Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Ryan Zurrer: Polychain – A Crypto Hedge Fund Success Story

Episode Date: August 22, 2018

We are joined by Ryan Zurrer, Principal and Venture partner, at Polychain capital. Polychain capital is a breakout crypto hedge fund with over $100 million in assets under management, and large investments in major crypto projects such as Dfinity, Polkadot, Filecoin and Vest. Ryan was the first person to join Olaf Carlson Wee in managing this fund. He built multiple companies in the wind energy industry prior to making a switch to the cryptocurrencies. In this episode, we go behind the scenes of the Polychain success story. We get details on what crypto hedge funds are, how Polychain got started, reasons for its breakout success, its approach to blockchain investments and the current challenges of running a crypto hedge fund. Ryan also walks us through Polychain’s interest areas – Layer 1 blockchain protocols such as Filecoin, Dfinity and Polkadot; and financial derivative protocols. If you want to understand how some of the leading minds allocate capital at a large scale in the cryptocurrency industry, check out the episode. Topics covered in this episode: What is a crypto hedge fund? Differences between a crypto hedge fund and a venture capital firm The Polychain success story and how it played out Polychain’s approach to cryptocurrency investments and entrepreneurs Polychain’s major flagship investments – Filecoin, Dfinity and Polkadot Polychain’s perspective in the “frozen Parity ether” debate Episode links: Polychain capital website Fortune article on Polychain Previous Epicenter episode on Polychain with Olaf Carlson Wee Polychain's perspective on the “Parity frozen ether” controversy This episode is hosted by Meher Roy and Sunny Aggarwal. Show notes and listening options: epicenter.tv/249

Hi, welcome to Epicenter, a cryptocurrency show that interviews entrepreneurs, academics, and thought leaders in the blockchain and cryptocurrency technology spaces. My name is Meher Roy and... My name is Sunny Agarwal. And today we have on with us, Ryan Zura, who is one of the principal and venture partners at Polychain Capital. Ryan, great to have you on the show. Could you start off by telling us a little bit about your background and how you got involved in the cryptocurrency space? Well, thanks for having me on, guys. I really appreciate it.

And I've been a big fan of the show for a long time. Originally, I got involved in blockchain and crypto took sort of the proverbial trip down the Bitcoin rabbit hole in 2012. At the time, I was running a fairly large renewables company in Brazil. We were doing execution and deployment of large-scale wind and some solar. And I was sending remittances home, but was very dismayed at the cost, the overall kind of cost of remittance. A lot of people don't realize that as an individual, you end up paying a tourism dollar and not commercial dollar quite often, which adds considerable cost to it.

And so discovered Bitcoin as sort of a new means or new rails for sending remittance home, set up a company in Brazil that did that professionally, which still operates today and still has a really loyal following of people who use it for payments and international transfers. Did some mining as well back in those days. This was sort of like pre-kne of the curve on the mining difficulty explosion and that started kind of late 2013. And, yeah, I just became very passionate about the potential for this technology and where we were going with it. Certainly, you know, sub areas like smart contracts and governance were primary interest. And then in 2014, became very dismayed with sort of the narrative in the Bitcoin community

and migrated fully to focus on Ethereum and next generation blockchains, continued to angel invest in the space. At the time, I had a certain amount of access to excess legal resources. So usually I'd reach out to a team, just be a cold call or a cool email, offer to deploy some money, but also offer to deploy some help. So either help with some legal stuff or just whatever I could. And that's actually what brought me to Polychain. call calling Olaf and offering to help.

Cool. And so, you know, what made, what brought you to Pauly Chain specifically? Like, why did you choose to, you know, there were a lot, a couple other big like crypto hedge funds starting around the same time. What attracted you about what Oloff was doing? Yeah. So at the time I was spending this kind of an irresponsible amount of time on crypto. and not nearly enough time on my business.

And my board had sort of questioned the amount of time I was spending on traveling around and going to crypto conferences and not running that organization, that team, which merited a focus CEO. And I started out looking for somebody else to be able to manage my crypto portfolio for me so that I could refocus on my business. But then during the process of that and meeting, with some of those early crypto funds, so off with Polly Chain and Lucas Ryan with Metastable

and Jake Bruchman with Coin Fund. At that time, it just sort of occurred to me, you know, how deeply passionate I was about the space and still on today and how realistically this is what I wanted to spend my time on. So when I went back to my board and sort of explained to them how, yes, they do need a focus CEO. They, for one moment, were quite happy thinking that I was going to refocus on the task at hand, and instead I resigned, and decided to cede Olaf and then join Polychain as the first employee

for many reasons, but primarily because I identified that he was a very pragmatic, very strategic, low ego investor, which is very important. We shared a common thesis on the space. That opportunity would accrue deeper down the decentralized software stack known as Web3, that there was sort of gray areas between like protocol and application layer, but generally you kind of lower the better. And our original call, I think, was scheduled to be 30 minutes. And I think we cut it off at about two hours and change before we were both sort of like,

okay, I got to go, I got to go. So we hit it off personally right away. And then I just liked his approach. And then very quickly around that time, Olaf was, and Pauly Chain was starting to consolidate kind of both sides of the equation. So the top investors were starting to pile on, you know, Union Square, Andrewson-Horwitz, Sequoic Capital, Bessemer, Bain, so on and so forth. And then also the top projects were sort of flocking to Pauley Chain, in part because there was the validation of the investors, and in part the investors were coming in because of the validation of the top technical minds.

So there was already a really great relationship with the Pocodot project and the Tessos project and Xerox and Auger and so on and so forth. And so there was a momentum there that, um, kind of allowed us to sort of extend the lead on, on the rest of the, um, you know, the rest of the industry and, and unfortunately we as, as of today, haven't haven't really relinquished that lead. I'm so pretty happy with, with the growth. The, the company changed and evolved quite quite quickly though as we started working together and really again, my M.O was this like pure seed stage or almost pre-seed as we would call it today, Angel investing. And so I just wanted to come in and kind of

do what, you know, do what I know how to do and what was working for me. And so came in and we, you know, we wrote the first SAFs and certainly have executed the most SAFs since then. And, and that has been the primary source of our alpha is connecting with entrepreneurs at a very early stage, helping them through the pain points that they face as they grow their businesses. And then, you know, just being a mentor and being available to support the growth of these protocols. So Polychain ended up generating a lot of alpha into SAFTS and we'll get into that later on in the conversation.

