Why Crypto's Capital Allocation is Broken | Jordi Alexander

Transcript

the IQ of the space is still like very low because like the narratives might be like this this ticker is good like I talked to VCS and they're like oh I like the ticker like this is going to be a good ticker serious VCS very successful VCS like say I'm not kidding hey everyone excited to share with you that Kronos ZK evm has launched its Pioneer program offering early adopters a chance to earn not only loyalty points but also potentially win part of a 30,000 ZK cro giveaway if you're interested in being an early adopter visit zk. Chronos org Bridge big thanks to Kronos for sponsoring today's episode

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free secure your wallet for free at harpy Empire Link in the description now let's get into today's episode all right everyone you know him as uh game theorizing I know him as Jordy Jordy Alexander welcome to the Pod good to be here again man it's been a while good to be back yeah yeah yeah good good time in Asia good I guess you live in Asia don't you I live in Asia so it's always a good time yeah always a good time when uh what's the backstory there you you you're you're from Europe but then you did you ever spend time in the states or so uh actually like you know I grew up in the US um my parents were were in the US I was born in the US um originally kind of like European I

guess like background and so I've lived in Europe as well in London like for 10 years um and just looking at the world I just thought that Singapore might be the best place for me so I packed my bags from London and moved over about five years ago nice and uh yeah one of the best decisions of my life I mean it's just I love it out here why why so good um well Singapore specifically has like its unique strengths I guess you can really rely on the uh safety which is huge um especially if you have like children stuff like that um the things just

work and so um yeah it's hard to explain um but also like the quality of people in Singapore is super high yeah and government has a very like logical structure to uh doing business they're very business friendly even if they're like not always crypto-friendly because they try to be and then they invest in FTX or something and then they're like okay we're gonna stop this for a while and then they dabble back in yeah well uh Jordan I want to have you on and so for people who don't know Jordy uh he sits at a you sit at a really interesting place in the industry um you have a builder hat with your work mantle obviously which I I do want to talk about you have like kind of the podcast

media like Twitter personality uh with like you know just I mean your Twitter but also uh host of the steady Lads podcast which is a great show and then you're the founder of Selen Capital right so you've got kind of the trader hat on with Selen I don't know if you do angel deals through the fund or personally but you see a lot of the angel stuff and so you've got kind of the Venture The Venture hat on you've got the Builder Hat on with mantle you've got the like media person hat on with steady lad so there's all these things happening in the industry that like I think I'm trying to work through but I think a lot of people are trying to work through it's like uh the eth salana stuff there's like macro stuff election stuff uh what's starting to feel a little bit like kind of grifty

deal type of stuff there's the meme coin so anyways I just want to have you on to maybe we can work through some of these big things together yeah absolutely and uh as you can imagine you know my entire um career in crypto has just been one big bet that every everything is everything's related so all those things you mentioned um just looking at the space five years ago I thought that you know if you see the VC deals then that will let you uh you know make better trading decisions which will make you you know be able to philosophically understand and talk about things better so it all kind of like Loops together and um it's an exhausting work week but I love it yeah yeah is is the idea that it's all tied together is that like is that the same

idea as like it's all one big trade it's all one big liquidity trade or it's a not something different it's something different I mean like I'm optimizing for um instead of like you know short-term profit let's say like you know when I when I used to play poker professionally you have this moment where you solve a game and you can make let's say a$ thousand dollars a day by just playing like this one specific variant or table um and you can just keep grinding that over and over again and just kind of like printing some money or you can say okay I'm going to like challenge myself with something new and then maybe I'll get better at like this meta game so the metag game of like understanding the space and understanding um actually it's not about crypto it's about sort of

currency and money and like the world economy and also just like what is the role in society of of currency and um you know this like Community money as I've started to like realize it it all is and and these like memes that we share um I really want to get to the bottom of that and it's so complex and there's no book you can read like it's kind of we're at the Avant guard right um yeah we Mike and I struggle with this because we you know you want to hire crypto native people at you know at your company because like nine times out of 10 those are the people who are going to work out better than the than the non- Crypton native people at least we I think we found that but it's really hard to Define what it means to be crypto

native it's like it's it it doesn't mean like go read the book on blockchain or like go watch the Youtube video that's like how Bitcoin works it's like the the my working thesis of like what it means to be Crypton native actually has nothing to do with understanding how the technology works it's about understanding like the cultural side of the industry and the community aspect of the industry and like knowing that this person's kind of grifty this person's actually considered legitimate uh when CZ gets out of jail everyone replies four like what is that like why is everyone saying for like uh okay like saying like GM is kind of like cringey now but used to be kind of cool in 2021 like it's it's it's like that kind of

stuff is the most important stuff and it's I actually find it very tough to to like teach or like tell someone how to go learn it they have to love it and just like spend their free time on you know Twitter and just like in the chats and in the know uh be out in the streets and you can tell like if someone knows about you know some unlaunched protocol that's like getting Buzz underground um that that's kind of what you want yeah all right so let's talk uh let's get into some of these topics you mentioned like Community money so let's maybe talk about obviously eth first if we're talking Community money um you had this blog post from September 2022 called was the eth merge overhyped uh

and then you recently tweeted eth is community money its values P purely derived from the bonding strength of its community so I actually there's all these conversations happening on Twitter about you know did eth give up it's valuable thing and are the l2s uh extractive or valuable for eth and there's is salana eating eth's lunch and there's these big conversations happening but I actually think a lot of people don't even frame the conversation in the right way because they kind of forget what we're what eth is trying to do and I think a lot of that goes back to the decisions that were made like 2017 to maybe 2022 but really this thing that happened in 2022 so maybe you can tea up the conversation can you kind of give us a a

