A Sober, Bullish Conversation on NFTs w/ Matt Silverman

Transcript

[Music] thank you hello and welcome back to the strangewater podcast thank you for joining us I'm gonna be honest with you here I am pretty skeptical about nfts I can list off a few reasons but my biggest issue is that if there's anything real here it's covered up by an almost insurmountable amount of scams toxicity and just predatory behavior for me it's pretty tempting to just write off the entire space and yet as much as the Temptation is there my boundless optimism for blockchain

won't allow me to ignore a technology primitive as fundamental as the nft we have already seen nfts unlock new ideas features and communities and we're still in the opening act more the real world that we all live in is not a fungible world most of the things that we care about are not interchangeable but the real reason I can't ignore nfts is because some of the people that I consider the most level-headed and and wise have gravitated exclusively towards nfts people like today's guests my friend Matt Silverman Matt and I met in the bankless Discord

sometime in the last couple of years he has been my go-to guy on all things nfts what's interesting what's a scam what's coming I am so grateful to be able to share one of these conversations with you a sober but very bullish reflection on non-fungible tokens one more thing before we begin please do not take Financial advice from this or any other podcast ethereum will change the world but you can easily lose all of your money between now and then especially in the realm of nfts all right let's get the conversation started

Matt thank you so much for joining us welcome to the podcast yeah thanks so much for having me appreciate it cool so um before we get started uh would just love to kind of get like the basics of your background and um kind of the 0 to 60 on you know Matt um who've never heard of D5 or crypto or nfts before into um getting involved in the space I guess when I first got into crypto it was like just hearing about Bitcoin but not understanding it and I ended up you know always interested in entrepreneurial schemes so like I ordered one of those Asic miners from butterfly Labs before they were shut down and like we had it mining in my brother's dorm room um it earned like a full Bitcoin which we probably sold at 800 to pay off the asec and I think you know for most

people when you have a story like that like when you sold too early like the earlier you had that happen the sooner you learned it benefited and that was definitely the case for me um so it was like 2013 or something um and then fast forward to like you know a few years later I started just buying some eth I didn't really understand what smart contracts were but I knew it was like different than Bitcoin and that was interesting to me to like have almost like a internet so to speak built upon crypto um so yeah as we got closer like 2018 or 20 2017 um I had this eth and I believe it was I want to say 2017 that I discovered crypto kitties um again not really understand what

entities were but I knew it was you could it felt different because you like purchased this thing and it was in your this you know in the metamask Plug-In or whatever plug-in I was using at the time but it like it just felt different than like it wasn't like using a regular website where you just sign up with an account and you have this thing like it existed outside of just the website and that even though I didn't understand what it was it felt different and it brought back a little that Nostalgia for me of like collecting pogs or stamps or whatever you know coins as a kid just like something you could feel you could have it and it had some value um so then that was the pause of nmts for me for a few years um I started becoming interested in D5 like

it had some Ethan there's all sorts of schemes going around so you know started messing with um decentralized exchanges and you know this concept of being able to trade Ethan to other things without us with them just like with the decentralized exchange just knowing your public wallet address I mean the concept was so insane to me you don't sign up for an account um how you could deposit eth into Ave and then borrow stable coins against it so it's like a decentralized bank and all this stuff just like got me super interested this is probably beginning of 2020 or 2021 um polygon yeah yeah when polygon was kind of just kicking off and so I was able to try out Ave with polygon and not worry

about the gas fees and stuff so that's how I kind of got into D5 and um and yeah and then it was early 2021 when I started listening to like the proof pod I mean it had been listening to all the proof Kevin Rose's modern Finance podcast we'll take a pause here because like that at this point the story is like when you know at least um one I met you but two I think like you're um you know like passion really like morphed into like seeing nfts as something that so anyway 100 but um one I just wanted to say that like I everything you're saying resonated with resonates with me except for you know as you know I'm on a much more recent time frame but it was that it was that same thing to me as well the decentralized

exchanges and like you know I this deep into the the cycle or the narrative or whatever it's like it's just so basic that we like lose sight of that but like at the end of the day like I even started caring about what ethereum is because Hayden I heard Hayden Adams explain uniswap on a podcast and it was just this idea of like like that this is different exactly what you're saying like this is different and like I'm not even understand if I really think that like we need to be able to trade all these like long tail assets into the future but like it's different that there's an option there and so um you know I think um as we've discussed like the a lot of

the the bulk of this podcast is going to be talking about um like what I don't understand about nfts and like what everyone like should how they should like kind of reframe how they think of them but it is like so funny to hear that um no matter like where we stand in our careers right now it was like the same things that got us excited and bought it yeah totally I mean it's wild uh yeah yeah so um anyway okay so you're now we're in like the you know like D5 summer kind of late D5 summer in nft world and like I know for you like a huge kind of like Catalyst or like turning point or or something was like your

introduction to Kevin Rosen to the Kevin Rose universe and so um can you tell the audience like a little bit about um one who who Kevin Rosen proof is two like what um how you how they just caught your eye and like why you knew that was something you needed to be around and then most importantly like why are you so energized by it for sure yeah uh so Kevin Rose let's see I mean he started uh dig.com back in you know the.com boom time or or somewhere around then and that was shortly but right before Reddit and so I kind of I knew of him from back then because he was a young Tech Guy um got famous for for doing dig and then I just kind of followed him ever since

