E120: Raoul Pal: How to Get Rich in Crypto (without getting lucky)

0:28It's f***ing terrifying for me. financial trends and shaping the conversation around global economics and digital assets. How to get rich in crypto without getting lucky and without falling for all the scams. It's the same advice to everybody who comes into the space. Just buy Bitcoin. There's no such thing as free money. Bitcoin on average has like 150 % returns since 2012. But then once you start seeing the rest of crypto, 100 % but that bloke just made 100x. I'm all in on farm coin. No. AI is becoming super, super tangible. One thing I do know is crypto has a superpower. Behavioral incentives of tokens.

1:02The crazy thing is AI is doing better than 99 % of all analysts. For me, if it looks like a duck, smells like a duck, quacks like a duck, it's a duck. These things have some elements of sentience. He's so cooked now that the crazy meme coin meta is behind us. I'm massively overweight, Sui. Percentage is wide. Over 70%. People lose their fucking minds. They sell their houses and buy crypto. This space is so full of risks because you have to be paranoid at all moments. Tell me something about your life that I can't. take with me for the next half of my life. Get out of your comfort zone. Don't do something that's different.

1:31I need to find a girlfriend. You've got to stop wearing that t-shirt for starters. 69 % of the people who watch this podcast have not subscribed. If you enjoy this show, if it provides value to you in one way, shape or form, can I please ask you a little favor? Can you click that subscribe button, give this video a like and leave a comment down below? It helps this show more than you can imagine. My goal is to bring the absolute biggest and brightest people on this channel. And the best way to get there is to have all of us rally together and build the When Shift Happens family. Thank you. This conversation is supported by Jupiter, the most used decentralized trading platform on Solana and the largest DAO in the world.

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2:49It's good. It's not as good as mining Bitcoin at 24 cents. Just keep hearing these stories so they'll make you feel sick. I'm happy to not be hearing them because I would be wondering why I'm taking all these planes to be like white, like an ass. You know, it's interesting because you speak to a bunch of these people. Like speak to Wences Caceres. He was like OG Silicon Valley. He bought$2 million Bitcoin at three bucks. and he's like yeah i asked him how much he works now and he said an hour a day he's still doing the bitcoin vault example yeah yeah but he doesn't you know he doesn't work on it but the point being is like it's very difficult to build any business even a sas amazing takeoff product that does the same returns as just owning bitcoin yeah i have a friend of mine yesterday who we do business together i have a data analytics company since 10 years not in crypto yeah and he's been bringing me a lot of business because they do ERPs and this data collection systems that are underneath the data analytics.

3:56So we're very complimentary and he's buying back the shares of one of the co-founders because they have issues in the business. And he came and he asked me for a loan. He was like, Hey, do you have some, I'm just going to my friends to get some, some cash so I can buy back, I can buy these shares. Right. And I mean, I know it's going to be good for our business because it's, he's less motivated because of these co-founder issues. Right. but I'm thinking in my mind I mean I'm like I need to help him because he helped me when I was in tough moments so I'll do it but this USDC I mean Swiss franc in that case could be in Bitcoin fuck right I know he's like and you choose the interest rate you want I'm like okay let's do it zero interest because anyway like versus Bitcoin it's a bad bet it's just throwing money away I know it's like the NASDAQ is down 99.97 % since 2012 against Bitcoin and tech stocks have been the next best performing asset in the world so what do we do you know just try and get as much cash flow as possible and stick it into crypto yeah absolutely that's what i'm doing now with the with the with the media company 60 is going into bitcoin the rest is in usdc and then i have my personal portfolio for like all the more risky stuff yeah welcome back it's good to be back third country third country we're meeting in more places than I met a woman in my life yeah we're not dating yet not yet as you said you asked before what is this cast thing because I think the rest you're kind of familiar with them yeah Pudgy Penguin's always there yeah cast is how I bought your coffee today so basically it's a very low cheap sponsorship it's actually an amazing sponsorship because I use it all the time.

5:44What is it? So you spend your stable coins, right? If you want to leave, if, for example, the, again, the stable coin things, I don't own any stable coins. I've never owned any. So in the business, in the business, again, everything is paid in stable coins. Right. And so I have this, I have this data company since 10 years, normal word, cash, right? Yeah. Takes days or weeks, you're paid late, and then you have crypto, right? And if you're a crypto business, you can be paid in stable coins. And if you're paid in stable coins, That's why people say it's a killer app, right? You pay it so fast. I know, it's unbelievable.

6:18It's incredible. But then the next step is, how do I not off-ramp this money to spend it? You can use a credit card or debit card like Cast. It's an application. The only function today is spending your stable coins. Yeah. And it just works. That's it. It's beautiful. It's life-changing, actually. It's so simple, but it's so life-changing. The off-ramp is so hard. Absolutely. In the Cayman Islands, none of the banks will accept it. So all the crypts I've ever bought, I've never been able to sell because I can't take it out. Yeah. Let's start with the basics for people who might be new to the man I have in front of me.

