Solana, Dogecoin & Beyond: What’s Driving Crypto Innovation? ft. Joe McCann

25:59That being said, the alts that we are actually looking at, I mean, you know, the size of our fund, we can't be in the trenches with the degen, so to speak, right? But I do believe that if you look at obviously things like Solana, right? Like, let's just call it what it is. Trump launched his meme coin three days before his election, which inauguration, I should say. We'll come back to that later. Yeah, we will definitely come back. But if you look just fundamentally what happened on Solana, hundreds of thousands of new people onboarded, records amounts of trading volume on DEXs, record amounts of tips on JITO, which is a service that you can utilize to land your transaction faster.

26:45I mean, it's very difficult for me to still see a scenario where either A, Solana should remain one third the value of Ethereum, or B, any of the high performance, you know, high throughput chains can currently catch Solana. Now, I'm a trader, right? I understand the technical underpinnings of things like SWE, which is fantastic. I know Evan and the CTO there that invented the programming language. As you recall, I'm a technologist myself. This is a very powerful potential L1. But as a trader, I want to trade it. So yes, absolutely owning something like Sweet in addition to Solana, I think provides you some beta to your Solana core positions.

27:35And as, you know, the Solana ETF comes to markets, you know, we saw yesterday a leaked version on the CME of Solana and XRP futures are going to start trading. The vol will start to slow down a bit in Solana, but the demand for it is nowhere near done. I think this thing has a lot more room to run. Now, secondarily, on the asset allocation piece, it is no surprise that we were the first fund to actually start trading and investing in meme coins in 2023. And this is one of the things that was a huge performance driver for us. If you actually look at the top 10 tokens for 2024, what was the number one performing asset?

28:14Dogecoin. It outperformed Bitcoin, Ethereum, Solana, everybody. I was long Doge. It's the Elon plus election plus meme. It's a no-brainer, right? And then when he named the agency Doge, I was just like, you've got to be kidding me. This is so obvious. And in fact, doge.gov website has a picture of the dog on it. He's telling you this. It's a simulation and he's telling you what he's going to do, which is he's going to use it on X and use it on Starlink and everything else. Exactly. And so from my perspective, I think we own some core positions in what I would consider a blue chip meme coin. So these are things like your doges and bonks and kind of pepes of the world, right?

28:55And part of that is a function of the liquidity available in the markets. We can't be, you know, buying$100 ,000 or something is just not moving the needle for us, right? So I do think that, you know, trading these things tactically, but having a core view that meme coins needs to be a part of your asset allocation is going to be key for the rest of the year. I can't imagine a world in which a Doge ETF is not phenomenally successful. I've been begging Jan Van Eck for a year now to say, file for this bloody thing before somebody else does, because it's going to get$30 billion of capital. 100 % agree with you.

29:33And by the way, I mean, Bitwise, which I'm an investor in, they just filed for their Doge ETF, right? So this is coming, right? And, you know, last year when I was chatting with Jeff over at Bloomberg, who's one of the guys that works for Balkunus on the ETF stuff, you know, when the Ethereum ETF, Spot ETF got approved, which caught everybody by surprise, my immediate view was Solana's next. And there's going to be an utter proliferation of these ETFs going forward. And the reason is, as you know, asset issuers love to make money on the fees of these things. And if they look on chain, they see trading volumes of meme coins or pick another token.

30:13They're going to want to wrap that up and make it available to folks that typically just use Robinhood or E-Trade or Schwab or their own broker. Right. This is not slowing down. I think you're going to see a massive proliferation of these ETFs. And of course, when an ETF is announced for a particular token, the value of that token tends to rise. So a lot of these are going to be meme coins. TradFi is going to have to start accepting the fact that things that have no fundamental value are going to be traded on the New York Stock Exchange and the NASDAQ. They are going to have to understand that they never understood the internet.

30:50It was always a game of attention. Exactly. And they don't realize that attention is upstream of everything. Personal relationships, work, everything is attention. And this is a capturing of attention. And look, I mean, I've mentioned this many times, and I mean this with no disrespect to people that went to business school. But if you go to a Chicago business school, there is no curriculum teaching you how to value culture. It doesn't exist. Or value attention. Now, you can look at things like monthly active users and daily active users and use some sort of modeling for that to figure out what the value of meta would be.

31:26but when we're talking about the tokenization of internet culture or culture in general there's just no discipline around this and i don't blame these guys right it doesn't actually fit their mental model let alone their training that they got to be able to value things they look at things like discounted cash flow price to book these types of things that doesn't exist for culture because culture is it's not tangible it's just a it's you know it's more art than science and it's an intangible on the balance sheet. I've said this many times on many conversations is Disney has more cultural culture that is an intangible that does not get reflected in equity.

