Tom Dunleavy on the catalysts for the 2024 bull market

Transcript

what are the catalysts that will ignite the 2024 crypto bull market that's what we're covering in today's episode is it going to be an influx of new crypto ETFs outside of just Bitcoin is it the web 3 gaming meme that we always talk about maybe it's dpin or maybe has nothing to do with these mainstream use cases and instead it's changes to blockchain infrastructure that's going to allow institutions and companies to start using the chain maybe it's one or many of these that's what we're here to discuss Us in today's episode uh we think it's going to be a bullish year for crypto and we're trying to figure out what are those catalysts what are the things that are going to onboard new users and push the prices of crypto higher GM GM welcome to web3 Academy

your one trusted source to capitalize in the next big phase of the internet we are here to make sense of an onchain World in constant transformation I'm Kyle rehead your host for today's episode and today I'm joined with our guest Tom dunlevy who is the partner and chief investment officer at MV capital he oversees a $20 million Venture Capital fund uh in the web3 space where they have uh invested in over 30 different web3 projects since 2021 and get this evaluated more than a thousand projects annually in web 3 so Tom knows a thing or two about web 3 and potentially what's going to be the next big Catalyst he does a lot of his investing um privately obviously with his fund and that can be a great signal

for what's going to happen in the public markets so we talk talk a lot about that in this episode especially in the beginning just understand what's the appetite like in the private world where the private uh investors are putting their Capital to work uh and then we kind of broaden out and look at the public markets uh and help sort of paint a picture of what we think is going to happen this year and even do a little bit of price predictions at the end of the episode so make sure to check that out okay so before we get into the episode I just want to do a quick poll here to understand the audience what do you guys think is going to be the biggest Catalyst here in 2024 is it going to be reaching the mainstream is it going to be gaming reaching

mainstream uh or do you think it's something like stable coins that gains adoption finally or is it just a bunch of ETFs launching that brings a lot of demand and legit legitimacy into the space please if you're listening on Spotify answer the poll if you're checking out on YouTube then make sure to comment uh in the comments there on YouTube as well let us know what your thoughts are we want to get all the information we can from our audience that helps us all learn together and by the way since you're here make sure to like comment share whether it's on on Apple podcast on Spotify on YouTube that's what helps us grow and get this content in front of more people so thanks for your help on that okay let's not take any longer and get right into the episode Tom welcome to web3 Academy

it's great to have you on the podcast thanks Rob me glad to be here awesome well listen let's just get right into it I want to sort of zoom out a little bit get your high level thinking first on either where we're at right now and maybe you're just sort of framework on like where we're at whether it's the cycle or this year whatever your sort of framework is let's think sort of short medium term what are you sort of looking at in markets and you can talk if it's macro if it's specific to crypto maybe there's something else you're looking at feel free to dive into whichever area is really fits your your framework yeah so just kind of starting from the macro side I think a lot of people had a thesis last year that we would see some sort of downturn and there were a lot of

things generally pointing to that everything from credit conditions to us just being long technology cycle to tightening Etc and that obviously never came to fruition in my mind there were a few reasons for that it was really a lot of the excess consumer savings that we saw primarily from stimulus payments and otherwise a lot of positive immigration numbers and others that really helped a lot of the spending which buoys at least the US economy and we almost received that kind of soft landing on the macro side now we're seeing um a continuation of that Trend into 2024 so so there may be some sort of downturn but all indicators are pointing to the macro andir a bit at least being okay we sort

of it seems are out of the woods for at least what would be a really severe protracted recession which in my mind would hurt risk assets presumably uh hurt crypto uh being a still a very risk on asset so at that kind of high level framework level I think we're okay in the crypto uh space from a mro backdrop looking directly at crypto specifically the primary driver of a lot of the flows recently have obviously been ETF and otherwise sort of at a at a high level but you know what I find sort of more interesting are a lot of the things we're seeing in the private markets that flow into those price trends so we do a lot of investing almost primarily in illiquid private markets and in Q4 of

this year what you won't see in the numbers reported by a lot of the fundraising outfits is direct uh investments in the seed stage being at sort of record levels and you don't see that yet because these are generally lagged and reported values so the things you see on in the normal press our deals happened six to nine months ago Q4 for us and the other folks that we talked to on the VC and Landscape was the biggest quarter for deployment almost two years in terms of aggregate dollar value in terms of aggregate deals done you're seeing other key indicators that you know we watch for and would sort of be um some pretty appearance of folks that would led to bigger Trends is like you know rounds are closing faster rounds are getting marked up much quicker and

you now have to sell yourself as an investor to some of the best projects rather than like them drudging around for months trying to get Capital so all of those things to me are saying we're at the inflection point of the cycle because you know if you say these starts are getting funded now and they're eventually going to launch in the next call a quarter or two which is what we're seeing for a lot of the token generation events that is going to be the key area of time where you're going to have a lot of folks who on the retail side are able to participate and start putting Capital to work and you see that next Trend and that next up cycle on the broader market so I think we're going to see a lot of really strong projects coming Market in q1 Q2 that's going to have at least a