7:00Let's say I'm your Uber driver. If you have to explain to me what it is you do and why you do it. That's really hard. What would you say? well when people say what do you do i'm like i'm sort of in finance but i'm also media and i'm also in crypto um do you say crypto yeah because now a days i feel it's still kind of uh it's still a bit dirty still but i like it that way i like it dirty um will do and so uh yeah it's kind of like finance media crypto um and you kind of see where their interest lies but if it's an uber driver it's usually crypto don't give me shit about the rest do you try to go a bit deeper so they ask more questions or do you actually like people to just ask too much questions you can kind of move on i don't mind um if they don't know you if they don't know me they tend not to ask the questions because they're really they're topics that scare people finance media oh does that mean you have a podcast or do you do whatever or and then crypto if they don't like crypto or don't know about it it's daunting so they don't ask another podcast another podcaster yes and in crypto like it's probably the worst combo you can ever find for for people who don't understand or don't know that's right i mean there's enough bloody crypto podcast that's for sure that's for literally not bloody podcast that's for sure yeah the world was freaking out a few weeks ago oh my god tariff Staris, end of the world.

8:30Nasdaq was down bad. Crypto was down bad after most of the coins had been down only mode for two months already. So it just happened after. At some point, that's always with crypto. You feel like this should be over. This should be over. And then you have this big news that destroys another 90 % when it's already down 90%, right? For all our bill of the cheat coins. So there's all this madness and this panic happening. and then there's Raul getting pissed on live streams and loathing at everyone. Why? Because I've tried to explain to people, this space is long-term. The hardest thing to do is not lose your shit.

9:11Every newbie who comes in loses their shit. You tell them, hey, listen, because of the tightening of financial conditions last year, the market's going to start weak. They're like, yeah, yeah, yeah. When it happens, it's like, oh my god what's happening like i told you the market should be weak because the financial conditions another week later what's going on nothing the market's going to be tight you know and then they start assigning narratives to it and everyone starts and that's why i try and be flippant on the podcast to get people to understand that what they're doing is building narratives to describe why the price action is and it may not be the accurate narrative so it's like suddenly they They go from, oh my God, we're all going to be rich to Trump's ruined everything.

9:54Tariffs are going to destroy the world. The world's going to go into recession. This is the worst thing ever. Maybe it's not that. Maybe it's as simple as the flow of liquidity into markets. And over time, crypto gets adoption. So that's why I try and just lighten it up. Because I know we've talked about this before. All of our life savings are in this. It matters massively. And I get that. So I'm not flippant about that. what i'm trying to do is get people to relax and understand there are ways to do this that don't fuck this up thesis that we talked about on this podcast before just ways of of not worrying about it and so then it's been interesting to do that drinks with ral show that's kind of become cult viewing now because people love it because i insult everybody which is funny because if you think of the average audience age they're generally in their 30s they're generally learning about things like wine and stuff like that and they they like to be told that they're philistines and that they need to get more classy why do you think people like to be insulted i don't know but they come to me all the time so that's the best show that they know of because i just insult everybody i i don't know but it's because it's genuine and it's fun and it shows a sense of affection for the people in the community that you kind of know what they're going through and who they are and it resonates with them they're like yeah i need to kind of get classy now i'm getting old enough to think about you know being a bit classier stuff like that and it's just fun and also just making fun of americans is what my favorite hobby in the world why i love americans i love america and because they always come from the you know we're the freedom country the strongest nation in the world and so to take the piss out of them is very funny and they don't quite know how to take it but they kind of like it as well so it's just a fun thing and Brits and Americans have always had this relationship of taking the piss out of each other like English and French have you know there's this endless through the ages fun.

11:51Dear When Shift Happens family the following message is probably the single most important thing you should take away from today's podcast. If you're serious about your crypto investing journey please take some time to learn how to self-custody your assets to make sure that nobody can take your coins away ever. If you don't learn how to be your own bank it is very likely that one day you will lose all your hard earned crypto the safest way to hold your crypto is in a cold storage that we also call hardware wallet hardware wallets are not complicated and they give you peace of mind i personally use a hardware wallet called treasure it is open source very easy to use and the first hardware wallet created ever as we like to say in crypto not your keys not your coin you can order your treasure wallet with a 10 discount by following the link in the description down below and by using the promo code WSH10.

12:42And now back to the episode. So what you said before is, I mean, something we say often in crypto, right? Price leads narrative. Yeah. So if you guys feel freaking out about the market, just have a glass of wine. It's kind of that, right? It's like, don't forget there is life you know you're supposed to be living a life that the whole touch grass thing is actually really serious because a on a physiological level grounding yourself but yeah i spend my entire life in barefoot nice and so um yes that is really important um and then it's the point of just move away from your screens looking at tick charts and minute charts and hourly chart they're just not going to help you everybody thinks they can be a trader because they see ansem or somebody online and they think oh i'm gonna make a hundred x i'm gonna do this i'm gonna trade in trade out when the reality is the true wealth in this space true worth in all businesses are people who just buy and hold and i know it's less sexy but it is the answer i mean i see you post about this all time is i learned yeah i learned we talked about this like you you i think the the people who spend their entire days we call them chronically chronically online right uh and you're there and you're just going crazy i mean first it's like a dopamine hit every time yeah uh but you get dopamine burnout as well and you just destroys you it destroys you completely yeah uh but you kind of have to i mean you have to go through that and get kind of screwed i guess especially when you're younger and you don't really understand markets and and and media and clicks and all that stuff and you probably have to go through like oh it's so painful or i hate it so much or i feel so bad mentally that hey maybe i'm gonna go and do something else right and by the way it also works better at the same time and that's that famous bell curve thing is the moron on the left the jedi master on the right and the mid curve in the middle you all have to go through that journey you know the the the the moron on the left the first person in space is like buy bitcoin and just hold it then you go through the whole justification of everything and then you build this massive macro thesis that is entirely wrong and then you're trading out of your coins and then it's like i'm going to make the money by trading the early stage stuff and i'm going to do the ai tokens and this and blah blah blah and in the end you come to the other side which is just buy and hold yeah absolutely and buy and hold but like only certain coins the rest is Yes.

