality projects which i think candidly is probably a better thing right i felt that there was just a supply influx last year that you and i were talking about it just felt like two or three a day you're like that it doesn't feel sustainable but it's nice to see that there's higher quality projects with uh uh some sort of a compelling road map to to you know get people excited and and have these floors pretty high i mean you're talking about okay a moon bird or a nuzuki is worth the same as like a pretty high-end car let's just frame it like that i mean that's pretty wild yeah

and i mean there was a gaming acquisition i saw go through i think it was this week or last or uh pretty recently it was i think 300 million dollar deal 300 million deal to buy i think it was like 1200 gaming developers came over in the acquisition or 1400 gaming developers and some aaa rated games 300 million dollars that's like around how much yuga labs made in this other slide deal right so like the uh the the capital that's in the space right now is just completely ridiculous but yeah i mean just going we'll talk about eagle labs in a second uh there's this just one shout out uh this guy martin actually data journalist over at nansen and i thought he had three great points that we can talk about one is uh volume

is still higher right now than almost any other week in 2021 right so volume of nfts is still higher than almost any other week in 2021 that's one piece of the data the next is that users and transactions uh users per week is still higher than any week in 2021 transactions per week don't look as strong but they're still in a lot in in pretty good health and then projects with at least 10 sales per week is showing the strongest growth right growing from 1.8 k projects at the start of the year to over 2.4 000 today so yeah if you really look at any of the data it still shows that the nft space is going really strong right now where do you think we go from here um like

ape what the token the ape token has done is pretty remarkable and it feels like there's a lot of strength and excitement and you also look at the land sale um that they did recently and um it wasn't executed very it was actually pretty poorly i think just how the dutch auction and this is leading to these crazy gas prices but i'm curious like before we get into that like you you keep saying that you and mike talk about nft market a lot and you keep getting proven wrong that the music has to stop and a lot of people have been calling that myself included but like for folks out there skeptical um like what do you think sustains the nft market what do you think is in store

for the rest of the year um i'm gonna preface all of this by saying i really like what the hugo labs team is doing and it's just remarkable what they've done i will say uh it's getting a lit it feels like it's getting a little out of hand with hugo labs and it feels like someone who's trying to basically absolutely race to scale and just like blitz scale maybe without finding perfect product market fit and uh actually i'm going to give a shout out to our podcast producer garrett who said this to me in slack yesterday he said board apes feel like the last great hope of retail in the bear market and i just think that's a really interesting line because when you think about what has happened with board apes like why is why has the floor gone up so much and like

why do they have this die hard community well it's because board apes are the best investment in crypto since bitcoin better than ethereum better than any better than anything else better than your step in investment it's the best investment since bitcoin really and and i'll and i'll say this because uh what what did they mint at like 200 right you say you mint it at 200 that 200 has turned into basically a million dollars so you've got your board ape you've got your mutant ape you've got your kennel you've got your like other side land you've got your ape coin all that combined it's around a million it's probably maybe a little less 800 900k there's hasn't been another investment outside of just buying bitcoin in the last you know 10 15 years where you

could turn 200 into a million dollars and so that's why i think it's going to take a lot to pull this market down what might pull it down is um is this summer there's a lot of projects launching that are working on the financialization of nfts like using nfts as collateral and that could uh i think that could be pretty dangerous for the market yeah so just put in perspective so assuming that's correct uh board ape investment if you minted an ape would have been a 5000 x return if you'd have bought the ethereum ico i need this trading that would have been slightly below that because eth if you're an ethic ico investor you would have made 600 6000 x probably a little bit more with the forks right you like theorem classic but nonetheless um you

know it's pretty impressive you're right and so yeah we'll see um i i don't have a good answer for this um other than i think nfts are bringing you know just i think it's still not positive i hope people don't get hurt um but it's fun it's collecting that idea doesn't go away we're seeing music nfts we're going to see other type of nfts that brings in more users um and so you know we we spoke about this in the episode with the variant guys you know i think they're very much believers in this web 3 creator economy underpinning that a lot about is nfts and so you know i i think uh traditional classic jpegs i think that's where i i would probably concede the

