The New Crypto Landscape: Tokens, Equity & Venture Capital

27:41And so, okay, we're going to take discount for the locked token portion. He's specifically going to be focused on buying these types of assets. So I think you're right that there has been a large amount of capital in early stage deals. And so a lot of prices have been distorted. it. And I think some fund managers are starting to see there's perhaps less tapped areas, such as you highlighted. Yeah, because liquid markets have been definitely under allocated to over time. There's plenty of money in liquid markets, just mainly retail, plus a few trading shops. I mean, that's it. There's very little professional capital in comparison.

28:17And by the way, that liquid, call it retail, and what you're seeing, if you just look on any given day at the top 30 coins by volume, you're going to see mainly L1s, the top L2s, and mostly meme coins, and then maybe one or two category leaders like a Filecoin or a BidTensor and AI. There really aren't a lot of what you would call the VC-backed or substantial projects. The liquidity in them are exceedingly low. So to your point, I think it's going to be really interesting to see how venture investors do actually generate DPI. And it will be reliant, I think, on some of these, like we were just talking about D-Pen or some of these DeFi brands attracting real users and consumers in the millions.

29:04And then those folks actually finding value in the tokens and seeing them appreciate and telling their friends about them and the way that they told people about NFTs and ICOs in past cycles. That hasn't happened yet. So let's talk about this giant city of block space that we've built. And we now need to fill all this office space and create coffee shops and accommodation and all of the things that make it vibrant. Stablecoins have been one big area, obviously. They've taken up a lot of block space. But what are the other big things that move the dial? I mean, some things are smaller, but where do you see opportunities for real scale of blockchain use?

29:43And then we can dig into more specific, smaller things that interest you. Yeah, I think where we spend most of our time, I'll just highlight two categories would be D-Pin and consumer. I think D-Pin is one of the most obvious investment areas and for builders, design spaces to be focusing on right now in crypto. I think for some people, it's really hard to understand D-Pin. And the way I reconcile it is it's the analogy of the restaurant. What happened to the restaurant industry by the franchise model is now happening with physical infrastructure. So before, if you were a restaurant and you wanted to scale globally, let's say from two stores to five to now like 100, we need to build up a massive balance sheet.

30:31You need to understand the local rules, requirements, the best street corner, any type of town you wanted to go into and scale. You need to hire local employees. And so now actually growing a business that works is extremely challenging versus the franchise model. Well, now you allow others to inject their own risk capital who understand the local regions, who understand how to maintain and operate the infrastructure. And what you do is you give them a set of APIs and in some cases hardware that you sell to them. And then likewise, they return you back money in the same way that a franchise does to the protocol or to the entity.

31:08And so I think just how franchises totally revolutionize restaurants, we're seeing it happen in infrastructure today. So I think there's a number of successful projects out there, such as Helium and HiveMapper and some of these RTK spaces. Basically, how do we use... I just want to stop on that one because everybody wheels out HiveMapper and Helium. and beyond that, it gets really thin on the ground. But you guys are early stage, so you're seeing the interesting stuff. And that's always interesting for me why I love speaking to people, early stage VC, because you get a pre-look. It doesn't mean you get them all right, but you get a pre-look of the trends and where things really could be happening.

31:50So what do you see there outside of the kind of household names that we know already? Yeah, I'll give one area that I personally find really interesting. And, you know, if you believe in a world where there's going to be more automation, more self-driving over time. I think everyone can foresee that world. Well, one of the challenges today is that most traditional GPS sensors, GNSS sensors, have high degrees of inaccuracy between within one meter to, in some cases, three meters. And that's due to atmospheric distortion. And this is a traditional WET2 technology called RTK. It's a way where you basically have base stations on the ground that because they're in a fixed space, they can calculate an atmospheric, say, correction factor, such that if you have a GPS sensor, you know where you are based on these three satellites, but then you get this fourth upload of the distortion that the atmosphere has.

32:47You multiply, you know, matrix multiply it out, and all of a sudden, now you can get within one to three centimeters. So literally 10x to 100x improvements in location, all because you have this base station on the ground that's relatively cheap to run. We've seen a number of companies building out these types of RTK networks. And one of them out there is - And what does that get used for? Drones or what is the - Drones are used for, I mean, things as fun in retail as robotic lawnmowers, believe it or not, is one of the largest - Yeah, I'm not - You guys just got back from Singapore. People have got robots in restaurants in Singapore.

33:20Robots in restaurants. I mean, because here's the thing, if you're trying to design a self-driving system, you need to have some basis of where you're starting at. And then you use image recognition, LIDAR and other technologies to get more specific in where you are. And so if you can start instead of this, you know, one to three meter space, start with one to three centimeters. Well, now your sensors, can you reduce your sensor requirements because you have better information and where you actually are in physical space, right? So robots on the ground, end up drones, self-driving cars, all of these are used or can benefit from improved atmospheric correction, right?