on probably Twitter and Instagram and then he started doing podcasts and I I started I started listening to them I think he called it modern first it was Kevin Rose podcast and he did modern finance and I just like love the way he interviewed and just the way he thought and so I just was a fan and just started listening to all of his stuff and fast forward to I want to say this was 2020 was probably when he started um modern finance and then eventually as he got more and more into crypto and nfts he started the proof podcast which focused exclusively on you know nfts um and he announced the proof Collective uh on on the podcast kind of months before

it actually launched I believe it was decem I want to say December of 2021 when proof launch it might be mixing up the years crypto's all such a blur but um and so he you know is like a Dutch auction from five East down until it sold out and I I knew I had to get it so I had like metamask loaded up with five eight that day I kept watching it and then it minted out between 1.25 Ethan one eighth and I like rushed on it open C and bought it but um I just knew you know I looked looked up to him in all of his kind of nft thoughts and I so I had to be part of that that group so you know the proof Collective right like just like to put it really simply for my Outsider it is just like a group of people that are

like really really passionate about nfts at this price point but like really passionate about nfts and I've just decided to like congregate together right and I guess let me take a step back and can you describe like what is the proof Collective and like what is it more than just like a group of people that have agreed to like trade nfts like kind of in concert yeah well I think it's definitely evolved since we're started I think where it started was there wasn't much of a promise and it was literally from the get-go a three-year membership club that you you know buy as if you're on the nft you can go to these events and all sorts of other token gated things but nothing else was really promised it was all just

an experiment um over time it's evolved to more art focused nft collectors so jonative art photography all that stuff um but yeah at the time it was really just people were interested in collecting FTS and fans of Kevin Rose and the team he was building and then so for all of you who thinks you you don't know what the proof Collective or Kevin Rose is like the the most famous thing that came out of this is moonbirds right and yeah or maybe most famous is a um is a tall tall bar to clear yeah no I mean definitely I think that that was probably made the most outside of pure art collecting that definitely made the most headlines for sure and so

again like well outside of pure art collecting um you know I think like what was interesting about Moon Birds when they like first hit the scene was it seemed like it was like moving from just nfts as pfps into like nfts as PSPs but as something that are like dynamic in growth with you and um you know I I would love to kind of hear your feedback on like what what the promise was and you know how they've delivered but um I think like more holistically first like when you think of what's exciting about nfts are you like more excited about um like looking how we can combine art and like smart contracts and programming

a lot of moon birds or are you much more like bullish on how um you know like your your fidenza is like represented as nft I mean so I wasn't interested in in collecting anything of it high value before nfts I mean like as a kid I collected basketball cards but like keeping track of the values and then if you ever actually wanted to get liquidity and sell it you know it's just like it was totally crazy so I didn't get into that until I realized that nfc's kind of on Lock and solve this key problem of collecting any digital good which is you know being able to trust you don't have to worry about a third party authenticating something like you just know that it's legitimate because of how the blockchain works uh and then also having just like the ability to get liquidity instantly

is also insane just so that trustless you know decentralized marketplaces like openc allow you to sell or buy from someone that you've never met you don't have to trust that they're you know they're not they can't rip you off because I mean everything is is there and verified so with the caveat that like you need to have been around the block and have some experience like right now you and I could go list like board Apes that look exactly the same and like but but point taken yeah I mean yeah the the user experience is is a long ways away from being widely adopted so that's a whole separate story but yes um so I was able you know kind of just get over that hurdle and and um and yeah so so to me then all of a sudden it made

digital art much more interesting both the extent like digital created in Photoshop for example or glitch art or generative art where the the artist is actually a coder you know writing scripts and not using a digital brush or anything um and because nfts allow you to actually prove the scarcity of that and it's not just a metadata from a computer that's saying when it was created that anyone could fake and and like in this um how should I phrase this and this like kind of unuanced take of nfts um where look like bottom line and like let me just like Zoom to the question is um

like how do you respond to people that say like nfts like I can just like right click and save as like how can you say that any of this like means anything yeah I mean I think that that's a common kind of meme as people kind of start to wrap their heads around what nfts are I think almost everyone who's ever gone into nfts first had that same thought and they kind of eventually passed in it's it's I think it's it's common um but that this simple analogy is you know you see a painting in a museum don't just take a photo of it and then say whatever buy a painting like maybe many people wouldn't buy Fine Art but like it had it's worth what people are willing to pay for it it's no different with nfts like so um I just think that that probably takes

some time for for folks to to get used to that the right click save uh aspect of it yeah and I honestly like I I just think it's like just like a real mid-curve take right yeah I'd say the more reasonable take is nfts are a scam I think that there's a lot of people who feel that way that they're not necessarily wrong I think so that that was definitely that's interesting like what do you mean like in what way are they a scam outside of like the people that are actually running scams well I think it's more like the because first of all I mean people are generally avoidant of I think new technology that they don't understand so when they hear about nfts and they hear about all these scams they just associate nfts in

general with being a scam and I think that's a really common take for people who don't collect them and um it's unfortunately due to just human nature I mean if there is a way to scam people out of money some people will take advantage of it there's been plenty of that with nfts a lot of bad stuff um that naturally I think just has to the market has to go through that to get stronger yeah and then you like then then we need to start to address like the wild gray area in the middle like one example off the top of my head is like the Goblin Town thing right and I guess just like for posterity I will explain that like Goblin Town was just this like ridiculously stupid nft product project that came out of nowhere and like took