32:05That's right. But if you tokenize it, it goes to a tangible on the balance sheet, right? This is a very big concept that people don't yet understand. I completely agree. The other thing is, as yet, Wall Street hasn't figured out that all of this from meta to doge is all Metcalfe's law. And so it's had a value networks. And Doge is an unbalanced network. So it's lots of retail investors, very little on-chain use. If Elon brings use, you're going to see a multiplier effect on the value of this thing. It's as simple as that. Well, Ethereum has got both sides. Lots of users, lots of value gets transacted.

32:46Bitcoin, Solana, all of those. So once you understand what makes a network valuable, these things are much easier. Oh, I completely agree. I mean, there's two things here. One is, so I was a CTO at one of the top ad agencies in New York City, you know, 12, 13 years ago. And working in a place like that, the CEO at the time was a close friend of mine named Andrew. He kind of taught me the value of brand equity, which is what you're describing with Disney, right? But it's very difficult to frankly tokenize or securitize brand equity. Brand equity is the je ne sais quoi of Apple, or of Tesla, or of Disney, or of Nike.

33:31The brand itself has this cachet associated with it that if you look at a company like Nike and you look at a company like Adidas, nike's brand equity is arguably worth more now how do you price that it's difficult to price that in the traditional sense right i think the second piece to your point about metcalf's law was having this conversation with some founders yesterday uh they were looking to build like you know a super secure peer-to-peer encrypted messaging app and i said how are you going to disrupt whatsapp and they're like well it's just more secure and i'm like no one cares Like, no one cares about that.

34:11What they care about is, are my friends on this? The power of a network is extremely valuable. And so to your point, if Elon Musk decides to flip the switch on Dogecoin for payments on X or whatever, then all of a sudden, how many hundreds of millions of people on a network just get lit up with something like Dogecoin? The value of that creates a digital repricing event that I don't think people are actually pricing in. The other one, talking about brand equity, this is what people don't understand about LVMH and Hermes. Their charts look like Google or Amazon or their log regression channels.

34:51And everyone's like, what the fuck is this all about? It is because they actually price brand equity in their goods. That's right. So the margin is ridiculous. And the network effect of people wearing a Louis Vuitton handbag creates the value in the number of goods sold and the scarcity value, and then it drives a sequedence. It's Metcalfe's law. It's bizarre, but it's Metcalfe's law in handbags and fashion. I completely agree. And look, speaking of folks like LVMH and the large fashion houses, there's a company, I'm good friends with the CEO of this company called Mischief, MSCHF. I can assure you most of your listeners probably don't know this, but their kids know who Mischief is.

35:33They are arguably on the tip of the spear of internet culture, and the fashion houses are now working with them. They want to be involved with companies like Mischief. Why? Because they understand the brand equity associated with something like LVMH, but they also understand that the tides are shifting to the internet. A lot of the traditional customers of LVMH are now being, frankly, aging out. for better or worse, right, a diplomatic way of putting it, they understand that, hey, we need to be able to start to shift our focus to a new kind of cohort of potential customers for us. And the way that we do that is embracing the internet and ultimately internet culture, which is one of the reasons why they work so closely with companies like Mischief.

36:16It should be no surprise that Mischief is also now interested in Web3. So you can start to see this kind of confluence of brand equity, meme coins, internet culture, and Web3 starting to really come together because they have to. I mean, this has always been my working hypothesis. And I set up a business four years ago to deal with this kind of tokenization of culture. And it was too early. So we eventually gave the money back to investors. But this is coming. we're starting to see the for the first time web3 native brands doodles penguins stuff like that which is interesting i don't yet know whether these will blow up and the wreck guys are trying to build as well all of that stuff uh ov and mando g money's got this fashion thing the stuff coming there um i know what do you what do you think about whether we can break out the other way or do we have to go and tokenize existing culture or can we create culture and let it let it go viral into the into the normie world yeah i mean i think the shorter answer is it's both and and you know um frankly i've been evaluating this for quite some time um we are actually going to be launching uh venture fund two at asymmetric which is the first crypto slash Web3 VC fund exclusively focused on consumer-based applications.

37:39My view is that we're actually at the point now where we don't need to keep investing in infrastructure. Do we have infrastructure investments in our previous funds? Yes, but look at what happened with the Trump meme coin. The technology is there, and I'm not just backing Solana on this. The types of applications that we can now build with this core technology is available, right? So if you think, if just go back to like, call it like 2005, 2006, how many VCs were investing in laying physical infrastructure for the internet? The number is zero. What were they looking at? They were looking at companies like Groupon and Twitter and Instagram, these types of applications that are built on top of the core infrastructure.