33:57And understanding where they are in space. So like, that's a really interesting one that Mike and I spent a lot of time on. I'll give one other category, which is, you know, decentralized virtual infrastructure networks. It's like a subsector of D-Pen or something analogous to it. But basically that would be like these decentralized compute networks. So you have folks who have sort of like, hey, I've got, you know, NVIDIA machines that are underutilized. Why don't I contribute them into a network? Because people can't get access to them. So we've invested in a company called IO.net in this space.

34:34There are others. There's also a DVEN called GRASP protocol that basically gets access to residential computers and effectively scrapes the web in a way that an industrial company could not because they'd actually be blocked at sort of the ISP level from doing that type of scraping. So there's a number of different networks. And by the way, like, for example, that GRASP protocol has millions of people, more than 2 million people who have downloaded. It's not an investment of ours. It's just an amazing stat. More than 2 million people who have downloaded the software and are allowing their computers to be scraped.

35:14That information is then scrubbed, cleaned, and presented up to companies that have demand for data that they can't acquire themselves. So there's a number of models and we see a new one literally every day, you know, decentralized weather data, decentralized energy sensors. We invest in a company called Don Wireless that Carl can kind of talk you through. Yeah, I just want to ask also about the token economics of a deep in network. Right. So I have this sensor for helping the GPS map. I'm getting paid in tokens for it. So I just set it up and I'm getting paid in tokens. I now want to realize the money out of the tokens.

35:58What is the demand side of the equation? And does the token exhibit network effects or is it going to be more stable in price than others? Because I think there's something slightly different about the token economics of an ecosystem like this. Yeah, I think what we see is a lot of teams are using what's called Birdman Equilibrium. And that's a fancy way of saying if you're buying data from this network, whether it's computer images from a car, whether it's atmosphere correction factors, whether it's you're buying internet, gigabit internet in a monthly basis, you should pay the same price, right?

36:35Like you can't have a world where one month, you can't rely on this as a source of infrastructure if one month you're paying$10 and the next you're paying 100. So I think we've seen teams pretty much uniformly move towards this model. and that provides a level of stability. And how does that work exactly? The customer pays in dollars, that gets burnt, and the entire supply gets reduced forever, or just taken off into a vault? How does that? Yeah, I mean, there's different sub-mechanisms that teams use, but by and large, they'll just burn. They'll basically do an open market buy. It's probably the easy way to describe it.

37:11And therefore, open market buy of the amount that the customer pays, burn the tokens, and then how much they burn will determine the emissions on the backside when they issue new tokens in the next block. Right. So I think the demand side has been the challenge for most of these teams, to be just completely candid. When we underwrite D-PIN deals, one of the things we look for is do they have proven demand? And in the deals that we've done, we've invested in the, let's say, the category leaders in generating demand because we know at the end of the day, that's the most important part of this network is not can you build it?

37:46In fact, we've, as an industry, pretty repeatedly created the supply site and built out networks much larger than existed in Web2. Well, because when money is the first outcome, literally the first outcome, supply is almost infinite because everybody wants money first. Exactly. As opposed to building a business. Why bother when you can just sell the token? Yeah, exactly. So I think it's going to take time, but we do see some very big bright spots and upcoming announcements that I think will really energize a lot of these deep opportunities. communities. So Mike, what are you seeing at consumer level that you're seeing that's interesting?

38:20Yes. At the highest level, what I would say is that it feels as if, and I would say just empirically based on the numbers, we're at a smaller number of market participants and really dollar participation in consumer crypto, however you want to define it, the sort of the totality of, you know, NFT, social apps and gaming than we were two years ago, right? Or two and a half years ago. So you really have, and we all know this anecdotally, but if you talk to enough people, you know, it becomes a pattern. There really aren't a lot of new folks who have entered into crypto during that two-year period.

39:02So it's been mainly, you know, kind of people leaving and then the diehards remaining. And so what that means is, you know, you have resilient people, they're often, you know, they're kind of like power users and whales. They clearly have like a high risk tolerance to have stuck around. And so the majority of things, the majority of applications that we're seeing getting significant usage, and by the way, this could be across consumer DeFi, it could be across consumer gaming, or it could be across consumer apps, things like the new apps, the mini games on the ton network, or sort of the biggest category, I guess, the last nine to 12 months, what you would call meme coins, is that consumer behavior right now is still primarily speculative.

39:50So we're fortunate enough to have invested in the sort of what I would call a foundational kind of company in the space called Pumped Out Fund, Basically, they've reduced the cost of launching a coin to zero, and they've created an incredible social experience, live streaming and chat around that, and have an incredible roadmap to create what we think will be a category-defining mainstream app over the next five to 10 years, which is a social app that has money embedded in how people interact with one another. So thematically, as I said, the last couple years, it's been largely kind of speculation.

40:36But with Pump, with Farcaster, and with others, we do start to see kind of like social interactions beginning to emerge. And that being said, I wouldn't say that we've drawn new people into it. So for us as a firm, we really are investing still in basically things that rely around money more than things that, you know, consumer things that tie to, you know, call it like creator distribution and just things of that nature. Because our belief is that we're still probably 12 months plus out from mainstream folks coming back in and we're early stage investors. Memes and celebrity memes and other stuff feels like that is the experiment that you and I have talked about in the past is that the social token idea, the creator economy, it feels that that is an iteration and experimentation step.