24mon history of like what has happened over like how how did we get to this place would you say yeah 24 months ago the reason I wrote that piece was the merge was was just happening like it was literally two years ago um and I would say it was the time of celebration for the eth community you know they were feeling like this is amazing we are moving to proof of stake we've already implemented um you know burning of fees which was honestly like a really good idea I think like it kind of um gave the benefit of transactions to everybody equally just by holding the asset so I thought that was great but I I could foresee that there were [Music] some problems in the Horizon with

regards to the um the narrative like it was kind of like it was trying to be two things at the same time and they were contradictory with each other so either it's a great user experience very cheap or it's like you know it's a great internet Bond and it has revenue and you're spending money and it's kind creating like a you know like a financial instrument out of it and those are quite separate and what we've seen is that Bitcoin since then has done really well at the financial one and something like salana has done quite well at the user experience one arguably um and eth is in this sort of predictable spot I guess where it's it's finding its footing um and if you look on crypto Twitter even the core people are like disagreeing with each other like is this

money is it it's not meant to be money and like vitalic is just like oh this is about charity and it we want to do good for the world and all the def5 founders are like ad him um I think it's very healthy it's important that we have these conversations and um I guess my frustration two years ago was that nobody was talking about it like when the price is fine nobody like even talks about it and then everyone starts soul soul searching when when price is showing something's wrong so tell me more about the decisions that were made and like what you think eth got right and what you think eth got wrong um decisions made you know there's two layers of decision there's a technology layers and then there's the what are we

talking about as a like Community as bankless as like not to say that they're you know the only ones that matter in terms of narrative but as a as a general like ethereum echo echo echo chamber like what what is being talked about on the technology side look I'm I'm not like a incredible technologist where I can like point you know what uh what is good and what's not good I think we know from a user experience standpoint that uh bridging to all these l2s has kind of sucked and it's created like a bit of fragmentation I don't think that the L2 um decision of like focusing the road map was a problem

I I think it can work and ultimately you can have like these subd Dows sub communities and every L2 has its own unique uh culture and take and like you know risk tolerances and centralization tolerances everything else um and what I what I've said is um ethereum could be sort of like the NBA and each L2 can be a team and you're kind of like above all the teams you're not the Bulls or the Lakers but you're you're the league and you just keep a neutrality common standards referee standards and that works out well for everybody and everybody loves basketball and you're the basketball token right like it's it's a good outcome I don't think that um is bad they've been a bit slow like that's true like

things have moved slowly um you know Tech takes longer and and I guess like we're we're maybe like in the in between phase between where the user experience is going to get better and uh you know the decisions got made a long time ago so not too much to say on the on the tech decision I think it can work but on the um Echo chamber like narrative I think that's kind of where it's obviously failed and people like you said are confused and you're like everyone's confused like what is going on and um I think vitalic is is an incredible person I I've never met him but I have to say that like comparing to let's say like Satoshi who just doesn't

maybe may maybe doesn't exist anymore or like doesn't talk like I don't know like what what the situation was with Satoshi but um that's brought Bitcoin a level of neutrality and um Peace that actually kind of works in its favor and ethereum still has that like where people are looking for there's still like some leader right like you associate italica is still a leader even though code should speak for itself and it might even be better if he just disassociated or or just you know retired or I don't know because right now I think people are still the road map is still sort of um uncomfortable and and they're for some answers yeah okay so what was the main I

mean in back in the piece you talked about like you know the the anyone who's around in 2022 will remember like the triple happening right feel like every bankless episode back then was like reduced issuance uh oh boy I don't uh Lo lock stake eth that you can never sell again right eth goes into Li you can never sell it again and then uh it was the Burn Right 1559 burn that was like the we that was like the triple happening basically um what what went wrong with that idea I mean the idea I mean I I like two of those things I had like those three dragons where like two are like serious yeah yeah yeah that's right the silly one is that the idea that like staking eth you can never sell your eth again once it yeah it has no effect like we see like you know people

on stake and they sell or they just sell the steak version or the steak one gets liquidated or whatever it doesn't reduce um like liquidity there's no Supply squeeze based on like staking so it's still liquid right like it's still EX this I thought the the supply burn is is is a great idea and the issuance also fine although I pointed out back then that you know um as more and more people stake uh it increases issuance like it just like naturally has more and also like yield goes down um and so it makes it less attractive as a treasury asset and so many people like even sophisticated people like Arthur Hayes even to this day he gets on stage you know a token and talks about how like e

yield can be higher than treasury yield and so like this is bullish having this level of like fundamental misconception is um prevalent in the industry and it's just completely like like you can't compare the yield on the yen versus the dollar like there there's just completely different currencies and like it's even worse when you're talking about like a fiat currency versus a digital currency the the yield is is completely irrelevant say say say more about that actually yeah so basically like when you're when you're holding dollars um or holding Bitcoin um the decision on like whether to hold Bitcoin is not based on the yield of Bitcoin it's just right

like what is the supply okay I'm getting diluted like 1% but like what do I expect the demand to be when you're holding dollars um the yield like fluctuating obviously matters when you're earning a wage in that currency and you're trying to like pay a mortgage or you know have like a monthly interest that you have to pay for uh for a loan um ethereum yield or salana yield what's the easiest way I can say it okay Clayton there's a there's a chain called Clayton right this a Korean Korean blockchain the yield is 25% does that make you really want to buy Clayton and get that 25% yield like does does that Clayton yield like make it more attractive of an asset I I think whether the yield goes up to 50% or 80%

um is sort of irrelevant right like it's just it's denominated in a different as asset so you can't comp them yeah so you had this tweet uh the other day you said some interesting thoughts on eth here but I disagree that is so I think you were quote tweeting someone it can't be defined in one line but here it is eth is community money and its value is purely derived from the bonding strength of its Community uh and you go on to you know get share some notes maybe you could share those notes on on like we can have a conversation around that here because I'd love to hear you I think it's around look did are l2's value extractive or do actually drive value back to ethereum um I'd love to hear you maybe expand on those thoughts right here so there's this like mem coin Mania going

around and a lot of the discussion is around bitcoin's a meme coin as well and it is like it literally is the OG World meme coin of this can store value like this is a a way where you can work hard buy this thing and just like leave it and it will let you pay P off your work that you once did so that's a great Meme and it's uh something that I think ethereum wants to go towards and and be this like Community sort of way of money in my head it's a little bit different Bitcoin being um the first one the cleanest one like this is where it all get created and the fairest one um in a sence like you had