38:26I think we're at that inflection point now. And the key will be, how do we make Web3 be magic in the background? It's not about connect your wallet and do these things. No, it's how do entrepreneurs and innovators utilize this new form of technology in ways that consumers can embrace it. Now, the typical thing, right? So you saw with the Trump launched moonshot they just crushed it but that's a very specific type of application where you're just basically swapping or wanting to buy tokens right that's great that's a good use case and it worked however if you start to look at companies like moonwalk this is an actual consumer-based application this company they they basically have folks go on these kind of they create these competitions to go on walks right get your steps in and they post you know solana as collateral and whoever is first place wins the prize so to speak the the app is exploding so this is like a new version of steppin essentially yes but i would argue i would argue much better yeah obviously because they're because with steppin there was a token associated with steppin currently there is no token associated with moonwalk but the point is they're they're using the technology and applying it to something like fitness right in a meaningful way in addition to that uh there's a company that I'm invested in called Golf N, and they're doing something very similar.

39:51They're building, you know, effectively like a digital caddy for folks that play golf, and they're meeting brands with their end users, and there's NFTs and also a token associated with this sort of a product. It's all abstracted away though, right? So my view is we're going to start to see a lot more of these consumer-based applications, and do I know what the breakout application is? no, of course not. It's just like the AI industry that was around for 70 years and nobody was asking to be able to speak to a chat bot, right? That happened to be the breakout application. But these things are coming, which is why I want to invest in this ahead of the curve over the course of the next two to three years.

40:30So here's a broader question around this. Does everything need a token? I think we're trapped in thinking things need tokens. And I see what Coinbase has done with base and I think it'll end up occurring to the equity. And we don't need to have this hybrid structure unless it's truly needed or we can have tokens that are non-traded, loyalty tokens and stuff like that, that are just part of the engine. How are you thinking about that at VC level? Because the market, I mean, there is going to be tokens, obviously, but it feels that we're over-tokenizing all sorts of shit. And every time we go through a down cycle, these things never recover.

41:04And I think you're destroying businesses, future businesses because of it. Yeah, I mean, look, like all credit to the base team, rolling out that L2 with effectively no token, right? Currently, there's no token. And there's obviously speculation that there may be at some point. But it's a revenue generating business for Coinbase, which makes total sense. It's a very good use case of how to utilize Web3 based technology to benefit shareholders of a publicly traded company. I think you will see a lot more of this. The difference is, is that it's technically still infrastructure, right? And it's a great use case and it's great for Coinbase.

41:42What I would like to see is beyond infrastructure, what are going to be the things that businesses are going to utilize? The first one is super obvious. My friend Kyle Simani over at Multicoin wrote a great piece that went out recently about, you know, Solana and it basically being like the rails for high frequency, excuse me, for finance in general, right? I'm butchering it, sorry, kyle but that's effectively what this essay is about and it's extremely well well written i think one if you look at payments super obvious use case everybody's looking at that but two and i think this is one of the key things that happened last year that didn't catch a lot of people's radar is that when stripe went and acquired bridge for 1.1 billion dollars a few things happen one stripe Stripe is the, you know, darling of Silicon Valley, right?

42:34That board is not making the decision to go and acquire a company like that if they don't see where the future is heading. So, two, it also gave Silicon Valley VCs the agency to be like, hey, there's exits in Web3-based companies. I can now go and safely, you know, big air quotes there, invest in these businesses because there is there's going to be these types of acquisitions. And we just saw Circle recently announced that their acquisition of a company that does tokenize treasuries. And Circle itself will IPO. Exactly right. Full disclosure, investor in Circle as well. But yes, like there will be.

43:12And I mean, the head of the NYC came out a couple of days ago saying we expect more crypto IPOs coming. Right. So I don't think this this kind of stuff is is going to slow down, per se. The question really is, how do how do businesses get smart quickly, whether it's on a corp dev side or it's their product strategy side to not say, hey, let's do what IBM did in the last cycle in 2019 and create a permission to blockchain, which defeats the purpose and creates a shitty database. let's actually find ways of utilizing the technology for problems that our customers have or for net new products that we want to expose to our current customer base.

43:55That's actually, I think, much more valuable than just saying like, hey, we're a cryptocurrency exchange. Let's just go build another L2 because it was successful for Coinbase. The two big ones, I always look for really big use cases. The two really fucking massive ones that people don't understand and you will, ads. That's right. Right. The high-frequency trading of ads, it's a filthy business. And it's the same with tickets, right? They're both the same. It's, in fact, the same high-frequency traders that are involved in them. And it's a filthy business because client A, the buyer and the seller of the ad, is paying, the price gap is so massive.

44:35And some of these ads get traded 1 ,000 times before it actually gets to the end buyer of the ad space. this whole thing needs to go on blockchain and it's gigantic it's like a dark economy that is much bigger than people understand i would love to invest in any company that is building that because i think there's two things here um uh or there's two instances that that that come out to me that are challenging for this to be usurped the first is the ad tech space they have a pretty strong network effect, right? It's very difficult to wedge into that. And then second, I mean, Ticketmaster and Live Nation effectively have a monopoly on ticketing, certainly in the United States.