15:13Even the ones that we think, I mean, there's this logic, right? Oh, it's a smaller coin, there's less liquidity, it's going to perform better. But I mean, you always call that, right? You say if you go too far down the risk curve, it's not going to work. But it's actually even closer to the top of the curve than we think. Then it doesn't work anymore already. Yes. There's too many coins. there's too many coins and it's a game of attention. So the more coins there are, the less attention can focus on the key ones, or it hyper focuses on the big ones, or a narrative holds for a period of time and it doesn't hold for long in this world.

15:53So if you look at what's happened in the last three years over the bull market from the bottom of 2022 through to today, it's essentially been a Bitcoin dominance game. So just owning Bitcoin has been the best bet, except for two asset allocation ships, basically, that have been relatively long-term for a year each. One was by Solana at the bottom, and the other was by Sui last year. And those have been the big bets. There's been interim bets where you've made a lot of money from some of these, but they've been less persistent. So they haven't captured attention for long so some of them have lasted six months but really what you're looking at is in the top 10 top 20 projects what are the ones that have persistent network adoption that are growing and provable those are better quality bets how do you find that how do you find one that is going to persist through time in this crazy game where attention is everything and usually the persistent just doesn't it's not persistent so there's two ways that look at so this is what we're talking about now is metcalfe's law that's how this price is actually um priced so metcalfe's law is how to value networks it's how amazon was valued google was valued all of these things and what it is is the number of active users and then the total value transacted so i are those users valuable so the bitcoin network has a lot of users they don't do anything except buy and hold and trade a bit, but the value of that is a lot.

17:25We've got sovereign states buying, so there's big numbers. So that's why Bitcoin is worth more than everything else. Ethereum has a huge number of users and a massive number of applications. Now, the layer twos have confused it somewhat, but that's why it has the value that it has. So what you're looking for is projects that are seeing growing user growth and growing applications that have value. And Solana, at the bottom of the cycle, it was being priced as if it was going to go to zero, yet you could see the developer community was actually growing and the number of users was stable. And then Bonk was like one of the things that kind of shifted the narrative a bit and you started seeing user growth.

18:11So now you've got a big, proven, high-quality team, one of the best in the business, with great technology, and many other projects have great tech, but they got the adoption. And so that started to feel like it was a decent bet. So he's the same thing. Yeah. We're releasing Tully from Solana. He's a great guy. He's such a sweetheart. Like, literally, he's such a good person. It's amazing. like we spent 90 minutes talking and you can see just like so so good and he's pure yeah and he's just super smart he's a very nice person and what they built is incredible and i asked him what's the moment that was the kind of inflection point in solana great comeback right and he said i thought it would be bonk but he said it's actually the the mad lads lounge oh really and that's probably that's i didn't understand mad lads until i talked to him i was like what is this i mean it's an nft right but like why is it like but it's actually the kind of key moment where solana the solana team realized oh man we're able to have some something happening that doesn't break the network and we're getting there and and he said that's the moment i started to have less stress and d gods had disappeared from solana if you remember they disappeared at the bottom yeah that's right and then mad lads came and bonk came and those were two test cases i'm always looking for test cases where somebody's doing something that hasn't been done before that proves out and we've talked about this before is that means what they're really doing is massively stress testing these networks and they've proven that these networks can take it we're going to talk about that obviously i'm your uber driver still and i ask you you tell me i'm raul i'm in crypto i'm a crypto podcaster god that's the worst thing i'm sorry it's the worst it's fine it is what it is i'm the communicator we're all trying our best here right so i'm the uber driver there is a simple but not easy question uh that every new person coming into crypto ask themselves how to get rich in crypto without getting lucky and without falling for all the scams so let me ask you how can i build wealth in crypto without any luck involved so simply it's the same advice to everybody comes into the space just buy bitcoin and dollar cost average so buy some with your paycheck and hold it and get a feel for it and everybody have taken down that journey at first they do that you're usually giving them that advice when the market's going up then they have the correction they have to learn oh my god it can go down 40 as well am i going to lose all my money they have to go through all of this but that's the learning curve and then after a while they get used to the volatility and they become numb to it and then you can say okay have you listened to podcasts have you done research have you been on twitter not to listen to trading stuff, but just to understand what is this technology.