decent macro backdrop and then you know we'll have that broader crypto uptrend and mind share that I think is really important for for retail investors to be able to see to actually allocate Capital when you say this private funding is at numbers you haven't seen was it the last two years or like are you saying we're beating numbers since past cycle as well we're not at those numbers yet are we since the previous cycle I don't think we're at 2021 numbers yet but we're certainly and it's jumping over a bit of a little Benchmark but it's not only been kind of Q4 but we're seeing it directly into q1 to presumably or a lot of you know folks would take kind of the Christmas period off the last week of the year was fast and furious and it just mve right into TR4 so it's not a

stop right now on the private markets we'll dive into nichas in a second later in the episode but I just want to get an idea on the private side because I think most of our lers are not investing on the private side is there specific niches is it mainly salana is it across all ecosystems or like what's the market type like what what's going on in that market right now there's a few emerging trends that you're starting to see in broader retail markets the first one being kind of BRC and Bitcoin either dexes or ordinals related projects there are dozens of projects trying to launch there I think a lot of and and I would classify these as more opportunistic projects that are very hard to invest in very much like ordinals were there's going to be a winner there in like the

Bitcoin Dex base and believe there's going to be uh some real value in a Bitcoin Dex because it's Bitcoin itself is the largest settlement layer just by economic weight fantastic uh but there's so many players trying to compete there it's like everyone's trying to gain Capital there decentralized physical infrastructure so that's youve probably heard of helium or Hive MPP or Dem you know using either physical devices that incentivize bootstrapping a network whether that be cellular 5G or mapping or whatever are really really emerging right now so you're seeing a number of protocols that are are really really interesting there is along with a number of dedicated l1s that are launching to support deepen specifically so Peak

network is one that is coming to Market that is uh directly supporting deepen and there are others that are actually forking so um to do the same thing and making some some numerous under the hood adjustments to make it more performant specifically for decentralized physical infrastructure those are really interesting seeing a lot of protocols there on the sort of counterbalancing side a few trends that I think folks have probably heard about recently that are less interesting on the private Market side is the real world asset Trend so you probably heard about like you know real estate onchain treasuries onchain a big one that was like a Q3 thing was private credit on chain so lending were sort of banks kind of wouldn't in the Middle Market area and

traditional markets that would net you at 10 to 15% yield and folks are trying to bring that on chain a lot of those projects in my mind are really bare Market projects right like why do I want to invest on treasuries on chain and take like some more contract risk and all those other things just to get like five six% yield right similar with all those other projects there's a lot of folks are still trying to raise in that real world asset space but are just like really having trouble making that product more fit because they're bare market products l in terms of what yields you can get versus diving directly into the deep end of kind of defi other Trends really we're seeing are are kind of I would call them defi 2.0 and kind of like cross chain primitive so getting more complicated on

defi right there's we've done Bor and lending we've done like sort of perpetuals which I would call those Like A Primitive kind of derate now we're kind of seeing like folks trying to push the envelope so how do we get you you know sort of like American and European options on chain up and above like stuff like deret that folks use right like that's the dominant player today so how do we do that how do we more effectively leverage like LP positions we're using on udis Swap or something like that like more complicated kind of defi stuff so a lot of Primitives that are kind of trying to do that and then taking that all cross chain right so like someone like an A or compound or something might be fantastically well thought of and have a huge amount of tvl on ethereum but bringing that cross chain so you can

leverage a position on solada and utilize it on ethereum or polka dot or whatever so a lot of cross chain in Defi and sort of otherwise is going to be sort of the the future we think so number of verticals are they kind of emerging on the private side interesting and do you think that the massive amount of investment Capital that you said came into the private markets in Q4 is this just a function of price go up and because price went up in q4th end of Q3 everyone's back or do you think there's different reasons for it like is it because the macro setup is now better and people like okay we now have sort of Tailwinds for the next couple years so time to deploy some Capital back into the space like what do you think was the Catalyst to bring all this private

Capital back in first and foremost it's market conditions there's been a lot of projects who sort of waiting since last summer see the Bitcoin hav coming up they see the ETF launch they see the regulatory Clarity and now they understand and it's been the same thing on the investor side folks are sort of wait we're waiting for that other shoe to drop as well and now that they a lot of those things you not only get crypto need investors like myself but you get institutions who say like hey okay we've gotten some regulatory Clarity from the SEC that we can actually deploy some capital in the space which BR projects and sort of that flywheel effect but I would also add you've seen match R of a lot of products that we've been building throughout the bare market so things directly on ethereum that make it much

