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Diving Into DeFi with Ivangbi
In this podcast episode featuring Ivangbi from LobsterDAO, we delve into the world of crypto communities and the challenges of scaling them. Ivangbi, a former lawyer turned crypto community leader, shares his wealth of experience navigating market cycles and building successful communities from scratch. Throughout the conversation, he offers valuable insights on the importance of timing narratives in the crypto space, and the merits of investing in public equities versus startups by drawing from his years of experience working with early-stage startups.
We also explore the nitty-gritty of building and securing protocols like Gearbox. Whether you're a crypto enthusiast, entrepreneur, or simply curious about the dynamics of crypto communities, this episode offers practical wisdom from someone who's been through it all.
Join us for 90 minutes of insightful conversation—you don't want to miss it!
Welcome to the new episode of the DECO podcast. I am Saurav, and Joel has joined me as a co-host. Today we are going to talk to Ivan, who's deeply integrated into DeFi Fair, to say that he is what we call a true DeFi detail. We will talk about a range of issues like communities, narratives and their life cycle, investing, new DeFi privileges like Airbox, and where DeFi as a sector is headed as usual. Views expressed here are our own and don't reflect the views of any organization we belong to. We are not financial advisors. Let's take in Edgehold. Since you've known Ivan for a long time, why don't you introduce him? Hello everybody.
Speaker 3:We have Ivan from Nobstadal here with us today. I've been hanging out in this community named Nobstadal for quite a few years. He has been also co-contributor with me at Gearbox. We've known each other for a few years and he's graced us with his presence to talk about all things DeFi community and what's going on in the industry today. So good to have you here, Ivan. Hi sir, Thank you for inviting me. Let's just start with a brief background of yourself. Like how did you end up in crypto? What's the story.
Speaker 2:Yeah, so before I joined crypto, I would just study natural law, similar to how style was doing it apparently in many people in crypto. For some weird reason well, being the company poker or a client which makes sense, right or the developers, or for some reason they did law. Probably the reason why people switch from law is because they understand how miserable it is to be a lawyer. So that was kind of my understanding. I wanted to send them a bit more dynamic, interesting and gotten portraying and slash learning about finance like a university, but basically gotten to crypto as many people on the way.
Speaker 2:2017, when everything was going up, I was actually my fellow thesis that them well writes in a strong word, more like copying from Wikipedia. I keep putting Wikipedia in the references, though, so there was no plagiarism, I hope, I think. And yeah, everything was starting to going up and I just got a couple of assets. I thought, wow, and the most amazing investor ever. You know this mean, with three little children and sitting together and saying I'm a bigoted black rock. I made 300 year to date, right Percentage gains. Well, same thing in my case. So I got into it. Then, obviously, a couple of lives down the line and I was right. So I had the choice to continue university or get more into the industry by having some role like working in a company in media, and started from there. So did a bit of media side, wrote a bit, was always active in communities, then worked with one project for about two and a half years.
Speaker 2:Meanwhile, as many people in this space as Joe you are as well you angel at the same time. Right, kind of like when you went, startups engineering work can go side by side. Some people are against combining GMO or F and both fund when people combine those things because it helps both sides. Right To be more diverse in your thinking when you see new startups, yet also having something more day to day, right, and yeah, so Gearbox is my second project. I guess I could say I'm a co-founder, but I'm the stupidest one on the team. They call shitposts my role and, yeah, still engineer on the side. As you said, lobster down, we've both been it for, I think, five years. At this point, it has been since summer 2018. So it's an anniversary to an extent.
Speaker 3:Nice, I think you know. Let's just start with community, right, like what made you think you know community is a big level that you want to play with you know, a couple years back you said Friday this we're involved with community. You set up an opsadal where, again, you handle the community, and even with Gearbox. Sure you did mention you should post, but actually a large part of that chunk is, you know, managing the community right. So what's the bet that made you attracted to community as a never for establishing yourself?
Speaker 2:With question. I've never really thought about it, most so that I'm not too much of a social person, but online it's kind of a bit different, I guess, similar to many guys in the space too, right, I guess back in the day, maybe part of the reason was that I'm an open or not guy, so to kind of show contributions and do something. I needed to have another way of output and I think that we have just simply a right in post, in thoughts, learning more, like by asking right. To an extent, that's a good way to grow and keep your presence, because most of the things when you do it or you try to grow is just about presence. As they say, bet PR is also PR, right? So maybe the same thing goes here. Even if you ask a lot of stupid questions, if you do it two years in a row, people know you as the person who always asks questions, right, and then it's not so bad. At the same time, again, I'm exaggerating, but that could be part of it.
Speaker 2:The second part is that I was working always like since childhood, I was doing some part time jobs in marketing because that's something that didn't need like big background to know, right, not like chemistry or finance or mathematics, right this something you pick up online. So I was always doing those kind of part time jobs and those always involved I don't know maintaining a Facebook page that claim Facebook was the same I don't even know if it is anymore or doing something like that. And then when I got to crypto, it was also community. I was in the sign up like an immediate agency slash community. So community has always been something I was doing and just feels natural, I guess Understood.
Speaker 3:How have you seen, actually, these communities evolve in the last few years I'm pretty sure 2018? It was all ICOs and then you had this whole DeFi boom and I don't even know what communities are up to these days. Just curious as to how you've seen the evolution of these communities.
Speaker 2:Community in general is a very dangerous word because people abuse a lot, right? Most of the time when people say community, it's actually my following, the title, the selling, interact like I don't know hedge fund managers having a last week of presence discussing people. They can say their community and of the day they are dumping their books and then write their share in their own narrative, as we all do. So community is a strong word, so it's not all pro bono and fancy unicorn rating votes, right. A big part of it, of course, is just having following, which is your leverage in whatever you do after that. But anyway, back to your question about communities evolve, and I mean I'm not 40 years old, right? So I cannot say I had that you cycle experience, right? My point is, I think it's only I'm looking at finance cycles, I think about two and a half cycles at this point, yeah, so I wasn't even there when 2008, either, were you, so cannot say that experience is very large. But back when I see how forums were developing, how all online presence was developing, it all kind of follows the same pattern that at the beginning it's all about the future, everybody is staff, right and everything. Then, as soon as it grows and it will be spent. Starts the thing.
Speaker 2:You've got that really big question about moderation and about in strategy right, the same thing that Elon has been grilled for in Twitter, that every social media platform is getting grilled like, do you actually moderate or do you not moderate? And if you want to keep me trying to see your kind of moderation, right, that big question. I guess the reason why such big questions also existed because there is no purpose or core idea. Everybody is like trying to say, but why did you moderate, for instance, right, why did you delete this or this? Well, if you have a few core ideas that people stick by, those who have stick by, they will kind of abide by them and then new, new commerce will see. So I guess moderation could work in open communities, as long as, in case you have a few values I guess to grab on to Not even values that's a strong word More like topics, right.
Speaker 2:For example, you just oh, here is one thing and there is just a golden rule you never touch. What is it? Remind me three things you never touch politics, you never touch religion and you never touch anything sexually. Right, these three things. You just don't go into that Because as soon as you go into that, any community, however smart that they start, it's degrading and descending. They're discussing the most vile, stupid thing they could imagine. So yeah, if you avoid those, you can see how a little bullshit essentially is brought up in the communities.
Speaker 3:Anderson, I think it would be good to just dive deeper into it, but I think you mentioned we've both been around for two and a half cycles and that's kind of true. Did you see the transition from the ICO lull phase to DeFi excitement two and a half years back? Were you able to see it in the kind of conversations that you were seeing on LopserDOW at all?
Speaker 2:Well, one thing, lopserdow, even though maybe we'll see it, tell me. The thing is that before that there was an active the coaching news, which Andre Cronius started back when people liked him. Now the sentiment, of course, shifted after a few events and, like many developers are very fluid people right. Today they're too more than that, because many of them are creators and when you are a creator, you are shifting from one side to another, from one extreme to another. And then to one day he was like I'm so tired because it was their market people just coming. They were I don't know big mouthing people all the time and I didn't really ever care for it. And people who are creators, they of course, they get much more personal. So because through each ad deleted. But then everybody who was present there and I remember when I was a 15, this literally go about like 100 people right, they were less than 100 times projects that are right now. So it was a very, very small space and people still wanted to chat somewhere. So, like, can I just create another chat room? And then, yeah, and then back from Y-Warning Core, he just said name it LopserDOW. And they just named it LopserDOW. There is no like I mean his story. It was kind of like just threads jumping from one chat or another and I guess moderation was a big part of it.
Speaker 2:But anyway, back to your question about how communities has a role. I don't know. Lopserdow as a whole took having a bit less time because there are many OGs, but at the same time, communities that stayed very OG are also very much flexible when change comes. For example, when Gameify right, when the C became a thing for a long time me included till the very last moment we all hated it and then we jumped on it on the top right. So OG had its merit as OG. You can see it in Bitcoin communities already. You avoid a lot of scams because you stick to this very traditional values, but you also miss a lot of new things. So it's a double H store.