wall street journal article which is probably feels like that is is slowing down quite considerably i think where the most of the excitement in the in the nft market today is around uh something like what you labs is doing which is you know a game and other projects uh attached to that and or music nfts which seem to be all the rage these days and i i candidly don't own any but i can see why people are excited about them yeah i mean it feels like we're entering the second phase of nfts so the first phase of nfts was really profile pictures and these are just like collecting uh collecting something almost to show it off right you wanna and and also maybe access to a community that was like really just the first phase of entities was these pfps now you've got a lot of the uh projects

coming with utility which you know pros and cons to that um but you've got what is it moon birds you've got chris cantino did his thing with like club cpg the permis community obviously very biased but um i think it's a really interesting community that has a lot of potential and then it feels like maybe a year or two years until we enter phase three which is starting to actually financialize some assets that don't have tokens usually associated with them and putting like a non-fungible token around them we interrupt your programming with a special announcement empire has a new sponsor santi and i are very excited to welcome bipmix that is right bitmex is back the exchange we all know

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from land sales which by the way just to put that in perspective that would have been probably the largest round of financing done two years ago in crypto well yeah maybe not like with l1s but like with like uh but but still it would have been one of the largest rounds so it's crazy and this was done in like minutes yeah i mean i think it's becoming abundantly clear that nfts are just a new funding mechanism for startups right um this is no different than a uh a decentraland or another metaverse raising a massive round right to go build their thing out here here are the two interesting things about yugolabs and and and other side a uh they did a kyc offering right so you had to you had to kyc

go through kyc to actually purchase this land and it created the secondary market that was kind of underground to be able to purchase other people's kyc addresses um so you had people just like you had people promoting that they were buying up like 50 60 70 100 kyc addresses to be able to buy this so that created that kind of interesting secondary market around that um which you know that didn't really feel like a good thing obviously what hugo labs was trying to do with their kyc addresses is like make it so that one user can get one plot of land but that kind of fell through with the secondary market and the second thing is they completely crashed ethereum so this was the craziest thing that's happened to ethereum since probably cryptokitties broke down the blockchain in 2017

gas prices were at like what eight thousand gray or something like that it was i don't know three four five thousand dollars um and that has that has a lot of secondary impacts right not only is that bad for kind of the smaller folks who can't pay 5000 bucks for a fee which obviously is like most people um but it also really negatively impacts all the other every single other company who's ever built something on ethereum well now users can't actually use your uh use your project right because yeah your your your database is completely clogged up so what were your thoughts on the hugo labs land sale uh terribly executed i think they could have done certain things with the smart contract like

architecture that would have like severely reduced gas consumption um right more than a hundred and i think is 180 million was paid in each fees to the other side contract right that's a 56 uh transaction fee based on what the 320 million raised no it's crazy um and then they went down and said oh it's abundantly clear that ethereum doesn't scale we're gonna go on like launch our own i'm like guys what are you talking about like first like at least take a shot at like you know designing something correctly it's i i still concede partially that like we're not ready to go truly truly mainstream i mean an l2 environment yeah but um

[Music] but look whatever i i don't know we all constantly see these projects be pretty mercenary they use ethereum um as a way to harness community and then they extract value by leaving um and you know anyone can do that in open source it's fine but it's just from an i don't know it's like sits well with me from like an ethical perspective loyalty perspective so anyways i understand they need to build a business they want to build a game but they want to launch your own coin and l1 like you know ape chain go at it you know yeah fine yeah so we we have an episode dropping with framework with uh vance and michael from framework this coming monday and their thesis is that yugo labs should actually

go fork their own l2 well i'd be curious to get your take on this is that is that the best strategy i think so yeah i mean like or you know i i think there's still a lot to be done here but like immutable x kind of did this they force their implementation of starkware so we can just go and do that um why do you have to fork an l2 why not just go do this on optimism or arbitrom or something like that i guess you could i'm not very sophisticated to understand perhaps some tradeoffs on the margin that they may want to just tinker on it and create their own um but theoretically i mean i think you can um use arbitrarily or objects yes yeah does this make you question whether or not ethereum has long term