41:33You know, and when you do something this scale that Pump.Fun have done, you really battle test a lot of ideas to see what works and how do you build a token economy? You know, can Iggy Azalea manage to do it or not? It's fascinating. Absolutely. And frankly, they've done an incredible service to Solana at large, battle-tested the network. It's not falling apart. It hasn't over the past year in the way that CryptoKitties years ago crashed Ethereum, or even Solana had significant downtime in the past when there were NFT drops. And in fact, Pump is a massive, massive user of Metaplex, which is fundamental infrastructure that was spun out of Solana Labs that's appreciating a value and usage.

42:18And they use Helios, an RPC and infrastructure provider on Solana. So they're really, really hardening the infrastructure to support all the use cases on the chain. One of the things that I've noticed in the consumer end is we are starting to accept that gambling is a core use case for things that go up and down. And we've seen polymarket, we've seen pump.fum, we've seen just generally crypto markets because there is a societal issue with generally young people not having enough assets and not being able to get enough assets. So I'm also thinking through as AI starts replacing jobs or changing the structure of work, it feels like the speculative economy is actually going to grow and not shrink yeah it seems like it's going to be one of the only ways to you know achieve achieve the american dream uh it feels increasingly out of reach for most people and being able to nail 100x on a coin might to to a lot of people seems like one of the only ways uh they can achieve it so i think you're you're totally right i mean i think gambling industry if you look at the metrics i I mean, it's grown, what, maybe even 2x over the past 10 years, if not more.

43:32It's a really incredible growth. I think one of the things about crypto that we're really excited about on the social speculation side is that it's fundamentally social. I think when you look at experiences like - It's a human-to-human experience. Exactly. It's a shared experience. If you look at - Because don't forget, also, sorry to interrupt, Carl, but if you think about once AI gets the next step from here, it's going to beat us all at markets. to that game that we play over. So what is the game that we play? Sports betting, that's a human to human thing, or betting on fucking raindrops or mean coin.

44:05Nobody cares, right? It's just a way of social bonding, commonality of purpose or tribalism and all the kind of stuff that humans love doing. But I think markets kind of dies away over time. Crypto markets less so just by their very nature. Yeah, and I think it depends on the type of market. I mean, as I look at polymarket, I'd really define it as what I'll call an event outcome, an outcome-driven or event-driven market where there's fundamentally an oracle that settles a real-world event right over time. I think Pumped Up Fun, I describe that more as an attention market, right? And I think as you would expect, as certain memes come into vogue, they increase in attention.

44:44And likewise, as they go out of vogue, you can expect they decrease in attention. I think there's another category of what I call opinion markets that I'm really excited about. And these are things like, for example, markets that can recursively settle themselves. So if I asked you, hey, if I put up a poll, what's the most popular pizza place in New York? As an example, there are, what is the right answer? Well, there's no, you can't settle that with, like, there's no actual right answer. It's the market determines based on financial allocation, what is the right answer? and because these recursive themselves are already settled themselves in recursive you can have infinite content in a way that you could not do if you're actually trying to build oracles to settle real events in the case like polymarket um so i i think opinion markets are going to be even larger super interesting just on the opinion markets have you ever read the book super forecasting i haven't read that book but the the idea goes back 100 years to or i mean 180 years to Tia introduced this with, you know, the hundred photos of beauty contestants.

45:46And the goal was determine what you think everybody else wants. What they figured out in the book, Superforecasting, is you can have a group of experts and they will be beaten by a group of highly motivated, broad-based experts, not experts in that particular topic. So whether it's looking at, let's say hurricane prevalency in wherever at whatever dates this group of people self-educated because they were motivated by economics to do it and they always beat the experts and so i think the opinion markets are much more powerful in many many things think about product launching think about think about what that is for polling or what companies do when they go to market and try and ask questions of market.

46:34Well, there's a very powerful way of getting better signal. Yep, exactly. And I think, again, it's infinite content. So if I look at what's a team that can build a billion-dollar business with five people, it's something like an opinion market. The other thing is you can have really fast capital turnover. You're thinking about a polymarket today, a lot of it is driven towards the election. By the way, I think actually polymarket is going to be successful for a long time. I'm not a polymarket bear. But at the end of the day, most of your market, capital is not turning over that much. It's kind of people, a lot of people holding on until the election.

47:05Well, if you could have daily polls and daily things that are coming out and you take a spread on the markets being settled, well, all of a sudden your revenue is going to go up like crazy. So I think Plymarket was a great, kind of like how OpenSea was the first level of NFTs, the first iteration NFT platforms. And then we saw many derivatives from that that were extended and introduced new ideas. I think we're going to see the same thing with opinion markets. Can we have individual-based bets with an oracle? So if you and I have a bet about something, Carl, we can just, you know, we can essentially put it on the blockchain, it automatically resolves.