years to mind this thing and it sort of gradually got distributed in the minds of the financial industry and the world it's a macro asset in my opinion like it's becoming increasingly a macro asset it's a it's a hedge on global chaos in a sense it's a hedge on like not chaos necessarily but definitely like money printing yeah and people are used to Gold it's a digital gold it's a macro asset like literally like Stanley dren Miller and Paul Tudor will will have the charts up and they they're not going to have like you know salana and like xrp they're going to just have gold dollar and then maybe Bitcoin and see like when's a good time to buy it so it's a macro asset in that sense um then you get to like the next

level of money which I considered Community money and Community money basically means like um there's like an internet State an internet nation state that is around the world distributed they're not on the same country and their currency is like this coin because they're all building there they're using there like they're denominating some of their assets in eth let's say um so this is where having a very strong Community that's a lot of people that collectively like um have like a large GDP as in terms of like their the power of their Workforce that's a very strong reason to have like a shared asset and it's all like in people's brains you know why do people want the

dollar it's just we just kind of assume it's it's a good thing to hold on so if during the bare Market was literally the only L1 that had a lot of activity going and and was in people's heads and it managed to have this impression of community money would you would you agree like during the bare Market did you feel like there was any other L1 that was actually like no it was eth eth is money it was like eth is money and it was nothing else it was just eth yeah um it seems that there's a couple things going wrong one is during the bull market people always inevitably want the larger returns yeah so you kind of get off on the um on the on the spectrum of like taale

assets that's fragmented the community so like there's less of um you know this is the calculation um that goes on people's heads they look at ethereum L is the the only game in town there's other games in town and there's other communities that still have enough strength and you see this with exchanges as well like during during the the bare Market all the liquidity is just like on binance and May that's it um in the bull market you get like you know gate and Mexi and all these like random exchanges start popping off again because like there's there's just like this tail tail users that come back in and and they target those exchanges um so there's a similar thing going on with uh digital economies I would say yeah Mexi is like Peak bull

market like get need it need a token before it's listed anywhere like um yeah you know I'm I'm not smart enough to like fight with Max Resnick and debate tog and Anatoli on Twitter but so my my kind of like Smooth brain take of what's happened with eth is I think there's three things one is when a new person comes into crypto and I've talked about this on the on Empire before when a new person comes into crypto it used to be like I want to buy eth or I want to buy some Bitcoin I want to buy eth maybe I have 10,000 bucks to buy eth uh until fairly recently it was okay I'll just put that $10,000 into eth and now it's become okay should I put $3,000 into eth and then maybe 2,000 into optimism 2,000

into arbitrum 2000 polygon okay ZK Sync has a token now maybe I should buy the ZK sync token okay it's it's basically fragmented like investment attention I would say away from E all right so that's the first thing the second thing is um I don't think they ever uh this isn't a crypto problem it is a branded marketing problem where if you sit in the messy middle you they haven't defined who they're not for and so if you sit in the messy middle like Bitcoin is uh macro like they they uh like uh not internet Bond because eth is trying to do that but like they they've optimized for like scarce asset so la is optimized for like the user experience and eth is kind of

sitting in the middle saying like we're trying to be both in a sense uh so there's like a big branding problem in messaging problem and then the third is I'll just pull up this chart from the blockworks research platform that I was looking at before this it's uh this so for anyone not watching on YouTube I'm looking at the base like a coinbase's base so the Bas L2 financials and I'm looking at fees and costs so if you look at um let's take August for example uh base made two and a half million bucks and they spent 11,000 right so eth hasn't figured out again this is the part where I'm not smart enough to debate togl and Resnick and all these people about like what is

the optimal solution but what I do know is that's 2 and half million bucks that's going to base and only 11,000 that's going to ethereum so those are like the three those are the three problems with ethereum as as I see it today I'm curious how you think about that yeah I mean you know the second one in terms of like trying to beat two things at once this is kind of what I wrote about so anybody wants to di I think this was your I think this was your uh yeah conf fuchia say be a great Batman or a great Buddha maybe don't try to be both at once yeah they're just like you have this guy um yeah so this one is I think is clear the the L2 like paying fees and trying to

get some multiple that makes sense the multiple never really made sense I mean even even last cycle it was it was like 100 P um yeah you could say like I was a little bit wrong people do kind of care about some p ratio even if it's 100 they do want to see some um some Revenue um like some people are buying Bonk because like there's a little bit of like Bonk bot Revenue so even if it's a pure meme they like the idea of in their back of their heads like there's some floor Revenue coming in and you could say that ethereum had more floor Revenue back when it was you know charging us $100 to Mint an nft though I guess you

you actually could take the other side and say like having revenue is a net negative because it allows you to put a multiple on something whereas if something doesn't have a multiple you can it's uh it's like a pie in the sky how do you value this thing you know yeah but I'm definitely for uh for non-monetary assets I think you're right like it's the usual Silicon Valley theme of like you want to be like pre- Revenue but for assets that are meant to be mimetic and have a community money or like some base money aspect um people are not looking to do a multiple but in their heads they want to feel comfortable and they want to feel like calm that this is the right asset it's a safe asset and for some people having some semblance of um of Revenue can

create that even if the PE Ratio doesn't make sense so with ethereum um arguably some people were preferring that having this 100 XP multiple um at least having something to point to rather than just the mtic uh mtic side right yeah and I think Kyle Sani kind of you know he's been attacking ethereum and he's being like a oneman kind of wrecking Wrecking Ball there I disagree with a lot of his takes and we just had him on the show so um managed to clash with him a little bit on it but nice the one of the main things that he's correct about is that there is a little bit of a um confusion one with the L2 assets like you said the people are using they're using optimism

they're using arbitrum like they're using Basse they're using mantle that's the chain that they're using and there is a little bit of a leap between okay this settles on the L1 and like I can therefore use the l1's asset as money because it settles on the L one it's not the same maybe for base kind of because there is no base token so you argue that base right now without a token is the most ethereum aligned um but the other chains do create this feeling for the user where I'm not actually on ethereum right now and therefore like my this is maybe where it all went wrong like now that I think about it the