use easier to use um the chain so I'm sure folks may have heard of kind of account abstraction intent based protocols a lot of things that just abstract away the complicated layer that is sort of crypto today and we're not all the way there right you still have to get on and use your B ofas and approve different you know chains and transactions and it's not very easy for Grandma to use crypto still but it's baby steps towards getting there which I think excites not only the Crypton native people and allows for that next level of sort of creativity you can build with applications but it also brings in the non- Crypton natives in sort of slow baby steps right I feel like we could start to see the light at

the end of the tunnel for chain abstraction like last cycle it was like you you there was wasn't much for it at all now I think whether it's investors or Builders are like oh I sort of see where this is going I see how we can abstract it all way and so like now you could start to think of how to use cases make sense on top of that so I definitely agree that you talked about the ETF I assume that was what you're saying is like sort of bringing the legitimacy and how we kind of got an answer from the SEC of of what they think of at least of Bitcoin so would you say that that is a big sort of second impact of the Bitcoin ETF approval like obviously there's the potential for more flow to come into Bitcoin but now we have the like the

sign of approval I guess from the SEC is that sort of what you're you're saying on that and then let's sort of dive into the ETF as well after you answer that how do you think that has gone so far in terms of flows or whatever else you're sort of tracking on the on the ETF side of things yeah so I think the primary unlock for the ETF is regulatory Clarity and a tacti stamp up approval you know we can talk about the flows all we want we can dive into why that's important but that's for first and foremost the most important thing and it opens up a very clear legal precedent that once you have a Futures based ETF you now you know the court has said they're like for like with spot ETF you can't preclude essentially you know based on some nuances sort of track record I think is

is something they pointed to but um you can't really preclude the other uh spot ETF coming in which is why I'm generally bullish I'll to get an ethereum ETF and a salana ETF at some point as well because folks have uh have looked at listing salana uh Futures on on the CME and others um and I think given their volumes they're they're likely to to have that in the next 12 to 18 months in terms of what a spot ETF kind of brings more broadly up and a about cut regulatory Clarity it's really those flows but we can say Flows at high level and we can look at the Bloomberg guys kind of say Flows In and Out you know the first few weeks we've had a number of negative sort of catalysts that folks I think saw coming right the flows out from gbtc and we didn't really see that

coming because no one knew the fees that gbtc were going to charge until kind of almost the last minute which has been the primary driver why flows have rotated out up there you've had the liquidation of the FTX estate you have liquidations of Celsius creditors you have you know Mount gox coins that are now coming in lock tunos of those are actually flowing out as well but all of those things have all kind of happened and were set up based on the up uplift them the price for for these Liquidators to come in and realize a lot of that value now going forward we're going to have a lot of flows coming directly into the new products that overhang sort of mark down and Mark away to not really worry about and a lot of the flows that we're going to see in the future have

not even really materialized yet there's a very small set of some set of people who are like oh hey Bitcoin eats yeah let me go buy on day one or day two or day 10 it's really about the incremental flows we going to get through the advisor Community within the US and for non us listeners it's really every two weeks most people contribute to their 401k and that is an autopilot so you make an election and say I want 80% S&P 500 or um 20% bonds or whatever now there's going to be maybe a percent or two of Bitcoin in there and people are don't think about that it just automatically goes for their paycheck and it's passive inflows that support the market this is one of the primary drivers of why the equity Market has been booed over the past 20 years or so

because of the prevalence of these sort of products so you can do that out yourself today and you're own 401K depending on your provider but getting advisors to educate their clients to sort of do this in their you know sort of personal accounts and other types of retirement accounts it's going to take some time you'll meet with your advisor once or twice a year the advisor got to get approval so to talk about these products even so it's like a it's still a bit of a process on that end but once that flywheel starts trading it doesn't stop and you're going to see billions flow in in the back half of this year into next year which will support the Bitcoin flies price flow in essentially Only One Direction because it just puts a floor underneath the asset right and the other thing is like the advisers

themselves need to get educated I think one thing people don't realize on crypto Twitter for example is like not everyone is on crypto Twitter and a lot of these advisers in parts of the US are not on crypto Twitter and like they're not sitting here celebrating that these Bitcoin ETFs have been approved and they probably don't even know the names of all nine of them like everyone here on crypto Twitter can rhyme off no problem they don't know about the inflows and they're like they're not as excited as we are and so like many of them still need to be educated by the people at their you know institutions and then they need to go and advise their clients and like all that as you said just takes time for it to sort of unfold and happen in real life right and I think a lot of

people just sort of Miss that and just think like oh it's proved okay now everyone's going to go and recommend it and it's way we go right yeah so exactly it's an incremental process and it's just going to take time it's not a day one thing and this is step one step one of a of a journey but it's a it's a good step right so let let's move to the EF it sounds like I know you think that it's probably coming I guess because we already have the Futures ETF that's been approved so it seems like it's a high percentage chance to come I think the DAT is May 23rd would be like the equivalent to the January 10th date of of the Bitcoin ETF is your thought then that you know when we had leading up to that Bitcoin ETF we had prices just kind