47:47And so that becomes those, you know, mates betting markets, that settling of a fight over Twitter, whatever it is. are we are we seeing that yet i think the hard part is that it depends on the type of market because then it's if it's you versus me then it's who how do you settle it if it's just whoever put some more capital you would need some sort of social network to determine well i can bet on your bet versus my bet that's when it gets interesting right ral and carl have a bet on something right and if it's really interesting to other people it's like fuck yeah i'm gonna back carl on this one because he's much smarter than ral you know that kind of idea exactly so i I think that absolutely will exist.

48:30I think there's also ways where how to use capital formation to influence outcomes. I won't say the name of the market, but I met this really interesting market idea where basically it's pooling capital to get people to do certain things. And fundamentally, that I imagine going extremely viral, that idea and that concept. So we're really excited about. Yeah, it's the old question. Would you do X for a million dollars? those markets can't exist at this point yeah and people might be willing to pay to actually see somebody perform that outcome and this is you know i'm loving this conversation because we're not talking about the normal kind of stuff what i'm really interested in yeah we talked a little bit about ais i you know society and the economic system is going to restructure in ways we don't yet understand and i just think there's something among this kind of stuff yeah yeah like i'm not as a unified purpose absolutely like earlier we were like i don't see a world where you're gonna have to you know win 100x on you know your meme coin bets to live no i think that most people are underestimating you know sam sam allman came out with what the intelligence age uh a couple days ago and you know everybody reposted it and i think i did you know because i'm a lemming but But the point being, within a couple of years, you're going to have that personal assistant, literally all the world's information in your hand.

49:56Somebody like me, who's 45 and still has yet to learn a foreign language despite trying a number of times, and has yet to learn how to code with any level of proficiency, will literally be able to speak in any language and be able to code. We can't imagine how that changes the world. And every kid who's under 10 today is going to experience that, or most will have a chance to experience that world. It's remarkable. One of the other things I think might be interesting for your future thesis as it goes is I've been thinking through what I get to is an economic singularity where everything starts falling apart.

50:34I won't go into the whole thesis, but one of the parts of this is very soon, like within next year, anything I see built, let's say Magic Eden, company you're invested in, I can give it to my AI and it will build it. Now, I may not get the customers, but it will give me the marketing plan and how to do it, right? So the velocity of business creation and destruction is mind-blowing and AI will build AI businesses. I already think that's happening at OpenAI itself. And that, when I get to that, this is not the velocity that normal capital markets can deal with because creation destruction is too fast, but it perfectly made for crypto.

51:14It is what ICOs tested. It's what meme coins are testing now. It's there truly becomes how fast, how long can that new product hold attention before somebody disrupts it? So I just think there's a very big thing coming. Yeah. And I think too, I mean, what I find really exciting about AI is it's going to necessitate greater degrees of entrepreneurship, right? I I think gone are the days of 20 years ago. Hey, 40 years ago, you worked the same job for 40 years or 30 years. You have your big plaques you get every five years. I mean, those days are already mostly behind us. I think as you get into now, anybody can build anything.

51:56It's going to be even more people are going to be required to be entrepreneurs by default in order to have, let's say, outsized outcomes. And so you'll see a lot more entrepreneurship. And I think crypto is obviously great for entrepreneurs from a capital formation perspective. In fact, it won't even require venture capital in many cases, and people will be able to pick and choose. I talked to a founder today who is, I think, 23 years old, is on his seventh project. Six of them, not all of them are crypto. The last two have been, but he bootstrapped the previous six. A couple of them were profitable.

52:34He's doing well. and now he finally wants to quote unquote, you know, go big. But just the way that people think about resourcing is completely changing. Sam Lessons actually talked a lot about this, the solopreneur who basically just needs 10 to$25 ,000 to start and create, you know, multimillion dollar business. Yeah, I can't remember there's a bunch of these VC people who've got to bet that there's going to be a billion dollar company by one person made, you know, I think it's the next two years or something stupid, two or three years. And frankly, they already do exist. You become the head of AI at Google.

53:07You leave. You basically pretend to start an AI company outside, and then Microsoft buys you for$2.5 billion. That is the game. Question I want to ask you, Mike, just as I don't know if you're investing in them, I don't think you are. Do you think Yuga's going to get this right now? Don't forget, they've been very, if you step back, they had the meme coin. Yeah. They had the cultural ecosystem. They pioneered the NFT market. They started with the gaming thing that they kind of get where the metaverse is going to go, whether that's gaming now, wherever. It drifted. They bought a management team.

53:46The core groups come back. Feels like something's going on. I just want to pick your brains on it. Yeah. So I think there's two separate questions, which is one, will they ever realize, you know, the call it the enterprise value ascribed to them in a round at four billion dollars? Look, I don't know. I mean, that's really, really hard stuff. And it was a over euphoric phase. Will they ever make the people who spent hundreds of million dollars for NFTs at the peak happy? No, probably not. But again, those people were clearly speculating at that point and paying$1 ,000 in gas fees to buy other side land plots.