But you actually started off doing something like SAFTS in 2015, is that right, with Maker and auger on a personal capacity. Yeah, yep. That's fair. You know, I'm not sure if we'd call the maker one a saft. I think we like had to just post a transaction on the, on the, on the message board, the maker, like the maker forum at the time. I had been angel investing in the space since about 2013. And however, focused more on kind of next generation.

blockchains and the Ethereum ecosystem specifically at that time from about 2015 and was focused mostly on tokens and token enabled protocols and kind of getting out in front of eventual token crowd funds, which became known as ICOs from about 2015 on. And so that's, you know, as I transitioned into polychain, it just made sense to kind of continue to do the thing that I knew how to do, which was not trading. I'm not really an active trader. I can't really speak to like daily or weekly or monthly movements in public crypto markets. I just focus on connecting with entrepreneurs at a very early stage and helping them grow.

Cool. So actually for the benefit of our listeners, so like Polychain is a crypto hedge fund. And it's I think the most successful crypto hedge fund or one of the most successful. measured by assets under management. Could you tell us what is a crypto hedge fund and how is it different from a venture capitalist? When we started polychain, a crypto hedge fund in our view was a fund that was exclusively focused on blockchain tokens and sort of this new form of digital scarcity and making investments in these peer-to-peer networks and that, you know, use the token to drive in some kind of

crypto economic model, drive security and network effects. And a crypto hedge fund is exclusively focused in this area. However, the sort of the scope of a crypto fund has expanded in part because we, we, identified around this time last year actually that it was kind of you know summer of crypto love and and a lot of hype and mania around ICOs and and using tokens for anything. However, we saw sort of mature entrepreneurs start to take a more cautioned approach to tokens and start to take equity as their kind of first investment and and delay any structure with respect to a token and be more patient with a token. So we expanded to also

start making equity investments via a venture vehicle. And I think many of the crypto funds that you see today and certainly going forward will have this very hybrid approach to invest in tokens, potentially trade tokens as well, where they have like a market making or more active trading mandate, but then also not forget the opportunity that is implicit with early stage seed equity investments of teams, you know, very special teams that go on to either produce an interesting protocol or in many cases, our expectation is that some of these very special teams will go on to produce many protocols. And so it really has migrated, at least from our perspective, more towards a VC look, then say a hedge fund look.

Now, there are many funds that are active quant-trader strategies, and that's fine. That's really not our forte, and it's not what we enjoy doing. Okay, so like the whole space of crypto hedge funds, it could have firms that specialize in the tokens that are already public and exploiting opportunities there, something like Block Tower, might fit a description like that. Yeah, I think that's fair. Whereas, like, Polychain would fit the stage where there's an entrepreneur with a very small team, there will be a token, but that token will be still probably a year or two away,

and the entrepreneur needs money. That's when they approach Polychain. Polychain puts in the money in the expectation that the firm will get tokens two years into the future. Not necessarily that the firm expects to get tokens in the future. I confess that's certainly how it started out. But now, again, just because of the evolving regulatory market and the evolving nature of our industry, we don't expect and we certainly don't try to push every project towards some kind of tokenized model.

There are many models within crypto economics that don't imply a token. There are many ways to drive incentivization on peer-to-peer networks that don't imply tokens. And then the last thing I would mention with respect to expectations of tokens or not, we're often having conversations with entrepreneurs today where we kind of come to the conclusion that, you know what, if you just charge a fee on your network, a very simple, transparent, small fee on this network for the maintenance and security and all these other things that your team is providing, it's very doubtful that that fee is going to get forked out.

And it's much more likely that a token that is forced on that network gets forked out. So we don't, we today don't try to push projects towards a token model at all. It's a very important distinction. But certainly there's some expectation of some monetization in the future. We try to be very experimental, very patient with respect to business models and how values created. Our sort of mandate is that if you build something cool and interesting, there will be value along the way. Someone will figure out how to monetize that in an appropriate fashion, but we're more interested in just like entrepreneurs building really cool, technology deep down the decentralized software stack.

Essentially, you guys are acting a little bit more as like a VC here, where like a very hands-on approach to like helping out the teams and stuff. What are some of the other ways that you help out the teams? So you mentioned like helping them figure out like business models and whatnot. What are, what do you provide any other like services or like aid to the, projects you're like investing in? Yeah. So this is very core to who we are.

And to my knowledge, I think we're probably the fund that deploys the most amount of capital outside of capital into a project, just in people helping our projects. Nearly half of our team works for our sister company, which is called PC 2030. PC 2030 is named after the futurist FM 2030. And this whole team is designed and focused on just adding value for projects. So there are seven verticals that we identified that most of the projects in our space have issues with seven major pain points. They are legal and regulatory, smart contract security audits and code reviews, community management and PR, We help more with community management and building a community than we will with, say, like, traditional PR, although we can help with traditional PR from time to time.

Crypto-economic design and then like token distribution mechanisms. So we get often into whether to do an air drop or not to do anirdrop, different token designs, different funding mechanisms, so on and so forth. That's something that we do in-house and our research team spends a lot of time on that. From there, recruiting and executive coaching is the thing that we spend the most amount of time and the most amount of resources on for our projects. Cash management and OTC deal, so we want to make sure that our projects have enough cash on hand. And often that, you know, the easiest way to do that is do an OTC deal. And then business development. So like, you know, helping some projects connect with exchanges or connecting with other projects.

within our portfolio that help their business grow. Because as this space matures, we're starting to see people need to take a more kind of pragmatic approach to, you know, business development and actually forging relationships and and sort of getting out there and selling, selling what they have to a legitimate market and not just sort of expecting, you know, if they build it. Everyone will come to their door. So we spend a lot of time, I spend almost half of my own time on

on these support functions with projects. Each project selects from this menu of seven items, the things that they need. Almost all of the projects select recruiting, because that's obviously the biggest pain point that we see in the space today. And these services are available free to our projects. And again, it's very, very central to the thesis of our fund.

Now that capital is no longer the scarce resource because a bunch of venture capitalists on Sand Hill Road are no longer the gatekeepers of capital. In order to survive and thrive as an institutional capital player, you have to provide what is the scarce resource. And that, again, it's not capital. It is all these other things. It's this real value at. So in order to get in front of the best entrepreneurs and technologists, in order to be leading, you know, the best rounds and the best projects, you have to be known as, you know, the best highs. value add player in the space and we work very, very hard for our projects in this respect.

So traditionally what has been the difference between a hedge fund and a VC for, like as I understand it, it's really liquidity, right? So when I, let's say invest into a hedge fund, I can liquid like, and I want to take money out of the hedge fund I've put my money into, I can send an order and maybe 15 days a month or two months later, I'll have my money back. Whereas in a VC fund, I put my money in, and then it's locked up for an extended period of time, maybe 10 years, 7 years, and then I'll get hopefully more money back than I put in. And that's been the difference between these two worlds.