crypto Twitter by storm and then my understanding was that like six months later after we'd all even forgotten that this happened like someone went and basically like changed the underlying photo to be I don't know if it was like grotesque or gruesome or just like unrelated to the original thing but like you know but Matt you might have some like more background on that but bottom line is it like it begs the question of like well was that a problem yeah well so I don't know specifically maybe I vaguely heard about some some sort of thing like that like a maybe unplanned metadata change but like Goblin Town is by this company called Truth Labs I believe um and you know I think the all the

intentions with that are a fully legitimate project and I think they're still working on stuff and doing stuff um but let's say if something did happen with the metadata I mean at the end of the day the nft itself is just a token right and it has metadata associated with it that has an image the the best way to kind of secure that image is using decentralized metadata like ipfs or R weave so your your actual image is stored on chain and it can't be changed um and so that's like kind of probably the to some extent maybe the Holy Grail of like how you can store images and attach them to nfts but some some providers use like an Amazon S3 link or whatever and that could be changed so like at the end

of the day though it doesn't really matter it's when you buy an nft it's only as strong as the person who has or company who has created it so regardless if it's centralized metadata or not like you're buying it because you or you should be buying it because you trust who has created and you trust that they are going to do something interesting or keep supporting it or whatever um and most of the people who've lost money bought it for other reasons like they just were speculating and wanted to make money and they didn't do research on the Creator well it's interesting um how do you reconcile like being so passionate about this space exactly because like we're creating a space that is predicated on you don't have to trust anyone yeah and yet like your specific Niche within it is like yes the

technology means you don't have to trust anyone but the value is like entirely based on that like very squishy trust yeah I think well where it gets to be nuanced is I think once a project or artwork whatever has kind of proven itself or made it so to speak that's when you're no longer necessarily reliant on the original Creator it has a life of its own so examples would be crypto punks like The larva Labs no longer is doing anything related to them they sold it to yoga Labs or whatever but yoga Labs could also do nothing really to cryptobunks and they still have this provenance and historical value that people will always valued some decently High degree um same with artwork you know like the

fedeza like Tyler Hobbs could stop producing or produce a bunch of stuff but there's still some unique value to what has been created you can't ever go back in time and create more before it um but there's a lot of you know stuff in between there that that's kind of On The Fringe that it is really dependent on output from the current creators a lot of the pfp groups right now are in that boat where you know it's just a totally different story and and so I think that's where like once it has a certain has crossed a certain Chasm um that's when the trustlessness of the network has a huge value yeah that's interesting that yeah and it's really interesting to think about like crypto Punk specifically I mean one like

they're the biggest in the OG and whatever but two it just like it does kind of work where like it was created by one entity a community formed around that and gave it this like massive massive valuation and then they sold the IP and like we all have to ask ourselves like well what does that mean yeah I mean I think I don't know that I can't I don't want to call the specifics I think with punks the IP is like the owner of the token still retains a right to use the IP if that's my understanding but but that IP is a whole separate Canon worms um but yeah no it is I mean it's very different yeah I think like once we start actually talking about legal stuff that that is like a can of worms but I

guess I what I'm like specifically referring to is like the value of this community is supposed to be expressed through the tokens so what does it mean that you like theoretically you could even sell the IP like what is the value of being able to sell the IP I guess like what did what did Yuga Labs Buy so yeah I mean with crypto punks I guess it's it's the I mean it's the right to create derivatives of it officially you know so like um it if they wanted to make merchandise or cartoons or you know stories anything um only they could do that because they own the official IP and then the holders you know have that like what is it like revocable or license or whatever

um but yeah I mean it's it's not dissimilar to any major brand like a Disney or something like in in how they have their characters and they could sell the IP of those characters to another company it's then on the other company to figure out how to then yeah well I think the distinction here though is that like if Disney sells the rights to um uh Lion King right like there isn't also this Associated claim of like everyone every consumer who's watched Lion King also is supposed to like own like have the financial value of Lion King I mean so yeah what you're touching on there is is definitely something I put a lot of thought into which is that most nft companies probably should need to recognize the nfts they've issued as

a liability and not as like an asset by any means because they literally you have an army of you know thousands of people who are expecting something from you and it's not reflected at all in your company's financials so like that's a whole you know interesting discussion I think is is how that that works from a corporate standpoint yeah well so how does it work today like you know not picking on anyone specific but like it what's your understanding of what the average case is is that like when as an nft project I meant like a thousand tokens to my internal treasury I call those assets and then I sell them out into the market I don't to my understanding from in most cases like they're not actually necessarily taking possession of them because it's like the contract is minting yeah but all what I

do know from understanding at least for U.S tax law is that nfts are incredibly inefficient way of raising Capital because you're literally like it's taxable earnings for you as the company when you sell them so if you sell a million dollars for the you mean to million dollars worth of nfts you're paying you know whatever 30 40 of that to the government that year in taxes and it that's not it doesn't work the same way if you're raising money as a company you're not recognize the money you're raising in equity as as income and so it's very inefficient way to raise capital for a company now and wait just to be clear like what we're talking about like again not picking on anyone but just because like you go Labs like every time they