uh has has staying power as like the long-term settlement layer of crypto yeah i mean i still have doubts about that like to me it's not like abundantly clear like 100 certainty you know i never think this way episodes like these do kind of like make you wonder can we truly scale and maybe maybe it's just going to take another five years of actual true deep uh you know research to get there um because okay ethereum back to your point around malcolm saying that ethereum should continue to stay provoric like the merge doesn't solve any of this this is a reminder of people the

movement of proof of stake doesn't solve any of this meaning that the demand for blocks base keeps increasing and it creates this dynamic where yeah it's a free market of pricing gas and block space but it creates it's sort of like imposing new york style rent to all of america like that's crazy and l2s just are like creating suburbs to create different populations to you know not pay three thousand dollars a month on rent so i think there was a really interesting episode uh with olaf from um from poly chain he much like me i

believe in a multi-chain world i think we're gonna probably see way more l2s in the next five years that we have seen today and i think that's a good thing um you know to to allow for all these different projects to deploy but at the same times use a settlement layer like ethereum i mean i think ethereum continues to be that leader uh relative to all the other l1s out there i mean solana is a few years behind i mean it contin it has its own issues um it's still and the team will concede it's still in beta very much beta and so you know again it these are is this a reminder for people like these things take a lot of time the internet

took really like 15 20 years more than that to get to a place where you can stream video on your phone and the problem now is that you know you always have these moments where the expectation is such that people want it and they want it now they get a taste of nfts they get a taste of what you could do in a decentralized context and it's really cool to be in these open source communities the vision is there they sell it as such a lot of times you know knowingly or not i mean teams are promising this grand vision but it's just like you gotta just constantly be a skeptic and say yes i probably believe that this is possible but it's gonna take way longer than what we're probably allowing

ourselves to do and so you invert and you say yeah you probably should raise a bunch of capital to be able to get there yeah yeah it's i mean it's an interesting notion what you said at the beginning of this around uh you're basically applying new york rent to everywhere and that you'll end up having these suburbs created which is kind of like what um who is it haseeb who came on the show talked about urban yeah his thesis for different different blockchains or different cities i'd i'd ask you does minting and nft on ethereum kind of afford this additional value to the nft right like if you minted an nft on on polygon does it carry the same value no not today i mean i think there's a big discrimination uh i bought some nfts in polygon and so differently you haven't seen i think floor prices on polygon are

on the aggregate much lower than in ethereum um what it will be interesting to observe is that there are a few of these projects that are launching like blur for instance um that is just an nft aggregator and so maybe that places emphasis around the actual collection itself uh unless on was it minted on ethereum or avalanche or cosmos or solana like no one cares and if you're a creator then yeah you probably want to mint in the cheapest kind of environment um in an l2 so that it's not as expensive for you to deploy the you know the collection and so who knows maybe in the next six months we won't even think about like where

that nft is being minted today it very much matters because you know a lot of times like punks more minted years you know years ago right and it was an ethereum that was kind of the only game in town and i think a lot of projects historically have tried to emulate that and say okay if if all the artists are in paris in this salon would i probably want to move to paris and like you know be there because that's where like funny enough that's where all the galleries are like we're kind of in that state um but i think over time that kind of probably fades yeah yeah i think last thing on board apes before we move on is just um there was actually an interesting proposal today the apecoin dao approved a proposal to allocate and a half percent

of the total apecoin supply to be distributed over the next three years via this ecosystem staking program and so apecoin has a max supply of a billion tokens and the rationale was like as a first step to apecoin becoming the preferred token of web3 this is a quote early nft adopters and existing and potential ecosystem participants should be incentivized and i got to give kobe credit here uh you know kobe said quote apecoin is legit voting to give away 20 of supply really 17 and a half percent of supply in quote fake staking program merely days after hugo floated the idea of an ape led l1 or l2 there's no discussion on whether that supply might be useful for actual