Now, I see something interesting happening here. So in the beginning, like crypto hedge fund started with the expectation of, trading with liquid cryptocurrencies. And the one side, you have a firm like Polychain that began with that approach and then transitioned and then pioneered the approach of like investing in SAFs, which are more illiquid. And on the other side, I have personally met over the past months a few VC firms that started off as complete like totally traditional VCs doing angel rounds or pre seed rounds or seed

rounds but now that are also investing in these SAFs. So an example would be like I met this fund in New York called Notation Capital which is willing to put money in the in expectation of future tokens. So crypto hedge funds are starting to behave more like VCs putting money into the money to illiquid things. And VCs are also starting to behave a little like crypto hedge funds, buying, putting money into contracts that would give them tokens. Do you think like the future is that this crypto hedge fund and VC,

these two markets merge and they become just one market, the VC market? Yeah, I think that's a very good point and very well identified and kind of like segregating the different categories here, that a crypto fund can span the whole range of, you know, illiquid venture capital investments to very liquid active trading hedge fund investments. And so now I would add the caveat that I have not seen a crypto fund do both well. Often you'll see crypto funds kind of pick a spot somewhere in that spectrum and try to do that well or the ones that have succeeded have tried to execute sort of one thing very well. And obviously, Polychain today sits further towards the VC illiquid assets because obviously SAFs are illiquid, not for the length of time that a venture investment is, but still, you know, quite illiquid and then we do have a separate venture vehicle, which is for those very long horizon

equity plays. You know, then we have observed this trend of the traditional VCs observing that they, like they really can't survive unless they play in this market. You know, a lot of VCs would have had to do some explaining to their LPs in the last, which are their limited partners or investors for those who don't know, would have had to explain if they didn't have a really significant 2017, why that was the case because so many crypto funds did so well. And so we kind of observed in the early days of Polly Chain where we started doing well, some of our VC backers would call us to me happy that you're making money and we're making money and this is going great. And then over the course of about

June, July, last year, the calls would be with somewhat more concerned in their voice, where they started to want to participate more directly in some of these these Saff rounds that we were doing, and we were happy to include them

because, you know, fortunately, these are some of the leading venture investors in the world, and this just adds more credence to our space as a whole. But we definitely saw some pressure for traditional VCs to venture into the space because it was existential risk for them and remains existential risk for them. I think a venture investor, like a generalist venture investor that doesn't have any exposure to crypto will probably underperform their peers over the long term in the next, say, let's call it decade.

So it doesn't surprise us that there's this kind of melding of the world and we'll see crypto. and we'll see crypto funds basically be anything in the in the range of of trader to to to illiquid seed stage assets and many funds doing all of the above um whether many funds do all the above well that still remains to be seen so you say that like you mentioned that um the crypto space is like act as an existential risk to like current bc's and stuff so we've been talking a lot about the saft uh one of the things that i like personally dislike about the SAF is like it's basically restricts like only institutional investors are able to participate in these sales. And so do you think that like, you know, I feel like early last year in 2017, there was a lot of like talk about how ICOs are disrupting the VC space. But now it seems that it's been seeming to me that most of the participants in token sales are essentially just VCs at this point. And now, you know, common people who aren't institutional investors aren't able to participate?

What are your, you know, thoughts around this? Yeah. So that's a really interesting point. But I mean, the issue here rests in regulation. And that is, you know, it's very unfortunate that to be considered an accredited or sophisticated investor such that you can participate in a private sale of securities, the only measure is one of, of, of, capital or income potential. Really, there should be like a technical test that you can go on maybe some like SEC website and fill out a technical test that you have the technical competence to participate in a,

say in a saffron or some private self-securities because unfortunately that has kind of given the institutional investors a little bit of life again because, you know, they have this kind of walled garden that they can get access to. And obviously there's a certain amount of concern in the market about going out and doing public ICOs, especially here in America. I think, given the level of competition that we see, also given the fact that, you know, Ethereum and Bitcoin have spawned on the order of 20,000 millionaires in the last three years. So now you have, you know and of that 20,000 more than half of them are are fairly active investors at this point so it's not like their you know rounds are being totally consumed by institutional capital

players like these saff rounds um but it would be very good if we could get updates to regulations that would allow individuals to participate in these saff rounds um you know, based on something other than, you know, whether they have a lot of capital or whether they make a lot of money. People should be, should have the freedom to put their money to work where they want to put it to work. And especially as you see millennials with lower, you know, investment appetite for traditional assets, there's a lot of pent-up capital there that could be intelligently deployed. and not only intelligently deployed, but then people end up kind of onboarding and migrating into the space as a result. So in line with the point that I mentioned before, that really the biggest problem that we see in the space is one of recruiting and talent.

I'm personally very much in favor of opening up investment rounds to more individuals because it brings more people into the space. It brings more awareness in the space. However, I'm also very pragmatic about the realities that we face with respect to regulation and how long it takes for regulation to be updated to reality. It's not something that we can control, although we invite it. I'm perfectly happy to share around with a thousand individuals because I know those people are probably going to be fantastic value ad. And we feel really comfortable about our value add, whether it's in comparison to an individual

or whether it's in comparison to another venture capital firm or any institution. It would be like let's switch gears and talk about like Polychain and its journey and its success story. So I think in the January of 2018, Forbes published an article that Polychain had greater than a billion under management. And at that point when I read the story, I read that number. and I didn't appreciate it. But then a few months later, I was in San Francisco and I visited like the A16 Z office and I realized that at recent Horowitz, which is like this huge VC firm itself manages between 2 and 3 billion in funds. And then it dawned on me that like Polychain, which is a crypto hedge fund founded 2016,

is handling at one point or maybe even today, 40 to 50% of that size. Is there a particular reason for this success, do you think? Why did polychain make it so big? While there were other crypto hedge funds, like those mentioned before, which is like Metastable and Coin Fund, founded at around the same time?