issue a new nft that they should be recognizing and assuming they're domiciled in the US or whatever but like they should the mint cost yeah so I think for board Apes the mint cost is very low I don't remember what it was but it's some very small amount so so it was probably inconsequential there um but then you know secondary whatever the royalties you know that's all taxable income um but you know a lot of nfts projects were created that were created when royalties were still the dorm are now completely having to find a different business model because you can't depend on those yeah well actually thank you for the segue so um one of the things that like I do think is like particularly interesting um in the nft world is like this whole

conversation around royalties and like there are two separate conversations which is like what is just and like whatever like what we can have that conversation I think like everyone roughly thinks the same thing uh unless like you're super radical about like you know the free transfer of information or whatever but the the other conversation is about um what the technology like is capable of enforcing and I remember when blur first came out there was like so much just like World about um like okay like can you enforce it on a smart contract level and like okay basically like every time you build a

mousetrap like the attack you know it's just a game of cat and mouse and that kind of thing and so race to the bottom yeah yeah and so I guess um do you have any thoughts on like what um commission like means for nft and like more importantly like what what is the world that we should be working towards um and does that like sit in the social layer or in the smart contract layer so I mean I didn't understand this when I first got into nfts I just thought the royalty was you couldn't get around it and so that's something I've definitely had to completely come to grips with changing entirely how I thought about it uh so to my understanding there's no technical way to like force royalties

because if you could do that then you you would also be restricting like valid transfers of an nft from like the person's own wallet to another wallet they own or whatever so to my understand there's no tactical way to do it I could be wrong um so let's assume that there is no technical way to enforce it uh it's I think the only answer today is that it has to be on the Creator to the first of all they have to know and acknowledge that they can't restrict the sale of it to certain places in the long term um there are always going to be ways to get around it if they block certain marketplaces that's just whack-a-mole because another Marketplace could pop up um so the creator has to decide do they if they're going to be providing utility to the owners of the nft they

could also see if the royalty has been paid and if the royalty has not been paid for certain holders they could decide that they're not they don't get to you know bear the fruit of any or utility that is provided I think that's probably the most logical step and particularly for like Community groups and pfp groups like that um I mean they're going to have to earn Revenue somehow it's not going to be coming from royalty so as soon as the crazy amounts of Revenue that they did make over the last year or two go away it's going to be a Day of Reckoning until they figure out how to actually make money so I mean it sounds like the implicit message under that is that um like due to the realities of like the technology and

human nature and like whatever like it just is probably not possible to build like a real viable long-term business based on like royalty sales I think the the only way you could do that to my understanding now is if you developed nft like an nft Marketplace that enforce these royalties and for you you convince people that buying it on your Marketplace is the only way to the only way people who want to buy it and there you could kind of force a royalty and I think the the long tail of nft adoption will be lots of different Niche marketplaces like each brand will have their own and they'll own that experience and they can then enforce the royalty on their own Marketplace and

people trust them because they want to go to the you know Hugo Labs Marketplace or whatever it is speaking of like marketplaces um like I'm excited to say for like the first time since we are in nft world like that there are like viable alternatives for um like different nft marketplaces and you know like specifically I don't know I mean I guess like looks rare and like there's a couple that like people use but you know like blur was the first like in my opinion the first like legitimate Challenger to open C is just like absolute Monopoly and I think that's a good thing for every everyone except for the VCS that backed open see but um I guess uh my question for you is

like when you see this like whole new era of um I mean nft Marketplace Wars or um just like more variety and options like what are the things that are exciting to you um in terms of like features and Trends and like what are some of the things that um like the what are some of the directions the industry is pushing in that like you wish you could kind of like nudge in a different direction yeah I mean I I don't like so so I think an important aspect of royalty is to at least touch on is is the whole other category which is artists and individuals who are literally making their living off of the art they create with nfts and you know if people are are buying and flipping those and not contributing

anything back to the artist you know I I do feel strongly against that um and so I think it's a balance I think eventually you know a lot of artists they reward their holders by having them qualify for white lists for future artworks they release and I think as tools become more sophisticated they will probably inevitably have to you know some artists will choose to you know use tooling that makes people who didn't pay royalty not qualify for you know those future whitelists and stuff um but to answer questions so stuff like as the marketplaces evolve I mean I think it's just like how phone apps have worked or social apps in that people will always just kind of inevitably head towards what's the best user experience and it's been very interesting to see how blur is focused

more a little bit more on like a kind of Trader type experience um whereas openc is still a little I mean they've adapted now but but you know a little more of a retail experience was at least how they started um but yeah I mean I've used blur a whole lot and and open CSO can kind of double click into any of those sides but I think the user experience is huge what do you think like blur like got right and and I don't want to hear like the same stupid thing that we can hear from the blur co-founders on every podcast that is like oh it's for institutions and the but like um like what do you think is like the fundamental thing that like open C missed because they were like the only game in town well I mean I think part of

it is that I mean I was able to incentivize all this activity with their token and and open c for whatever reasons you know for regulatory or whatever they weren't able to go in that route because of how they were started and so that was just an inherent massive Advantage blur hat that did not there's nothing really open so you could do about that um so I think that was probably the biggest ever be honest I mean the blur has done an amazing job with the features they've released in in the the quality of their product but like if it wasn't for the token I don't see why it would have displaced so much of the volume of up and seeing that incentive is what got you know the vast majority of nft volume going to blur was to to farm that token and honestly like I just use blur now