45:19And yes, there's been, I would say, some discussion in Washington, D.C. as to whether or not this is fair or not. But someone is going to have to figure out a way, just like we did in the 1990s when the music industry basically had an oligopoly on music distribution and production, the CDs, the pricing, all these things, the people had enough and created Napster, right? They weren't saying, hey, we're going to try to destroy this industry. We just want an alternative system. I think that that is likely going to be the case with, say, something like ticketing could be an easier, easier, big air quotes again, easier approach for a founder and entrepreneur to wedge into.

45:59The challenge is that that industry, the entertainment industry, they actually don't make a lot of money, those artists. You know, there's a handful that do like... No, 80 % of the economics go, I've been down this rabbit hole with a lot of artists trying to sort this out. The problem is, is there's like 10 different people own different slices of the IP rights. It's an ugly, messy business. Yeah. And, you know, I could see, dare I say it, someone like Kanye West, look at what happened with Donald Trump and say, I can do that and then I can also use that to create a more democratized version of a record label or something to that effect.

46:38It's very difficult to forecast something like this. However, the technology is now available and ready to enable these types of entrepreneurs to take a swing at it. And I think that this is one of the reasons why I want to find these folks and invest in them because there are going to be outsized winners just like we saw in the late 2000s for, excuse me, the applications that were built on Web 2 will now apply to applications built on Web 3. Yeah. And to your point, it is really not easy to know what it's going to be. The things that I thought were going to happen fast still haven't happened.

47:13And the things I never expected happened. You know, Donald Trump launching a mean coin was not on my radar screen. But NFTs for tickets has been on my radar screen for like five years and it's still not got there. So you don't know what the breakout is going to be. And it could be something entirely different. You know, who knows? Even Doodles could become a giant brand, which is going to then lead other brands to kind of reverse into normie world in ways we don't yet understand. Yeah. I mean, this is the hardest part of being, you know, a early stage investor is you're trying to predict the future by connecting the dots of what.

47:50And so one of the things that I try to do is I'm somewhat of a student of history as it relates to technology, particularly internet technology. So, you know, small, small section of history there from like the nineties to now. And I just try to look at like, are there patterns that could potentially repeat? Right. And I use the web two to web three example and I look at it and go, yeah, like they stopped investing in infrastructure in like the late nineties, early two thousands. And then a few years later, we had this explosion of web2 based applications and then and the vcs made more money out of that phase than all of the other phases added together i completely agree and this is exactly what my point is is that do i know what the breakout application is going to be no and i don't think anybody knew that instagram was going to be such a massive you know breakout application as an example right i mean i remember when uh zuck was coming out saying he wanted to acquire them for a billion dollars and the sell side analysts were saying he was absolutely insane.

48:50Look at that business now, right? WhatsApp for$19 billion. Yes, exactly. 24 people,$19 billion. Yes. And this is what my point is, right, is that those types of applications are going to exist. I think one of the key differences now is the way that capital can be formed in Web3 is so fundamentally different than it has been, frankly, ever. And the fact that the president of the the United States, not only, well, whether it was he, I doubt it was him directly, of course, but like his family, his name, not only issued a token as an American citizen and frankly, the president of the United States, but he's also an investor.

49:30This fundamentally changes everything we've known legally about structuring tokens and capital formation in the United States since the dawn of Bitcoin. And I think that that is why this is such a seminal event, probably as big as the genesis block of Bitcoin, because now you're basically saying, hey, not only the president launched his own token and a bunch of money flowed into it, we can debate the moral arguments around that. I don't really care. What I'm actually focused on is the United States could actually become the launch pad going forward for this new form of capital formation as well as token issuance.

50:06And that is such a huge tailwind to the crypto industry? Yeah, I think people don't yet understand. We have been testing this capital formation idea since ICOs. We tested it. That one didn't work properly. Memes are another way of testing it. That's often without VC involvement to begin earlier stage. So I know product market fit or even a deck or whatever. What we're doing here, as you're saying, is we're about to restructure how capital is formed. And what, again, people don't understand, it took half a day to coalesce$75 billion of value. That has never happened in world history. Correct. I remember back in 2020 when Mukesh Ambani in one day bought back$18 billion of debt or$13 billion of debt and did it all in equity.

51:02It was like, okay, that was capital formation at scale, the largest we'd ever seen. this fucking dwarfs it. Exactly. And it was instantaneous and it was global. And the other one we saw this with, which I said at the time was a signal, was the Constitution Dow. Yep. Same idea is look how fast you can form capital around an idea on the internet. That's right. I don't know what it's going to mean. And I don't know where the regulatory aspect lies within this. But this breaks down and turns everything into crowdfunding. It levels the playing field on many things. This has honestly been my view around, you know, once the ICOs happened, the light bulb went off for me.