21:22Because Bitcoin is just a part of the space. It's the digital gold, the store of value. But then people want to go, they want to get more speculative in the space. They want to try and make money. So then you start saying, okay, listen, only use the top three or four projects. Yeah, but that, so I'm the Uber driver or anyone else coming into crypto. First you say Bitcoin, right? And I'm like, everyone without exception will say, yeah but bitcoin is a 90k or 100k if it goes to 200k i'm only up to x fuck this shit bro i want to make money right no not yet not yet because at first they're coming out of 401k world or investing world or they've got a bank account they're getting five percent interest on their deposits right the uber driver and he's thinking well how do i make money i've owned some he might have bought a share or two or owns you know an etf so when you say well bitcoin on average does like 150 returns over the last since 2012 they're like holy shit but then once you start seeing the rest of crypto you're like 100 but that bloke just made 100x okay this is the danger zone now is this is when they start you know you talk to them they're like i'm all in on fart coin you're like no no and i try and explain to them is you have to go down that learning journey do that with 10 of your portfolio because then you can fuck it up billions must fart billions must fart i saw something brilliant tweets uh i think was yesterday fart coin is ai fart coin is a meme fart coin is the coin of the cycle fart coin is rwa tokenized farts do you hold any fart coin by any chance i don't why i'm still i'm still holding on to my smoking chicken fish which was down 90 and is rallying well i've kept with that meme because look i don't have an edge in memes and as you know all you end up doing is switching from one narrative to the other at narrative peak because people are really in the trenches can see this and there's a different set of signals they look for so i don't so i you know i have that's the one meme i've got still oh and I own Doge.

23:35Do you still have faith? Do I still have faith in the chicken fish? Yes. Lord Fishnew will be, will save us, will rise from the ashes. But I don't know and I don't care is the point. It's fun. It's fun to do and whether Fartcoin's your fun or WIFS's your fun or Bonk, it doesn't matter. Just don't let it be a large part of your portfolio because the probability is something like 85 % that it will go to zero. Yeah. Only 85 %? To go to zero. Oh, yeah. Yeah. something i learned with the luna thing was uh it never goes to zero it goes to 0.1 then to 0.01 then to you can always add a zero and it's like it's crazy it's crazy it's actually i'm laughing but when you're in the thing like it's not i'm surprised that luna didn't become a mean coin i thought it was going to happen where people just rage bought it for the for the hilarity of it That was the narrative of a bunch of big, big Luna ways.

24:32I knew a bunch of guys who lost like$250 million. Actually, I had one guy on the podcast who lost$3.6 billion in Luna. They're the biggest loss with Binance Labs. They were a VC. And I think people got so hurt, maybe they say, we're not going to have fun with that. But a bunch of the guys who were putting$500K at$5 in Luna to buy the dip, right? they're the same ones were like i'm buying more luna because you're gonna become the best meme coin never happened it didn't ever i thought it would have been i thought that would have been the most outrageous outcome would have been it was the meme coin of the cycle but no it would have been so painful anyway it's been three years and you're still scarred but that's good that's important like that's how you're like okay do i even want to buy this shit like or too much of this shit or this fart.

25:29I want to have some, but not too much. For me, the main thing I learned from you and from getting very wrecked is a portfolio allocation. And it sounds so boring when you're in your 20s, you're having crypto, you listen to these macro guys talking about portfolio allocation. You're like, man, these guys are so boring. And then you realize like two months ago when everything got wrecked. Most of my portfolio is in Solana. It's down 60%. or 50 % it's not great but I'm not bothered and I realized I was thinking about the difference between this big liquidation that happened like one, two months ago and March crash 2020 because some people were making comparisons right and in March crash I was levered 2, 3x on BitMEX and lost all my crypto in the crash and I was like you actually no one asks you to put yourself in these situations but you do it because you're fucking idiot and then if you learn asset allocation i mean risk management all these boring concepts then it becomes like a walking in a park and you can focus on building businesses and doing something useful right or you can drink wine online and insult people but but you know the other issue is is that's not the only risk this space is so full of risks you have to be paranoid at all moments because before you know it you're like well i'm buying and holding so i want to get some yield next one i want you to ask yeah and then you're on some defy protocol that's giving you yield and something goes wrong goes to zero immediately okay that is a classic one that happens endlessly or you expose your wallet and get hacked and people don't understand wallet hygiene and how to keep things in different wallets and never expose your key wallets to things always have a step in the middle you know the custody side of stuff there's so many ways you can get hacked there's people impersonating me online or new online trying to get your wallet or impersonating coinbase online everybody's after your money um and you have to be paranoid at all points that's that's very true i would say even in life in general when you have businesses right it really helps you if you're always paranoid you're always thinking about everything that could go wrong and you're never becoming complacent and therefore your business I mean your life is more stressful but for example I was the opposite of that when Luna was going to the moon right I can go to Bali for 3-4 months I'm just making money doing nothing doing arbitrage from my bedroom like pressing one button making 1.5 % every 21 days and printing when you're like crazy in UST obviously and then I got so wrecked right and I'm like now I'm thinking the opposite I'm thinking if I'm not paranoid I'm paranoid if I'm too chill basically so I become scared if I become too chill right and if I'm if I'm paranoid actually makes me feel good because I know I'm not gonna I have less chances of being upside will take care of itself yeah so you don't need to worry about will the market go up over time now as long as the central banks keep printing money and this technology gets adopted you'll be fine as long as you're adhering to not being too far out the risk curve and then you need to be paranoid about every single other part because don't forget in the end we go back to the point I made earlier, everybody's life savings is in this.