I'm actually also going to butt in with an extra question here. Do you think the AUM, the asset terms of management, is the best metric for success of a fund, or is there some other better metrics that we should be looking into as well? So, Sunny, the second question, very well placed. And just quickly to knock that out, AUM is absolutely not the metric that we use to define success,

nor be sort of a relevant metric to show where we are in comparison to others. it comes down to alpha and to return for for investors, you know, adjusted for risk obviously. That's the, that's the primary metric that we're all, we're all here for. Because AUM can be driven by fundraising as much as it can be driven by returns. And we're fairly fortunate that that most of our AUM, the vast majority of our AUM is organic and has been driven by returns. but somebody can show up tomorrow and raise a billion dollar fund and then and then say hey you know we're also a billion dollar fund so it's not something that we look at and then you'll notice that our our close partners at indreason horwitz recently raised a crypto a crypto specific fund because sort of a brilliant leader over there chris dixon wanted to really focus on crypto and they kept it only to 300 million even though they could have raised you know, some significant multiple of that. And there's a reason for keeping a fund a specific

size, especially if you identify what I would say identify correctly as the key opportunity lies mostly in kind of the seed and early stage space of some of these, these very compelling protocols. And if you're playing there, you know, a lot of these entrepreneurs don't want a $10 million check for me. So in order to move the needle on a fund, you can't be, say, like a multi-billion dollar fund and still be deploying mostly at the seed stage. So you've got to be coherent with the types of capital that you're deploying and AUM isn't necessarily an indicator of that. Going back to why we saw the growth that we did, I think it came down to a certain conflicts of

of factors. One, we weren't the first crypto fund, but we were certainly there before the run-up, and we were sort of the first to get scale. The first to sort of raise very significant sums of money and deploy that

relatively early when Ethereum was single digit. The second factor, which I think has maybe been the most important, and it's also important to remember that that injuries and Horwitz isn't like a 40-year VC fund. They started, to my knowledge, I think, around 2009.

So they kind of came out of nowhere as well and got scale and got into billions fairly quickly. Using the exact same roadmap that Polly Jane Capital did, which is a focus on value add and deploying a lot of resources in having people, you know, doing real work for projects, getting really in the weeds, rolling up the sleeves and being the closest partner, being an extra employee to the startups in the portfolio. And I confess when I moved out here about a year and a half ago, I was shocked.

I would have thought that like every VC here in the Valley would have, you know, just teams of people doing technical due diligence and going through everything that a team is working on including personality profiles and a whole bunch of other stuff before making investments. And then after investment, there would be this other massive team that would help every project on everything from recruiting to to strategy and so on and so forth. And for the vast majority, with very few exceptions, and Driesen being obviously the most famous one, they really don't do that. There's only talk of being value at. There isn't actually execution of that value at.

And I was very surprised that we were just able to walk right up the fairway, offering this thing that seemed like a total no-brainer to me. And that was still very much a differentiated characteristic in the market. It still today completely baffles me that this isn't the M.O. Like, you know, baseline model for every VC fund in the world. And frankly, just a ticket to the show, like to even be able to play in the, you know, the best opportunities in the market, you should be able to demonstrate this very robust team that has a track record of delivering significant value added projects. It baffles me that VCs don't have this and try to run like super lean teams and things like that.

So that I would like to think is, you know, one of the very key items. And then, you know, focusing on the right stage, some of those, some of those, some of those, projects had great successes early on, like a zero X, for example, which was one of our first SAFs. And then Olaf, to his credit, has gone on to make some very, very shrewd trading decisions in certain moments that have generated extraordinary alpha. And unfortunately, I would love to be able to tell those stories. Unfortunately, I can't. But really, he has, he has made some, um, some phenomenal moves in very key moments that have ended up like quickly, you know, but I don't want to say like two X or three X, but quickly creating very significant alpha

for the fund in a fairly short period of time. And then with that, uh, we tried to be kind of the leader on compliance. Um, so to my knowledge, I believe we were the first fund that was registered with the SEC. Now, this was forced on us because we were also the first to kind of go above $150 million, which is the cutoff to not be registered as a 3C7 fund. And so that just forced us forward on compliance, which then brought us in a new cohort of investors, where we went from being like the darling of angels and venture capitalists to more, or an institutional exposure to crypto that large-scale sovereign wealth funds or endowments

or very large wealth funds could get that minimal exposure that some of their investors are looking for into crypto via a balanced portfolio. And so I think it was mostly those factors, just kind of one of timing, which is the single most important factor for success or failure in a startup, a focus on value add and being pragmatic about the realities of our space, some good decisions in the right moments, picking the right partners, and then being a leader on compliance. And I think that's sort of been the story to bring us where we are today. So I'm actually curious, like, how polychain is structured. So you've mentioned that, like, there's a separate firm that does VC,

like activities, but like walk us through the overall structure and how you run your teams. Sure. So it kind of, I mean, Olaf is a CEO and extremely competent in both sides of the business and a really special, very unique talent there. But then the business sort of bifurcates into the fund ops side, which is run by Joe Egan, who's a 15-year Wall Street vet and has been CEO of some of the Tiger, Tiger Cub hedge funds over the last decade or so. And he run, and that's sort of, you know, investor relations and compliance and reporting and all these things that, frankly, I'm very happy to not be CEO anymore of a company and not have to deal with these things that I just don't like and don't want to think about. So it's very nice to be able to just like have that and know that it works and I can kind of focus on things that I that I enjoy. And so then on my side of the business, it again separates into two parts.

One is research and deal making. And so we've got an extraordinarily talented team of led by some dropouts from Dan Bonnet's Cryptography Lab in Stanford and, in Stanford. Andrew Miller's lab, and we're continuing to add to this research team all the time. And so we get out and just using our networks and trying to understand the space as much as we can, reading a lot of white papers. There's a lot of inbound. And we're just sort of like evaluating deals as they come in. And the inflow is fairly significant, but not unmanageable. And very Unfortunately, the market has kind of started to self-select. So somebody making like the next kind of consumer chat app knows they don't really need to send that to polychain capital.

Somebody building, you know, like the next layer two off-chain computational verification tool, that's something that is definitely in our wheelhouse we're going to look at. And then separate from that research team is a PC 2030, which is just, and it's a fairly, like seamless flow. So you go from research and due diligence into a deal. And then once that deal is signed, it becomes a PC 2030 project.

And then the team of PC 2030 comes in, meets with the team, talks about, again, everything from your cash management to your crypto-economic model, to token distribution, to team compensation, recruiting, executive coaching, and so on and so forth. and just act as consultants to these teams, or in some cases, just full-on team members.

Like, we have, we have fully two employees in our office that are 100% exclusively dedicated to DFINITY. That's all they do. It work for DFINITY. They're basically a DFINITY employee totally at DFINITY's request. And we have the same thing, almost the same thing with POCEDA, where there are team members who spend 90, plus percent of their time just focused on that project. So how many people are there right now overall at Polychain and like how or like and what's the distribution breakdown between these different divisions? So today we are 16, five are PC 2030.