of Skyrocket over the last couple months leading up to it do you think we have the same sort of thing happened with eth or is this a different sort of environment now it's already happened right so when you saw that first fake tweet from Gary Gensler if you look at at the eth BTC ratio eth actually jumped above Bitcoin Bitcoin didn't even really see a price response and we've seen the eth BTC ratio perform pretty well and that's primarily because people are trying to front run the nextar before it even happens so it's somewhat likely eth um still has some ambiguity where it falls in jurisdiction whether it's commodity or security depending on what exchange you know I think the SEC is taking enough losses at the hand of crypto that they're probably just going to let this one go but yeah point it's like people don't vote you know we like

to think people vote uh single issue voters for crypto but if you just speak with any politically focused person anyone who chats with representatives and senators and others daily like we are not even a drop in the bucket in in terms of Mind share for the electorate or for any of these politicians outside of Elizabeth Warren so like the more Gary Gensler uses uses a very minor issue as a hobby oforce the worse it is for him and I think he's realiz this split so I think you know there's going to be one or two things like he's probably either going to be out if he keeps railing on sort of this particular issue because it's not really a voting issue or two it's just G to be approved because they have the precedent now they could say we you know got the regulations straightened out there's

also the possibility that things that weren't sort of classified as potential Securities could have a much more clear path and even ethereum to getting a Futures on the CME and then potentially spotf so like cka dot for example was not declared a security there's one of them and all of these providers are just looking for incremental ways to get revenue and they saw these billions of inflows into these products and they see all the fees that are coming off this the natural next step is like how do we get more of this and like what other assets can we list they're going to try to list as many assets as possible just so you think we're gonna have tons of crypto ETFs absolutely think it's going to be in the next few years you know five to 10 all the major assets in my mind

interesting and so your thought is salana is the next one saana probably the next one just given the the amount of market share the amount of price appreciation and it has a a track record for since you know now 2020 or so right the only thing Soul at the moment is isn't it still part of the court cases going on with coinbase and un I think binance is now settled maybe but I don't know if that is or not but I'm pretty sure it's one of the tokens that are part of the like this is a security as far as I remember but I don't know if that matters yeah a lot of them are but it still goes through that same channel I mentioned I think we're going to get a future Bas ETF and then all that'ss are off and then right true doesn't matter

from there okay interesting really cool that's the ETF side of things let's look at other narratives so obviously I mean for most of us we believe we're heading into another bull market another big crypto cycle we had a bunch of narratives in the last cycle that if you were sort of front running or ahead of those narratives you would have done really well and uh I think there's obviously a bunch of new narratives that are going to come this time around I guess you sort of touched on some of them with in terms of where the private markets are are beginning to push Capital you said to dpin I mean the Bitcoin defi set of things and then like defi 2.0 which I guess would be 3.0 because we technically had a defi 2.0 last cycle that kind of failed so are there any specific

narratives or catalysts or things that you're sort of eyeing right now for for 2024 anything that you can already see that's that's probably going to play out for sure so few others so privacy protocols I think are really interesting so one of them privacy protocol is at like the not like tornado GH level but actually at the layer and additional enhancements in wallets more generally so like if I wanted to send a transaction to you I can just click like I'll pay 0.1% more and an automize that transaction for example that technolog is already here that's coming that's going to be built into every deck amm what the legal implications are for that not exactly clear to me but using a number of acronyms you're going to hear

a lot about in the future so ZK fully homomorphic encryption homomorphic encryption which is FH and then multi party computation NPC are all really really big uh trends for privacy going forward and there are a number of protocols that are going to be doing this especially as you go kind of cross chain and you start sending a number of transactions Financial transactions more importantly and let's be real for you and me it doesn't really matter like guess if you found out I sent whatever $10,000 to buy a poy pay win like yeah you might be able to to do something with that information or you might be able to you know get some sort of transaction or yeah whatever exactly but like what's more important is actually

financial institutions as they come in right so the options are today like hey I could kyc or go to some ky2 or go to some permission chain to transact but like even more importantly maybe I could interact with a protocol that's actually layering in ZK technology so it says I know the counterparty that you're doing business with Tom is not a known terrorist and they've confirm that to me and they provided a proof of such and you could send an automized transaction to them you don't have to know who each other are but you've done a transaction uh that both of you you know wanted to do and you provided by all sort of jurisdiction so there's a number of protocols coming here uh that I think are extremely interesting and it's sort

of going to bring in and provide an incremental advantage over layers of traditional finance that we have today because you can't do that in traditional settings so that's one that's super interesting you know I think we and are you saying those are coming live are you saying those privacy ones are like coming live or are live like this year kind of thing you think that's going to be a catalyst for whether it's institutional adoption or whatever yeah there's there's a few so elusive is is one that we've invested in full disclosure that's coming up soon skuro is an L2 that's launching very similar over the next few weeks I believe and take your pick there's probably about you know five more that are pursuing the sort of same path my network is one that's actually doing that techn