Speaker 2:But if you compare it to ICOs, but then well, defi, as soon as it became a thing, started having a bunch of copycat projects, a bunch of farms, a bunch of like you know this sushi sorry sushi, but like food farms right and many other things. In a way you could compare it into ICOs, because all of that they're just a different form of gambling, like ICOs were gambling, sale launches were gambling. Sports books are gambling, right, gambling, and people always will love gambling takes form in different ways, in leverage, in different classes and of course every new cycle is a different asset class because there is no seeing that it kind of jump over right, because seeing has never existed for it, there is no history for that asset. So it can. It can can sexually go as high as possible.
Speaker 2:Okay, so I wasn't saying you can't even get a wall. That's always the same OG communities. If they remain, they're a bit stagnant but they still remain and they're good. And the new communities pop up and then as they grow they get into the same thing. So cycle of life I don't think it really changed, but again could be wrong. Would be here, would be interested to hear your perspective, but you think it has shifted to the better or to the worse.
Speaker 3:I think until, like I, I did that we did university when the ICO boom was was really heating up, I think the quality of discourse was almost always hey, can we get an early stage allocation and how soon can we dump these tokens right? Versus in 2020, when DeFi was taking off, it was more like, okay, how do I track the, the tokens on chain to get alpha? So the quality of condensation should switch from how do I front run somebody else that's coming into ICOs to how do I front run somebody that's going to deploy into a pool. I would think that it just became users that were more technical, that were it was still PVP in the sense that people were still competing with one another, but I kind of felt like it's still more technical than what used to happen earlier. I think to your point about you know how conversations have evolved.
Speaker 3:I think a lot of it has to do with three things right. One is what's going on in the market. Two is, to what extent does a conversation actually absorb that information? And three is, how do the OGs in a community actually discuss about? So what I mean by that is, for instance, last week there was this whole bald token fiasco. I think for 99% of the people it's not worth tracking at all because there was a token show. You could have traded if you were on the desk all the time and you may have made some money, but for the worst majority of late entrants we lost money on that. So at least in the community that I run, we didn't really discuss much about it because I didn't feel like it's actionable.
Speaker 3:But a more quote unquote degen community would have definitely discussed it. They would have analyzed what's possible in terms of a trade. And, you know, depending on who are the quote unquote people that actually drive emotions in that community taking a position, I would think that everybody else would have aimed along with it, right? So, yeah, just some thoughts around how market action and community and conversations really blend together, right? I think with Lopsidao, one of the reasons why I love hanging out there is because the quality of conversation is not just about hey, here's this, okay, I'm gonna buy it. It's more so. Okay, there was this recent exploit, what was really happened here? And it's not just a few people that's driving the conversation. There's actually 23,000 people there. So if you say something insightful or really stupid, you have, like this large community that's either willing to correct you or, you know, say okay, that's something cool, that you said right. So that feedback you just becomes part of the reason why you go back and contribute to that community.
Speaker 2:Absolutely. I would compare on the last North in a. I would compare it to Twitter, really right. That's why I always was fascinated by Twitter. Well, even still now, however, terrible, ux has become a new experience. It's always the thing where, if you post something wrong or good, people will jump on it right, either to correct it or to validate and things like that. So that's the benefit I feel up to.
Speaker 2:That was well, a different platform, I would say, an easier way of communicating. But, yeah, I agree on the points that you made at the beginning of your speech. Let's call it like that. You said that. No, sorry, I don't have a word in my mind. You stand about the discourse becoming better, because it's not about what I saw in West, but what's like numbers, full blah, blah.
Speaker 2:It's you, but this also, to an extent, a bit obfuscating. Right, like many traditional DCs jumping the crypto because oh, here's the fun thing last cycle, all the narratives about this is the point for banking, right, this is gonna be for IOT devices, right, and all of that. That's what people jump on. Ico. That was the thing. They became exhausted because after two years, people see no performance from that narrative by any actor at all. Right, not Ethnic. So those were some B2B pilots with corporates in Chinabell and anywhere. It was okay. This pretty much point. The narratives didn't be in the bottom so many people Myself included well, okay, what is even the next narrative to jumping right?
Speaker 2:Didn't see defy first, but what really made sense is when any industry grows, when asset class grows, it always becomes more sophisticated. It doesn't mean that the pink sheets variable loses its meaning or becomes less. Actually grows proportionally, but the larger area, like what they 90%, I don't know the numbers Becomes more like traditional asset class, right? Traditional brokers, what not? And what do they need? They need trust, reputation and they need numbers. So the thing I feel like they'll find guys got really well on is they saw that narrative and wave of just making up numbers. Right, not only bad way making them up, but they were numbers just taken out of low, like, for example, this is my like those Presentations. You see total addressable market is like trillion, right, so you are at the least one percent and gonna be Ambillion, yeah, so that's the thing and that's what it felt like in crypto and deep fire as well. People were throwing around all of this price to sales a bit dime, all of that right, but there is no. It's a cyclical market for now. There is no recurring revenue. There is no, there are no numbers. It's very, very cyclical, right.
Speaker 2:It's like similar to even the most boring thing in crypto Bitcoin mining. Even that thing is technical. You plan just model at all. A lot of it is just predictions and Spectation of this. So, yeah, what's it? The same thing here. The discord has changed. It has become more sophisticated, but end of the day, just the same. E-gents, at last time, just by operating nice awards, some Basic cell sheets, right, and a bit of on-chain magic. That's what really changed. Advice still gambling or narratives, but again, traditional world is much different from that. Right, you still have a bunch of that happening there. Just look at the work today. I think it jump. The base is zero. Think like fell 25% again they, it's almost zero price.
Speaker 3:Yes, value that 300 million, I think.
Speaker 3:Just just just to tie back to what you were seeing, right? I think what usually happens is, with each cycle, the number of participants in a market really grows, and so there's more scrutiny, and that's why narratives need more Density to them to hold up to a larger market that is now looking at it. Right, like in the 1998, you could sell, you know, rocks or soft toys on the internet, but by 2018, nobody is looking forward to buying you know, any of these beanie baby Trends anymore, right? So I think it's really a function of the majority of the market. But I think what also happens to your point is markets also get more regulated, right, like if you see the kind of DGN stuff that happened in 2020, the number of rock pulls, and you know that kind of madness. We likely have a different kind of more sophisticated version of it whenever there's a Bone market all over again, right, and the kind of players being able to pull that off may look fundamentally different from the kind of players that did it in 2021.
Speaker 2:I Would say it would change in terms of the players that are doing it, because, as you seen, in the last few hacks, everybody was found, which was a very surprising to me. Right, for like two years, three, nobody was returning the money from fast. Right, nobody could find anybody. It would see a thing like in the last set of which were major sites, starting from about every March, right, every happened. He ends my back. I was like, wow, this is cool to see.
Speaker 2:I don't even know what shitty shit that's happening behind the scenes, because probably a lot of it is based on these things that we don't Appreciate is decentralization we like to think. We like this is a right. I don't even know it, it's true or not. I do like the idea. I don't know if I like endorsing it, like we are on the old node, no so, and we even talk about it, yeah, and we can't be critical, but anyway, the style of actors will change, probably from actors if you'll be people in suits making false claims with a bunch of fellow sees and Happened is in the money, you know. So that's why I don't believe a regulation.
Speaker 2:You I see a mellow, anything like that, because anybody who has ever dealt with it. You know how bullshit you just don't. You just know how stupid of this, how much arbitrage there is, and it's simply a game of how much time when you spend on it. You may not talking about weeks of spending time right on the research, a few days and you will like, without seeing some illegal things together. I don't ever participate, partake in that stuff, but you can at least the stories I. You can wash money out of anywhere with other source they are into whatever else, if you just have enough effort behind it. That's basically it as a summary, right? So yeah, next cycle, maybe you'll see less hacks, maybe it will be more safe for users, but end of the day, new users and and client and user and end investor be screwed yes, same as in real world way. You have a Other.
Speaker 3:It's really back to all of them. I think you know I did have a few questions around self-regulation, but you know sort of had a question on communities, so do you want to just hop on that?
Speaker 1:Yeah, I mean this is to both of you, right. Do you manage a community that is, I think, has more than 5,000 members I want?
Speaker 2:yours is north of 23,000 now at your lonely has bots, so don't worry about just saying, just see.
Speaker 1:Yeah, I mean many telegram groups that I'm a part of. Right, they are super annoying. People are constantly spamming. What have you to done to ensure that that sort of thing stays out of your groups? And, like, have you kicked people out on a regular basis? What is it that's made it so civil? And you know, I mean you can actually, as Joel mentioned, you can actually go and learn a lot of Stuff from these two communities.