emotional attachment of people to ethereum reduces when that's not what they're clicking every day like they're clicking on the l2s and it just reduces the emotional attachment and then everything flows from there all flows from the click yeah from from the wallet connect yeah it flows from the wallet connect the thing I'll push back like I don't think um you know buying arbitrum or buying op is necessarily a calculation that someone is actually doing like no one's like oh I was going to put 5K in ethereum now I'm going to divide it between like all these oh I just I think so I I mean they're just such Bad Assets like all these like BC unluck assets are gonna Happ but you don't know that if you're re well maybe the people who are in crypto today but if you are a new retail person coming in

you don't you don't know that I don't know I think although maybe you're not even thinking about the l2s if you're a retail person yeah you're just like okay I've heard of Bitcoin I've heard of yeah like put put money into these two yeah okay so uh to close out the eth conversation if you eth has just been like a beated down asset this cycle what are your thoughts on like what eth does over the next 12 months um I I really think that they need to improve just the the the image of it and um you know we yeah but who's the day there's like the the ef's not going to do that vitalik's not going to do that bankless is has been trying hard to do that who's the there's no they yeah so the bullish the bullish

side is that we've we've hit like Peak yeah PE fud like Peak desperation right right right this is obviously the bull case everyone hates eth like like most hated asset yeah it's surrounding like a month multi-month rounding bottom yeah and I think that's possible like um these things will not go away and I always thought that it's funny like I first came into crypto and I didn't have all these like misconceptions that from like the echo chamber I looked at everything from first principles and I said back then like in 2020 um eth should look to unlock bitcoin's potential because Bitcoin is just like such a pure digital asset ethereum is the place where it can be Unleashed into Defi and lending and all

this stuff and instead of like focusing on its own monetary properties it could try to get Bitcoin uh bridged in and then just like use that like you know trillion of value to uh to unle [ __ ] I do think that eth has a chance at some monetary premium though and I think that Western countries that are more woke like environmentally friendly like they don't want the mining you remember like Elon kind of like just dumped all his Bitcoin because of the mining stuff like the environmental stuff so there could be a a large contingent that wants ethereum to be like a a safer cleaner form of you know uh native money so

that's the bull case and and maybe it happens the be case is like you know there's just more dispersion we we just keep rotating like it's sayy so like it just kind of keeps going down and then everything's a meme coin and and everyone's just kind of randomly doing stuff mud Marauder is Right Marauder is right yeah um okay let's Mo let's move on from eth uh what are I will so I would say you are Vindicated in this piece like I would say this was you wrote I remember when you wrote this I remember when you released this and everyone's like ah Jordan I don't know about this piece and I would say you're right like you're you're right on a lot of the things that you said what else do you when you look out at the whole industry like what else do you see where

you're like wow like guys I I really think about it like this and you're all thinking this way um what what else are you looking at that others so I think the biggest problem we have in crypto is a dollar comes in the space and it's either going to you know some trashy mcoin because the reason it's coming in is somebody you know heard about Dang or or some some hot thing um or it's coming in through like a venture route and it's being put towards building the wrong stuff the reason we have capital misallocation is because it's such a new industry nobody really knows how to Value things and everything is relative so people will only give answers and even like your co-host Santiago uh I think he's like extremely

he one of my favorite people to talk to but even he will like answer questions with like a relative sense of like well if is worth you know 80 billion then this thing should be worth 50 or like you know ethereum is 300 and this should be 100 like it's all relative and not really grounded in like a framework we don't have a framework um so there is a confusion as to how to Value things and that causes misallocation of capital which um you know doesn't work out in the long run um so we have to fix that and then the other thing is like the FTV market cap stuff nobody understands it um people are slowly putting together some of the

pieces on it I feel like I've put a few more pieces and I want to like write an extensive kind of piece around that but all I hear is like either complaining about uh low market cap High fdv which is like being one of the narratives of the year um or you know like Fair distributions but like fair is like in in in quotes because it's never really fair right um and uh there was a great panel of token where the the VC guys were discussing like what's the solution and I know Kyle wants to just unlock everything day one uh I think regulatorily like in the US there's a

bit of a problem with uh with day one unlocks he he wants to unlock all he wants to do no vesting no vesting VC is just like everybody unlocks they want um and I you you look like you think it's crazy I think I think it has like some huge benefits to to do that um mainly that it will smooth out the bias that exists with retail investors who it's an attention game right think about it this way day one is when like all the people are tweeting and the exchange is like headlining you know igen layer just launching you get the maximum amount of buy pressure on that single day if your

vesting is like going to happen a year later for like the next three years you're inevitably gonna get like a spike and then just like a Decay like it's just inevitable Bas what are you what are you optimizing for in a in a scenario you're oh man yeah I really disagree with that what are you optimizing for in a world of of zero vesting you're optimizing for retail having a fair market you're optimizing for the um the supply Dem demand to like not have more Supply coming later M which is just a it's it's a huge problem because um you you have all these VCS that are sitting on 100 X's like actually Jordy

can you explain can you explain Supply unlocks for for the listeners like what what does it mean that like there's a big unlock coming in October for example for for someone for like Celesta let's say right let's celesa launched a year ago and all the investors that got in like super early they made an incredible investment you know 50 million FD and now it's trading at like five billion so they're up 100x they have not been able to sell for the last year we don't really know like where the fair value of this thing is these people are desperate to sell because they're up so much and they're just like just like give me my 100x I'm happy like great you know

um if there's no like ability for them to sell and it all gets unlocked contractually right like they they sign an agreement they buy Equity or staff and it says you know after 12 months then you you get an unlock and sometimes it's a cliff like in this case with Celestia it's literally like the entire years's worth of tokens you get them in one day so it all happens at once or you get these like monthly like unlocks which are a bit of like a what arbitrum had where it's you know death by Thousand Cuts where you don't really feel it but then like it it's starts to just like keep coming um so that you know and then eventually they run out that's when the unlocks end so um I think it's a huge problem and it creates

artificial Supply demand um imprints in people's heads and because everything is relative in their heads some Founders purposely like do it because they want to trick people into thinking that my asset is worth a lot more than it is by constricting Supply initially yeah low flow FTV like that's the yeah I mean like you think something is cheap because you know it's down like 80% because it launched a 10 billion and now it's a two billion um maybe if you just let it happen organically it would it would have you know a very different profile and how do you think about this being the same or different than what happens in web 2 like people might hear like unlocks and all this stuff and it feels very confusing it's it it's very similar to how web 2 Works where like if