technology directly on through ccip to anonymize a lot of those transactions there's a number that are coming today okay cool I mean tokens token extension just launched in and it does a lot of this as well right so I think it becomes even easier to do this where you can like send a transaction you can see who you said it to but you can't see how much it was and I think even that itself is a is a massive use case now I'm sure these what you're talking about is a little bit different but a bunch of different types of things are coming for this sort of privacy and I think it allows it enables a lot of businesses to do more things on chain that they otherwise could not have done right yeah that's so it's is your great point so Solana launched token extensiones which

one of the inherent features of that was privacy so what I'm talking about is sort of Still A Step Beyond that so right now you can say like Alice sends Bob whatever x amount of usdc and that x amount is blurred out yeah what these protocols allow you to do is like Jane do sends money to John do I don't know who those two parties are and I don't know what the transaction amount is at all or the token so like it's a whole another level of uh you know Anonymous which maybe you and I don't need that again but like you know there's certainly a number of use cases for that for well businesses in general like we we pay a lot of our team members who are all around the world in crypto because some of them are in Argentina some are in Russia and like we actually just

can't pay them with Fiat and so we have to do on crypto and right now it's like if anyone no one cares but if anyone did care and they knew our wallets and their wallets they could see how much you know we're paying our employees which is obviously great thing but no right now nobody listening to this cares and no one knows our wallet like it's not a big deal uh but of course for bigger companies this would matter if it ever came out there and so these sort of privacy things are massive to adopt companies because companies probably want to use the chain at least we do it makes our lives a lot easier and cheaper and possible we can't do it through Fiat and so we love it and I'm sure others would too but they just can't because you need this privacy so I think it's a

a big deal for sure all right what else did you have you said deepin and then I think you have some more yeah for sure pen um definitely one that that we like a lot of things directly around so improving the tooling on chain so there's a number of new kind of boring things that you and I wouldn't think about but like block explorers as well as integrating a lot of the technology that have been built over the past Cycles so a lot of the directly integrated kind of like AI related stuff to not only do research but also to look at onchain transactions so and I I assume most onchain people people who have are listening right now have used ether scan but there's New Primitives that are 10 times what ether scan is and doing it kind of cross chain so you can

go in there and say like hey and it'll show you all transactions in kind of like natural language it'll tell you like not wallet to wallet it'll say like exactly whose wallet it is what they've done the tokens they're using and that allows you to go in and say like give me the top five sort of profitable Traders on Unis Swap and their positions of the last like 24 hours and based on their wallets and they'll bide you like charts and data based on it so like taking all the stuff that was like clunky and hard in the past cycle and like moving it a step forward and integrating a lot of the technology that has been developed you know the web t space and bring it on chain so again with that theme of like making it just more intuitive and everything has been today so that's

certainly one area we're seeing it sounds like let me ask you another question as you can continue to think if you have more here but so a lot of what you're talking about is more like infrastructure plays right like things that the rest of us need to happen for more apps and more things to be built on top of it do you see this cycle I mean everyone always talks about what's the thing that brings on boards x billion users or whatever when do we have our iPhone moment our chat gbt moment do we have that this cycle and if we do even if it's not this cycle actually what is the thing that finally does it whether it's the sector the specific type of use case like what is it do you have an opinion on that we'll go deeper on deepend because I think it's the most

apparent use case in my mind and and why is that because it allows you as a user or someone who doesn't care about crypto to offer up something that you're already doing for incentives people run on incentives we know this so let's just take a few examples right I'm already driving around in my car how hard is it to throw a dash cam on you know my car and say okay I'm I'm running to okay I'm already doing it if I'm already running and that's D if I'm already running my computer every day and I have all this unused hardware and storage okay why wouldn't I just throw it up to Network and get excess tokens for it right that's R weave that's render that's AOS that's koi which is one of our investors in that I think is doing this better

than anybody and there are other ones that provide you know just maybe a little bit more friction but even more incentives on the token side so like helium is a great example I can offer I can brought a node at my home offer up sort of 5G Wi-Fi whatever and you know earn tokens off of that the challenge to date has been making those tokens valuable so that's really been what this past cycle has been is like okay not only are we seeing the emergence of it's to of deep in protocols but like how do you actually make the tokens valuable people just get them and sell them right that's really the challenge that The Deep End Market is facing today and still battling with through a number of like novel mechanisms which you don't have to go too far down r on but if I'm a user and