Speaker 2:Okay, yes, a lot of kicking, a lot of burning. That's the thing I pointed out in the beginning of the podcast is that moderation is a big factor and then you have to kind of be fair, not to moderate people out, but also be very strict when you feel like the spam is there and obviously there is a degree of subjectivity, but people will respect that, the green subjectivity. If you don't do it, or out of man's or other people on that right, if you delete posts by projects that they simply competitors to the backs and into the nose with you, alright, that's dodgy, that shady people at some point will learn it. If you just remove everybody's SHA marketing post, then that's fine, right, it never people understand that. There is just a low degree of spam and flood there and noise, so it's fine, but anyway, yes, so a recipe if you want is have no social life, have no friends. Your partner always the metal to, because you never send that. You only look at that online. When you eat, you also spend time in the chat. When you go to the toilet, you spend time in the chat.
Speaker 2:I'm on job and then I became a habit. No, it's a thing like people, are you fucking those like, yeah, I'm gonna make so much money in that cycle and then it will stop looking at laptop, right, I will stop looking at the chart, I will pick up a hobby, go golfing, I don't know, pick up my tennis skills and things like that, right, and it's, the next cycle comes. They make some money. Then they're like you. Actually I'll stay online. You know. That's why you see, send Bitcoin oh geez, you shit. Post in a Twitter Like people worse, nine figures or more coming to conferences and just bullshit in online. I think she learned later in the comments. I guess it's part of a Weird habit, but, end of the day, if your life is done in small less, you don't have to make it efficient 100%. Right, and people smoke, some people spend more time in the chat front, people give me more online and so, yeah, you can pick your own, so long as you don't get to abuse it you spoke about narratives, right.
Speaker 1:I mean, and I think you are giving little less credit to yourself and lots of doubt as far as NFP is closed, because I categorically remember that you guys were not that late to NFP, right. I mean, you launched your own then. That was like that served as a basis for launching another few NFT projects. I did really well later on. So I was just curious as to like is it the time spent in market that helps you to Understand what a new narrative is and what sort of juice that narrative has left? What, like? If you were to like break it down into factors, what would those please?
Speaker 2:This is a perfect question a lot of it, because it's very interesting. It's one of the biggest questions investors, traders and anybody is asking themselves, right, how do you know that the narrative has been a persist alone enough? How do you know that something is a new narrative and it's organic or just being fed to you, right? I guess you can look at there are different ways to assess it and I just Taking it out of the on the spot, right, I don't. I didn't think really properly now. First, on, the force is time, so the longer something persists, the more likely it is the narrative. But again, if you are waiting too long for confirmation, you're also not that early, right. And then if the question like, is it the narrative? Like it is the new superconductor type of thing, right, which can go on for ages, or it is a narrative like a new shit coin or a new layer? That's a difference, right? So on one you sort of need to do early enough To make sense being in it. On the other, it doesn't matter if you are early or not, because that has more one jelly. But again, they won't. Gemic narratives are very scarce. So usually you like as the movie set, what is the big short. Right, you're in the very smart, you are early and you don't have to be the first person in luck, but definitely better to be before the Middle begins, right? If you take time span, be before the middle starts, yeah. So about there it's then. That's one right time Assessment.
Speaker 2:The second one is where the noise is coming from. If the noise is coming from the participants in the market, who only ever driven by price and again, prices are important Prevents is a big validation of narrative being real or just being fed to you by the primary market using liquid. So this is different, right? So if it's coming from developers and people who mean something, then that means that others will be more likely to listen to them. It was coming from your favorite anonymous Twitter influencer who is tweeting it alongside a chart going up. Then it is less likely it will stick by, right? So if it's coming from developers, you can know that it probably will have some legs.
Speaker 2:And if you develop or use is talking about the Same thing, or, let's say, it's coming from the top, like usually foundation of a protocol or foundation of an open source code language, right, or something like that, then you know it's a piece, has merit and again, it was coming just for calculators you can most likely disregard, unless you are a short-term trader, then obviously you'll think to jump on it. But then, as you made an example with bulk before, then just know that until and as soon as six hours as you buy not six months, not six weeks, but six hours, and it was to the unlikely you will exit at the right time. Did I pick on everything or you would add something to it? So time, who it is coming from? And yeah, I guess those are the main things. I will not even sure if it's, if there is anything else to it.
Speaker 2:I would surely love to know a couple of examples where you caught on to something early and and somewhere where you thought that it's going to be the next narrative but it didn't pan out to well, let's start with first example that I'll let you ensure I caught on to, because I never really caught into it, nor neither did it ever become a narrative from the spectrometer in a point of view right. So much sure, it's actionable, but account obstruction, right. Many people say that account obstruction, with the hearing, really the smart contract bullets definitely existed already, was three years at this point, right, there were even protocols like Projects like instadap, argen and others, right, trying to do it. So it's not new at all. But now it has been pushed much more. So back in the days you could say it was a narrative, but for three years it's somewhat well, nowhere, I'd. Let's say for two, again, it doesn't have anything tradable because none of this after the tradable, so you can only have a derivative of a derivative. Some would be in part of the market, right, but in general Not really so. But they. Just. One example, like just for those lists.
Speaker 2:And you think for yourself, did you see a counter faction becoming this big and this talked about, or no? And again, while the reason why resurfaced again is because the theory of foundation is pushing so much, because we see it as the next wave of importer, as they like to say well, one billion users coming into the ecosystem. And other thing I guess you could look at is oh, remember when AI picked up a lot and India was the main big beneficiary, right, a bunch of other small stocks, and in crypto there were a few shitcoins picking up because of that and Probably that cycle I haven't looked at the performance of those coins, by the way. Think that cycle lasted a bit longer and I thought it would be because it felt like it's like a one-two-week hype in general, but because there was more fundamental value in it, show companies and in the real world. That's why in crypto, it lasted for a bit longer. I don't know how is this episode about now.
Speaker 2:But yeah, one thing when we talk about the AI and after, okay, all of this, illiquid seed investments, people did, funds did Insane valuations was that smart? I mean, I'm very much pessimist, so I would say that was very stupid and not, in hindsight, was obvious. It was going to be stupid because you couldn't really connect the dots there the way you wanted as an investor. But again, we have yet to see how that will get out right. I don't think anything has really listed right. All of that is in liquid for now and only secondary market is pricey and the fees was very, very late, absolutely, absolutely late.
Speaker 2:I bought a doodle at the very peak the day jump to 20 Ethereum literally. So I was very, very stupid. I could say my girlfriend is a fault for that because she had one, since it was one you think she forced me to buy when it was 20, so she used me for a quick with you, but she never sold hers anyway, so whatever. So yeah was very, very weak to that. When I bought it though you didn't see that it was in America, the dollar, just thought it would go higher. I never looked them. It never made sense to me as collections.
Speaker 2:Mk collection because at best, like in lobster dollar case, is just a tax to the community, right, all of this rarity and other stuff is mostly just for gazi gambin, which is fine, right, as an asset class. Now the question, I guess, is what form will they take? Will they Evolve just as white to white, tangible passes, like picketed mostly, like more with tickets in red, exclusive ticket in panda, video influencers? Will it be more like one-to-one collections, so like one-to-one pieces similar to art and real world, right, or something else? So that's interesting because that's yet to be discovered, since the activity and the prices on I believe in all of those across the board have fallen Dressed the hardcore, so it's hard to say what is in outlier now.
Speaker 2:What are the narratives out there? G5? Um, I guess, compared to many others, I was early to it, but I sold it also earlier. So this is one of the things that is bad about narratives and being early to them Is you sell early as well. It's like many people who are deaths, who bought the theory of it.
Speaker 2:Like what was it? What was the theory of it? Like the lowest, and I think it was a dollar right at some point I came in a few cents, I forget. Like, let's say, do all ten dollars. They sold it well before 50, because another day when you look at it, they're like a five X, the format. See when, on some a new ground breaking knowledge, would you take the crop? Probably right. Like, why not, even if it's your own startup? Like if it does a 10, x and it's liquid, really great. You, of course, don't take off, as they say, you don't take all of the chips of the table, but you do take a major job, unless, of course you are some AI over a lord and you think this is gonna Inslave all humans, but that's another topic.
Speaker 3:I think. Look a bit where you mentioned, hey, you can be early to narratives and sell early. I think an ugly version of that is being only to a narrative and Waiting even before there's a commercial outcome for it, right? So I see another founders that come to, let's say, defi or or NFTs, and they were well ahead of the time and they simply didn't have the Resources, so they shut shop and then, three months out, defi summers on, and this actually happened in the last site, like I know. But at least two or three founders that shut their ventures in December 2019 and by June 20, 20, it was a big deal.
Speaker 3:I think a different way in our display Shape is in the minds of an investor, right? I think what I once said in terms of the logicity of a narrative is very, very real. What happens is people form absolute faith in a narrative and they tend to think that it's going to be the case forever. But what happens is narratives evolve very rapidly. So, unless you are Very close to an in-group, if you're training on a narrative, chances are quite high that you are actually the laggard or the exit liquidity for a number of you know, early adopters. So in this case, more than selling early.