51:46I was like, this is the kind of first time we've had a globally democratized way of raising money. Now, are there going to be scams? Yes, there's scams in TradFi too, right? Like, I mean, it's the same. It's not like, you know, I love the fact that people focus immediately on, oh, there's going to be so many scams. it's like, right, but what about the positive stuff that's going to come from this, right? You now have the ability for, frankly, anybody with an internet connection and a crypto wallet to participate in something that they frankly never had access to, right? I mean, we know this running funds, you have to have accredited investors or qualified purchasers to even get into the thing, right?

52:24This changes all of that. And I don't think people really grasp how big of a shift that is, because look at the speed that you can raise money from myriad people around the globe. And yes, I'm sure there's going to be people debating, well, where's this money coming from? We're already seeing, you know, folks on the Democratic side of the United States, Maxine Waters, Maxine Waters and, you know, the folks like Elizabeth Warren saying like, well, who's investing in this meme coin of Trump? And what are the disclosures and this and that and the other? That's going to happen. But the problem with, I think, looking at D.C.

52:58and the way that they currently function is they're operating in an analog world. The digital world is so much faster that you actually need people around you that understand it. Maybe the people that built it, like David Sachs and Mark Andreessen and Elon Musk, right? So this is another reason why I feel so bullish about what's happening in the United States right now. And as it affects not only innovation in the United States, but I would say generally globally is that you actually have, you know folks that are representative of a modern day manhattan project in the united states government trying to affect change in a positive way that's going to create i think one of the biggest economic booms we've seen in a long time yeah and i've i think you'll share the same i have a very fucking strong opinion is that the regulatory rules about who's allowed to invest in what is just basically all about middlemen.

53:54Oh, yeah. And so, you know, the whole regulatory framework about what is a security, what's not a security, you know, who's an accredited investor. Oh, because you've got a million bucks, you're now suddenly smarter than the guy who had$900 ,000. It's fucking stupid. And then you give the audacity to say, well, you can't invest in this stuff because it's risky, but you can go to Vegas and just blow your entire fucking check. And then you have young people who can't afford to buy a house, can't get ahead. Their wages don't get up as much as assets from debasement. And you tell them, we're going to fight an election on not giving you your opportunity.

54:30Exactly. And then we're going to ban you from trying to invest in the opportunity. So the middlemen, this is not going to wash. There's going to be, there is no way this will last. I agree. And look, I was being interviewed by a Financial Times journalist the other day. and and he asked me point blank you know uh shouldn't are investors at risk of investing in meme coins and i'm like are investors at risk at investing in anything i mean think about it like if you invest in something you are putting risk to work knowing that there's a potential loss of principle period end of story and if you need the nanny state government through agencies like the sec to protect you well go talk to the madoff victims because the year before madoff actually imploded.

55:16The SEC gave them a clean bill of health. So I don't think this argument that, hey, these folks, we need to have it approved by this archaic set of rules from the 1930 to protect me is actually relevant anymore. And people want access to this type of stuff. Again, the alternative financial system that crypto and Web3 has created is not meant to simply replace the current one. It's basically saying there's an alternative thing that you can access. That is the big unlock. And, you know, once you apply AI to look for what is scam, what is not, you know, these things can be spotted. You better filter out a lot of this pretty quickly and action it quickly, too.

55:59It doesn't have to go to bloody court. It doesn't have to take all of this time. There are ways of dealing with this using technology that's much better than using laws from 1933. Yeah, I mean, if you're running a company, are you running it based on, you know, the principles of almost 100 years ago? I mean, you're not in business if that's the case, right? The companies that have been around for generations consistently adapt to the new environments. It's time that we, certainly I'm speaking from a U.S. perspective, do the same thing at a policy and government level. and this is I think one of the reasons you know you've seen Mark Andreessen who's an LP in the fund I love seeing this guy he's been on every podcast like I think he's been he's doing like a new podcast every day I haven't seen him this excited I think ever and it's because there's the chance now we can kind of break up this ridiculous set of layers of bureaucracy and bullshit around you know regulations and policy that are restricting innovation and growth in the United States and frankly globally.

57:08And I agree. And I'm very excited by that. The flip side is that may be true and it may be a kleptocracy and a whole big grift. Oh, a hundred percent. And I'm not discounting that to zero. And I sympathize with that argument. My counter argument is, was what we had a better alternative? I mean, you have people saying like Donald Trump's grift in this meme coin is so obvious, et cetera, et cetera. It's like, right. But did you know that Nancy Pelosi outperformed every portfolio manager last year. And it sure is ironic that she can buy call options on companies right before news seems to hit that's relevant to those industries.

57:46This happens within D.C. They just have a way of covering it up or keeping it obfuscated. Trump is literally doing this in the open on a transparent, permissionless blockchain that anyone can access. I think that that is missed in the media cycle right now because they want to focus on how Donald Trump is a grifter. Why not focus on how DC actually works? He's just doing it in plain sight. Yeah, you know, I think that's exactly the case. So what else interests you for the balance of 2025 outside of the big things we've talked about? Is there any other specific? Oh, actually, one question I did want to ask you, because I don't know how to do this.