you are an employee let's say you're an employe of block works like and you get Equity foure foure vest one- year Cliff like that's like the St we do the very standard thing it's like foure vest one- year cliff and you get liquidity on it when uh when there's like an IPO or an acquisition one day um it's which is like in in in this case for Celestia like all these all these people invested 50 million valuation 200 million Val valuation all this kind of good good stuff and then the vesting starts the day there's the token so then the first clip the first like big Supply Cliff is actually no different than just a like a cliff at blockworks like you have a four-year vest with a one-year Cliff I guess I guess the difference is

you can't sell if you're like a blockworks employee because there's no liquid token of blockworks maybe that's the yeah it's a huge difference because like uh you could say web two you could compare it to like listings on NASDAQ or like NY where you know um pelaton or something lists on the exchange you have much less retail participation that's the difference like the retail participation is completely different so retailer buying S&P 500 and you're not going to be in S&P I mean if you launch super high you'll be in the S&P 500 and they'll just start passively buying your token without realizing it um so like you know micro strategy now I think is 500 so it just gets you like passive which is interesting um but um in crypto it's

retail buying so it's just a completely different Dynamic you're not dealing with sophisticated investors or doing a DCF you're dealing with retail that you can trick them you know they just like look at the price they don't look at anything else it's just like okay $4 dollar $4 is the price and if it's $6 then it means it went well and if it's $2 then maybe it's cheap I should buy it so your solution would be so you think you think Kyle's solution is the right one which is like just have no vesting out of the gate it it introduces like other problems it would solve um it would solve the the fake Supply like the fake Supply Dynamics it would it would solve that um

the problems are like one you get to Market so quickly in crypto like you know you sign a term sheet and then like six months later they have a token because it's so easy like the capital Foundation is so easy so like what are Venture funds doing like if they're unlocked um they have to start building a reputation for like being aligned longer term like you know quity chain sells like this kind of stuff yeah so It's Tricky I understand like your hesitation and you're like well my my main concern with it is yeah my main concern is that it uh it's optimizing for the wrong thing which is fairness of markets for retail and I think you should be optimizing for great great

things being built and great things don't get built in one year or two years they get built in like 10 years and so I actually like I I love vesting I think people should vest for I think the standard vest should be longer than four years like at least in web too like I think it should be like eight years or something um and I think people who stay at a place for a really long time should be rewarded because it takes a really long time to build anything great um like you look at the great companies in crypto like at least by size and value which I'll attribute to being like value contributed back to this it's like circle coinbase bitgo like these companies have been around for a really long time right and it just takes a long time to build anything great and then

you contrast that with like quick vesting and it's like a friendtech for example like I I think friendtech could have been great I I really think friendtech could have been great but those Founders took from I mean this is rumors I don't really know anything but like they just cashed out they just cashed out and they have no incentive to build anything anymore but it wasn't like a token there was no token investing they just cashed out the fees they just CAU the fees put them in their you know in their pocket like it wasn't related to token investing so like don't don't don't like mix like those like like things the we're talking about tokenomics like purely tokenomics it's broken my solution is not like clearly formed but I'm starting to reach I was talking to

uh uh Jeff from hyper liquid and just trying to think through like what makes sense I like releasing everything but having a high infl inflation rate and then using that inflation for doing things like you're talking about like uh incentivizing uh people who are still working on something or even the investors that are still helping so imagine it this way like instead of what we have like fixed Supply this like fixed Supply [ __ ] which we all got from Bitcoin right Bitcoin is great for fix Supply okay like whatever like I still don't fix Supply is idiotic I can I agree with that idiotic so like you know you look at like a token like uh Celestia they say okay like 10 billion tokens and um there's never going to be

any more tokens and so we have to like gradually like unlock them or whatever no no no they one everything's unlocked but you have like a large inflation let's say it's like 10 15% whatever you think is reasonable for the amount of um you know people you want to remain incentivized and those people get the get the inflation so it's not a fixed Supply and you're still aligning people you like you know for the long run like if one of your employees had a blockworks Tok even if all the supply was out if they know that every year you guys as a firm are making like another 10% of tokens and they get to claim some percentage of that they're still going to be hoping that this thing does well um so I'm I'm starting to go in that direction

obviously it's a huge change from where we are now with like fixed Supply and like multi-year stuff but um I think it's interesting right now you're having like the worst of both like we've seen like all these VCS that have been uh vesting tokens that are like like earning them more like liquid tokens I think flood uh had a nice tweet he was asking like if a token is earning interest while it's locked is it really locked and it's not really locked like if it's earning you a lot of uh yield right right what do you I heard you say on a podcast that uh VC games are the biggest grift of all

the games right now can you just tell me what you mean by that or did I get that quote right I don't think VC games are are the biggest gri I think the biggest grift is um the builders that are building things purely for the uh the token game and to extract money um so I think those are worse BC's hey everyone Jason here I wanted to quickly talk about Kronos ZK evm a Next Generation zero knowledge layer 2 blockchain Network focused on scalability security and Innovation secured by ethereum it further expands the Kronos ecosystem

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you control all completely free it works with all the major Wallets on ethereum base polygon and arbitrum head over to harpy iempire and set up your free protection today that's Harpy iempire I promise you that your future self will thank you now let's get back to today's episode how many of the good projects Jordy do you think are run by Founders who are who are like that where where it actually seems like a tier one project and they've raised from the good brands but like really you then talk to the founders they're like yeah I'm I'm a one cycle Pony some of them are like hiding it some of them are like self Del delusional they're like oh uh this this

is actually makes sense um the amount of people the amount of Founders that I meet that will directly tell me like yeah I know the game I know how the game plays like I know I'm doing this I'm G to get my listing because I know the how to pay the guy to get my listing and then like I got my K telegram chats I'm gonna pay them and like this is the business model um there's not too many of those although I've said before I kind of like at least respect the the honesty of knowing what game they're playing even though it's like very grifty um and I I have them like they're not my worst tier like the worst tier for me is like the ones that pretend as if like um you know they're building something