Speaker 3:You're entering very late, and where I've seen this often is a lot with People that are in tradfi or venture capital, because they always, always form their opinion from public news outlets and they are usually the last ones to cover something right. So I think it it. It comes back to even things like superconductors and AI and the like. Right now, again, going back to what Ivan was saying, those trends last for longer because there's a deep Technical angle to it, but things like you know this conversation about gamble fine hour, this there's also conversations about social tokens are wild back and these things died really early and the reason why a number of people End of news money them is because they hold forever instead of just seeing it as a trade. So if you're playing the narrative angle, I think this could be very clear in your mind. As to are you Trading a trend or are you building a position, because the tool can be very, very different depending on what you want.
Speaker 2:From that I'll come right we can on that, just to any little point there. I love cover a couple of especially American friends from the US who are investors. When they talked about Byton, of peace and trade in shitcoins, which is like they knew what they do it right. But the psychological you referred to it as Wiron sits building a position. You know it's like a meme, like when you get so much into believing what you think is true is true. And again, okay, the degree of conviction, right. But the question is always like, again, this is like by the longevity question, right is it, are you too early or early enough? I'm you too late or late enough? Right, like that's kind of thing. And honestly, if anybody is looking for a reply to that, there is no reply. Whatever they do, you use which is the person gaining fuck ball and you don't know the truth, whatever they tell you you will be gets in the wrong conclusions anyway because there are so many externalities. It's honestly like if you are low, be Reports.
Speaker 2:Me and Joel shared with each other a few couple of years ago even about venture capital, about stocks, investment, so we touched upon the public markets as well as primary markets. That now, because everything is a narrative and because market it's so reactionary and so much base and close right rather than Everything else. End of the day, unless you are trying to get in politics, your capital, you are better off just being in this console, in this don't. Because, end of the day, venture capital is an index right like it didn't be testy wide for many years. It was the same. It was even under before. It is even under performing right as we speak right now. And when it comes to crypto, similar thing. If you look at BTC and performance of outs, only like two outs made it out.
Speaker 2:So if you are in a cyclical market, you have to place. You're not in a cyclical market. You can. You can even build the position right. And is the question like are you? I guess this is the question you can ask yourself Are you in a cyclical market? Are you in the market where you know the value will see? Can you build position? So what would you can say about crypto for now, are you building a position? I guess you could say for ETH right again subjected. So even PC, you could made a target, but for any type, don't see how there is. They can stop yet.
Speaker 3:I'm just gonna add a couple points. So what Ivan was saying. Right, I think a lot of people don't have positions. They have beds that are very time-bound. So one of the things I've learned in the market is they extremely wealthy. They totally fine if a bet goes to zero, whereas for certain people they're playing with rent one. So if you're playing with rent money, you don't know, you do not have the optionality of playing a cycle. You have a time-bound outcome and if an asset does not hit a certain price point within that time-bound, you are forced to set.
Speaker 3:But a different way that this this also played out is when people think that you're supposed to hold all assets forever. Right, like in 2017. Everybody used to believe that what will mean? And then there was this ETF Ruling. That was actually no. Actually there was this whole CME listing of, I think, btc assets and BTC went from, I think, 14,000 to 17,000 overnight and then it was just down only from then.
Speaker 3:What happened is a lot of people were holding on to assets, thinking that the price would go back up, but at least 90% of the ICOs that were around back then never really came back to their all-time highs, like there was a small subsection of the market that did go exponentially high and you know, people like both Ivan and myself May have sold tokens at the lowest, but they get. Part of the reason was because you didn't have the optionality. You had to sell to just cover the bills. So only people that have that kind of runway actually have the optionality of holding on to assets forever. It's what I realized. And with BTC and ETH, if you build positions that you can hold on forever, maybe it'd be fine, but if it's a time-bound bet, nobody really knows where the market is going to be, like two, three months.
Speaker 1:I mean if you're building a position that is probably for the cycle so and so right. I mean if you're doing that for one month, unless you are very close to an operator with, you know, a high stack of assets. Yeah, I mean good luck.
Speaker 3:No, I think that's this element of what what's referred to as Mimesis. Right, like you tend to do the same thing that 50 others are doing within your network. Like a lot of people go to law school, because every smart person that they know is going to law school. I, when you join a smart a community and you see like 50 other traders making like X dollars Taking these outsize positions, people are influenced to do the same thing and that's why retail Behaviorist is almost always. What do you say in hordes? Right, like they see one another and they do the same thing?
Speaker 1:Um, to both of you, and I mean both of you mentioned BTC. Any, if I were to put it like favorably at this time, wherever we are in the market. Is there a third asset that you add to that bucket? The only possible candidate that comes to mind, the Solana. I'm not sure that too, because of couple of things. Right, one is off lit. There has been some uptake in activity. The metrics are improving. I don't know, I mean I would, you can speak to it, I don't know.
Speaker 1:Client level decentralization, to what extent it matters having multiple clients, because, as I understand, if there is a bug in original implementation, there could be weird, like implementation of that across clients and then Trying to address that becomes even more difficult. On the other hand, like if there was no bug and Suddenly something happens to one client. You have something like couple of other clients to fall back on. And another thing that I would add in favor of Solana is, in General light after the fdx we asked for, especially totally, the discourse that I've seen on Twitter is not one of those founders who Will shut up critics for no reason, right? I mean he seemed like a guy who takes it on the chain or whatever. So, yeah, I mean, what's your thoughts around that?
Speaker 2:first of all, sir, please go wash your mouth. Second, well, I don't have a qualified opinion because, again, as Joel said before, you can't think one opinion here. What the mxs you look at, I can say any other ecosystem is also kind of a bit of an uptick, right, it's not difficult to have an uptick after you have a major, major desk cycle. So it's the question whether just that, as they treat us call it, the debt, get bounce right on actual reversal and in any way all of this client diversity and other things. Of course you can argue for their benefit. You can also argue for the useless uselessness, right in their position and of the day. I was, and I'm sorry for a very dull reply.
Speaker 2:Assessment is what the next improvement doesn't offer over other things. Right, what does it actually do better? Is it better? Desynchrolization in the bad things, decay? He's a better developer? Onboarding? Is this the ball with geography focus, which I wouldn't say it is right because the area Miss penetrating up in each decan communities. If Salana was doing it, let's say specifically in India, vietnam and what, for instance, right areas where theory might not be that set Out well and you could argue if it's wrong or not. Then maybe a tennis improvement. Would it need to be there? Because they would and they don't. So the question is, what is it that they have that is a 10x improvement. Previously, last cycle, that was the 10x, 16, 10x degree right, 10x funds, who were all new, shiny and supported it by Donating the LPs mining with the outcoins of Salana, as many have done. But yeah, apart from that, what is there right now? Not as fun, you know, but like what is they? Maybe not free, bad, but what is the what is good then in the question?
Speaker 3:I think a different way to think about this sort of is most of the large capital sets, like you know, salana's, you know near even polygon I think I see all of them to be giving similar return profiles as Unlisted equity in a hot narrative.
Speaker 3:Like if I take Nvidia or any of those stocks and I compared with how some of these digital assets have performed, I would see that the equity market scares better at once, so long as I'm looking at editors and we are in the current you know bear cycle that we're in.
Speaker 3:So in such an instance, the opportunity, in my view, is to go to the absolute other end, that is, you know the assets that are so battered that it makes sense to take a small position in them, because there is a product and you're getting a discount on the team and you know just the overall valuation of the asset itself, because the outcomes are big enough for you to justify the risk that's there. So I'll be looking more so at really small all coins in a good way to just think of it is go to sentiment or coin get, going to get coins with FDVs with sub 30 or 50 million market caps, and then that's. That's where I've been hunting. I don't have a pick yet, quite frankly, I've been just. You know, I have become an equity maximalist because I've seen it outperform some of these digital assets, and that's just how I've been thinking of it. I know that's a very dry, boring answer.
Speaker 1:By equity maximalist you mean.
Speaker 3:Listen, let's listen. Equity is not not I mean so if it. When it comes to angel investments, I'm happy with two outcomes, right. Either you build something phenomenal and you fail colossally At least you had fun in that process or you give something that is a return that is meaningful.
Speaker 3:I think the worst case that happens with equity and I think this happens with a lot of angel investors is you invest a small sum and now it is there in the back of your mind for the next three, four years. It's growing very, very slowly, while you have an opportunity cost with other, more liquid assets, including Ethan, btc, right, like if I had to put in, if I had to ask you. You know, hey, there's this angel investment. You can't speak to the founder, you can't really do much. Dd, it's doing a very lot of the mail. You're 20th variation of the same theme that's been hot in the last six months. What do you put $10,000 into that? Or would you put it $10,000 into eat? I would think that for the worst majority of people, just putting it into eat or, or BTC, or even illicit equity, which you'll find, might just be a better outcome, and that's been my observation in the last few years yeah, what you're saying is totally true and of the day.