I'm just like Mom and Dad like it's easy for me to download an app that does one or many of these things either on my computer or my phone and I'm getting money that seems like a really easy use case for me what I agree and I'm super bullshed even my only thing that I continue to think about is like most people this world just don't care about tokens no they don't care about them they don't understand them and so it's like I get helium I just did a bunch of deep dives into helium and demo and all these things and it makes so much sense and they are onboarding a lot of people already really fast like they're growing faster than a lot of other apps that are out there I wonder if it reaches like a threshold where it's like okay it got

all the crypto natives because these people love tokens and we get tokens and we want tokens but how does that make it into the mainstream because most of those people just don't they just don't give a about these tokens you know what I mean totally seems to be just thing that they need to get across and and I don't know that if deep in is the thing that does that or not it's tough for me to understand totally agree so I guess two points there so one I think eventually you're G have to be paid in usdc and the token will need to be behind the scenes either through like nodes and validators will always have the stake tokens which will create demand for these tokens but people can get paid in USD and that shouldn't vertical as long as you can transition in some level so you can abstract that

away from others the other thing I would say is yes and this will probably this will pivot ni into the next category that I kind of like is you can think of these things as kind of points right like this is like a very Salient model in gaming like if I'm playing Call of Duty I get Call of Duty points I can spend them on whatever fortnite same thing if you just think of it that way and you can transition it very easily to Dollars yourself I think that is probably sufficient if people stop doing these things reckl tokens and that happens through the passage of time you know time time is linear we think it all moves long way like the younger generation finds is used to like those sorts of systems that it becomes a lot easier for them to wrap their heads

around that but totally agree right now it's kind of like it's a bit tricky and again we're still working through those models once you have enough case studies too where you're like hey I'm a taxi driver and I put this thing on my dashboard and I've made a couple hundred bucks last month all of a sudden that starts a fly wheel you like oh I'll do this thing I don't care if it's a token or what is but I want you know what I mean like once those case studies come out I think it it happens kind of what happen back to Infinity honest last cycle so I was arguing with the founder of like Hive mber on Twitter the other day because he was pissed off that people were selling the dash cams for like 5K each because they were saying like I'd making whatever $500 a day by

mapping these areas and he was so mad about this and was like you're you're thinking about this like completely the right way like you want the hyp pr your project you want more people do be buying these things just like ship faster so anyway um no I think there is the demand for it and there's other data sets too that you can't even capture or you could capture with today's kind of web Technologies but we wouldn't want to so for example noise level data and you could capture that directly through an app on your phone your phone has a million sensors you around aware of noise level data is just one of them so why would you want to do that you could you know capture that data for a restaurant an Airbnb you're going to and you could sell those data that data on

to providers who would want to use it in their websites or monetize it through other means so like Google or someone else do that like yeah but would you want to give Google or Apple those same permissions that you would potentially give to a decentralized protocol that has governance rights and that you understand you have very clear line of sight that and things are happening there so a lot of things like that the deepend I think are gonna um prove to be emergent in terms of capabilities that we just don't get up to yeah agreed you said that this was a perfect transition to another topic was it something outside of dpin or what were you thinking there yeah yeah yeah so uh the points based system so this is probably to be not great but I mean I think everyone has been talking about gaming

forever and I was one of those people who was like not so bearish on gaming for so long like I totally get there's going to be a game that eventually hits but like as an investor it's just so hard to figure out which one because like even peoplein gaming don't know what it's going to be good and the development Cycles are so long in gaming the tripa game but having been behind the scenes now I can tell you like the Triple A games have finally been built they're finally here and they're now launching so the first step is just getting like a really really cool game for people to apply and then like the second step is like how do we abstract the crypto layer away from the people who don't want to play it and then the third step is like keeping that layer in

for the crypto people who care about that stuff so trading in game assets leveraging the points systems or monetary token systems that are associated with these games and then bringing that sort of product to Market so there are a number that are coming to Market a lot of them actually on aack so you want to met a plan that that's that's probably an interesting one to look down so trapnel is one of them off the grid by gonzilla is another one all these are coming out in the next two three months we're recording this late January block Lords another one Studios ether games is another one there's there's like five to 10 AAA quality games are G to be coming in the next quarter with tokemon monos with nfts that I think a lot of people are G to be very surprised by after kind of like

writing it off for dead if you think about like the traditional Gardener hype cycle it's like coming up it's like oh everyone loves it loves it loves it and like crash and that's like when you generally wanted the investing and then it's like okay now we're back up again I think we're in that kind of trough of disillusionment right before we get that next episode right the meme of web three games is back I mean I think we've all been saying it for years and years years and it never makes it but I agree this is one of my big predictions too is that web through gaming is finally this is its big year but we we we'll see where that goes question for you for those that are listening many of them are not doing private markets right they're just investing tokens and so when you think

about this industry we talk about you know there's deepin there's gaming there's you know all these different sectors that may or may not explode on chain when you think about investing in this space do you see it as more let's just buy the underlying asset like the eth the soul Etc do you think it's more you know try to find those the application layer or like how do you sort of weigh that and do you have like sort of a framework around that so my core thesis is first and foremost you don't want to miss the beta of the Asa if you're going to be exposed to it so whatever amount that is for you in your broader portfolio of life if you're high risk maybe that's 50% of you're low risk maybe that's 5 to 10 but you can't afford that zero in terms of your