staking if an l1 or l2 was built we're just in the stage of more coins vote yes um and i think he makes a good point here which is people don't realize how much thought went into creating bitcoin or creating ethereum or even some of these other competitor l ones uh where you have you really have to think about the economics it feels like something like uh like hugo labs with board apes might just be kind of racing to make a lot of these decisions because they've got someone like andreessen as an investor who's just like build build build let's split scale let's do this as quickly as possible in web 2 that works because you're just trying to get more users you're not creating economic systems in web 3 you're creating economies where you need to actually put a little more thought into it yeah

that's a good point uh i think it will be really interesting over the next five years 10 years to understand which chains actually came out ahead the most because there is this camp of ethereum purity which is it is decentralized the decision making you know vitalik still wields a lot of power in the community uh but you know there's there's different clusters like consensus and the ethereum foundation and i guess to some extent like large holders but it feels very different than uh than a project like solana um that is is much more centralized at the decision product level uh or even perhaps all the others like poly like avalanche and uh you know polka dot to some extent like you know these are much more centralized organizations and so

um yeah i think from a case study perspective in the next 10 20 years it'd probably be something that we were going to look back and say what was the optimal like place in that continuum of decentralization and what are the things that you should be decentralizing certainly governance but not necessarily product development and i think sometimes people lose sight of that and say let's decentralize everything you're like wait a minute no like absolutely not but we know i mean i just i have a view but again it's too early to tell yeah um all right so we recorded this episode with um the head of coinbase cloud joe lulu's who previously ran by uh bison trails before bison trails got acquired by coinbase i

know you weren't able to make that episode but it comes out next week and one interesting thing that we talked about is lido and just liquid staking so right now lido has a 31.6 market share overstaking and about a 90 market share over liquid staking they basically have a monopoly on liquid staking right now does this concern you uh photoscopy i was a first investor in lido um i was a paraply um i so so i have bias here i think the team is actively trying to address this uh what you have to remember though is that it is sort of a consortium of like a council that determines it's not just one validator it is a group of validators that come to lido and the lido kind of governance

determines which validators are part of this kind of i would almost call it like a a safe white list of validators um so it's not to say that it's just one validator like chorus one or like you know staked or who stakes on par later but you know one validator entity that like is getting all of that 31 percent of staked eth um so so it's important when people hear these figures to appreciate that there is a whole set of underpin like i think the role of lido is to be like that router that determines that everyone in that has been kind of approved whitelisted in the lido system

is a credible validator that has a good track record um and and the community kind of has assessed that and so um i'll point that out um and so yeah i mean this this goes back to one of the interesting discussions that i had i was in the backless podcast at the time where they were getting some criticism just being too ethereum centric and it was constantine who was the one of the founders of lido myself and the backless team uh ryan and and and david talking about solana and ethereum and all as a i'll just go on this quick rant which is the criticism that we hear from salon is

that the hardware requirements are really hard and onerous and it creates this implicit idea like it creates this dynamic where you know only like rich folks can like be validators and so therefore like it's difficult that not everyone can run a node with a raspberry pi in their house which is kind of what ethereum allows and so naturally you might look at that and say oh ethereum is one of the ethereum is just more egalitarian sort of like a flat structure that anyone can be a validator but the reality is like no one actually runs these things and it's still very centralized and so the proc the point that i'm trying to make here is from an architecture standpoint it might be easy to run a validator but that doesn't necessarily mean that you're gonna do it and i think human structures governance if you look at

like political participation in systems even like corporate voting um and activism and certainly in political systems of elections like the turnover is really low for the most part like humans don't like i'm very active um and so when you you want to sort of like think that this is going to be how humans behave at the end of the day like everything is a social construct and to reach consensus like there are there will always be i think a natural pull towards centralization because participation will be low most people will not want to participate will not take the time and the effort to be a validator and they might they would much rather