28:44This is the single most important thing for most people in their financial lives. And there are so many ways you fuck it up by getting a little bit greedy. Does the 6 % yield actually matter to you? Oh, but it gives me cash flow. Yeah, but if I'm 6%, you get 6 % and there's a percentage chance of losing all of your money and you don't know what that percentage chance are. Now, that's not the case with all DeFi or anything else but it's just that people end up doing dumb shit the yield is a very interesting point because now there's a big new narrative that a lot of very smart people even bitcoiners believe in which is bitcoin defy yeah and earning yield on your bitcoin and this bitcoin staking and restaking and all these different things right i'm actually for this drop series that i told you about before i'm interviewing a bunch of them i'm always thinking about you and another dude i interviewed on the podcast a year and a half ago it's called james who is the youngest crypto billionaire.

29:40He runs a digital finance group. He's like 30 years old and he said the same as you said, I'm not in crypto for yield, I'm in crypto for capital gains. Any yield that I can get is not worth the risk. I can go in bonds or whatever, try to fight to get some yield. What do you tell all these people who are trying to push the yield part on the most pristine collateral? I mean, you were saying on one side, it's pristine collateral, Bitcoin. but you don't want to freaking lose your bitcoin like for for a yield paid in another token like i don't understand i i and they're saying uh these bitcoin etfs with trad fi is going to become a big thing because bitcoin ito bitcoin etf will want to have yield on their bitcoin what do you think about that and you're probably talking to a bunch of these institutions would they want yield on their bitcoin well they've dealt with no yield on gold but they've never owned a lot of gold because there's no yield so they do prefer it and you know that's why i think when the eth etf has yield which will come um it'll be more attractive to them how do you get the bitcoin etf well it'll be the same as the safest yield will be this kind of borrowing fees for borrowing it and if it's run by large institutions you've got some backstop protection you know all etfs have some sort of yield from borrowing that's often taken by the asset manager i just don't like it because the capital gains is so big we're not trying to eke out an extra few percent here um and you know even stuff like and i don't really understand like lido the the aggregator for staking right it's huge but what you've got is a yield curve mismatch so you're able to have short-term access to yield but really they have to lock it up so managing that liquidity and they're smart people it's complicated and we don't know what can go wrong and when it goes wrong because we've never stress tested it and that could be a weak point we've talked about weak points many times just like deribate with who i love is a weak point because it was 80 of all the option market or 90 now it looks like they might get bought by coinbase which is much better for the market but we need more options platforms um they need more competition to spread risk have you thought about other weak points no it's the yield enhancement stuff i don't like um and you know without naming names but i just don't like them and they're all smart people and they're good people and they're all trying their best but i think those products should be in the hands of professionals and not retail i really do now you're if you're only so only institution can invest in them you're saying yeah um you know to put their capital because they understand the risks where are the counterparty risks all of that stuff and if they want to get the extra yield from doing that great you know your breven howard hedge fund and you've got cash and you want to reinvest that or you've got crypto holdings that's your job but for the average person to see 20 yield and that this is amazing i'm going to be rich you don't know what risk you're taking i know a bunch of i mean you know a lot of very OG Bitcoiners.

32:58I know a bunch of them too who made billions of dollars with being early. A bunch of them think that what Saylor is doing is retarded and the others think he's a genius. What do you think? I don't know. It's so hard, right? It's so hard. And I think it's either or. And I don't really know. What I do know is by him doing what he's doing, he's creating leverage in the system. So he's basically, via the convert, selling cheap options. They're being bought by option arbitrages and who are then laying off the option risk on exchange, whether it's against Bitcoin or whether it's against MicroStrategy's listed options themselves.