58:25It takes a certain mindset to run a liquid crypto portfolio. It does. A certain, you know, you build portfolios in a certain way, etc. etc. And VC is very different, right? Because you don't know what the winners are. While in the liquid book, your entire fucking job is to concentrate risk in the things that make the difference. How do you run that dichotomy in your head? Because you're either kind of built one way or the other. I've seen a lot of VC people trying to do liquid. They can do well, but generally it's harder. Or the liquid people trying to do VC. and it typically doesn't work right yeah no because we're so used to take a theme bet on that theme it might be the wrong you know you know what i mean it's just complicated or too complicated portfolio uh it's it's a great question and i will try to say this with humility yeah because we all wear egg on our face pretty quickly in this industry um so look i i've been i've been a technologist and a trader for 25 years now um i you know i i I started a company, bootstrapped it years ago, an open source enterprise infrastructure company, raised over 40 million in venture and sold that business in 2019.

59:36I started doing angel investing and advising to startups. But I've been trading this entire time, too, just mainly on my own personal balance sheet. And when I kind of proposed the opportunity to join a fund and then ultimately ran my own, my mindset was, hey, crypto venture, yes, there's some fundamental views that you need to have. Like, for example, the consumer-based fund that we're going to be launching. You have to have a kind of hypothesis here and thematically invest in that. Right. However, the big difference is that we know and you know that the liquidity events are way faster in crypto.

1:00:23And that requires, frankly, a hedge fund, you know, trader or portfolio managers mindset. For example, when I'm looking at some investments and I won't name the investment in our previous VC fund, but this came across to me as a deck. that was like at a$40 million valuation and I was like way too rich for a pitch deck, right? I said, if you come back to me and kind of build this, I'm happy to pay a higher valuation because I knew they were issuing a token suit, right? So you look at it and go, is this a long-term 10, 15-year investment or is this a trade? And I think that this is one of the things that's lost on a lot of VCs because frankly, they're not traders, right?

1:01:08It doesn't mean that I'm dumping my tokens that I invested in this private round, it means that I can actually manage the risk of that in the VC portfolio, kind of like a hedge fund manager, right? And that is one of the things that I think has been kind of our superpower. We've done extremely well out of Venture Fund One. Our asymmetric Bitcoin DeFi Venture Fund One is doing well as well. And it's because we have this mindset. We do have these fundamental views, but we have this skillset of understanding how to manage the liquid side because it comes way faster than I think traditional VCs expect.

1:01:43I also have a strong opinion, obviously running a fund of hedge funds, that the hedge fund industry is undercapitalized versus the VC industry. So valuations, tokens come out, most of them fall 70, 80, 90 percent. This is the they're dumping on the public. It's not because there's no fucking secondary market yet. so to be a hedge fund and to find the right ones and i spoke to richard galvin about this is you get some great opportunities right you choose the ones like you know sweet would be a great case comes dumps you buy it you know whether some of these others whether celestial whatever is one of those i don't know but that's what a hedge fund's job is is to find the the rubies in the dust.

1:02:28There's a great relationship there between the illiquid markets and the liquid markets. Yeah. And I mean, this is, I think, one of the things that we look at on the hedge fund side is, you know, there's a lot of short opportunities in crypto, as to your point, right? I mean, I wrote about this in our last market update that if you look at the layer twos, so your kind of optimisms, Arbitrum, Polygon, and even Blast, which was launched last year, they were all down over 50 % for 2024, right? And why is that the case? Well, there's probably some structural Ethereum issues and Ethereum underperformed, and maybe there's not a lot of interest in L2 tokens.

1:03:17Who knows, right? Vesting schedules, put your narrative out there. those are great trading opportunities right but shorting in crypto is the fastest way to end your career so you have to do it in a very kind of like you know tasteful tactical way and this is why like by i get back to the sab 121 uh repeal if the banks can actually start you know frankly offering prime brokerage prime brokerage yeah they're not going to focus on the longer tail of tokens. However, the broker dealers that we trade with today, like your Galaxies, Falcon X, DRWs of the world, they're going to have to start offering derivatives on the longer tail of tokens.

1:03:57And so will this, you know, stop the bleeding, so to speak, by some of these projects that can't seem to catch a bid? Maybe. But I think more importantly, you have safer ways of being able to trade these things. And so we're really excited about that potential opportunity because the crypto-native broker-dealers that offer derives currently in crypto, I mean, no disrespect, but good luck competing with Goldman on this, right? Like, it's just not going to work. You're going to, you know, I think they'll see, good for us, spreads will collapse, but also they're going to end up taking a lot of that flow if they can start to onboard folks like Asymmetric as clients.