because I like that I like not only can sweep floors but I can like pick the specific ones that I want yeah absolutely I mean I think the big feature that it's missing that I know is coming up actually is putting a bid on a specific trait within a collection that you still can't do to my understanding you can't do trade specific bits so you can only bid against the whole floor which is not as good for various art and you know but it's not good for people who want to collect to own long term because you generally want to actually pick the specific one you want but you don't want to pay the buy now price what do you think about all the um like Financial products that are being built around um nfts and like the first one that I'd like you to respond to is this like

thing that's coming out around blur and blend and I don't even really know how like related they are but then also just like the longer tale of like fully like on chain and just like more um like like for example JPEG and that kind of stuff like is this the type of activity that is like really exciting to you or is this like starting to like turn already like kind of questionable art pieces into like truly like degenerate ways to gamble yeah I think it's I mean I'm always for like more technological kind of innovation regardless of what what the outcome is because it kind of naturally has to allow the market to mature you have to go through these these Cycles um

I'm definitely conflicted though with the financialization because I think they're when when you have these competing groups you have the people who are in web 3 and nfts because they kind of are early adopters they're the people who you know I was just in a few discords today and people were excitedly watching the Apple announcements which is something I've always done for years but it's you know people who are getting excited of that new kind of breakthrough in like of your AR headset um so there's a lot of people in these nft communities who are like that they just kind of like being part of this new thing they like the ideals of web3 and that's why they're there but when you have other people who are just there to trade and make money that you know inevitably does nothing to help the community generally I mean it maybe

temporarily can inflate the value of the token but it usually then causes it to crash down at some point if it's artificially inflated and so there those values aren't aligned and I think this financialization of a lot of nfts has hurt the communities but again this is natural I mean the Market's just naturally letting this happens there's no way to prevent it but it definitely is happening well I I I'm always really really concerned when things when more leverage is introduced and more financialization is introduced because like the reality is is that like those rails are going to be used by like highly sophisticated insiders to like extract money from like retail and

um you know I think like the flip side of like being like there's a reason Gary Kinsler is coming after us and like I don't know what to tell you guys but like this space now you were saying this earlier like this space is full of scams you know and I think that um like the financialization like I guess on the plus side it it makes a lot of this stuff more clear if you understand what to look for um and like you can see the manipulation a lot easier because like the swings are a lot harder and faster but um you know the downside is like there's people on the other side of those trays yeah for sure um but you know when it comes to regulation like I think that's just such

a slippery slope as well because like what regulation is there in place to prevent someone from buying a hundred thousand dollar car when they can't afford it and when it loses you know 20 of the value when you drop it off a lot or whatever that figure is like these are people spend buy things that they aren't supposed to mean if they're legitimately just fully getting scammed that's another story but like the legitimate purposes of buying these expensive nfts um you know I'm not sure there's any regulation that could no yeah you definitely have a point where it's like I if I need to commute every day like uh um Toyota whatever like a 20 000 car is going to get me there just as much as a 200 000 car is there and like no one on this in this country is going to stop me

from extending myself to get the more expensive option but like I do think the place for regulation um is like the if I go spend two hundred thousand dollars on a car like at least I can have faith that like when I walk into the store like someone is going to be like relatively like honest with me and like the safety standards are going to be up so far and stuff and so I think that like look like the reality of this space is that like it's not an option to say like hey you're not allowed to sell stuff unless you're in this like regulated Zone but like I do think it's the role of Regulation to create safe spaces and then allow people to leave them if you don't want to be in them yeah I mean I think potentially over

time that the marketplaces end up particularly if they're able to enforce a royalty on their individual marketplaces they will then have more responsibility to protect users from Bad actors so I think naturally that will play out but yeah I think that's where if the question though is like can regular regulation help you know people from NFC nft scams I think it's hard to say if that really makes a difference at the end of the day if someone's seeing they're going to provide something and you buy it and they don't provide it I mean that that's illegal you know there's all sorts of established precedent for that no but fair point fair point and I think um the like underlying thing and what you're saying is that like for every argument that like you could conceivably make that like regulation creates like a

better space for everyone like the reality is like look at history look at the people that are making these rules like nobody is looking for that like like the Goldilocks solution that is like perfect for everyone they're like looking to come in here and just like [ __ ] [ __ ] up you know and so I like I very much understand and empathize and like depending on what side of the bed I wake up likes agree and support with like the proposition of just like stay out and like regulation is bad and get out but um I don't know man like the deeper I get in this industry and the more I see like what these Dows and companies and projects actually are the more I'm like oh my God yeah I mean yeah but there's a lot of

things that I think are experiments many experience will fail um yeah anyway there's a point of this conversation is not to be Debbie Downer about no sure that kind of stuff but so anyway back to nfts like when you think of um categories of projects like what what like gets you excited and like to give you some structure like a category being like okay pfps like that's the original category that like we um kind of defined and like so much hype and blah blah blah but like what I'm really excited about is like we're starting to see nfts that are like more than just like slap it on Twitter and like the one that I'm thinking about right now is the llamas okay is that a uh I've heard of it it's like associated with the Curve

ecosystem oh okay they're doing two things that's super interesting one is um the like some auction style to do the mints and like they're all minting for like a two-ish ether piece and like the whole concept is they're taking that eth and they're basically a buying curve permal locking it and then like the rest they're going to like farm that stuff like Farm those Assets in curve and create like real yield for nft holders yeah I think that's an incredibly exciting use case in the evolution of nfgs and then the second piece is they're using it to do like reputation so like your