that makes sense so let's just like take one of like like my my bottom tier which uh I dislike the most are the founders that are they're spinning up like some buzzwords it could be like oh like we're going to take the svm and we're going to put it on ethereum and we're going to get funding from all the founders because like you know Anatoli likes this and um this type this type of Dynamics so eclipse is like one where you know they got a ton of angels including myself um kind of saying you know they come to us and they say like anatol is investing and like he's supporting this and Solana is obviously like doing really well so we're going to bring s to ethereum and

ethereum has a need to like have like this better like you know virtual machine cool then when when I like I you dig deeper and you're like okay what is what does this actually mean it sounds good and then you look at like what's actually going to deploy there and it's generally like not the top tier salana projects because they don't want to move they're like very aligned with their ecosystem so you're getting some like B tier salana stuff that hasn't found traction on salana and you're going to try to like create a narrative and put some TV up you know paid for TBL and like try to like do this now obviously the founders changed and like there's a better founder now that we you know we actually like and you'll try to like create a bit more of a sustainable structure to it

but given that Neil's gone I think you kind of like understand that you know he was doing all these back room deals right like he we have the poly chain story where um you know he was giving out massive allocations in order to get somebody to invest so this is like my worst tier is like this this like level of uh of founder what what are the other I mean you are so deeply involved in the like Angel Venture space What are some other things where you're like o that the the public market doesn't see what's going on behind the scenes but like yeah there's there's some stuff like for Me Maybe it's uh OTC deals that are actually marketed as Venture raises um

that feels like a my grifty thing like I'd love to hear you just talk about other other things that like the public isn't fully aware of I never understood even last cycle why when there was like some Twitter announcement of a of a round the tokens were pumping like that's a bearish thing to me it's not a bullish thing it means it literally means that there are now back holders that got in very cheap compared to the current price and at some point they will unlock and sell and so you have like future selling pressure in the system for some reason the market is still viewing these things as bullish if those tokens were just kept

like you know in some Foundation locked up they would not be on the market and now they're on the market somebody's eventually gonna have to like make a profit on them and the more you pump up the price the more you're like creating uh like large notional selling pressure so it's partly an education problem um can you Jordy can you explain these rounds like when someone rate because there's uh I think what people don't get is there's a people who haven't done like one of these deals is you're actually getting two valuations here and you're getting two you're investing in like the the equity structure which everyone kind of says yeah like there's no value there and then you're getting either token warrants or like a saf or

or like two to one or 3 to one like token on the equity like can you just explain how these deals work I mean the the token conversions I would say I I do agree that for most projects the safe part like the equity part doesn't really come into play unless they tell you like we are specifically trying to get money into the equity right generally it's just a token deal you're getting discounted tokens and they have some lockups so you know um there might be like a six-month lock up it could be short it's a it's generally like not a bad thing if they're trying to raise runway in order to be able to keep operating so we've had you know projects need to raise a couple more years of Runway they want to find the market price and instead of you know

they have two options right like they can either OTC with market makers for liquid tokens and just sell tokens or they can do these like rounds where they like lock them up for six months or a year sometimes a one plus one um it kind of delays the the selling so it keeps the project like looking okay for another year let's say say in terms of like selling pressure um but it's just a way for foundations to like raise Capital it doesn't have to be a bad thing like it can be a totally uh benign thing I guess what you're referring to is like the announcement where they say like we raised $100 million um and then the price pumps when in reality it's

like we sold tokens at 50% off you know with like some vesting sometimes very short um and the willing buyers but they don't usually like tell you the price maybe maybe like if they said the price like it wouldn't pump like if people said like oh this around3 um people wouldn't be like oh I need to like bid this up from six to seven right yeah it just feels like I mean I don't know what the right level of transparency is but it I just see announcements then price action and I say retail doesn't understand what just happened in that deal and it happens over and over and over again again and

yeah someone's going to get caught on the other side of it so yeah they always do it's just it's just a matter of time um what do you um how do you think about how narratives get created yeah I mean that's another one where like I um I find fascinating and I don't have like a full picture although I have gone into like places that I decided early on and in my like uh crypto Journey that I was going to go into like the the back alleys and the trenches because I just wanted to be unless you're in there you don't really know what's happening so um everything from like you know doing shows

that I was getting bashed for going on Crypt banter let's say because it's like oh Zack xpt is exposing them and like you're giving them air time I want to go to all the big kind of like successful channels and understand like what are they doing if you're not in it and like like how they're talking you backage and what do they want you to say or not say you don't really get a full picture and I I wanted that full picture so for me going out there and talking to everyone that is creating narratives and understanding how they're doing it um is important and even like some of these memec coin communities like these cabal meme coins let's say I don't mind like talking to them

getting like just I want to understand like what's going on yeah you want to know the game you want to know the game yeah yeah and like I don't judge like I literally don't have a moral judgment on people like others do I don't I don't make it my uh my ego and my uh my self-image to like judge everybody everyone has like a different hand they're playing some people are really good at technology and they can be just Builders some people are just very good at storytelling and maybe they end up spinning stories and doing marketing and doing you know YouTube shows that are spinning stories I don't I don't I don't have a value judgment against them so I'm trying to put all the pieces together how do narratives happen it

seems to be that um the IQ of the space is still like very low because it like the narratives might be like this this ticker is good like I talk to VCS and they're like oh I like the ticker like this is going to be a good ticker serious VCS very successful VCS like say not kidding like I had a conversation two days ago uh why did you invest oh the ticker is good but they're not wrong they're not wrong but they're not wrong is the thing they not wrong like like the token and the ticker and the the image that like is associated with the ticker right like the little

thumbnail it matters so much because like I said it's all just like we're all figuring it out and there's just complete misallocation of capital and if you want the misallocation to come into your team the one that you're investing in um then you have to like evaluate those things and I think going back to the soccer team or the basketball team analogy like the team will do better if it has a nice name and a nice cheerleading squad because then people will go they'll buy branding yeah and then once people buy tickets then they end up you know like Real Madrid like they just bought every single good football player you know in like tens and 2000s because they had so many fans and they could afford it and then it

just like leads to more success and crypto has the same flywheel where like you raise a lot of money by being like a good salesman and then you can kind of like keep parling that into like a relationships Partnerships I mean how do you maybe we can transition to talking about mantle for a little bit so you you're you're in this other seat at mantle actually maybe before we talk about mantle what is your story of getting involved with mantle so mantle used to be uh bitow B which came out of bit Yeah so bit wanted to you know fund a big Dow and they they took you know a billion dollars of their profit in I think 2022 um they were taking like a third of the fees or something of that cycle

that's no longer the case there was no like Association anymore but that was like the Inception so you you got this big Treasury and people were really hot on Dallas if you remember like a few years ago people people thought like Dows are going to be um great like investment vehicles and like everyone's going to use the what is it like the the knowledge of the crowd right to to make really good decisions and I think what we've figured out since then is that Dows have a place but um you need like some centralized Committee in the Dow to like get things properly done you can't just have people voting um on like everything it's just like such a slow democracy process so Switzerland