allocation thinking about that bucket you certainly don't want to miss the baa of crypto itself so you need to have some level of exposure to bitcoin or ethereum I think a lot of folks would find that level comfortable at sort of about 40 to 50% allocation of the total crypto bucket your portfolio and then it's done research on this based off p cycles that last 40% of your Crypton native allocation and should be like an equal bucket up things you keep in for me that that is application layer things right I think a lot of the value has been sort of milked out of either in layer one level and if I think about where valueable crew long term it primarily is going to be either through

crypto moving up as an asset cluster bware ethereum more broadly or value will crew for those 50 to 100 X opportunities on those killer applications are going to be developing whether that's in deep in zire or otherwise what where the value will not ACR and this is exactly what we've gotten out of web 2 is the tiers and the people who are assuming some sort of teak rate in the middle between the L1 settlement layer and the application layer so I'm extremely bearish on this huge roll out of l2s because think any of them have have any sustainable mode and if they do they probably don't need chensize that right so that middleware layer I'm generally very beish on so if you ask me today like would I be an investor in optimism or arbitrum or pick

your flavor of L2 the answer is going to be like absolutely not because you know one I think we're going to have broader level chain abstraction so it's just going to filter the best application possible whatever use case you're using it for rather than some L2 in the middle and then two these things are abstractive by nature and then three they don't have any clear value utility for any of their tokens in general besides being govern tokens so bearish on kind of the middle stack and then like the bottom and top bearish so it's just to confirm you're bearish on the tokens but are you bearish on the technology or do you think LTS is the right like thing for the ecosystem of ethereum I think the L2 Centric road map just fractures liquidity and there are a number of solutions that trying to pinge

that liquidity but I think it's inherently sort of a flawed model especially if you consider kind of the passage of time of technology and development having it in a single state like Solana or others trying to pursue seems to be the right model to me especially when you can if you think about something like local fee markets on soled you can actually cordin off specific applications and um have them be called and priced based on their usage which is exactly what kind ofl2 is trying to do and they're solving that on Solana on suie on aptose the ethereum Centric road map of um dividing that across a number of l2s just doesn't make any sense to me and I think the tokens

really AC value because all they do is control sequence or Revenue which in my mind and my broader thesis is that most of these fees are going to go to zero anyway and all you're going to be paying for at the end of the day is is is sort of valuable acrw towards ordering transactions which is me so in that world a L2 almost has no value especially in a world that you believe sort of Technology progresses and monolithic chains sort of end up running so I think ethereum becomes a fantastic settlement layer but it doesn't mean we need hundreds or thousands of use case specific l2s to make it that very interesting getting mixed reviews you are bullish ethereum or you are not bullish on ethereum it sounds like you're barely bearish their scaling road

map but it sounds like you still think it is going to be a good settlement layer so how does that how does that make sense can you try to dep pick that for me yeah so I think eventually all of liquidity will be bridged among l2s which makes all of their governance tokens essentially worthless and the ethereum Centric road map as a settlement layer become solidified I think we're like in between that atmosphere right now right now we're in this area where there's all this like liquidity sorted in these little silos and eventually it'll be bridged together and they'll have the general sentiment there for ethereum which is a fantastic you know place to to eventually sell transactions but today it's I wouldn't invest in any of the l2s interesting okay cool in your thread where you did sort of your predic predictions for 20124 you did a price

predictions for Bitcoin for eth and you didn't do necessarily a price for salana but you just sort of gave your your thoughts on on where it ends up I think it was for the end of this year not the end of the cycle can you walk through your sort of thoughts around that and and kind of what you're thinking in terms of and if maybe you have something to expand upon Beyond just Bitcoin and eth but basically looking at the markets for this year where do you think we end up yeah for sure so I mean my general Asis is that it's going to be a very constructive year for crypto I kind of talk through that in the beginning and once I think about these things still is sort of a beta off bit coin so you're going to have a lot of strong inflows

into Bitcoin which the next trade is going to be ethereum and ethereum is very it's very easy to explain to try people and it's one of the reasons I got into crypto in general is like you can say hey here's this quote unquote technology company that's earning quote unquote this revenue and here's the multiple you can assign to it and you're investing in you know sort of the base layer of uh you know the next virtual computer on the internet blah blah blah you can tell that story like pretty easily to try so I think there's a strong narrative there terms of price appreciation for e theory regardless of some of the challenges I mentioned earlier on kind of L2 level that most people are not even going to try to Del that far right I do think the next next thing which we're seeing right now is

salana and other kind of single state Focus layer one so solada I think is gonna have a fantastic year not only for you know sort of the token improvements that you've mentioned but also the huge developer mind share uh and narratives that are forming there including tpin you know soana sort of the Deep In Chain right now and becoming even more so as as more applications are launched so I think that's going to be obviously fantastic for price and thinking about it very simply you know I think salana is like one ten the market cap of ethereum just the economic weat for it to compete with ethereum is it has a lot more room to run including getting back to some level of all-time highs some percentage than it had previously I do think there's some interesting opportunities to on