54:31So I think those things are going to be difficult, meaning to hit the valuation milestones and make people who paid those prices happy with those purchases. but do I think that Garga is an authentic, driven, like caring, and I don't know him deeply personally. I've met him in passing a couple of times, but do I think he cares and really wants to create something impressive? Yes. But I think people's vision of like, I don't believe that it's going to be a Roblox or, you know, epic Fortnite quality metaverse. I think that kind of like ship has sailed just by virtue of the brand is a few years past where it was.

55:19And you have kind of like one moment in time, I believe, at almost any company that's consumer facing to be really dynamic. And if you miss that moment, it's tremendously difficult in this digital age to recover. Although I do think, you know, obviously Wiley's been out ill as well. but you know i think if those guys get together they there's something about the border yacht club itself you know the clubhouse in miami the idea of creating a a soho house of roving people that has value i think is still there i think people i think that part that seems right to me and crypto punks themselves i mean i still i i still own my crypto punk um you know it's not a financial investment it's an investment sorry it's a it's a me just being part of a global group of people who i enjoy so yeah i i think like that's more likely that's what these communities really are they're just groups of people social identifiers want to associate with one another and i think we got you know a lot of us got carried away um thinking that you know we needed to create kind of like venture scale businesses uh and scaffolding and visions around that um And really, the only one that seems to be working right now is Pudgy Penguins, you know, in terms of delivery of vision relative to the amount of capital raised.

56:43And I'm talking about just out of the pure projects that started as ProfilePIC, PFP projects. They've done a really good job. But still, even for them to realize, you know, significant, call it value, accrual and realization, they're launching an L2. So effectively launching infrastructure that other folks can build on. It's just really hard to create venture-scale businesses out of communities that are naturally constrained at 10 ,000 or whatever the number is. And again, Pudgy's done a good job of expanding beyond that with Instagram and other things. But by the way, that's why we've been so much more bullish on investing in sort of meme coin infrastructure and in that area generally, because those are almost like infinitely divisible, right?

57:30You look at meme coins and hundreds of thousands or millions of people can hold them and make that their identity. Question I want to ask, because you mentioned it before, where are Steppen? Because there's clearly a brilliant idea there somewhere that's going to become big. Yeah, so they've now launched multiple products. They launched a marketplace, NFT marketplace. They launched a wallet and they recently relaunched the actual core step in app with new NFTs at a more accessible price point with team elements. And they have the partnerships with brands that they've been talking about for a number of years where you actually get real world tangible benefits from the tokens that you earn, which was always the original business model.

58:20What happened, it was really hard. When we got pitched move and earn in 2021, it was hard to even imagine that within a couple months of the token launching, the fully diluted valuation at one point was, I think, higher than Reebok. I mean, it was like$15 billion or something. Just a speculative mania that you can't control. These are permissionless networks. And the token traded on exchanges, centralized and decentralized. centralized um so anyway that that definitely led to confusion and i think in a short-term period when ifts were going down in price a perception that the project had run away and failed but that absolutely isn't the case like the team is still extremely focused as i said just re-released um a new version of the game my partner surge our partner surge actually still uses step in daily uh as part of his routine magic eden yeah so magic eden where are they going again nfts in his first iteration great i'm a huge nft collector you know i have my punk and my all of that stuff but nfts are a very very useful technology um magic eden to be big needs to exploit the technology in a broader sense what are they what do you think they're up to what are Where are they going?

59:45Yeah. So, you know, basically you could see that they've taken. So one, as Carl said, you know, they basically work across virtually every blockchain now where there's volume. They've released their own wallet. And that's, you know, a huge focus. The wallet today is the primary entry point to on-chain activity for virtually everybody. And I think that's probably not going to change. So clearly they're moving towards, hey, we want to be a gateway for more than just your NFT purchases. And the first foray into that was, as Carl mentioned, they now support Bitcoin. And they supported their first fungible protocol, which are runes on Bitcoin, so fungible tokens.

1:00:27So that's not to say that they're going to become an exchange. But the point is they're expanding more broadly and supporting more asset types, both in the wallet and organic. Something I've talked about for a long time is just somebody has to get ticketing sorted out. Oh, unquestioned. And that's a perfect platform. Magic Eden, Solana's fast enough. You know, it's like there's a marriage made in heaven there for ticketing that gives it secondary value after the event because it's a moment. You know, all of the efficiencies, the capsule efficiencies, getting rid of the ticket scalps, the whole lot is up for grabs.

1:00:59There's a few people building, but. Yeah, look, we've been pitched so many ideas in that space. By the way, I've been pitched. I was there when Stubbub was getting started and SeatGeek, very early days. Look, I think Live Nation just got sued. There's just a bunch of real systemic challenges around the high value ticketing market, certainly in the US, but really globally. uh i think that will get worked through like in the way that spotify was sort of able to sort of pierce through uh music the music industry and make it a little more accessible to folks and change the model uh we're hopeful and optimistic over the next decade that's going to happen in ticketing i don't know if it'll happen on jane but to your point it's absolutely something that should happen and um you know tickets as collectibles and mementos is something that When I've got a draw of concert tickets I've had since the age of 11, I've got my Live Aid tickets framed on my wall because I was a Live Aid.