outsource this to someone else and so then you say well how can we create this this idea how can we design systems that assume that there will be a race there will be a natural gravitational pull towards centralization and then create wrappers and layers that that can mitigate an attack and i think that's kind of like i think the lido team is acutely aware of that and so um you know yeah does this centralize risk though because um okay so right now lido has 31.6 or seven percent of the market share at 33 of market share uh they have a they pass that 33 threshold right so if something ever

happened to lido lido like this this is the way i understand how ethereum works is that if more than 33 of the validators go offline blocks stop finalizing right and so let's say something happens with so if they get 1.3 percent more market share and then something happens to lido their validators for some reason go offline blocks won't get produced if lidar goes down that doesn't necessarily mean the validators go down like there are multiple different validator companies operators within the lido ecosystem so the probability of all of them going down at the same time is not necessarily a smart contract bug that affects lido that all of a sudden everyone goes down i'm pretty sure that

but anyone listening that would want to contest that please comment and we'll talk about it and maybe we'll have the lido team on we'll have the lighter team on that'll uh that'll fix this um let's put it away from talking about eth let's talk about the tara ecosystem for those who didn't see it the new anchor semi-dynamic earn rate went is now at 18 percent uh it went from 19.5 to 18 not not that big of a deal um but i think the big announcement here is people have been questioning like is the anchor yield sustainable what's going to happen with anchor here's the update is that rates are now going to be adjusted monthly based on the yield reserve performance there's going to be a max monthly movement of one and a half percent with a floor of 15 apy and uh 20 apy

ceiling uh on this note deposits also just hit an all-time high of 20 billion dollars um uh and i mean it's becoming pretty clear that like even at a lower rate well i guess 18 is still high anchors still attracting a massive amount of capital so you're still beating inflation yeah slightly slightly um by the way speaking of inflation just as an aside like can you believe coffee like is the inflation of coffee's off the rails uh i mean we always know that if you live in new york like you get totally ripped off by you know a cup of joe anywhere you go but like the coffee bean itself has been on this massive rant a massive rally uh you know so i'm feeling the pain sir

because i drink more coffee than i care to admit anything else you want to cover um on this roundup the only thing i want to raise attention to is there is permissionless well you always i always save that video at the end but there are now a few kind of litigations that have ongoing towards d5 protocols um [Music] and one of which came out recently that is pretty relevant for the dial space which says that i think it was bzx got sued by the same people that are assuming pull together um this law firm that is like are those the same people that are suing uniswap um i'm not sure actually but basically what

says is a bzx was a compromise one of the keys were compromising so it led to like loss of funds which bzx said that they were going to return to like you know make whole affected users but they still kind of went and sued them and they were suing everyone in the dow meaning the operators which included the investors and i think one of them was hashed and and another a few other vcs and the employees obviously of bzx and their claim was which is going to be i think a very interesting legal precedent here which is that the the veil like that the corporate like when you render an llc in a corporation like the you know personal liability kind of goes is protected and that's the whole point of why you'd

wanna these structures are so important because it protects the operator like personal liability but now their claim was that because it's a dao that that no longer applies and so anyone everyone here is liable um and so i'm i'm watching this very very closely um to see how it is interpreted in the court of law because it could it might have uh like have pretty big implications um on the dallas space as a whole um yeah yeah uh one of our reporters ben strack had a really nice piece on it if you guys want to learn more that's the one i was actually looking at so we'll link that to the show notes this is something to definitely watch um these are the kind of things that i i pay most attention to because it could

imagine imagine if a court rules that yeah everyone's liable like there's no like like this personal liability i mean if you're involved in a dow like you sure still should be paying attention to this if you're an investor if you're not right and here's here's the key line from uh from their lawyer right from the attorney is that means each of the partners is jointly and and liable to the plaintiffs and must make good on the full amount of its debts right so you've got uh the defendants here bzx protocol co-founders kyle and tom uh investors hashed age crypto b0x they created the dow right and now the they're saying that they're liable for it so yeah yeah definitely um i know there's a lot of really good uh you know