33:45But also, they're trading the NAV versus Bitcoin, which moves around, and that's feeding also within it the perps versus spot, the futures versus spot, all of the arbitrage in the system. And arbitrage uses a lot of leverage because you're making smaller returns and they use leverage to enhance the returns. It seems right now that most of the buyers of the converts are TradFi hedge funds and others. So there's people like Norgous Bank who are a sovereign wealth. they buy it for just the bitcoin element of it but then there's a bunch of citadel and millennium and 0.72 and all these giant hedge funds and they're doing the arbitrage these guys understand risk very well and they're probably systemically backstopped as well and their position is not big enough to blow them up it's who else is going to take the risk further further out the curve that blows up this market always blows up from leverage every time and we're seeing uh basically micro strategy copycats everywhere now in every country yeah and there's no such thing as free money no for sure and when people start calling it like the free money machine or whatever it is it's like no no and so and the other thing is you know there's a lot of etfs that are attached to microstratches the 2x longs that creates this convexity but it also on the way down microstrategy falls more and then it starts trading at a discount to nav and then that blows up the arbitrage people you know there's easy ways to see as this thing builds and builds and builds how it can create systemic risk in the system in the crypto system and maybe in the finance system we talked about toli before and solana last time you shared your crypto portfolio with us let's have a look at what changed probably nothing or almost nothing you own the majority of solana is soul cooked now that the crazy meme coin meta is behind us i'm massively overweight sweet over soul massively can i ask you percentages wise more more or less i'm definitely over 70 sweet and that's not anything to do with the foundation that i'm on that's my just capital allocation of my savings and simple it's not because i'm on the foundation and people are like he's just shilling his coin it's because the fucking chart of solana sui versus solana broke out and solana was the strongest horse in the race so if another large token is outperforming solana on like weekly charts daily charts you know significant time horizons and the chart pattern looks good and you can see the adoption and it's got a lower free float and there's large demand and there's a lot of developer activity and all of the things we talked about, then I'm forced to do that.

36:39I then also looked at anything versus three now because that's now your benchmark. And then what's funny is you see, well, there's one token that's doing really well versus it. Deep. Deep Book. And Deep Book is the liquidity layer of Siri, so I own some of that too. I have a question on both of them actually. You tweet, for three, I love Sol, but three is my favorite child if I need to have a favorite. other than SUI to Sol chart. What's new in the SUI ecosystem? Because you're pretty close to it. Since we last recorded together, that makes you hyper bullish on SUI. It's really interesting because when you talk to, here in the Middle East right now, you talk to people they know SUI because it's Facebook.

37:24You speak to people and everybody says, yeah, they're really interesting. You see, I mean, without giving away stuff from the foundation, you just know the quality of the people i mean you've interviewed adenny i went to the suite office uh in march to interview evan and sam he's not out yet because like we're they're actually a sponsor of the podcast we're an ecosystem partner and i did the um uh the the george for the for the launch of walrus right yeah and uh and yeah i went to their office and there was adenny there was Sam and there was Evan and we're in this office, the energy was insane I brought a friend of mine, we spent the entire afternoon, I did this podcast there and then it was like a party in this office you could feel, and they were saying, oh look this is the same office as we had in Facebook literally, like the atmosphere was incredible and we just left so energized, it was incredible You feel that, you feel throughout you see the type of projects they're going for it's interesting because I get called into a few meetings with some people that they're talking to and like christian who's the head of the foundation his opening question now to projects that want to work with sui is like well show me the path to a billion users right because it's built for that scale and if you're leading with questions like that is like yeah okay it's interesting you building this whatever but is this going to bring me a billion users if it's not it's not a high priority and so their mindset is really big um and they back it up by you know all of the projects that they've been launching so you know i've been privileged to be on the foundation to see the inner workings of an amazing group of people and see how they all come together they're basically all ex facebook and google and they're very smart they understand scale they understand how to solve really difficult things you know walrus stuff like that it's super interesting um and so i think the market's picking up that narrative now it's very early stage you know it's going to have to go through a bear market.

39:30It'll go down a lot because low free float goes down a lot, like it goes up a lot. And then you need to see how well does the team manage a bear market? Do they have cash? Are they investing? Are they building? Which is what Solana did really well last cycle. You know, Tully did a magnificent job of doing that under extreme pressure. And that's when Lindy effects kick in you know tolly earns his stripes from that and so it's still early but you know it's got all of the hallmarks of a massively growing ecosystem massive growing number of users massive growing number of applications have they had the big breakout application yet no but there will be one this cycle and that will be the first start of the bigger narrative so 70 percent in sui what are you going to do with that because you say buy and hold right yeah are you planning at someone you say i'm going to put some of that in bitcoin or in sol or you're saying if it goes down it goes down i believe in the the team and no i mean i've got locked tokens which will go down and stuff like that from the foundation um i will as i've talked to you before take some lifestyle chips off the things i want to do with my life um Um, and so I've not had any big capital expenditure for five years now.