There is four in research and then the rest is basically, you know, either fund ops, CFO, chief compliance, things like that, or myself in the law. One of the questions came to my mind is, crypto funds are different to VCs, although as we observe, there might be a merger and amalgamation of the two. Are there unique challenges that come with crypto funds that are unsolved today? Oh my goodness. We could have an entire podcast.

just on these challenges. I mean, starting from regulatory perspective, so just like as we went and obtained our SEC registration and licensing, there was a conversation. Unfortunately, the SEC was very pragmatic about the conversation, but there had to be a conversation about what was even physically possible today. So, for example, one of the huge challenges in the space is around, custody. So when you're a when you're an RIA and registered with the SEC, you can't custody your own assets. However, you can't find today anywhere, to my knowledge, somebody who will custody like a prime broker or or qualified custodian who is actively, you know, executing custody of say Monero or some of these high privacy tokens. So there are our our tokens that.

that are in our portfolio that we can't get third party custody for, even if we could go up to Jane Street or Goldman Sachs or whoever else and offer them whatever they want. And they just can't do it. They don't have the technical skills. So that's certainly one. Certainly as we move and evolve into this, you know, what a lot of people call kind of this third generation of layer one chains. So these new chains that are building on the lessons learned of each.

that have governance, have novel consensus mechanisms that are usually based on staking and not necessarily like resource intent to prove of work and things like that. So how do we manage those assets for our clients coherently given, you know, all of the regulatory red tape and, you know, and requirements of an RIA. And so, you know, if we're staking on behalf of our clients, then, you know, what are the implications of that in front of the SEC? And, you know, do you have to have clients then opt in or negative opt out or or various things like that?

From working with projects, there are a lot of questions around, you know, around securitization of tokens. For us, it's fairly clear that a token sold for a network that is not yet live is a security and thus exclusively the domain of accredited investors and institutions. But that could change and will change. And so there's this constant evolving regulatory environment that present very, very unique challenges.

And then from there, you get challenges with respect to, you know, to some investors, right? Some investors won't invest in something that has this type of risk profile combined with a significant lockup period. And so they prefer kind of a hedge fund wall. Other investors have a totally different profile. And so, you know, our fund has evolved as well, as well along the way where primarily our investors were wealthy, individuals, family offices,

and a few VC firms. And now it's more sort of these, like, I don't want to say more professional because some of our venture capital partners are some of the most professional people we dealt with, but certainly more rigorous with respect to like institutional expectations, reporting things like that. Taxes has been something that we've solved the most part, but when we started, that was certainly a very unique challenge that wasn't clear at the time. You know, certainly going forward, if I could like make a small wish list to sort,

and this like could be a lot of, a lot of opportunities that people could build in this space, it's around custody. It's around very easy to do staking. Also, we've sort of got to figure out governance. proxy voting on behalf of our LPs, things like that, being able to do that seamlessly such that we don't have to then distract ourselves from our core business. That's certainly quite a valuable opportunity that I think you'll see somebody take advantage of going forward.

It certainly seems like a big opportunity space, especially with the emergence of staking tokens. So I'm now curious about like polychains thesis and what sort of guidelines you use in order to decide what to invest it. Again, we are focused on sort of the infrastructure layer of the Web 3 stack, let's say. So again, that's that's kind of deeper down the stack. We, I would say, endeavor to be a significant holder of the infrastructure of Web 3. So think about the roads and highways and airports of Web 3. Those are the types of assets that we intend to hold over a very long period of time. And we're relatively optimistic that that would be a fairly valuable portfolio over a period of time.

but let's see how it goes. And then with respect to our decision-making process, there are sort of three major things that we have to be able to check the box on to consider an investment. And that is sort of, you know, a very core technical solution that is at the end of the day,

fundamentally a technical solution being provided by a team that is a compelling innovation. That compelling innovation typically implies that if network effects were to take hold, then it's a defensible position, but that's not necessarily in 100% of the cases. And then very strong technical teams. We are really not the fund that a bunch of, MBAs reach out to with a big slide deck. We're kind of a fun that, you know, some strange geniuses with like some random notes that, you know, they're calling a white paper for the time being we'll reach out to and work with in an open-minded fashion on like building out what it is that they're

trying to create. But it ends up being very counterintuitive investing. And this is why this is also probably why we've seen such significant growth against, say, like, our peers, where, you know, kind of the standard VC garb for so many years was, oh, you know, we back like great founders that are fantastic leaders and, and, you know, have this track record and so on and so forth. And we don't really care if, like, somebody has, you know, five exits and they, you know, an MBA and have done a bunch of B-to-B marketing and stuff like that. What we often look for

is purely some kind of compelling technical innovation. And that for one reason or another in our space has often been the fruit of either an individual or a very small team of kind of quirky technologists.

Right. Like if you look at some of the our successes that we've seen in blockchain, often they were not led by your prototypical, you know, startup CEO. Obviously, Ethereum being, you know, a case in point. However, when the technical innovation is very significant and can be confirmed by our team as, you know, genuine, plausible and compelling and this team has the capabilities to deliver it,

that's really where we get excited. And so we often are the ones who are backing, you know, the core keeper, professor leaving his cushy university job to, to, you know, start out on his own. And then in those cases, that's really where PC 2030 comes in. And we try to kind of fence them in with enough support and operational staff such that they can focus on their innovation and their business kind of gets built for them. And that's really kind of a key difference that, you know, that, again, is very core to our thesis. And I have to. I haven't really seen a lot of people or a lot of venture capitalists, you know, focus on since I've been here. So you talk about this, like, infrastructure of the Web3. What are some of the, like, main projects that, like, you see, like, compromising these? I know throughout this episode, we've talked a lot of – you mentioned quite a few times about Pocod and DFINITY, and I think Filecoin once or twice as well. So why do you, what led you to like look at these projects specifically?

Like you mentioned, you had like certain people who are full time basically working on Affinity and Pocod. What's the reason for these projects as your sort of like feature products? Yeah. So these are what we call our major ecosystems. And essentially they are significant innovation at the layer one where there is. is some critical component of what will eventually make up the Web3 stack being offered. And Pocodot is actually a good one to draw the infrastructure analogy to.

And incidentally, I come from a world of infrastructure so often kind of use these as heuristics. But I sort of liken Pocod quite often to airport infrastructure. If we consider different blockchains disparate lands of one another kind of separate countries, The only way to really connect with them and communicate within these different countries sort of physically, like transfer things, is kind of routing through the airports. And if you want to send something to a different country, it's inevitably going to go through a port or airport. And Pocodot really looks like that being set up to be that routing mechanism.