Switzerland is a better model like the cantons rather than you know the full down model in any case so um I think they realized that doing an investment di isn't a great idea um and they wanted to BU become a product kind of focused uh entity so mantle came out of this idea of like let's like stop all this uh just like purely uh investing and like let's start building and like building people's ideal product because you know bybit is a great product like if you look at it has great product Market fit there's like you know millions of users and uh taking that DNA and applying it to like blockchain okay so

that that's a good overview of like what how mantle came to be maybe let's get back to the point about like how did you get involved in this how did you go from the investor seat into this Builder seat yeah so I I've always been um criticizing projects you know like uh I came on with like Luna cloud and you know I was talking about Olympus da and like all these other things back then and um it's one thing to criticize something that exist and find the flaws but I I don't I don't I don't want to be a hypocritical I want to be a part of creating a better version we can say okay I'm not just like uh you know on the sofa and just like uh armchair quarterbacking what how you you call it um so it w it was something where I was

looking for a chance to get in the arena as shamat puts it and the mantle team were making this huge Rebrand transition into a product out and um yeah like they reached out and just said like you know you seem to be thinking about this stuff a lot and the the thing that kind of got me attached to mantle was there's a huge appetite for Innovation and they want to try things and they're willing to take some risks and do things differently I would say that they're the only um chain with any like exchange Association that is not copy pasting because people are used to like uh you know binance or like you know some of these other chains they'll make a L2 or

they'll make they make a chain they'll take ethereum and they'll just try to do the same stuff I think mantle is actually like innovating and has an appetite to innovate so that's the that's the key difference can you just give the lay of the land of mantle like what like what is mantle doing like how have you guys been able to have so much success recently like yeah yeah so you know initially we just have one L2 then we have two so it's arbitr and optimism at the beginning and then there just like they're all sprouting around because the first two like a 10 billion valuation and so like everyone wants to Wi to play that game they're not all going to succeed uh we're already seeing like some of them you know starting to die

out having a like very large um kind of commitment from a a capital standpoint where the treasury is just like stuck with mantle like this is this is part of the project like it's you know there's there's a multi-billion dollar treasury with like a ton of eth a ton of stables there's things we can do that's a very Solid Ground to build on so I think at this point mantle has become not just an L2 but it's a um it's both a product Launchpad where you know we're thinking about like what's the best way to hold eth what's the best way to hold Bitcoin what's the best way to hold stable coins like these are things that people actually want to do they want to hold those things and they want to earn yield

or they want to have them be productive um so a lot of the thinking is doing the best version of the things that people do want to do um and that's the eth thought that's kind of why it's been so robust and so successful like there's a Clear Vision on that yeah so you guys how how do you guys do these deals like you guys are an Advertiser on Empire so I got to actually learn a like a lot about what you guys are working on and then I yeah had lunch with the team out in Singapore um and you guys have these like really interesting Partnerships with different people so you can go you can get meth I don't know if you can still do this but like you can get meth and you get the yield it's like three or four% and then you can

actually earn igen via emth right where you guys are reaking uh I'm gonna bot this I'm sure you guys are reaking a bunch of the meth and then that generates the igen points it's like a it's like a bunch of igen points per day and then you guys are the I think you guys are like we're like second or third biggest person getting igen points I'm sure I totally butchered that but like how does that thing come together you said everything correct and like here's the North Star we want emth to be the best way for anyone to hold eth like they look at all their options they can hold naked eth they can do Ste you know I can name like 10 other ones um with me we initially did a double

dose drive so like the yield we just like incentivized the yield double dose so everybody started coming in okay like I can earn 7% instead of 3.5 and then this whole igen thing started and we sort of panicked we're like okay everyone doesn't care about staking yield now they just want igen points so how do we still create the best product possible for users and I came up with this idea of like let's just put our treasury eth into Igan layer and then just give the points out to everybody so they end up still The Best of Both Worlds because they can uh they can earn everything at the same time having that North Star of like what would I want to do like I'm a very sophisticated crypto user I want to

hold eth I would I decide and legitimately I created we created products for ourselves like the people on on the mantle BD team and like on the manle product team they're the most crypto native of any chain and they're thinking about like would I This and like is this the best way that I would hold my eth for example and that's kind of what we're trying to do and I think that was successful yeah and then and then what are the other products you guys have it's CM eth right is the liquid restake token yeah so obviously like now um there's igen layer there is uh symbiotic like there's K there's like other other ways to like restake your eth what we um have done is like created our own version of a reaking token so

instead of just competing with Lido uh we want to compete against you know ethery let's say so ethery can do like reaking into all these platforms so cam which is like the new one that we've been building and it's coming out very soon uh you you could kind of like to remember it you can say like uh cm is like Crystal math so the crystal math that that's the thing that's what you came up with was crystal math that's it's memorable it is memorable yeah so if you wna get that extra like more Deen yield and you want to go Crystal um then it'll into like abss right so that'll be earning um this like next

wave of like reaking points as well nice I would love to be in the I don't know if you guys use slack or whatever teams like you you send something to the designer like hey mock up some like crystal meth uh type things they're like Jordy I'm sorry did you send that right yeah so maybe fast forward like a year from now like where does mantle sit in the industry like how big can this get like what what are the products that people are actually using like who are you guys competing with who are you winning against like who are your partners like what is the vision for what the ecosystem looks like in a year yeah so the chain is part of it and then the the financial products are another part of it and then the ecosystem sort of growing is another one I think the