40:56So I would like to be able to do something. Um, and then yes, I'll do an asset allocations shift, whether it's to, I'm not one to really go out of the market. Um, yes, a bit of cash to have cash buffer, but I'm not one to go out of the market because I don't think, you know, the shape of the downside. My fear is that Bitcoin only goes down 40 % this cycle and everybody sells out and says, well i can buy it down 70 isn't this an easy game and it doesn't go down 70 it doesn't go down 60 it doesn't go down 50 it goes down 40 and then it takes off again as liquidity comes and everybody's caught offside um so i'll probably allocate whether it's towards bitcoin or whatever i'm not sure but yeah when you say uh take some uh lifestyle chip do you have a time frame do you have a price target for example for three or do you have an amount dollar amount that when you reach yeah it's what's the best way to look at that because it's so hard right like it's it's so hard um and it's a function of where you are in the cycle you want to de-risk a bit earlier than you feel comfortable doing yeah because then the back end of the cycle can play out short or long it doesn't matter um but you need to have enough wealth that you're feeling a little bit hubristic like oh i king shit that's when you take some money off as soon as you start thinking you know you start thinking well if i just double it again i'm going to be really just take some money off we've not got there yet for me um so you know another another larger move in the cycle i'll then take some money off and it'll feel too early and i'll hate doing it and i'll regret doing it but i'll know it'll be the right thing you regret doing it until you don't regret it because it went so high and then it went back so low that you're like i did the right thing yeah i mean you're always going to feel bad right that's that's the rule you're always you should feel bad yeah you're not going to time the top perfectly and the thing is is let's say you're buying a house with the proceeds you've done well you buy a house nobody can take it away from you right that's an asset that you don't have the fear of somebody stealing your wallet getting your seed phrase you don't have a fear of putting them the you the bricks and mortar are yours you own it you've got a house over your head you've got an asset that's a long term that is an incredible thing um and so people just need to do that and that de-risks your whole life because then basically it's what i bought my first house was a house in spain it was a holiday home and i bought it in cash and i realized i won the game and it wasn't an expensive house but i realized i could have a bar job in spain and live in that house and nobody could take it away from me and i was like i won the game of life and then you make much better decisions miles yeah of course because low stress yeah it's like you know we we talk about this the importance of income that's another one like the most reason why all these people in crypto freak out is because they're depending on their portfolio but if you're working you don't even need the yield right you're just fucking work just work and make money yeah and with your excess savings put it in crypto and worst comes to the worst, something goes horribly wrong, you've still got your income.

44:09And then imagine if you'd bought a house during the cycle. So now you've got income and a house and you've got your crypto portfolio. It's just these simple decisions, but people lose their fucking minds. They sell their houses and buy crypto, which is, I've just got a good friend of mine who's just done that. I'm like, that's so stupid. Do you dare him? Yeah. what does he say he doesn't listen he doesn't listen he sold his house yeah for cash to buy bitcoin or crypto yeah bitcoin bitcoin no no no no he's right at the risk curve do you have a what do you call that in english uh a guest room in your house for the eventual day yeah i'm just gonna buy a tent and put it on the beach where it's really hot, the mosquitoes bite, and so that's where you're going to suffer for doing these stupid things.

45:05You're not staying in the house, you're staying in the tent on the beach. It's probably not that bad in the Cayman. I don't know, the mosquitoes can be bad. You said that your beta to SUI is the DEEP token. What is DEEP book and why do you have a bag? DEEP book is the liquidity layer for all of the SUI ecosystem. So basically, if you think about it, the more SUI gets used, the more deep book is used because that's the liquidity and it's a smaller token and it outperforms now will that continue in perpetuity no but at this stage a sui becomes more known and more people are using it and realizing how fast and cheap and efficient is and what you can build on it the more liquidity has to increase within it and that's the liquidity layer so it's kind of it's kind of simple walrus is much harder because walrus itself is this decentralized distributed data layer it's groundbreaking technology it's super interesting it's multi-chain all of this stuff but it is its own beast it is not actually related to sui apart from it does accrue to the sui chain you need to look at that with metcalf's law how many people are using it what is the value being done that's very different deep book is is pretty simple yeah there's a guy named Cosomo de' Medici, one of the NFT OGs.

46:28He's a friend of mine. Who tweeted, few seats yet, but when you look closer, it's undeniable. Right now, it's the greatest risk-adjusted moment in history to acquire crypto art and possibly the last window to do so before the market changes forever. You replied, indeed, senor. What is the word, including 99 % of the crypto nerds out there, missing about nfts so i've talked about this a lot and people still don't understand it right they're like nfts got burnt in that last time because they're like the mean coins of the last cycle nfts themselves are just an amazing technology for non-fungible assets to be stored in perpetuity and traded okay fine but what's come out of this is the lindy effect i talked about Solana and how it survived last time and thrived.

47:24Within this, we had a bunch of digital art, amazing artists with a incredibly vibrant community that's small but growing, that are passionate beyond belief about collecting this stuff, and will pay millions of dollars for it. If that is not signal, nothing is. So there's signal. Let's do the macro backdrop. We're in a $3 trillion industry right now, crypto. If I extrapolate trend rates of growth, it goes to $100 trillion within 10 years. That would be$97 trillion of wealth created. So let's assume Raoul is a total moron, discount me by 50%. $47 trillion of wealth will get generated. That's more wealth than it got generated from the opening of Russia, China, all of the hedge fund billionaires and all of the Silicon Valley billionaires combined.

48:20So, and it accrues to different people. The average man, the Uber driver, the OGs, there's a whole bunch of people in this space. The podcasters. The podcasters. You! The macro strategists, all of these people.

48:41so people are going to make money and art is upstream of everything and the reason being is like i don't know if you know tad smith so tad is part of dan tapiero's uh 10t or 1rt he used to be the ceo of sotheby's and his nice stat is the average billionaire's house has 10 times the value of his house in art. Why? Because when you're a billionaire, beyond about five houses, it's a fucking pain in the ass. So they buy art. Art is storage of wealth that is outside of the system, that is transferable, ish liquid, not really, but ish, and it socially signifies your status. And so what we've got here is we're about to create a lot of wealth and people will flow to art.