Kind of an interesting food for thought in conjunction with that is, to my knowledge, airports are the highest cost per or highest revenue per square meter and highest actual profit per square meter of any of the kind of the major standard infrastructure components of our

world like highways and roads and things like that and so it's interesting to think about polka dot in or any of these sort of like parochane solutions in this kind of context that should they get scale should they work and that is you know that's a

if remains a big if they could be very important kind of crucial components of connecting disparate lands and kind of bringing blockchain out of the silo era and into an interconnected era and and so you know we're excited about that obviously then file storage is a it is one of these components and then DFINITY makes sense just because it's an extraordinarily high performance blockchain that allows, again, if it works, effectively unbounded computation on chain, which would be very interesting. Together with this thesis on some of these major ecosystems, I should mention another thing that is kind of very core to our thesis today and something that we're very excited

about, which are what I call crypto financial primitives. And crypto financial primitives are using sort of crypto and blockchain technologies to create some sort of financial mechanism that we may see in the world today, but offering in a dramatically more efficient fashion. So I think we're going to see the explosion of decentralized debt. I think we're going to see an enormous explosion of sort of tokenized derivatives of certain assets. So, for example, I'm pretty excited about the tokenization of a hash power derivative so that miners or stakers can, say, hedge their long position in, say, like, mining equipment and in the given token at hand with potentially a, short position on hash power and then they can have more stable revenues as a result because you know for the most part these miners and stakers on on these next generation networks will be increasingly professional and so these types of of instruments that allow them to have more stable

cash flows you know just genuinely makes sense there's a there's a whole range of of these projects building what I call crypto financial primitives. It could be that one of the first killer use cases is financially driven or financial primitives in these next generation blockchains. Like obviously, you know, Bitcoin was primarily a financial instrument. And that is right now the killer use case. As we move forward, some of the initial. show next generation use cases could potentially be the financial instruments as well. And there's a lot of exotic things that we can do once we add smart contracts into the pool. So pretty exciting, pretty exciting space as well.

So on the infrastructure layer, you've told us your thinking, which is like the blockchains are lands. And then and then definite, like, Polkarat is a project, this connects these lands. So like in that in that vision DFINITY is a high performance blockchain or like high performance land high capacity high performance land Polka dot is what

connect all of these Yeah it's kind of the bridge And so the way that I sort of look at it as And the way that these kind of work together is that polka dot would allow you to say store files in IPFS, read them from IPFS, and then use them, say, in a smart contract on DFINITY. But then because of some of the performance improvements that we see in, say, in DFINITY,

people who would otherwise use an alternative blockchain that they're maybe more native to now have a seamless way to transition and use sort of the benefits of definitive. without, say, taking anything away from their position in their existing blockchain. So, like, Ethereum users, should they not be able to get off-chain computational verification correct, or should some of the scalability projects take much longer than expected, which I think seems like a reasonable presumption at this point, may then migrate to DFINITY for certain intense computational. and then migrate back via Pocod, obviously, reading files from IPFS,

and then migrate back to Ethereum when they want to interact with something and that is more relevant to what they're doing in Ethereum. But effectively, something like Pocodot is a great enabler of technical innovation because it allows kind of the full extension of what I would call smithian economics, where each country does sort of that thing that they're specialized in doing and then trades with another country.

And so then you'll see like Filecoin does storage really well and DFINITY does computation really well. And so then those countries will trade with one another for the thing that the other does very well and be able to focus. And so you'll see high throughput chains with DAGs and we're really excited about some of the innovation around the directed A cyclic graph. You'll see very high security chains that maybe have very high transaction cost, but that's by design and a feature in our bug, but needs to be by design, in fact.

And you'll see sort of this like specialization of chains that then can be connected to one another. And that's really where we'll start to get the scalability issue solved. I don't think it's that one, you know, I don't subscribe to this whole maximalism thesis for anything, not for Ethereum or Bitcoin or anything, that there will be one chain to rule them all. Because if that was the case, then we would need to change the name of our fund to mono chain. And obviously, if there's anything that's core to our thesis, it's that it will be a poly chain future of Web3. So you have mentioned DFINITY as a high-performance blockchain, but then there are many projects building high-performance blockchains. There's EOS, there's Zilika, there's Algorand. what is so specific or fundamental about DFINITY

that you see that project as being one of the base layers more so than the others? Yeah, and that's a good point. And so I should mention that, you know, the reality is we don't know. I myself am personally excited about the technology being produced by DFINITY, but have great respect and deep admiration for a lot of the work being done across the space. So, you know, it's very plausible that Ethereum could achieve its scalability goals and be the high-performance blockchain. It's very, very plausible that you may see a DAG,

like the Spectre protocol, come out and totally blow the socks off of everyone. And so this is why we take a portfolio approach to the space. What? specifically excites me about DFINITY and this project is a range of things, but sort of the unique way that they have achieved sort of high transaction throughput and transaction finality in a very quick period of time. So if we go back, if we go to a POS mechanism, even the delegated POS, we're looking at multiple blocks to confirm transaction finality, where in DFINITY can be done two blocks. today, today already, that's sub three seconds.

It'll be sub one second by the time the network is live. That's really difficult to match in a POS system. It just by the fundamental nature of a POS blockchain and the probabilistic nature of block confirmations, it achieved finality that quickly even with scalability, again, maybe it happens. But we like to be experimental and we like to support. experimentation around threshold relay. We think the probabilistic slot consensus, which is the kind of the primary invention

by the brilliant Dominic Williams, is one of those very compelling innovations that merits interest, merits capital, merits experimentation. So we'll see how it plays out. But the way that threshold relay is able to achieve very quick transaction finality, I think is certainly compelling in this moment.

And maybe in someday in the future, it's an important part of the web through stack. So while we're on the topic of DFINITY, I don't know if you, I think you did see my tweet from a couple of weeks ago. I love your tweet. That was so lit. Thank you so much. One of the things, so I, you know, for anyone who hadn't seen it, I was sort of doing like

slight, like joking jabs at like many of the different like Gen 3 blockchain projects. You know, it wasn't like derogatory. I even attacked Cosmos, which is like what I work on. But the one I actually put on. So on point.

Yeah. Right. And so the one I put for DFINITY was actually blockchain's TM by Polly 16Z. And that was sort of a little bit of a joke about like, you know, it feels that the token distribution,

of DFINITY is a little bit centralized, especially in the hands of you guys, Polychain and A16Z. What are your thoughts on how do you like make sure that like, yes, you're doing the best for your investors and whatnot, but at the same time, you're still maintaining a decentralized system that usually entails some sort of highly decentralized token distribution?