1:02:02These things have value, right? Because they are just cultural bits of attention that remain persistent over time. They always have value. The other part of that is proof of attendance. Yeah. In the sense of, you know, if I attend, you know, a certain number of sports games by a particular team, you can imagine restaurants in that local area looking to target and give incentive to those types of fans. And right now, there's zero way to do that. In fact, clothing companies and all of that. It's like it's one of the most when you walk through the thesis, it's one of the most obvious use cases of crypto where there's benefits on layered like all the way down.

1:02:43there's just high amounts of regulatory uh barriers and other just like long-term financial contract lock-ins that these venues have that you need incredible amounts of capital to be able to guarantee the pre-purchases for some of these types of venues and artists so i think they'll get resolved but it's it's certainly one of the harder areas and it's i don't think it's going to happen overnight yeah i joined the board of divan i don't know if you saw them at um at breakpoint i'm i'm a huge fan i love it such a cool idea right because i get rewarded by opening a bottle of wine what's not to love um and incredible i mean just an incredible thing ignore the bigger vision but you're a wine producer you have no idea who drinks your wine and when and where zero clue because it's a 10-year gap between shifting it out of your warehouse to distributors to being flown around the world.

1:03:40And it's such a high value business. It's a really interesting idea. It's absolutely. So that's one that we are looking at and a use case that we're really interested in. In fact, another one is tokenized whiskey. You may have seen Baxos, Carlson, angel investor and that business. So I think tokenized collectibles that are the redeemable, but you don't have to redeem them, meaning like anybody anywhere can own them. But if at some point I actually want to consume it, I just redeem, you know, my NFT for that bottle. I think that's a really, really valuable use case that makes these markets that have historically just been purely collector, you know, stick it in my seller and nobody sees it again into really valuable ones.

1:04:30And what you just described with even i think is even more powerful which is allowing for a direct relationship between a producer and a consumer an industry where that's absolutely never been possible um it's really exciting and as i think you know it'll take probably four or five years for that to work itself out into the supply chain because you actually need to you know it needs to happen at the production layer um but really really exciting uh carl it's probably one for you actually um I just saw you guys were involved in the round for Helios. Yeah. You know, this, A, one of the most entertaining people on Twitter, but also shockingly good at what he's doing.

1:05:13What are they doing? I never really understand because this is all a bit too tech for me. But clearly that business is involved really at the core of what's happening in Solana. Yeah. I mean, the simplest way I would describe it is they make it easy for developers to build performance applications on Solana. So that's everything from the basic RPC layer in which they're one of the highest performers in terms of throughput. When you say RPC, what do you mean? Oh, so basically if you're an app and you want to put something on the blockchain, normally you don't want to actually do that yourself. It's easier to have a service provider that's able to get your transactions and actually publish them and put them on the block.

1:05:53It's like a very complicated thing to be able to do. And if you're an app developer, you don't want to be dealing with that. So you have an RPC partner where you specify, hey, I want to, this user wants to perform this transaction. Here's the signature information. And the RPC will actually be responsible for forwarding that to the blockchain, I guess to the block producers who then put it on chain. So basically they are, I think Mert's just general awareness and constant evangelism of Solana. I think every app developer, when they're saying, hey, I need to build out my stack, they go to the Helios website.

1:06:30They use their RPC services. One of the most interesting things they've done on their business model that's been fantastic is I'm sure you were aware of that period of time in March where there was a lot of congestion on the Solana network and there was transactions that weren't getting through. And long story short, Helios and others launched validators such that now they can guarantee a certain amount of block space for their customers. And so because Helios is the largest validator on Solana, they can prioritize a large amount of block space for their customers. And so I think you get this flywheel going where you have a lot of stake allocated to you.

1:07:11You build a terrific product. You can therefore get more transactions. into the block and therefore more people stake to you. And so they've really done a terrific job just making sure teams can build effectively on Solana. The other thing they've done is launched some really important technologies like compression. So let's say you want to do an airdrop to 100 ,000 people. Well, that used to be really expensive to do. And they introduced new types of compression for tokens as well. to now you can airdrop a token for a hundredth or a thousandth of the cost of what it used to be. So really, one of the things that led Mike and I to invest in Helios wasn't just that Mert is an exceptional world-class founder.

1:07:54It's that they were focused vertically in building down the Salonis stack all the tools that developers need to be successful. And this sounds like, to go back to an earlier conversation, this sounds like an equity investment. It is. Yeah. Because this is real equity accrual. This feels like it's a company that could be in public market, should it require to do so. It feels like it's like we saw them with the internet as well. These kind of back and middle end companies that run the whole system, the architecture. Now that said, there could be a world where I could envision decentralizing certain parts of their infrastructure or creating an alternative, another offering that would have some sort of tokens.

1:08:35And so I think with any one of these companies, the product space is massive when you look out over five years in terms of what we need to build. And so it's equity right now. And they've, I think, 15 extra more revenue since we invested. I mean, it's just been a machine of a company and team. And I think they have a very exciting future ahead of them. When you're looking at the applications, I know you've been erring towards Solana because it's more, it's just friendly for applications layer, right? But you've got other investments. How do you think that through? Do you end up just, I mean, do you have an asset allocation percentage idea?