Speaker 2:I feel like when people try to ask what is good or what not in In terms of when it comes to money, the answer is always based on two very depends is Very, nothing depends. It depends on your side of capital. This, it. It doesn't depend on your age. You know, I would this.
Speaker 2:People always say, like, if you're young, you should take a risk, right, well, no, I don't know, like lose all my money and taking so much risk. So I want you to say it's true, you'll just get everything. You said, like when I was a student and I think for many people last cycle, and if I was the same, like, okay, you had like, and let's say, a thousand dollars, that you own a part-time job, right, you could go for vacation. You could gamble it in the two shit coins. I would say a better around, or how do you call it? Risk return right, I think you put it with your shit coins because if you burn it, nothing happens, right, okay, you didn't go to one location.
Speaker 2:I wouldn't say it's that much bigger deal. But let's say, if you would say, kind of, because you work, you say that a bit, your company Should you put like a third of it into shit coins right now and the third into a term and the third into something else. Okay, that depends in the circumstance, because if I'm a climate and what's not, if you are, I don't know, 25, I would say the old you. Okay, maybe put in a half into risky stuff, as it really I think depends on the size of capital and yoke, how many gates you need to be, so how much runway you agree they're going forward, how much negations you have Providing what's safe for you, for instance independence, and yeah, that's it. I wouldn't say them Ages relevant to me here.
Speaker 3:I think one of my bone to pick here is the idea that young people should take outsize risk. Right, because I did this Early on in my career. I used to think that I should invest into every good startup opportunity that I see, and then I think it goes back to what I Would. I say it really depends on your personal situation and the kind of runway that you have. If you have it as a Systematic part of a larger liquid portfolio where you have enough Runway for a while, then it makes sense. But I think if you're in the startup ecosystem Again it goes back to me misses like you know you're, you're imitating what everybody else is doing. You tend to think, hey, I'm falling back if I don't put it in a check. It sounds very ridiculous when you really you know, say it out loud. But that's, that's one of the driving factors that I've seen for a lot of Indian investors in the, you know, in the early stages of their career.
Speaker 2:A friend of mine said who already made one cycle, you're up in the North in this book. He said also all the degenium environment and shit-coins down and just been doing Private sale and seed round allocation that has essentially closed and that and have stolen low money from him. That that was like it's a very true. Somehow it turns out to be true because if you keep an angel investing throughout the entire bear, it's as much as losing a big child just farming. You know, you do it. Yeah, like wow.
Speaker 1:That that's me about the risk and age, right, I think. Recently some reporter asked Martin Scorsese about this new movie of his killers of the flower moon. I think he asked like, this movie seems like a big risk, why did you do that or something of that sort, right? So his reply was look at my age, what else am I supposed to do besides taking this? So yeah, I mean that's quite counterintuitive to. He was young. I'm old, wisdom, I think, mid, mid-age, like my dad Maybe.
Speaker 3:Yeah, so I think, I think sorry I'm rambling on and on and we should be questioning. I went more, but just just one one point there. Right, there's two kinds of risk. One is your gambling or the outcome of a third-person's effort, which is great Like it. You know, when you're investing in our startup, you're really doing is you're betting on a third-party's effort yielding results. And a different way to take a risk Is that you know you, you own the outcome, that you're working on something. I think what a lot of young people get mixed up is the two if, if, the only way that you can make money in your early 20s is by betting on a third-person, is you what you're basically doing, is you're outsourcing your fate To externalities that you cannot control? I think that becomes a very you know, I think that that would be a bad habit to a crew really early on in your career. I give out a good Ivan. He's also been building and better than that. That. That makes sense.
Speaker 2:I'm changing. Yeah, so, of course, like, if you, if you have a choice, but then you choose both, you have a larger, a better outcome. Right, but if you have to choose one, but no, it's you like what there was a Pgm Spartan on Twitter says right, you in your early 20s you don't have seven figures, what do you do? Go get a fucking job. Well, get two jobs. It's not that you're aligned like what I did in your first, I just do it for you as well goes. Yeah, so I'm not sure for you, but yeah, you just limit your social interruptions, you limit your hobbies, you work more, you participate in different ecosystem. If you want, you can even be in doing this at the same time. Sure, you will have less friends left time for yourself. But I mean, it's choice, right. If you want outsize return to faptocapp to an extent outside sacrifices, you don't have to have it for your entire life. I'm not saying be 15 this isn't in your mouse baseline trying to limit your Exposure on expenses, right? Not having a girlfriend and not traveling ever? No, that's a bit too much. But if you want to have a bit of a boost, you have to take some.
Speaker 2:You have to do some things a bit different, right, and you're gonna force when you are in a comfortable enough position, then change your perspective.
Speaker 2:Like, for example, when you have a billion dollars, I don't use it and it does shit coins or crypto ever, right, like, if you have billion there while we jave and put money in VTC, put it in SPY bonds like 30, 30, 30 percent, right, present of the day, you can. Even if you feel out of this and you give millions of dollars every year by the time you die and you leave money for your kids, for instance, or something. Right, even after inflation, even after everything, even after losses and some stuff, even after recessions, you still can't spend it enough, right? Well, if you have 10k, you can forget that 30 existing ten tried years from now. Like this 10k you have today, unless you multiply, there's gonna be zero and yet and it's just true, right, this is at least inflation, with something that you kind of aren't with it that will be there always, can't really go away unless you all die tomorrow. That's another way to look at it.
Speaker 3:I think part of what's missing in this conversation is the concept of leverage. Right, like a lot of people think, that can get capital leverage, but what you want, for instance, has built with lobster now, and this is a very funny way to put it is the community is a form of leverage, but you know you can actually build something and scale it with that community a different way. People will leverages on Twitter Right like you. You have the distribution and that becomes your leverage. The problem in capital markets like ours, people bet heavily on what do you say? Just financial leverage, and they completely forget all the other forms of leverage. And I think when you build and bet, I think what happens is this fine balance of leverage and capital coming together to Scale your outcome much better than you can do it with just building or betting alone.
Speaker 2:We agree, yep. Different kind of leverage stick it up. Leverage and basis points are a half-fucket. Yes, no, no, yes, we should, we should, we should. They get a gearbox at the same thing goes for yourself, no, but it goes for you guys. You build in the community while you also invest in a disease on the same time. Right, so it's. You are also leveraging a few different things. At the time when I was also early in crypto. Well, look, earlier, if you kind of start doing different things and you're very early because you have, at East, have one thing cemented and be going, well, right, but you start finding a part-time job or a part-time consultant, certain things like that, and then you have the diversification Without extra financial capital, so you don't even have to have that energy capital, obviously a partner having allowed open food, which, again, this first opportunity must provide you, right? So, of course, there are many. If some concept should be stays the same.
Speaker 1:Yep diving into gearbox, like what happened exactly what was the park? And can you tell us, I mean once someone detects this, because Joel told me that you were involved in sort of defusing the situation, right, so what exactly go on, goes on behind the scenes, when someone detects a bug like this? And yeah, I mean you can just walk us through the story on good question.
Speaker 2:So I'm not a dead right, so I would like to have the show first hand view. But of course, since I'm poor enough and they see it from different chats where developers are, I guess they could give a bit of a Close enough story. Well, once, something like this I was really there is like a suspicious transaction or something popping up, right like bum had happened. So then get shared immediately, first in the deaf chat and Twitter as well. Right, those who have the monitoring bots and then people start looking at it Immediately. What everything looks at it is that they have exposure to the shit on or right, and if they do, what Mitigation record, the, for instance? You also have to distinguish two different things right. One is liquidity of an asset Degrading and the majority of liquidity for the assets will be in the market right, which means that we're there, the Fear goes away in one, two days. The position might recover right now, but again, this really happened. But it was a big question for you, st. Right for Luna, there was liquidity still for a day. People look at it evaporating, evaporating. Same trip tx right. So the growth are going through.
Speaker 2:Many people were just not delusional, but they really believe them the good guy, it's all be fine. So, but then when you look at it, you're okay. If you waste a bit in slippage and you waste a bit on gas fees. It is better than having your position be wiped out, right, so kind of you should always panic first. That's what they say. Right, always panic first. You don't have that outsider, you only have downside if you panic first and again we come back from this is team protocols. Looking at the there, you actually do have to be mindful about freezing the next sudden decrease in its boring. All the things can that right, because if you do that, you do affect your users. But the question is you have users on both side, borers and lenders. Right, because they're talking about rented protocols. Now, majorly, by protection, one side, you will offer a state or other side directly, which is why which is one of the reasons why and I've never used it, because it was quite obvious who the main lender was, sorry, the main boarder, which was Michael Igor from pure, and by implementing Strictly conditions, as some of the people in the other governance advice, they would be directly spoiling the relationship. Basically, right. So it's Actually the politics involved there. And because there is politics involved if we tried to make a causality line. Why is there politics involved? Because there is flexibility and there is a degree of influence. The protocol beat multi-segment Govinds. Being team right doesn't matter right, but the reflex ability and control they can impose to change rates, change position value and change what not. Because of that.