Yeah, this is a great point. And without getting too much into specifics, I can say that that polychain and Andreessen's, you know, percentage of the network is not that expressive. In fact, we own much more significant components of many, many other networks. And certainly there's more centralization, say, in the Ethereum ownership or other live chains than what you're going to see in DFINITY. I do recognize and we've had long conversations deep into the night on the issue of the fact that DFINITY today holds, say, maybe a higher percentage of tokens than most of the other networks. So where Cosmos, if I remember correctly, sold somewhere around 80% of tokens in the crowd sale between the public and private round. DFINITY via its various funding mechanisms all the way to network launch will be kind of a little bit higher than half. However, this is a very directed approach by Dominic Williams and his team where he wanted.

wanted to take a different approach than some of these open source projects that are that are kind of more laissez-faire about execution. He wanted to run this like a Silicon Valley startup. He wanted to attract the best talent and be able to reward them handsomely. Dominic and his team were one of the first to, in my opinion, correctly identify that as the war for developer, mine share intensifies, great talent in this space will require very compelling rewards to be focused on a single project. And he, again, I think correctly identified that there's a lot to be gained by having

everybody in the same room, even though we work in decentralization and we would like to have people all around the world and so on and so forth and support that. But the reality is a team can work best when it's in the room together. So he had to make a very significant sort of pool available to. attract, I mean, just a rock star team, right? Andreas Rosberg, one of the creators of Ewasom, Ben Lin, the L, and BLS cryptography, Tim O'Hanke, who created ASIC boost, you know, they're poaching at pace. They're poaching, you know, really solid talent out of Google and Facebook and the fangs over here, almost on a weekly basis. You know, these guys require compelling

rewards and so they had to make a larger allotment available for team rewards and like core developer rewards than had been had been made in the past um i was around and contributed to the debate back in the day when it was being decided what kind of um founder rewards and and sort of organizational rewards ethereum would would receive and remember a fairly heated debate on that when that was originally closer to 30 and some of the team members were going to run a kind of a VC fund out of it and so on and so forth. And I was very happy that kind of that came down. But I think if we look at that distribution at that time, the vast majority of the people who receive significant amounts of eth are no longer with a project in any capacity. I'm no longer sort of

pushing the Ethereum ecosystem forward. And so today, if we just look at that as a lesson learned, and we say, okay, well, instead of, like, distributing 10 or 15% all to, you know, the people who are around in this one moment, in this Genesis moment, why not, like, let's keep a bigger pool and distribute it over the long run. But, hey, let's actually go out and very thoughtfully poach the, like, most talented developers on the planet and get them working on these tough problems and see if that's actually go out and very thoughtfully poach the, like, most talented developers on the planet and get them working on these tough problems and see if that. can't create, you know, extraordinary value. It may not work, right? Like the community, we're believers in the community approach. We're believers that a, you know, an incentivized open source peer-to-peer community will develop faster than a centralized team.

You know, I think this is why Ethereum beat out sort of enterprise blockchains that were sort of shilling themselves around 2014 and 2015. and I think a decentralized community-driven approach will probably be the winner in the end. The question is, is when do you put it out in the community? And in the competitive context of today, which is different than we were a few years ago, how do you kind of manage some of these important innovations such that you can establish network effects and gain a lead? I don't pretend to agree with 100% of their strategy. I do say that we're open-minded to experimentation, and we support our founders.

And so this is a strategy that these sets of founders have decided to go with. I actually wish that we had more of the network. We don't, in fact, have as much of the network as I would like. But we'll see how this plays out. I don't think it's like, you know, he's not trying to be the evil empire. He's just trying to be pragmatic that he's going to have to pay some guys, you know, seven figures and eight figure salaries down the road, and he wants to be ready for that. One of the other contrarian opinions,

Polly Chain has espoused publicly, is on the issue of the parity hack and what should be done with the ether that, was frozen or lost in this hack. So could you explain the issue and your views on it and how you would like that issue to be dealt by the Ethereum community? So long story short, a very significant amount of ETH was frozen in addresses that are provably or demonstrably belong to certain individuals that were using the parody multi-sig or a certain version of the parody multi-sig last summer and then into last fall around around the time of devcon and today this is about well fluctuates quite wildly but today it's a couple hundred million dollars still there's a range of of possibilities here, one is to do nothing.

Another is just a very simple, clean hard fork to clean up these addresses and just to have a process where people demonstrate that they're the owners of these addresses and then they can receive that eat back or have some kind of op code upgrade to basically unfreeze the seat. This is sort of like the condensed layman's version of the debate. The counter argument, which I would like to preface by saying I respect and understand and respect many of the talented, important people who are, who hold this to be their position, the counter argument is that, you know, this would affect immutability.

And it would certainly create a fork. And so thus another Ethereum classic situation along with whatever other kind of worms pops up if we're to do the fork. There's a bunch of other possibilities that could be used to basically unfreeze the Zhe. Most of the more realistic ones imply some kind of fork. And so then getting to my argument, and I should say this is very much something that is very important to me as an active member of the Ethereum community since literally day one, where other people may not have such a strong conviction on this. And my position is that we moved over to Ethereum. I sold all my Bitcoin in 2014 and moved over to Ethereum very happily because we were focused on development and evolution at that time. I've often said that for me, Bitcoin appears to be going through some semblance to a classic case of innovator's dilemma,

where the need for innovation and change that gave rise. to the invention in the first place has been totally replaced by this religious dogma, this irrational infighting. And so I found it really refreshing moving over the Ethereum that we were focused on experimentation and pushing things forward and evolution and that, you know, in the end, it would be something more compelling, something more interesting that we could do many things with. And somewhere along the way, you know, probably when the token started to appreciate significantly, there was this influx of, you know, Bitcoin people into Ethereum as well. And then

the narrative started to be somewhat similar in certain respects where like this like huge dogmatic focus on immutability. And people forgetting that we're still very much in alpha, right? Like serenity is what, a year away or more? And my position is you can get dogmatic. You can get, you know, focus on immutability and these types of things after Serenity. Before Serenity, this is experimental stuff. I'm sorry that markets are leading indicators and the market prices have kind of skated beyond what the realities of technology are in Ethereum's case today. That doesn't mean that from a technical perspective that we should be changing the way that we interact with one another. And yes, you know, absolutely it was a parody bug. There are some coherent arguments

that would also place a significant amount of a blame around solidity. And that's not the first time that we have a community as have heard issues with solidity. But that's okay. We should be more forgiving to all parties here. Right. Like this is Vanguard area of computer science. This is difficult stuff. And so when we start to allow this immutability argument to sort of dominate the conversation, and then we're not actively evolving our protocol because of this fear, that's when I start to get afraid that we were starting to lose the ethos that Ethereum was really founded on, which was to evolve and experiment and create something new. And it's quite disappointing because, you know, I love this community very much and I wish for it to be strong and to thrive.

But if we're going to drive out the innovators, if we're going to make, you know, if we're going to take development timelines, which are already very slow and make them many multiples because you can't possibly have any type of failure even before Serenity, then, you know, we're going to drive. drive away the key innovators. If we look at this parity team, who in the entire community has done more for Ethereum? Whether it's the implementation, the wallets, the protocol work, this team has created an extraordinary amount of innovation that has driven the value to where it is.