um llama will like gain like traits and if you contribute to stuff or like you know like poapp style stuff and so anyway I I we can talk about that specifically but also to say is like I'm starting to see like more than just like pictures that you own like nfts that um like really like take the technology and run with it and so my question to you is like what what sort of things out there are you saying that like really like energize you and like make you excited about the um this Beyond art one would be I mean anything to do with staking of tokens or eats for example um to my understanding they're based on some I can't rename the eips or whatever

they are but but there's some advancements coming with ethereum where you can kind of do pooled staking where you could kind of group up with some friends and have this kind of secure way to combine your staking node yeah distributed validator technology or yes exactly and so super excited for that with nfts because then you can kind of if you belong to this community you can all pull eight together and for the you know thought of decentralization and and do it securely without trusting you know worrying about someone taking your youth so that's exciting um just literally today uh Kevin Rose tweeted about this concept of of doing an nft mint where you purchase the nft with Ethan this kind of sounds similar where you're describing with the the curve llamas um you the eth has immediately swapped

for S teeth uh you know Lido's liquid sticking token and then the the yield goes to the artist so the artist who created the artwork gets the majority of it maybe the holder gets a little of it but that is what kind of that's where the royalty is is from the the the eth residual but at any time the holder could then exchange it back kind of burn the nft and get their original eats back and so I think that's a super interesting primitive to kind of explore it's like then it actually does always have that value behind it and the artist has to convince people to you know hold it and that you're in their their income I mean I think that's like The Best of Both Worlds yeah and it also like creates

um like yeah that's really really cool because like it creates like a revenue stream that can like compensate the artist without like eating away and like the the idea that you like could mint an ft for two eth and then if you just decide ever like I'm done with this like I get my money back is um like you definitely create a permanent floor just yeah exactly and um yeah man I that's very cool that's very yeah so it kind of blew my mind uh but I think anytime you're thinking about nfts you have to be thinking about what is what is possible for Value creation out there and and and when you start to think about that you start to

think about these unique ways that nfts can create value that you couldn't have done before that and understanding who owned the nft before that provenance understanding when it was created and then the interoperability of like allowing you to get access to something because you own the nft or you could network with other collectors from the same artist and actually like prove that they own it like you can't do that with traditional art uh so it's just like it opens these whole new layers of kind of community and and stuff that to me does create value and how how interested slash like how much are you tracking projects that are like leveraging nft technology but um aren't like really related to art or like

visual stuff at all that aren't related to art I'd say vast majority of what I focus on is is definitely art I mean the the proof Community is cut the big one that I'm in that's you know more of pfp but they're actually you know interestingly enough now pivoting I mean pretty much exclusively about collecting art so which is aligns with my interest um yeah so I think sorry yeah I'm not trying to like trip you up there and I'm just like wondering is you know like the first pfp was or sorry the first nft was a pfp and that's because like it was easy you know and now we're like coming up with some other projects that are essentially like take the pfp and then make some like social promises under it like with you know and like we're very quickly going to realize

that this technology like doesn't need to be used for art and then like man like I don't know maybe this counts as art but like watches like just looking at your hand there right like that could be represented by nfts or you know I I guess like you know the the like kitchen line that we've all heard at some point before is like our world is not full of fungible stuff like the world is a non-fungible world and so like what nft technology is like much more representative of like real life than anything in D5 yeah I mean absolutely I think physical Collectibles I mean there's a whole whole different world out there as to how nfts can help solve problems for that I mean

but I guess so non-art ones that I'm following to get back to your question uh that the Starbucks Odyssey program I got into debate of that really early oh yeah so wait tell us about that and like because like why I find that interesting is like it's very easy to never have worked for a big company before and just like um think that everything that like large corporations do is just like stupid and lame and buy like some marketing executive that but like I don't know like I feel like if you can get over that like very American like if it's big I hate it like Vibes and like you just like look at like we need people like Starbucks to be building projects like this so I'm like I'm super interested and curious I'm like what are

your thoughts like are companies figuring this out yeah I mean it's happening pretty slow but it's happening and I I have to give props to you know company like Starbucks that like it's a pretty big risk particularly with all the negative sentiment or nfts like for them to get into this so early and I think what they're probably seeing is that when you add this kind of financial incentive around creating an ft that has value along with an existing retail business I mean you see people participating like crazy and while some of them may just be in it for the money like there are people who are probably legitimately feeling stronger about Starbucks because of this experience and owning kind of the special historical stamp that they earned for participating I mean just to give you example I I got into the Beta right at the beginning and