1:04:37They're going to have to compete elsewhere, and that's likely going to be the longer tale of tokens. The other narrative that I'm still cheering over because I don't think it's right is this VCs are dumping on us. I love this one. Because what everybody's asking for is a fair launch. So a fair launch is now a meme coin that has nobody in it. They kind of get in. And what do those fuckers do? They complain. No, and then they dump. And then they dump. It's like, okay, so either retail dumps on you. Early stage investors need to get compensated for the risks that they took, and they will take profits, and they should take profits.

1:05:15There's obviously egregious ones where if you saw a founder selling all of his equity in the first week, you would say that is not a good thing. So yes, there's a very big difference between founders, devs, all of that stuff, and early stage people who put in risk capital to bootstrap a project, whether it's in a meme, or whether it's in another project that has VC involvement, they're the same thing. Yeah, I mean, one of the things that you're identifying here is the culture of kind of crypto Twitter or just like the kind of like crypto native degen community, if you will. There's these, if folks are new to crypto, it can be, you know, very toxic.

1:06:01It's probably the easiest way of putting it Because there's some basic default stuff that they're going to say no matter what. One, everything is a scam. That's just what people say. Two, VCs are dumping on you. Three, Joe McCann and Raul Paul are KOLs, so they're dumping on you, right? This is consistent with the engagement models of the platforms that this information is actually propagating on. controversy anger frustration feeds the loop so to speak none of it is typically true i don't want to say all of it isn't true but none of it is typically true right and that's not going to change the vcs dumping on folks like i i was in this telegram chat the other day this guy was was claiming that i was doing the same thing and i was like dude why would i sell jito here Like, they're printing new all-time highs in revenue.

1:06:55You think I'm dumping my tokens here? This is crazy, right? This is never going to end. People are going to constantly be upset about something, right? The fact that there were multiple millionaires minted off of the Trump coin, more people were upset about it than the people that were stoked that they made money on it. This is not going to stop, and it frankly is only going to accelerate as we start to onboard even more people into crypto. And I do feel that, you know, I feel a little bit of empathy for the folks that are going to be entering this wild space because it can be pretty combative and toxic.

1:07:28You just have to zone all of it out. Well, because it's like a feeding frenzy of sharks, right? There's money to be made and people are desperate, right? There's a desperacy. That's why this happens. It's like I need my share. He's getting his share. I want my share. I've got to have it. I've got to have it. And it's that feeding frenzy that creates the ugliness. And I get why as well. Yeah, I mean, look, there's nothing worse than watching your neighbor get rich, I think is the old adage, right? And you can do that on the Internet 24-7, right? So, yeah, I mean, on the one hand, should we figure out better ways of avoiding rug pulls?

1:08:08Yes, of course. I mean, no one is debating that. But complaining about it is not changing the system, right? I have a rule with folks that work with me at Asymmetric, and I say, don't ever come to me with a problem without a proposed solution. Because then you're just complaining to me, right? Like, yes, I know as a CEO, everything's my fault. I can't take credit for anything, and I'm a complaint department. But if you see something that's wrong, propose a solution. People are not going to do that on the internet. And this is why I don't think this is specific to crypto, but it's amplified in crypto because there's money behind it.

1:08:43So to ask the question I was going to ask a while ago, what else, what are the other themes that are interesting for you that could grow into bigger themes this year? And again, we don't know, things change, but what's on the way to bring? So I have two. One of them is going to be pretty obvious and has been highly touted, which is, of course, agentic AI and crypto and the kind of merging of those two things. I think we're going to start to see kind of a 2.0 version of this. We saw in Q4 the kind of rampant acceleration of these agentic AIs that basically tweeted and people thought they were worth going to be worth trillions of dollars.

1:09:22And the other ones are there's a lot of macros that like, you know, they're not agents yet, but I can see where it's going. Exactly. I mean, and this is this is I think like my background in computer science and software development is like this is the first iteration of this. right yeah some people are gonna make some money but the idea that the first iteration of this is gonna be the thing i mean look at the internet web 1.0 is definitely not web 2.0 right it's the same concept so i think of this as almost like versions of software agentic ai is going to have another 2.0 kind of cycle where we'll start to see what are these innovators and building builders building that's driving more attention and or more utility and value i think the second one and this as I wrote about this in December, which I still hold to be true, I don't think a lot of people are focusing on the fact that governance tokens are likely wildly undervalued because of the protocol revenue that these protocols are actually generating, right?

1:10:24So for example, if you look at like Athena or even GDO for that matter, they have proposals out there. I mean, Uniswap has had a proposal to turn on the fee switch forever, right? Why haven't they done that? Because the regulatory environment in the United States has been so combative that the founders are not willing to take the risk to, quote unquote, issue dividends to their token holders, right? So if you look at TradFi, like the stock market, there's roughly three major components of a stock. There's the issuance, the IPO, secondaries, whatever. There's buybacks, which, you know, takes stock off, the market or out of the float and kind of either puts it back in the corporate, likely back in the corporate treasury.