49:37The other thing that's happening is as you create good times and bad times, you create culture. And the culture of the internet is often led by art, the culture of everything. Now, art could be music, art could be street art, graffiti art. If you go to look at the culture of the 70s, 60s, 70s, Warhol. wallhole represented culture and in the 90s it was damon and 2000s damien hirst it was basquiat it was banksy and here we've got x copy and people and then we've got this whole movement of generative art so people are thinking of nfts as these stupid monkey pictures derivatives that people bought went up and crashed they see all of the bad stories what they're not seeing is the unbelievable amount of money intelligence focus and passion that's coming so i spend a lot of time speaking to some very fancy people and those very fancy people are very interested in this space now whether that's crypto ogs because they've now made enough money where they want to own art and they get it you know a punk you know you're you you have a punk i have a punk and why because a they'll probably outperform bitcoin they're about the same price they socially signify in a way that your bitcoin doesn't because you don't show it to anybody but you can show your your punk off it gives you access to a group of people that are like-minded like i'm going to a punk's brunch here in a couple of days time and you get to meet a bunch of punks who I don't know they're all the nones until you meet them and so you've kind of got this membership to this club so you know punks is an obvious way to do that but then beyond that this whole art space is massive and you know I'm speaking to everybody from institutions to super wealthy people through to just ordinary people and they're starting to understand how important this thing is and it's early what's the timeline I mean there was this tweet of uh it was not uh cosmo it was uh i think the other the punk uh 6529 yeah and he had this i was in maldives on this plane for like 30 minutes to go to this island like i need to read this mega thread that he did it was in december yeah and then i was like i mean i had a bunch of and if that was like this makes so much sense but the time the time frame of the timeline is a couple of years right yeah so how so i think we will get we're already seeing like the x copy floor price of everything has doubled tripled punks have gone up a lot from the low they're not at the highs yet X copy is getting very close to its highs already it looks like he's the big artist of the space people prices have doubled and tripled and some of them have gone up 5x and there's a lot of lesser established artists we had Sam Spratt sell 3 million dollars recently for a piece of art so there's some big stuff going on and And so we will see prices rise, but this is not a trade.

52:52This is an investment. So, you know, I own a lot of this art now, and I just think of it as a 10-year-plus time horizon. Like, I've got a house, so I don't need a house, but this art I can appreciate. I can enjoy the culture, being involved in the community, which is amazing. But in the end, I've got an asset that's going to be valuable because it's going to be scarce, and there's going to be more money around chasing fewer goods. And these goods are highly sought after. And so I think of a longer-term time horizon. If I go back to, I think, the conversation you and I have had, once you get to the economic singularity of when the AI and the robots are basically running the economy, and we don't know what we need money for and stuff like that, a digital sort of value like that is extremely valuable.

53:40What's the logic? The logic is, as we live in an increasingly digital world, we will value digital things in the same way we value physical things now physical high-end art is 10 million 50 million 100 million 200 million 500 million the most expensive piece ever sold was beeple let's ignore that piece it's probably an x copy and it's probably around six seven million and there's a few punks that have traded maybe a 10 okay so we are nowhere near where traditional art that is all owned by baby boomers and some gen x most people of the younger generation won't buy that stuff for sure for sure and they'll also never be able to afford it because when i speak to you know friends of mine who own a lot of that kind of art they bought it early too and really it's the new entrant rich who comes and buys it um you know somebody sells their company for you know 10 billion bucks they'll go and buy themselves a warhol and a batise or whatever your argument about nft is that they will outperform everything because they're priced in eath yeah and not in dollars right it has been extremely painful asset to hold for the last two years i mean thanks to you i don't because i also followed you on the solar trade um in 2023 if is down bad in usd terms and even more down bad in btc terms what happens to a bill of jpegs pictures by arts if and if this if eath is forever cooked there is a possibility that eath is there is a probability and we'll talk about eath in a sec if it is not cooked forever and let's say it finishes this cycle up 5x or whatever from here or 3x or whatever 2x doesn't matter and you've managed to buy art in a low eth price you will make a multiple on that and if people make money they'll buy art so the art starts outperforming eth so you've got this double kicker that's available which is why there's been a lot of sales recently because in dollar terms it got cheap recently as eth fell in this correction that we've just had so there's been a lot of dollar buyers not eth buyers because not that many people hold a lot of eth anymore because of the same reasons we switch for other stuff so let's talk about eth what is the probable outcome eth's cooked all the developers were wrong this massive ecosystem they fucked it up with the layer one a layer twos nothing accrues what's the point?

56:20It's all broken. Salam is going to take everything. Okay. That's, I hear that narrative. My narrative is they've overbuilt capacity for what the system needs right now. They will adjust some of the accrual mechanism to the back to the layer one, but EVM is Microsoft. Every bank, every insurance company, every major company in the world uses Microsoft, not Apple, not Google. Why is that? Because you don't get fired. And once it's in, and somebody explained this to me yesterday, it was a really interesting thing. It's like once you have enterprise sales model, it is almost impossible to extract it from a business, which is why banks are still using Cobalt.