I just I didn't know what I was doing but I just like completing you know um tasks or whatever like like I wanted to get the full stamp so I just did it that first month that came out and I earned one of these holiday Starbucks cheer stamps and it was an addition of 5 000 but only I think a couple thousand people actually earned it or maybe I'm not sure exactly the number and um and now the price floor of this thing which costs nothing or I think I actually had to pay maybe for a cup of coffee or something like that and it's worth a thousand dollars so you could sell it right now I think the floor price is you know literally a thousand dollars I'm looking at right now does it like a utility thing or it's like no there's there's a

zero promise utility for it that's what's kind of crazy it's it the value creation is purely in the Providence that's the first ever holiday stamp from Starbucks that's it wow that's pretty cool so um if you have anything else to say about Starbucks please do but um you know there's like a lot of big companies that have either like made announcements or like actually done stuff with nfts and like announcements I'm thinking like Disney and basically the swoosh one is the one that just this past week which I also did uh yeah what's going on there yeah so they um the Biscuit Head and mint were it wasn't capped at a certain quantity so you didn't kind of have the same like Mania necessarily like you you could only mint four and I think you had to be part of

their beta or or whatever to be able to do it and they were twenty dollars each it meant for and you chose all you could choose is the classic box or the like new age box or something like that and so I minted them um and it was just using like a stripe powered thing to to purchase it so super smooth experience you'd have to use like a credit card or something yeah exactly dude you couldn't pay with these and they don't and this is the other interesting thing they don't mention nfts anywhere with the whole thing which is I think showing you the direction this is going to hit like it's it most okay so they don't mention nfts yeah they don't how how do you experience that like why are they nfts then well um I mean for those who who know about ft's

like you you'll see The Telltale sign of like a contract address or something in it so you know it is and then you can see it's polygon that's powering it um but your average person they might see that and it just be no different than like an item number on eBay like it just is some ID right and they don't have to worry about it but Nike very clearly um kind of shows utility on these pages and so they show like for this particular box your only guaranteed utility is a 3D file uh and she'll be able to download that in July July and you're licensed to use the 3D file is a benefit of owning the collectible and there's not really much other information I think the idea is maybe in the you know metaverse or any games

potentially you could equip this shoe that you own you know in in a virtual world but perhaps that's like one of the ideas well um God I'm trying to decide if I want to keep like badgering you about big company stuff but like I think this might as well do the segue that I've been waiting for which is about games right and I think like so I never actually had any real doubt about nfts like oh look man like I don't believe in board Apes I don't even believe in crypto punks but I never had any doubt on nfts right and that's because sent from middle school until 20 minutes ago like I play or sorry to be clear like 47 minutes ago I play

World of Warcraft right and like I understand that like people like bill you know like they they build like characters that um like have so much time and so many like of these like real in-game assets that have like real value and like World of Warcraft is like a good example because um you can buy gold and like it's so long lasting but like the real example that makes nfts just like not arguable is EVE Online right and that is a game that um without getting into it like there is like a whole dynamic economy with like huge huge like multi-million

dollar [ __ ] like literally you can buy money and it's like cost millions of dollars to like create like some of the most like expansive ships and stuff and so like if all of this stuff exists today like you just you have to be like so close-minded to not think that um if we can tie these things to like real value that are not related to like Activision Blizzard or whatever um people wouldn't opt into that and so um one I'm wondering just like do you have any overall like theories or thoughts on like how what the intersection of web3 and gaming is and then two like I'm tired of just like watching like companies just you know like create like

like not even like a real effort game but then just throw something with tokens on there and expect it to do well and so like what do you think it's going to take in order to like create a or just like you were talking about with Nike like a real experience where nfts are part of it but not like the whole thing yeah well I think when we look at what's happening with AI right now and how within probably a year from now or I mean yeah probably within a year anything you see that's visually appealing could be created by a three-year-old and up like prior to now it actually took people with graphical skills and so just if something looked cool that was

because a person made it and that made it also cool I mean but now this is going to change a little bit once you once anything you see could be made by anyone or artificial intelligence like I I think people are going to care a lot more about who has created it because if it's just a computer then it's going to be much less interesting than if it's an artist with a story and so if that continues to to play out I think in all these games where you have wearable skins and everything people are going to care it's either a brand they recognize like they want to wear a Nike skin in fortnite or whatever or an artist you know a special design of a shoe or whatever it is um but when you combine those you know especially let's say a fidenza Nike shoe

or something like that like I think that's the direction we're headed where these big brand names that we know today are going to have this interoperability with games in some way and that that's I think when we talk about the metaverse I mean that's I think part of the evolution is just having this you know these worlds that are that have digital assets or wearables that kind of relate to what we know today as the nft world yeah and like in this world um because I think that if you start to like think of it as like okay so like in World of Warcraft like I have my sword and you're telling me that like I'll be able to like sell my sword like I can already do that but now you're starting with crypto like I'll be

able to sell it and somebody will be able to use it in like a different game and it's just like don't think like that don't think like that the way to think about this is like in fortnite in World of Warcraft in Eve online like all your characters have shoes right and like let's say that like because of your relationship with Nike whether that's like loyalty or you gave you have their Nike pass or whatever like they say like we will enable you to like use Nike shoes in whatever game you choose and Nike shoes always have like a five percent speed bonus in like the game that they're in like that is like the world that I see that like web3 empowers that like you can have these like complex like unmediated economic

relationships that like get expressed in these online spaces yeah or I mean what gets me the most excited though is the inverse example which is um let's say any day you use your sword with the Starbucks Insignia let's say to like complete a mission that same day you get 50 off your iced beverage or something like a Starbucks like those types of things where they reward you in that type of collaboration between let's say World of Warcraft and Starbucks could have never happened because making custom apis to integrate with the point of sale at Starbucks and with World of Warcraft like they would never bother with that but to have this kind of standard uh API under the hood which is