1:09:15How do you deal with new chains? Because you've got the second risk of, does the chain get adoption plus the application? How do you think through that? What I'll say, I mean, what I'll start with is we're still so early in crypto. I mean, And in terms of Polymarket, I mean, Polymarket is on Polygon, right? But it's still one of the most popular crypto applications out there. And so I think ultimately, we focus on finding teams building killer apps because we know that if you have the right application and the right on-lance, it really doesn't matter, right? Or over time, you can move if you need to.

1:09:48That said, with that context, I will say that we've made some investments in the move ecosystem, which obviously is less mature than that of the Solana ecosystem. and you know we also on the board of sweet oh fantastic fantastic i spent a lot of time with the team out in singapore um and that's an amazing thing amazing thing right and so but with that you know we we have to underwrite if you're building a d5 product or a consumer app you know your initial customers are going to be mostly crypto for the most part right it's easy to do start with crypto go to market um and then from there expand to like a broader customer base and if there's less liquidity on the chain, there is some sort of reduction that we just need to think through because now it's not it's risk on the team, it's risk on the chain on top.

1:10:32So it does level up. But at the end of the day, if a team is building a terrific product and it's on a less use change, that will deter us from investing. Yeah. And I'll just add that we look at each ecosystem differently. So for example, we've made two Bitcoin investments recently, but we look at Bitcoin is valuable for two things, for its block space and security and Bitcoin as money. So we did one investment in a stable coin that uses Bitcoin's funding rate to generate its yield, a kind of an Athena-like product, all called OpenDelta. And then we invested in a company called Rebar that's focused on Bitcoin MEV.

1:11:15uh so you just basically but but i'm not going to go invest in a consumer app on a bitcoin l2 because then i'm taking you know l2 risk on i'm taking you know l1 risk on and you know where are those consumers coming from so i'd rather invest in that app on solana right so flip up for the most important final question your pa weighting what is it what is your heaviest weight what token and um how do you manage your pa because you know you guys don't run liquid portfolios so talk about your own stuff do you do you trade are you in the trenches do you care about the cycles i want to hear for mike you go and then carl you go absolutely so first i'll say yeah this is obviously not financial advice all the disclaimers were registered investment advisors and we have a compliance uh department that um you know gives this rule so basically to the to the question of like are we on chain to gens like look yes the reason we got into investing is because we wanted to participate even more in the things we love that's how you know we found magic eden because i was buying horse nfts for a game called photo finish that we also invested in so you know that's um you know basically digital horse racing so we look we love we we have so much fun i fractionalized one of my nfts which is how i I found fractional.art as a product and got to meet their founders and folks associated with them.

1:12:40So we do a lot of that. That being said, as we have kind of institutionalized, we've basically had to ensure that we're really just doing that with play money in most cases and sort of testing out applications and any larger buys or sells that we disclose. But how I am currently sort of allocated in my PA is largely to Bitcoin and Solana, sort of what I call my Marbell thesis, which is one is money. It's Bitcoin. It's globally recognized. It's part of my dad's portfolio as well, my brother's portfolio. and it's just clear that it's broken out as something that is clearly going to sit alongside government-backed money, I think, for the duration of our lives and generations to come.

1:13:37So it's just critically important. And then Solana... You're not in the trenches flipping NFTs anymore. That's what you're telling me. I'm not. I sold most of my NFTs and I just hold my PFP, which is a Pudgy Penguin and a CryptoPunk and a couple others for fun, but I'm not in the trenches. And then Solana, I just believe, is basically from sort of a valuation, from a smart contract perspective, a smart contract chain, it's basically the one that we see the most activity across the totality of use cases. So I believe for a smart contract L1 or programmable L1 to be valuable, you actually need a full economy on it.

1:14:17You want people transacting in the native currency and then also call it, you know, USDC or, you know, a stable coin, but you want them staying there, right? So you need everything from payments to D-Pin to DeFi to gaming. And to me, you know, Solana is that. Only Sol and ETH are the only protocols that got even close to that. That's generally our belief. And I think until chain abstraction happens fully and we have investments in that area, a company called ZeroDev and the Ethereum ecosystem. We're watching that very closely, trying to help teams with chain abstraction. Because today when I open my Coinbase wallet, I see eight different versions of Ethereum in my wallet.

1:15:04Yeah, it's a pain. So, Kel, open your wallet. As you can imagine, Mike and I think similarly in a lot of ways. So I'd say the barbell is 80 % or more of my total PA with Solana being the heavier weighting of the two. I'm very actively looking at the deep end space. I think there's some – if I look at the fundamentals though on the demand side to our earlier conversation around price, I think there might be some better entry points at future times. But I think deep end is an area where I'm very interested in deploying capital. Of course, memes. I think memes are incredible. How does it not become a massive distraction?