products don't need to be held to the L2 like if me and cth is held on L1 or on other l2s that's a huge success we're getting like a ton of requests from I could say this like publicly but like you know arbitrum bar chain like they want meth and CME to be there it doesn't have to like you know stay in one place so the products are going to take a life of their own they're already doing like super well uh there's one now called fbtc which is like the fire Bitcoin it's a very new product but obviously with wbtc sort of having some um some issues right now in terms of like the centralization or the safety of it it does open up the potential for creating a Bitcoin product and I think

um you know there's ways where there's an improvement to come over uh wbtc mantle is working on that um and then on the stablecoin front that's a really interesting one I think stable coins as we all know are like a killer product Market fit for for everybody mantle was the first to like really kind of commit and put a lot of money behind uh you know usde uh initially and it's like one of the hubs for for ethena and help that launch off I think there's other stable coins as well that have a lot of promise that can offer like a diversified um yield and be like very good product so I think we're seeing that like mantle is becoming a like Launchpad for good

products really and can really like support and bootstrap them why would someone build on mantle instead of all the Myriad of other l2s l1s yeah so I don't think you have to build on mantle like you can have a deployment on mantle you can earn like all the benefits of of that ecosystem you can still like you know be on other chains as well there's no um you don't have to like sign you know some exclusivity deal in Blood and be like I will never deploy anywhere else good place that you want to like do business and and uh you know like it's a very friendly like crypto native Place yeah yeah nice um I have to jump in a couple minutes but I wanted to round this conversation out with just like big

big ideas for 2025 um I mean there's all these whole host of things we didn't get to talk about so I'd love to have you back on the show again soon um but maybe just like one or two thoughts around like any big ideas for what you think 2025 could look like um I think macro is GNA start being relevant again unfortunately I know like everybody a couple years ago had no thought about macro and then as uh as inflation started picking up cross I mean you guys would do that very well like the crossover between crypto and macro just became like so relevant that yeah all these like anons had to educate themselves as to what was going on um I think we're going to see a a

sort of like a double Spike into inflation it's quite obvious to me that um it's going to pick up again you can see it in stock prices you can see it in Gold everything's at an alltime high and eventually like this wealth effect kind of like filters through so um I think Bitcoin becomes more and more of like a relevant asset in in 2025 um as like an alternative to to like this like Fiat system so that as a narrative you know obviously there's a lot of l2s building on bitcoin you hear different things about the technology side of that like you know how much of it is uh is actually like permissionless or not and I think

um PT like BTC L2 and BTC f is uh is one of the narratives that seems to be at least playing out um hopefully like a rebound in uh ethereum sentiment you know I've always liked the idea of having both Bitcoin and ether around because it creates like a little bit of a diversification in a portfolio and that's Alpha like diversification is Alpha like you can size more aggressively if you know that your um your variance is reduced by diversification so I think that allows like more deployment into the space but my one big hot take is that we're gonna hit the extremes on some of

these things so um I talked to the pump fun guys and they want to go like mainstream like I think we're GNA see like mainstream betting on videos on like random there there's like there's like 20 people building this right now it's like how many how many views will Mr Beast get in his next video like is he gonna say this word is he is gonna say this word yeah exactly exactly we're g get like extreme um versions where I think it's good you want to hit the extreme um because that's kind of like where you start finding the limits and start like you know reflecting on like where those limits should be drawn but right now we're still kind of pushing outwards um

on that on that Spectrum [Music] um yeah it's going to be a wild ride uh if someone's listening and they're they they're they're really feeling unsure of how to allocate in their portfolio right now how do you think about just like how to position I mean we're recording this September 30th so we've got all of Q4 ahead of us we've got this election ahead of us then we've got like maybe what could be a crazy bull market in 2025 ahead of us how do you think if someone's just a Buy and Hold person how do you think about how to how to set up that Port portfolio because it does feel uh trickier than it maybe this is just hindsight bias but like it feels trickier this cycle than

it did last cycle yeah um I think Buy and Hold is very hard unless you're just you know doing like the Bitcoin or Bitcoin unless you're willing to give up the big uh you know 100 X's or 10xs or something yeah like doing u i see like there's some products that try to do a uh Market weighted index like these index products and I don't think it makes a lot of sense like to put like 3% in xrp and whatever I would say like uh from a simple perspective you know put a bunch in Bitcoin put some in E choose like one or two ecosystems that you think are doing a lot of good things like ton you could say like okay there's a lot of users there I just like feel like this is

going to do well and and make a few like concentrated bets like if you like what's what's going on there um I really think that unlocks are under appreciated and you generally want to choose tokens that don't have a lot of unlocks coming think about it this way if someone right now to invest and hold something for a year needs a 50% discount why are you willing to do it for free why Mr retail dude do you want to hold this thing for a year when if there was a forward curve and it was pricing like the expiry of like this you know 2025 expiry it would be settling at like 50% discount you're just literally

giving away you know half of your money by uh by by by Buy and Hold so only buy and hold things that um are basically like either going to be like very asymmetric outcomes where they can grow to 100x and then it doesn't matter um or things that have like fully vested so um even if it's a dino coin like some of the ones that like Pendle is one like it it existed for years it's already like fully unlocked I don't mind if somebody holds some Pendle like you're not going to get dumped AR what do you think about some of the defi tokens like the makers and AES and Unis swaps of the world that like don't that aren't the yeah that don't have these like huge supply unlocks um some of them are good you

have to think about the mo if they have a mo um are they going to have some token utility or price I mean I like I like the pendal token I think you know Unis swap is still dealing with the US like regulation obviously and and like how they can ACR value to that token or not is is going to be dependent on Trump trump winning or not winning um a seems to be having a good moment but um yeah it's all Case by case and and I think allocating blindly to like all of them probably doesn't make sense yeah Jordan man I got to jump this has been awesome lot that we did not cover uh whole bunch of stuff we didn't cover but

this is great congrats on everything with mantle uh people should go listen to steady Lads pod and congrats on everything with Selen cap doing great thank you next week [Music]