you know nft technology it's abstracted from the user but like that allows unlimited collaborations to happen and that's what gets me the most excited because you could have these things that are literally just from a technical standpoint were never possible bridging retail with the digital world well you know what like one of my favorite exercises is just to be like as reductive as possible when describing ethereum and um what you just said is like so funny but it's so true it was like all this like crazy Advanced distributed computing technology that we're like really we're just like building an API yeah and um I I do think that like yeah the we're in a moment of crypto and of ethereum where all you can do is like

get within the evm and like just like spin things around you know whether it's like D5 or just like trade nfts or whatever but um I I think like the the really interesting thing happens not from like just building like more complex stuff within here but it's like we have ethereum we have like the world that we live in we need to like find ways that um where they connect you know and I I do think that like that's what an API is um and I don't know I'm I'm rambling just because like I I loved your point right there that was that was very good and um yeah exactly right like who on this planet would ever like go to

individual point of sale providers and integrate those to like a specific game but this but like that is like what composability and like the evm and like ethereum allows yep and that's exactly why I mean crypto has taken off because these decentralized exchanges can build on top of you know curve protocol or whatever and aggregate yield opportunities I mean that it's the same idea that happens in Defy is the same reason why I think you know nfts will evolve to this massive part of Brands marketing and loyalty over the coming years so the last like five or so minutes here um what would you say you're most um excited about in the next I don't know let's say for the rest of 2023 and what

are you like most excited about moving on from what we got from yeah um well I couldn't say for sure if it'll be 2023 but I'm the most excited for something to change the user experience of of nfts and crypto for the end users and I don't know yet what that'll be but if I did guess I would say it's any major bank or a Google or Twitter or you know major tech company having a custodial wallet solution or non-custodial that um essentially just makes it easy for for people to hold nfts and not fully worry about the safety of them what do you think about this coinbase wallet I mean Quimby small it's really cool and it does a great job of making it as easy as possible but at the end of the day it's still similar to a metamask in that it's

just a fully non-custodial solution so I think maybe if you combine like social recovery with having a big company be one of the parties that can help you socially recover your wallet like that's where it gets into mainstream adoption like seed phrases aren't going to be at to get to a billion users you know like it has to be I mean for sure and like I can totally imagine a world where like like you just have your ethereum wallet with Google and they just manage it for you and like from your perspective you don't even know that it's crypto or not or you know in the same way that like you know in the US we only have U.S like dollar accounts but if you go to any other country they have like foreign

like foreign money accounts and so like if you're in Europe like you like you'll hold Euros in your domestic account but you can hold like dollars and Yen and whatever and like of course like the way that this actually works is that like you just add the ethereum like you add the usdc line yeah exactly I think um particularly for lower value stuff like your fortnite skins or whatever like you don't have to worry about needing Hardware wallet security and stuff and so that's where just having a simplistic solution for someone to a company or somewhere to help you hold that securely it will really Bridge us into the next you know era of digital Collectibles all right what do you like most excited to move on from I'm excited to move on from I think a lot of the kind of like toxic fud

behavior that happens with nft communities and people you know speaking poorly about other projects and stuff um that just gets really old as someone who follows nft Twitter a lot uh and it just kind of you know if you're an outsider and you're trying to get nfts and you just start looking at nft Twitter because some of the influencers out there like it's it's not a good look for for anyone involved in the space so um I think you start to see some communities now rallying behind more positivity and less focusing on degenerative gambling of floor prices and stuff um so I'm excited to get away from that Obsession of that like kind of a bear Market problem or is that like a cultural problem in nfts that um existed before like we all

it's a cultural across their minds for sure it's a cultural problem I think because it just it becomes much more uh clear in the bear Market because the euphoria that everyone has from you know being on on paper so to speak worth a lot of money um chilled it but even in in Bull markets with nfts like there's a lot of people who are there and not because they are interested in the art or the project or the creators and that just creates a bad Community if you look at any of these discords I mean you just see crazy negative stuff and these are from the people who just care about money yeah and like this negativity is like at other communities and projects

or like at the like their own creators or both or everything or it's all the above actually I made a Twitter thread on it if you have show notes or whatever we can link to it but I like use chat gbt to help research kind of like what are some of the psychological factors at play for these things and and that there's you know it's like eight different factors at play but they cover everything including people who are fudding um they're you know talking badly about the project they own so they actually own it but they're talking badly about it for a variety of psychological factors most likely um and it's fascinating but it's happening and people also will talk badly about a project they previously owned but they sold it because they want to further validate that it was a good reason to sell

um you combine all this it's just it's really it's really nasty and it's not helpful to anyone well let's uh yeah let's definitely hope we move on from that but like I'm sorry man I'm not gonna hold my breath yeah I know I mean when there's money involved all about their outfit yeah and especially when when there's uh there's like only blood in the water and like no uh no Rising tide it's like oh man like I'm just pretty dark out there yeah and and with toy that you're falling apart just like at the infrastructure level so yeah anyway Matt thank you so much um this conversation I was excited about but like has a far uh exceeded my my hopes and my expectations so thank you

man um I definitely will put your thread in the show notes but can you just share like where we can find you yeah uh best place is just on Twitter at matsilf matsilv and um yeah it's usually either uh and if she takes or some poorly generated memes so enjoy it nice man well um it was an honor and a pleasure and um yeah man just thanks for being a friend and uh thank you for sure thanks so much for having me Rex