Speaker 2:Now there is, of course, all of this move towards Governless. And then listen, everything right, fully decentralization or all of this stuff which sounds fantastic. But when you get to the details of it, to the depth of it, you also understand that there are caveats involved with it and it's not all black and white. Back to you see, a big question. Let's try to make it a bit more concrete. So that happens right at team assesses. Okay, what's actually going on? Do we have any exposure to it? If the answer is no, well, then see it. Find right to go help others in the chat to recover or help read the concerts, right, whatever.
Speaker 2:If you could look at Exposure, then the question is how can you mitigate? What Tools do you have to do it? Do you freeze the market, but then you suffer from not being able to liquidate? Maybe do you not unfreeze the market but you force one side to either repay or withdraw or deposit more right, for which way will? The other trash goes through. I then you look at it and, of course, then kind of jumping back to governance. Question is how fast can you implement it? Do you have the merging, some multi-segment that can do it on the spot, right? Do you have a time log that, even after signing, makes 48 hours without to be executed, or do you, like other, have on-chain governance? Where is for these difference? Or does it really different, right between post and the proposal voting I've been being implemented thing?
Speaker 2:We then get to get yet again. Get to the question of flexibility in the socialized systems, where flexibility offers a degree of Influence and the ability to improve the product. At the same time, it also means control, and control is always bad, which is why many people and crypto right to remove that control and paypal, for instance, blocks you. But in this situation you can sometimes say to benefit because in this case, what happened? You had Ava abracadabra meme and inverse finance and finance being there.
Speaker 2:I've abracadabra and inverse, I believe I able to change their rates and kind of force the end of either one side of the user base or Another. I will have on-chain governance. That would take at least three days. So if anybody of them saw I would do a very correct and Downward pushing movements, restriction the position right and forcing the gradations. They would be Essentially thrown, run by everybody else because they didn't have full on-chain governance right. So it's kind of a game of musical chairs as soon as the ava would turn music off and then everybody would act in sync with front-run them, which is quite interesting to see. Anyway, I said a lot of random things, which one of those particularly interests you?
Speaker 1:yeah, the part where the control is sometimes good and Mostly bad, but sometimes it's absolutely necessary. So how do you think we never get? Is these things point forward?
Speaker 2:There is one which is absolute values and another one is product. As we know, with products, products need to be always fit, kept up to date with narratives, k tapped to date with what user experience demands, right, what users you want, which is somewhat impossible to do if you have a fully break deploy contract version and the same time, those users who are here for and this is an interesting point who are here for decentralization and salute, how do you call it? Nobody's influence, right, nobody's controlling. They are fully autonomous, right, autonomous, I guess, self-control. They really love systems like equity, for instance, ldsd, right, where nobody can do it, even if they want it, even if something bad with a, nobody can do it. And that is a big product selling product, usp, unique selling product proposition, right, but at the same time, okay, liquidity exists, right, love them, absolutely. A big hold of liquidity. Ldsd myself, because they find it the most safe out there. But then STH pops up, right, so liquid state in different forms, liquid is a bit version. They cannot add that collateral, so they kind of have to cope that. They cannot edit by saying we are the best, which is true to an extent, but there is a large user break that wants to utilize as the age because it's collateral, that actually is yield bearing at the same time. So you have those kind of things to balance out and, end of the day, a lending is still not even a figured out market yet. Right, like stablecoin is clear. I want stability of my stable. That's pretty much it. You can make stability happen with other mechanism. They thought it quite fine like it. Maybe it's actually it's a bit, but it's decent enough.
Speaker 2:When you cut, when you have a lot of different assets, you pretty just this is the great and everything like that, and it's a much harder product to navigate. It's not as clear as an old memory. I remember you there and you traded kind of more straightforward. There. It's less straightforward. So Even as you build it lending like liquidity, right.
Speaker 2:So fully break version you still have the point of it. You still have this thing that it needs to be a product, and when lending needs to be a product, you kind of have to build them on top of that thing. So you just sacrifice it, but in a different part of the day. End of the day, the user has similar risks, but the underlying system has less risks, right. So it's whether you're building it from the perspective of the user, to make it better for them, or, more so, from the perspective of the system being resilient so anybody can build it on top. It's like I know everybody loves building infrastructure, right, because infrastructure is such a big narrative, everybody's gonna use it. But when you build infrastructure, you don't build the product. So that's the big thing, that's the big difference. And most, because it is flexible, is somewhat better Building a product on the longer time frame compared to those who don't have that ability. But again, pros and cons everywhere. I wouldn't say I'm that expert in this opinion, but this is just something to think about.
Speaker 1:Yeah, I mean it's interesting. Right in general, it's all about rados almost everywhere, right by building these distributed system.
Speaker 1:I have one question related to how People go and usually, like you know, announce it on Twitter. Like it seems like Whenever something like this happens, there is almost a race as to who's the first guy who talks about it on Twitter and says that there are more Vulnerabilities that exist out in the wild. Right, I mean, say that one pool gets exploited and you realize that there are multiple pools which have used similar building blocks to construct. So, instead of solving the situation first behind the scenes, you just go on Twitter and make it public and even though the targets that were sort of Torment before and they are now active targets, right, and whoever is the bad actor has the site on these targets. So, like, what do you think about about this in general? Like, going to Twitter and immediately.
Speaker 2:That's absolutely nothing. So, no, no, and that's that's the most targeted you can do. And anybody who does it if you are security from, usually literally have no brains. So that's very bad to do because you will get some lights but you are basically hurting everybody else. The best way to do to go about this is to report to the teams or developers in those doubts were able to Carry out the necessary steps to secure the funds right, for example, the white-hawking group or something else.
Speaker 2:Of course there is a degree of trust you have to put into these people right, but unless they themselves Execution, they attack because they have a backdoor which, if they are not, then obviously they are to be trusted. And if they work on something for two years plus and they didn't make any backdoors, probably it's on them doing so. You I'm a beginner trust, but you kind of here because there is kind of no other way around Inefficient and fast enough way. I think at this point some June from paradigm posted yesterday that they made like a chat with a few devs where If some hat keeps happening, they will just report it to the bot that gets it to them and then they have enough network to actually go to the teams and tell the listen guys, developers, right, this is happening, so they can, discreetly enough, warn affected pools and affected protocols so that Necessary action could be carried out without explaining the attack to everyone else around, which is the best way.
Speaker 2:Probably there are better ways of doing it, I don't know, saying encryption, some other stuff, but that requires shield bigger systems to be built, so it's probably just not not flexible enough and not fast enough.
Speaker 2:But again, that could be built later. But I'm not sure there is a new need for that and of the day, any team has about like a couple of developers who are very senior, so you just need to get to them. And this gets to the point, though protocol tier is on any kind of company having to be global enough, because things related to interface being online 24-7 right when it comes to things like finance and liquidation, you need users to be able to constantly interact with it, otherwise they will be very upset when something goes wrong. And, of course, monitoring all of the smart contract stuff. You ideally want to have people in different time zones, which is something that I've seen in HR happen in HR happening crypto that when they get somebody for server stuff or hosting or something like that. They get like two people and then they're both in different time zones to an extent.
Speaker 1:Interesting. Yeah, I think we can switch gears. I want to talk about lending. So I mean, as I understand, like our way compound, they were probably the first generation lending protocols and then comes gearbox, which sort of disrupts the borrow side. So I mean, I mean, if you can walk us through what the genesis of the idea was, what is it that you guys saw as an opportunity and decided to build gearbox, and what the whole journey was?
Speaker 2:Love the question. Finally, time to show. Actually, we had the first ever team call. I mean we have a DAO right, so it's a bit weird to say team call, but I mean people who are mostly contributing to gearbox. I don't know why Joel wasn't there, but we all know he did it the way she has new friends. Anyway, we said it.
Speaker 2:On the other hand, we were talking about, like the industrial landscape, the narratives, because there is a big part, which is what we discussed before, which is narratives right, and even if they're sticky enough, there is a big difference between narratives and product. Your narratives can be two years earlier to the product actually being playable enough for users, and if your narratives are related to lending protocols, which actually are very close to products, it's not the same as, I don't know, building a network right, and network can even take three years to spin up and pop up and do better. But something like LinkedIn needs to be out in the market faster. You cannot just be building it as intra for three years, I believe, because then you will really miss out on your work.