consortiums within crypto that are you know putting up a good fight and making sure that this you know gets treated correctly but i think look going back to the original question i think this is not understanding important for the space where it's gone sufficiently large that it is attracting this attention which obviously is not fun but i think it's just a symbol of this industry theater stay and we need to create these precedents uh around dows around treatment of tokens and a whole number of things but i think that is just in my back in my mind this is just telling you it's almost really the way these asset classes get created right there's new standards and um legal rulings and and things that need to be created to address

you know you got at the same time innovation needs to be met also with legal innovation and i think that's what we're we're seeing here so it's encouraging but also super important and also i know can be really stressful um in the space where we constantly like climb these walls of worry but you know yeah i'm gonna one last piece of news and then uh we'll talk about permissionless for a second is the fairfax pension shout out to the fairfax pension they i remem i remember being in the room yeah in the room with pomp when he said holy i think we just closed a pension and it was him and mark cusco um and they were one of the f might have been the first pension to actually publicly allocate to uh to crypto they got them to put half a percent of their portfolio into crypto

into the morgan creek fund uh these are uh firefighters right and police police in virginia yeah yeah um they then got them to double it so then as one percent of their portfolio this is back in 2019 and um now here we are 2022 and it just got announced that uh crypto is now eight percent of the pensions portfolio and they're considering allocating to the the title of the article is a little clickbaity because it said pensions starting to think about yield farming but if you read the fine print they're they're thinking about allocating to two different funds that deploy yield farming strategies but man uh it just i think goes to show like once you it's kind of like uh moving your dollars into

stable coins like once you enter into crypto it's really hard to go back so big shout out to uh fairfax pension for for uh pulling the trigger on that absolutely yeah um all right quick shout out to permissionless but before we do that i just want to tell you this is actually the four year anniversary of block works oh wow yeah so that was uh i just got i just got a ping about that from my calendar so uh four year anniversary i'm realizing that this might have been the the day i actually quit my job at a company called size sentence to go full time with block work so yeah wow yeah it probably has felt like 20 years but you know it's a combination of 20 years and like six days so it's like either time is flying or like time it's going really really

long so yeah man um really excited permissionless if you guys aren't attending uh we are almost actually sold out on tickets so almost sold out on tickets um you guys should really go we here are some of the speakers chris dickson dokwan catherine rue wu vlad tenev uh is leaking a bunch of alpha on stage at a keynote uh him and mike are talking i think it's on the first day about some of robin hood's strategies and damn that's gonna be a good panel jiho from axi uniswap labs justin drake haseeb nick carter legion of varian uh polygons coming out eric peters at one river stani from ave this guy named santiago x we've got you x paraphi we got to

change that to institutional angel we got kyle simani i'm just like yeah i guess you are you are yeah christine moy big shout out just uh became head of crypto apollo vance from framework um head of cbdc's at visa kane from synthetics a vitul at electric the chief product officer of coinbase the list goes on and on so if you are not attending uh you should definitely attend if you don't like the content come for the parties we've got blau please and thank you um some really amazing djs and if you hate djs you hate content come for the nft gallery we got dez bryant uh coming out giving a really amazing talk about what he's doing life after football we've got trippy labs coming out and big shout out to openc for for sponsoring

the nft gallery the content is that going to be made available like weeks later months later uh it will be yeah okay great great yeah still you should we should all come i'll be there and i'm excited about it it will selectively so we'll probably release maybe the best five panels but for anyone who wants to get access to all of it no you're going to have to attend i think we'll maybe live stream it behind uh like if you hit our website you might have to put in your email um and we'll give you the because if you had some sort of nft tier that you could just unlock that content uh using live peer or something i i don't know like you just like connect your metamask and like to stream and like or maybe like drape the super fluid like you'll pay

on you go as you go like i don't know i think it'd be that's kind of the useful utility around nfts that i get excited about yeah yeah very much so so and speaking of nfts uh the only way to get a vip pass is to snag a permee so jump into the permanent community join santiami and uh we will see you there awesome my friend it's good to be good to be back hopefully we'll have to see another day in crypto up down we'll still be here we'll still be here next week and we're going to permissionless so hope everyone's doing all right out there don't get liquidated and we'll see you next week see you next week [Music] you