1:11:06And then the third piece is dividends. Those are the three kind of major components. Yes, there's probably some other nuance here and there, but roughly those are the three major components of a stock. In crypto, we have ICOs, token generation events, so the issuance. Buyback and burns happen, absolutely. That's effectively the same thing as stock buybacks, but in fact the supply gets destroyed. so price go up but three issuing dividends has not been a major part of crypto for a long time and that is because founders are frankly and justifiably afraid the SEC will say oh that's a security you're issuing dividends I think all of this changes now especially under the new administration is that you're going to start to see tokens with those three components represent the three components of stocks.

1:11:54And a lot of these protocols are really undervalued based on the revenues that they're generating. So using a like-for-like comp with an equity, because that's what will happen. Once you use the DCF model, you're going to end up valuing the same as growth equities. And so for the longest time, I've been pounding the table saying applying a DCF model is just stupid to something like crypto because it's the value of the network. This was before we had a huge change in the regulatory environment. Now I think there's a case to be made that a lot of the folks that have learned that type of analysis in business school and apply them to equities can start to modify that a bit and apply it to things like governance tokens that generate real revenue.

1:12:36I mean, if you look at Maker, you look at Athena, you look at Gito, the annualized run rates on these things, which is a poor metric, but just to kind of extrapolate out, they're in the billions of dollars, right? These are not tiny little startups generating$10 ,000,$20 ,000 a month. Well, how does that apply then to the token price? There's other aspects of a token that are fundamentally different than a stock that this is where the TradFi and crypto-native mindset needs to merge to find the appropriate valuation for these tokens. Yeah, because you end up with, you know, the way I think about Metcalfe's Law, part of it is the total value transacted.

1:13:12and what you're going to do by adding dividends is increase the value transaction on the network. These are not straightforward DCF models like you'd use for gold mining stock or whatever it is. This is actually Metcalfe's law, but with extra value added. So yeah, I think you're dead right. I think I've been looking at these for a while and just thinking, yeah, they're going to be interesting as well. Yeah, I mean, we haven't necessarily pulled the trigger yet. We kind of want to see a little bit more, want to get a little bit more comfortable with what the regulatory environment is going to look like.

1:13:40But, you know, proposals are passing. for this type of stuff. And in fact, I'm advising portfolio companies that either I'm an investor in or an advisor in to say, hey, look, if you're generating all this protocol revenue and it's just going into the Dow's treasury, which is great, but I'm pretty sure that you can start issuing this to token holders and it not be some, I tell them I'm not a lawyer, of course, but I don't think it's going to be as egregious or as risky as it has been given the new administration. super interesting joe look phenomenal conversation we'll probably be speaking for hours because as well but you know um yeah look i loved it really enjoyed it um good luck for the year i'm sure i'll get you back some point during the year to chat and i'll see you in miami next week that's right looking forward to it yeah absolutely there's a lot of people going it's there's like 500 people from around the world coming in oh really there's like there's like 30 events oh my god oh yeah yeah Yeah, there's eye connection.

1:14:38There's so many things. No, no, 30 Real Vision events. 30 Real Vision events? There's like 10 dinners. So what it is, it's like it's all across South Beach in hundreds of venues with periodic group, like a big party and stuff like that. So there's like, you know, people can have lunch with you and then they're playing golf with OSF Amanda and then they're going to do that. It's really cool. And there's no other speakers. Godspeed to your production team because that sounds like a lot. Trust me, it's going to be cool as shit. So I'll see you. Looking forward to it, man. Yeah, see you there, mate.

1:15:12So as ever, Joe brings in the goods. I just like how he thinks. I really enjoy his thought process, probably because it's similar to mine so I can understand it. Different people come with different investing frameworks, but Joe's is pretty similar to mine. And that means that we have a commonality of language. Also in time horizon, he's not vastly different to me. I'm probably a bit longer term because he trades a bit more. He uses options I don't. But you can see how we think through the world. That's really important because you can't rent conviction from somebody on the internet. You have to build it.

1:15:50You have to build it yourself by building your own framework. Renting conviction is the way you are definitely going to lose money because you never actually believe in what you're doing. so when people say to you you've got to believe what that means is you need to do your homework you need to do your framework have an understanding understand the technical analysis understand have you ever wanted to trade bitcoin but haven't dared try with plus 500 futures you can trade crypto without the hassle of opening a wallet with just a few clicks you can register and start practicing with their free and unlimited demo see a trading opportunity you'll be able to trade it in just two clicks.

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1:17:04Not all applicants will qualify. Plus500, it's trading with a plus. Where you could be wrong. Understand the bigger picture framework, how the technology fits in, the adoption. Those kind of things give you a hilarious edge. It's not that complicated. So just don't fuck it up. See you next time.

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