Speaker 2:Gearbox is a composable leverage protocol that probably makes no sense to you. Let's put it differently it's account abstraction, but for credit. So imagine having credit in web3 in credit, in crypto credit and other form of credit. Is leverage right? And now that is realized by the transaction which is my contract wallet that everybody talks about recently. So it's a leverage in an essentialized way about any KYC trust or anything that's fully based on math and code. You can come in, you can take 10x leverage and you can go marching trade. You can go leverage farm. You can potentially go leverage options, leverage perps although that probably makes no sense. And if T is a petition, whatever, it is right. It is a leverage layer.
Speaker 2:And then the question is what can you actually leverage right? Of course, as time goes by, you can leverage more things, but you cannot have it all at the very beginning. Yeah, so it's. If you had to give a key words leverage protocol, essentialized leverage, credit accounts, abstraction so it gets into that. And also, many from chat find always prime brokerage. So it's like, defiantly, it's prime brokerage. I called it at least puts it somewhere on the map for you like a leverage layer mentioned that. And then the question is what should I talk about? There is a lot to talk about. What is that?
Speaker 3:that is most interesting yeah, if you win, I think I'm gonna be good to just talk about who's the idea, the user here and what do you expect them to do on the platform, right, like what's the kind of behavior you expect from the user, right?
Speaker 1:and please also mention the how it works in a nutshell, like user goals and deposit asset, deposits, assets.
Speaker 2:Then okay, yep, so the protocol started actually more than two years ago, was started by me, co, who is a record inventor. It was done with a ton that eat global hackathon in January I think more than two years ago, and then at the world over time. Why I'm mentioning this is because the evolution is important for this idea, because when you talk about leverage, as I mentioned before, leverage can take form in very many different ways and evolution is important because evolution likely came from somewhere right, like why did people decide that one thing should be built first compared to another? So at first it was just margin trading on Uniswap, but if you do it as credit account abstraction, you are able to have leverage for anything. So then it transposed into leverage for G5. It started to be one two years ago as being leverage anything.
Speaker 2:But the point is and this is actually great for the conversation about when the protocols you asked before is when your narrative and your conceptual ideology is versatile and can do anything, which many learning protocols can do. There is still a question of how does the end user interact with it, and building good user experience and interfaces is still very hard. It doesn't take one month, it doesn't even take one year. So there is a big gap between what you think the product can do and what can people, what people can do with it at the current point in time, and what the bootstrap is. How do you actually get? Because, for instance, you can conceptually leverage was probably need very predictable rates and you need to have a lot of liquidity. So before that happens, you need to have a different bootstrap so that liquidity to come right. That's what I mean with evolution anyway, when we talk about users, the two which once a year ago was focused on leverage farming. So, like you take more capital and you go to deposit to cure finance via convex and others, right, like leverage farming.
Speaker 2:So the leverage delta neutral strategy is yielding high percentages. It grew to over 100 million TPL and on the borrow side they were no incentive so you could say it was decent PMF on that side. But because of the market and because it became very various, the market delta neutral yields have really degraded. Right back in the bull you could have delta neutral at 20% easily. Now if you find fine, you will already get a blow job. Really, give up somebody because that's really high. Okay, not fine, right, a delta neutral is pretty high right now, which has degraded the law as such. Leverage farming and the TVL of these protocols has degraded by law so that because gearbox is like a market, like prime brokerage, you have one side being sublenders who just provide the capital and then the other side, borrow, is out of leverage and when the rates the leverage side pays as low due to opportunities being limited rate, it means the rates for the depositor side, for passive lenders, to be small and because it's small they don't come right. So it's like a typical marketplace chicken and egg dilemma.
Speaker 2:So the next iteration we're going with is next to leverage farming. To leverage trading mean margin trading, which is very different from perp's option rates, and else because it's spot liquidity. So there is no house you have to trust, there is nothing. It's pure, pure like I don't know pure. Okay, I will not say it's pure, it's pure liquidity, which is very different from other avenues.
Speaker 2:And why this is interesting is because traders are able to pay much more as a borrow rate compared to those doing passive delta neutral positions. Right, because in trading you expected these like what, let's say, 10% in a week. Right, you don't do it for less. In delta neutral farming, you expect 10% on a year. So I'm not a map guide, but people could pay as high as five ten time apps more borrow rate, which is great because that means passive lenders will have a higher deposit rate put in and if they put in and they like it, that means there is more capital for the leverage traders to utilize. So it's a chicken and egg thing again. But, yeah, v3 should be October, november, before in Istanbul, really looking forward to it because the new system granularizes risks a lot. It is comparable to this ring in its own form because it has limits to collage rules, but it's built absolutely differently and it's an absolutely different use case. It has both leverage farming and margin split trading and is flexible enough to later on add in the fees or whatever.
Speaker 1:I also depend on matching yeah, can you just break down the difference between the current version and what we are going to launch, the biggest?
Speaker 2:difference. I would say well, apart from all of this gas the musician keep removing backcode right, and all of that bullshit what really matters is actually the different, similar reason that we do. It obviously is, even though the use case and the PMF is there, I mean product market fit to an extent I'm a little also doesn't have collateral limits. So that's what happens here, me right, you cannot limit something already when it happens. So you just don't have it. And I mean we can. You're both the same thing. Because when you speak about leverage, your risks can set you. They're not high at first aid, but they could conceptually be higher than even in what in protocol that work without leverage, even though the old camera leverage in the back of their mind. Because if you're not able to label collateral, you can at least want your assets. For instance, if I want to add a paper token which probably might have a lot of traders, if I have no collateral limits, nobody stops from a bunch of pet being deposited when used, for instance, or at least like it could be manipulated. With collateral limits and quotas, essentially like quotas for asset rate, are you able to limit those things, which sounds maybe not as big, but it is actually very big because that allows to add from arts in trading, like even the liquid stuff can be added, which is the cap of like 500k, which would be nothing for the protocol and would likely be fine because they would be pretty super. That it also allows to go to layer 2. It's to go to other ecosystems because of the theory among many assets you have deep enough, even not that deep enough, but they deep enough. If you look at layer 2s, even a theorem liquidation layer 2s is quite scarce. So that's based if you allows for that to happen.
Speaker 2:And there are a bunch more things. For example, the latest merits of being bots right, like whether there's uni bots and a few others, right, absolutely the range technology which holds your private keys, but very good UX are similar thing. Gearbox allows for that to happen, but in an inter-essentialized way where you can approve a bot on chain that executes whatever strategy you want and whatever I mean, whatever. It depends on what, what you select, the stop loss, limit, orders, throttle, whatever it is on the you can see the information you want to do it. That depends on what, what you approve and that what you can end up yourself.
Speaker 2:So, as we see the protocols. When the total addressable market is clear, they kind of go a bit more expansion, because you know there are many different things users might want and it's just about what's teachers your priority right. You know that lending will be there, you know that leverage will be there, like you know that trading will be there. Those things are said essential to any market. I just a question of what features are needed most and what security is most important, and this time of what you can do later. I'm telling something like that again. I'm not a death, so they disagree, and so right, I mean this is fascinating, right.
Speaker 1:So I mean, I have one basic question when, by this never, no, no, not my balance, no.
Speaker 2:So when more users um, with these three, we make a bet that margin trading with spot liquidity, meaning pure liquidity, will be better than even an offering of perps, because it is that for leverage trading, perps a lot better though they are limited. Yet what we cannot, but that is due to oracles, and if oracles assault which they will be at some point, they can edit to X, so it's like a temporary, and perps and rare twos are also cheap enough, so they're not bad like it's a good product. They have great interfaces. But we've have heard from quite a few people they don't want to trust the house because every perp protocol, professional protocol, house their own books. Right, they need to make sure the funding rates and everything works well and the depth works well and sometimes people don't trust it. So be your own chain.
Speaker 2:On main, that could be better. Maybe higher fees in terms of gas fees, but lower funding rates because since it's pot liquidity, you have no fun. Right, there are no books, they just paid borrow rate, and borrow rate will always be smaller than front and read by you time. So there is a financial beneficial component as well. So, with leverage farming done better at well and we leverage trading being there and leverage being a big total, addressable market. Right, then the question would be what marketing strategies there are, what referral and what referral campaigns are set up right and other things. So it starts resembling more like an actual product, which is good, because narratives and everything that cool and I can talk to you about narratives, credit account abstraction, all of that's gauges that forever, because it's actually fascinating and true at the same time. But when you actually have a token large, when you actually have a team, when you actually use this before you start worrying about usage a bit more than just a C ground project, right.
Speaker 1:So priority right do you want to talk about the token, or that's off limits?
Speaker 2:I mean, there is a doubt. Nobody has a single key to work, controlling the system or user assets, so I cannot say I'm operating it whatsoever. I'm just one of the contributors. Genuinely, I don't even have rights to many things, don't? They will have a lot to say, but as many deep five hours.
Speaker 2:There is, of course, the desire, when the users come and the fees are there, that will transpose into the token, because even true, because what we did is we, I mean the death bit the now voted for establishing an entity so it has a foundation and not like a foundation like in Tesla's way, right, where foundation control the assets.