1:15:47Because I used to do a lot more trading. And then like since working at Sixth Man, it's like I can create so much more value by focusing on finding great teams than if I'm sitting there building my own trading algorithms for NFTs. Exactly. The Mertz of the world are creating more value than Carl and I sitting around trading. So Carl, the question is, what is your biggest meme holding? I'll give you mine. I actually flipped most of my memes and sold them Borsui recently, even though I've got it because I'm already on the board, so I've got Granted a bunch. But actually, because I just look at the charts on a relative basis, and it's like, I'm just going to outperform Whiff and outperform Bolt and everything else.

1:16:26So I'm now down to two. Doge, because you kind of have to, just in case Elon does something with it. And the other is smoking chicken fish. That is my chosen, because it does that reaction to everybody. Well, that's a pumped-out fun coin, so we're delighted. Yeah. So to me, I received an early airdrop of Bonk. And so to me, I've just held on to a lot of that Bonk over the long term. Whiff is another allocation. Mother was a really great pickup. We talked about her a lot. Right. Really interesting. So I think that's done really well. Did you go to that party? I did go to that party. You almost didn't want to admit it then.

1:17:09I did not. I was looking at photos like, am I in that photo or am I not in that photo? I think it was a cultural event for crypto. And in fact... You could call it cultural if you want. It's okay. It was definitely cultural. But I will say that the caliber of people in that room was insane. It wasn't just a bunch of degenerates. It was some of the most important people in crypto that were there vibing together. So I think it was a really, really terrific event. So yeah, I think that's it on the meme coin side. But again... I really hope, you know, deeply, I really hope she figures this out. Yeah.

1:17:43Because it is attention. It's very hard to keep. But pop stars of all people understand that the game they're in only is attention. So this is a really, the first time we've actually seen somebody try to keep the balloon in the air or the ball in the air, which is how attention works. Because if you step away, it just goes. Well, I think one of the interesting things with her as well is it's not, it's moving beyond attention. So she's a casino. She has another project in the deep in space, actually. So there's a number of things where now that this token will be part of a broader economy. So the way I mean, I think about it is instead of just being a index to her attention, it's an index to her economy that she's building.

1:18:26And if you think about someone like Ryan Reynolds, imagine if in all the businesses that he was involved in over his career, if there was a way you could participate in a token that somehow was used throughout that ecosystem, you would have done extremely well. I think it would be a model for these creators turned business entrepreneurs. Yeah. And something this, Mike, you and I have talked about this for a long time. I think she was pumped up for them, wasn't she? Yeah, I believe so. Yeah. So she's pumped up fun, mean coin frenzy, brings it out, creates a larger ecosystem, then builds projects and networks on top.

1:19:05This is getting interesting. Now, again, most things don't last in this space, but all the experimentation, we're getting closer and closer to what I think is a very big unlock. You know, Taylor Swift's economic, Taylor Swift's economy is so big that it moved the economy of the United States, the UK, Australia, and Singapore. Yeah. Right. Now, if she can tokenize any of that and let her fans participate in the Taylor Swift economy, what is that worth? I don't know, but it's probably a lot more than what she's worth on paper now. And I think it's a lot more meaningful than, you know, basically Jay-Z buying a Bored Ape three years ago, right?

1:19:51So when we actually finally get to, I mean, look, Trump's heading in this direction. I mean, he has a couple of NFT projects himself. He's been hosting. I mean, this past week, he hosted people who bought$25 ,000 or more worth of his NFTs. He's done that a couple times now. Now, I don't see how you can watch that happen as somebody who's prominent and has attention and not say, you know, that might be interesting for me to do. And shockingly, he's delivered more value than 90 to 95 percent of the people who have launched these NFT projects. Brilliant. Listen, guys, fabulous conversation. Really wide ranging, super interesting.

1:20:31And I really appreciate your time. And good luck out there. Thank you, sir. Thanks. So look, I think it's fascinating to speak to guys like this, because we really do get insights. You know, why they think Solana is so good and why they've been looking at certain parts of the ecosystem to invest their capital. You see, eventually, for those of us who trade in secondary markets, I don't do VC. So when I trade in secondary markets, I know where the strong narratives are, what the good projects are. Doesn't mean price always plays accordingly. you know, because of this mismatch between supply and demand of new tokens, you often get a correction in price first, but maybe that's a big opportunity.

1:21:10That's how I'm starting to see it. That supply-demand mismatch is actually something for us guys, the retail investors who don't do the VC deals. So anyway, I think it's really useful. And again, the point being with this is we've all got to listen to other people's ideas. And that's what Real Vision is all about. And if you haven't joined Real Vision yet and don't know what you're doing here watching this on this platform. You see, on Real Vision, you can watch these interviews with full AI summaries, the full transcripts, the ability to look at the trade ideas, network amongst people around the world, join our meetups, join our live events, and all of the other incredible value that we have on the Real Vision platform.

1:21:53We've even got our own AI to help you understand the terms or the videos themselves. Anyway, see you at Real Vision. And again, if you guys are on Real Vision watching this, then it's time to level up to plus and get your ideas heard by the crowd.

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