other lons who are pursuing similar paths like we're seeing a lot of private Market activity on sui and aptose which I think is somewhat filtered into price but still not all the way apparent for folks who are actual investors i' thinkig you're to see a number of interesting applications there and folks will be naturally drawn to actually moving over those scenes and trying a lot of those things that they've only tried so far on E theum and kind of salana so you know I put a few numbers in the thread I made in more uh directional targets but you know I think it's going to be a really big year for for crypto across the board and if I'm trying to position personally I want to be in more of the high data stuff and i' still consider kind of salana appto in that camp that's at the all1 level of

course the application Level there are a lot of winners that that could be picked there but I I still think you're G to have a lot more luck trying to to do that in either private markets or get in on you know there's a lot of if you're not a US investor you can go on these launchpads on Ido uh platforms and form a nice portfolio of Fairly valued assets a sort of an equal weight portfolio that you can you can generate there as us investors we can't really do that unfortunately but um a lot of opportunities out there as well sure so sounds like bullish year potentially all-time highs for things like salana maybe Bitcoin ethereum Etc what would sort of break your thesis of this being a bullish year do you think we're relying mainly on the macro or is it like crypto just needs to keep shipping

things need happen well or like if like is there anything that would break all this and you're like okay if this happened for sure we're nowhere near alltime highs like what are your thoughts on what me what may go against your thesis primarily the things that would go against my thesis I think are somewhat being solid for so that's why I'm very Comfort comfortable being fairly long crypto right now because number one it would be regulatory I think that's somewhat Sol for itd be very surprised if we were going to see some sort of large bill that puts something you know sort of a stake in the art of crypto in the US I think that'd be very surprising at this point L Elizabeth waren decides that that's like going to be her one thing she really wants to focus on and continue with the crypto Army you know number two

is certainly Mao like I think we're fooling ourselves if we experience some sort of 30 to 40% downturn that crypto is going to be up it might be flat but it's not going to be up I think things are fine enough in sort of the broader macro environment especially if we were to see some sort of issues I think you'd see pretty Swift R Cuts along with more complicated funding mechanisms like the bank term facility and other things that we've seen sort of step in and then more broadly I think we're fighting more against apathy than a downturn right like if those two things are okay if we just like don't see any of the Innovations find any interest or traction with retail users that we've mentioned across this this this whole discussion we've had here that would be the biggest thing we're battling against

is just like General apathy like I just don't really care enough about this crypto thing like keep your decentralization keep your censorship resistance like I just need fun and like you know the games weren't as fun as you said to like I don't really care about deepend or choken like you know apathy is I think what we're fighting most and that would like invalidate my thesis if people just like don't care but I guess what keeps me happy is like I know people care about money I know know keep people care about making gains and if like this is the space that still has the opportunity to do that more up and above uh traditional markets like there's always going to be interest right the other thing that I love about cul is there's so many sectors that in use cases that like one of them's got to

hit you like maybe it's not gaming maybe it's not dpin but like maybe it's stable coins right maybe it's real world ad like there's something surely that's going to hit on chain other than just like pfps and so like and we just need one of them right so I feel like you got a lot of chances which is kind of like the internet right there was a bunch of things that could happen on the internet now a lot of them ended up happening but you just needed one sort of to really take off and then you're kind of good to go and so I feel like you're gonna have something but we'll see yeah I mean you're giving this new creative medium an expressive environment to a handful of the smartest people in the world and to say that they're not going to paint some sort of interesting picture with

that I think is imminently naive whether that picture is something that we can predict is another story but yeah there's going to be something that is a lot more interesting and gains a lot more value than a lot of the incumbent systems yeah absolutely Tom this is great thanks so much uh thanks so much for joining me today if others that are listening want to to follow along where where do they go where can they find you online what should they check out d89 Twitter I'm always yelling about something or other so yeah find me there and all of our Associated fun stuff have some links but yeah always happy to chat with folks there telegram same handle feel free to reach out cool we'll put the uh the link to Tom's Twitter in the in the show notes so you can check that out there otherwise Tom thanks so much

for joining we really appreciate you sort of sharing your thoughts your thesis and and your Frameworks on on investing in this space so really appreciate it keep doing what you're doing and uh maybe one day we'll have you on again to to review everything you've been discussing awesome thanks for having me it's been a pleasure thank you for listening to web through Academy your one trusted source to capitalize on the next big phase of the internet if you enjoyed this episode please share it and subscribe or follow so that you don't miss the next one while you're at it there's a link in the description for our free newsletter where we provide timely and relevant web3 insights so you can confidently build and invest in web 3 make sure to subscribe today one final note this podcast is for educational purposes only and nothing we say is

financial advice crypto and web3 are risky and you should never invest more than you're willing to lose thank you friends and see you in the next one