Speaker 2:No, if the dollar that is within has the assets of the Dow commissioned entity, right. So it's a better way because after some of the charge of any trap, five weird people, foundation holds, I would be licenses and everything else, which is great, because we've seen it become a conflict of interest in many cases where, if the protocol does well in the product as well, the core team will just say actually, we'll just take the IP right, because you guys, token holders, live on it and do our own thing, and then essentially disregard this case and that happened because all of that become. All of that is owned by token holders. Essentially it's like it is kind of which is a bit new and probably those who are doing that was will go more into that direction further on right. Can you just?
Speaker 1:explain how the token plugs into the gearbox system it owns it all the protocol, the fees, the distribution, everything.
Speaker 2:So, end of the day, when there is a pie to split, the pie could display whether it's in state and or in sharing whatever it is. The point is to get the pie grow right by getting better product, by getting better protocol, by doing integrations when the pie grows. That's another question of how to settle it. The important part is that the Dow owns the E in the licenses, so there is no way to steal the pie. That's basically it. So if the pie is there, the pie will get the pie and transpose into what we all want. Well, again, hopefully. Unless it's not, it should be kind of stupid.
Speaker 1:So I just want to talk about the five primitives in general. Right, so, as far as I understand, like exchanges, right, spot exchanges like the mistop, etc. Then even, to an extent, pubs, like a personal protocol, the idea is. And lending right, these three primitive seem like they have found some sort of product market, but like anything else apart from this, right, even options which do like really well in traditional markets. I mean, if you look at the volumes option, volumes are orders of magnitudes higher than the spot volumes. Right, so they are significantly higher. Right, so the opposite, that is folding deep eye back. I mean, and what do you think needs to happen for the upcoming primitives within the fact? And yeah, I mean, how do you see this whole space evolving beyond what it is today?
Speaker 2:let me just start with the options and derivatives. First, as you said, derivatives I am much bigger market troll. I am not a derivative trader or much fun person myself, so I don't know that stuff at all really. But isn't it true that options to option, other things are used for catching? So like you catch flows, you can't do the range and other things. So if the liquidity of assets and crypto is so scarce right now, there isn't much you can catch. There isn't much underwriting, there isn't much quality right as a lot of traditional finance I don't know is that insurance you hedge to somewhere else. It's a lot of like offloading risks and offloading premiums into one another just to get the delta neutral right with hedge funds and crypto is just not really liquid in terms of other assets to mandate in order to give it to you. It was happening to an extent back at the bull right because liquidity and the premium so much higher. As soon as it degraded, those people left. So as soon as the full comes back, all of their own mercenaries right, and it's fine. They. They had mercenary on their website as a thing, right. Hello, we have hedge fund the immersed in it instead. Job, they get capital in the end. Look here to the charity, they will be back as well.
Speaker 2:So I guess, if this we just need to mature, use cases need to happen and if there are paying users, there are paying clients and there are paying clients, there is stuff to buy, hedge, invest, the mark, mark down, blah, blah, all of those tens of words. I just that, while it's tiny, you cannot expect that activity to be big. What is to happen? The shit needs to get useful, not like useful in a way that I need my grandmother to use it, but more so that. Just there needs to be more stuff than is the more liquidity. There needs to be more commission of assets.
Speaker 2:Some people believe that blockchain needs to be useful IOT, your I'll system for your block, for your computer to talk to your coffee machine. I don't know. I'm like I used to believe in that highly unlikely. It just needs to grow as a class by Partly being maybe regulated, in some cases so fully. More people need to believe in it as a massive class and as an investment, for people need to hold it, trade it and yeah, if that works out, then things should be like me get her.
Speaker 1:Let me put it slightly differently, right? I mean, if let's say, as we say, that hundreds of millions of people want to come and use products in defy, do you think those products exist? I?
Speaker 2:Mean you can add regulators for sure, and like what of this? Come and use products in defy right to speculate, speculation to be there. You just need all the people stand up like a chicken and that right. If things go up, then more people buy them. Things go down unless people buy.
Speaker 2:That's a weird. But it's also true. There are different mm's. Now there are arbitrage is there is. There are interfaces. There are many different ones. There are sophisticated players that they able to jump in. Have me to like arbitrage into things and like hedges and whatnot. So I mean if you they come all in the same date and all the interfaces you'll degrade because there isn't any service right, supports in that much for the infrastructure and the speed and transaction, blah, blah. All of that not there on par. But it's not like it's. It means it's not like a superconductor that needs to actually be invented, right, it just needs to be upgraded. So that's different. So I feel like yes and no. But again, I probably not qualified to answer this question really until I guess and okay, that's fair, it's a question, though You're making me question like why the fuck would Boolean happen?
Speaker 1:No, I mean there's no problem, though, as the liquidity starts going into the system, it all takes care of itself. Is for that? I mean? It's all a function of liquidity, and Exactly because it's a financial aspect.
Speaker 2:Right there, I'm not. You believe that your your computable talk, the cost of machine. It is a financial asset class and you just need more Participants in the financial asset class, bigger money. Of course it would be beneficial with ETFs or other regulated activity starts happening because, as we've seen last cycle and people thought regulation was there Due to the X here men essentially given some of the green light. Right, not the current, not the current douche Endowment seeming started participating. Right, people come on to to get money for managers, operators they made structures that will come to an after-summoned down was to step in. That means more money came in and of course they all got wrecked and they all got right. But again, that is part of how to grow, because more capital gets. That sounds a bit like a Ponzi, but it also isn't right. It is, it's fine, it's right. So I and C spot right.
Speaker 1:I mean in general, that up. That applies to all things finance.
Speaker 2:Right, it is absolutely yeah no use for it to be something back in it. Right, there is something back in and Said whether it's a 10x multiply or 100x, right, that'll method. There is something. So, as more that on the line grow Whatever you believe it is with crypto, then the rest right.
Speaker 1:I mean we agree that most of finance is speculation, but I mean there are elements that are useful, right. For example, if you remove lending from finance, it will be difficult to build businesses and services and products that people actually need, right?
Speaker 2:so you remove credit, then right in this you can't. Today is not Lending per se, it is actually a lint in mind.
Speaker 1:You mentioned his credit right, fair, you'll see where I'm getting into it. I mean, the whole are the real world asset stuff right before and RWA. So all right, do you think there is merit in these narratives? I mean, as far as make or do, I was concerned like there are some numbers that back the narrative. But Do you feel that, like the next cycle, whenever the liquidity is flush in the system, the RWA stuff takes off this time around?
Speaker 2:I have to angel back in our blue Way. I am what one shit corner of the secondary because I thought for more two weeks ago actually. Yes, because, similar to last cycle, what I said about people be off to skating things just to make them more complex no reason. Right same thing here. Rwa is a great way for rich people and people and suits to make money and structure things and that means they will be capital Coming in due to them. So that's their way of making money and they want one in your capital, something.
Speaker 2:So I feel like, yes, I'm low, you a will be big. Feel like our ability will be the biggest pain point at some point when a couple of them Growing out, they will just get frozen or shut down and then he'll be like mayhem. But it is what it is. I don't believe you will probably do have bets and not that much, but like enough, probably to matter Only can up not to be, not to formal, what say like this, not to matter, yeah, so that probably will be big and anything like as always, like if, if an industry, a natural sector right, ever grows, it always will end up in being regulated and being more formal and having all dudes and suits because they have trillions of Capricorn right. So of course it will be that it doesn't mean the entire industry will be that.
Speaker 2:So Even if you are building some kind of finished protocol, you're doing some privacy stuff, you will never grow to that side. But it doesn't matter, because if everything else that is next to you is growing by a lot, you will be feeling fine as well. Because I believe like even if you got a short must-then in Dubai 20 years ago and you stayed around, you probably up doing okay because you had other things happening Okay. That's not a fair comparison. I don't think a short. My person Really has many opportunities going on. But you get my point right if everything grows a reckoning you, you could be getting some of that spillover.
Speaker 1:Yeah, but before we get like, do you have quick words? For what is listening to this Like you want to leave them with?
Speaker 2:something. Feel free to join, lobster down and read around. Please don't flood. Okay, free to join joyous community, even though it's mainly bots, but it's also my side work there. Sometimes. She's had great writing, so it's inviting me again. Apart from that, no, it's all subjected to speculation. Don't forget to touch grass. I don't like the word, I don't like the face that grass was like. Be chill, it's like aggressive, right, so it'd be. Look like I'm not in an annoying way. Don't forget to watch anime. Latest one piece episode is great, joel.
Speaker 3:But you, you forgot any fortnight rations. Is there even.
Speaker 2:Not that small. So I can't believe the new season which is due to Python, which is another great enemy, but I hopefully when I am back home it still will be there.
Speaker 3:All right, I think we can cut it today with that, good luck.
Speaker 1:All right, thanks. Thanks, I would for joining.