And I don't think that they should be ostracized for stumbling along the way. And I don't think that we should penalize them hundreds of millions of dollars for, you know, for putting out free open source software, especially when we are clearly still in beta. And we should recognize that we're in beta. And we're going to have hard forks anyways, right? So along the process of hard forks, I would suggest that we have a cleanup and that we, you know, and that we communicate to the world that we're about innovation. and we're about evolution. Question then is when you say like innovation, like what do you,

maybe this is a more general question that refers. What do you see as like the whole point of Web3? Like why exactly are we building all this stuff and what's the end goal? Because see, for me, I, you know, it's probably no secret at this point. I've brought it up multiple times on the podcast. Like I'm a huge fan of Ethereum Classic.

I was a very anti-Dalphoric and stuff. And to me, this stuff has always been about immutability and, like, decentralization. And so what is the purpose of pushing innovation if we're losing the whole point of what we're building? And, like, to me, I never understood why, like, we can have all sorts of innovation, but if we end up just using these things like cloud services, like it kind of lost the point. And we should be like, you know, there's also like a little bit of disconnect where it's like we're dealing with. billions of dollars here on experimental stuff. So, like, at the point where you cross that billion dollar threshold, like, it's no longer experimental anymore.

Yeah, the problem is, is the valuation has been set by someone different than the experimenter, right? Um, so like, I'm sitting here like building D apps and, and, and making protocol layer innovations. And then some guy on like Wall Street decides what I'm doing is now worth billions of Does that mean that I then have to change what I'm doing? I suppose that that is a fair argument. But more specifically to the immutability argument, I'm all for immutability.

I'm all for public, open, permissionless blockchains. I think, you know, and obviously immutability is a very core characteristic of that. Where I'd like to draw the distinction is the point in which we agree as a community, to, you know, to sort of strike the line in the sand. And then from there, you know, things are genuinely immutable. And my understanding, and to my great surprise, this was apparently incorrect, was that the point where Ethereum would become immutable was serenity. And so I am very surprised now that, you know, that apparently it was actually homestead. Nobody had informed me of that.

And I mean, if we go back through the history of our industry, there have been times when, you know, when the Bitcoin blockchain was rolled back. It had to be. And that was okay because there was only, you know, a few dozen people around at that time. And so they, you know, through via social consensus, decided that that was. was perfectly fine. Unfortunately, again, somewhere along the way because markets are leading indicators and pricing has created a certain amount of notoriety, we decided that at some monetary level that then that is like from there, we have to be immutable. And I would actually just argue that it should be from some technical point in time, which for me, with

specific to Ethereum, it should be serenity. And before that, you know, let's see, let's just sort of be open-minded and reasonable as a community. Let's use governance mechanisms where they make sense and not just allow it all to be, you know, screaming on Twitter and things like that. Yeah. And so I agree with immutability. I just think that it should be implemented in a known moment in time based on technical milestones. What kind of governance mechanism do you propose that we use to make a decision like this then in this beta period?

Well, I mean, we're obviously pro-governance. And, you know, I think when you look at just the enormous body of work around the wisdom of the crowd, and especially when the crowd is highly incentivized, like what we see in our space, you, you know, you get to a point where it's very difficult to deny that some relevant information could be garnered from listening to the crowd. Now, I understand the whole, like, you know, you're going to just give power to the Plutarchs if you make it tokenized governance. That's a perfectly fine argument, but I think, you know, one of the great things about tokenized governance is that we can take, take it governance and make it multi-layered, make it liquid. We can add so much more granularity to governance. We can do so much more

than just like, you know, one token, one vote or one person, one vote, or so on and so forth. So what I would propose is a multi-layered governance mechanism that, yes, samples the Plutarchs, so samples the coin holders and, you know, sees what they have to say. That does not mean that you have, say, an isolated carbon vote, which happened, which only my crypto wallets could participate in, right? It means a well-coordinated, properly communicated carbon vote takes place so that you can adequately gain an opinion from a large enough subset or sample of the population. I think you take in core developers into the governance mechanism. But again, there are biases that exist there that should be, you know, that should be weighed against other.

factors. You know, there are a range of community events that are happening to sort of bring people together and discuss these matters. And so I think having a kind of a multi-level mechanism where people building on Ethereum have a vote, people who own significant ether have a vote, and people building Ethereum, which is obviously kind of protocol layer, also have a vote. And if we get a significant buy-in kind of one side of the other, then it's very clear that that's the direction we should move. But we need to be open-minded to having the sampling of different constituents of our community in a differentiated fashion so that we get just sensible governance. Otherwise, it's just, you know, he said, said she said, and we don't, we don't really know what people actually want. Then the last point I would say is, you know, in conjunction with a vote, we would need to be very clear on what we're voting on.

And for me, what I would like to see is as we move to Serenity, probably just a very simple cleanup of these frozen, and if somebody can prove demonstrably that it's their eath and you know they can show kind of like how they came into it and and and you know and clearly it was it was in this wallet and they're a known entity why shouldn't they get their eat back like that doesn't make any sense to me and we're doing a hard fork anyways for serenity so just do a quick sweep up um together of those people most of which are builders and we want to incentivize to be in the space um that is kind of like the thing that would would sort of make sense for for me to to vote on. And yes, it may create a fork, but I know of no one in the Ethereum community, and this may be

a bit of a controversial statement, but I'll make it anyways. So I know I know of no one who lost money on the Ethereum classic fork, right? Everyone got between a 10 and 30% dividend. Yes, it created some stress along the way, but just like the Bitcoin coin cash fork, nobody lost money on that, right? It looked accreditive to the investor almost from day one and in any reasonable period of time. For me, forks are a failure of governance. They're not a governance mechanism. We should not leave it to get to a fork. If we got to a fork, then we fail at governance. Then we haven't created consensus. But at the same time, it's not the worst possible outcome if some very strange subset of people want to go out.

off and, you know, get dogmatic about the way that they are. I would prefer to kind of like continue to promote inclusion of a technical community. But again, this is my opinion. I totally respect that other people have a different opinion. Cool. So we'll stop at that. It's been a great episode and great time catching up with you, Brian. We hope that you'll be back on the show sometime at a later date in a year or so and we'll catch up on the progress polychain has made then well thanks very much guys I thought this is great and I deeply respect the work that you guys do both with the show and individually across the space so congrats for all the great contributions that you're both

making thank you and to our listeners thank you for joining us we release new episodes of Epicenter TV every tuesday You can subscribe to the show on iTunes, SoundCloud or your favorite podcast app for iOS and Android. You can also catch the video version of this show on YouTube.com slash Epicenter Bitcoin. We've recently created a Gitter community and you can join that at Epicenter.tv. Finally, we love to listen about your, like read your reviews on iTunes or on Twitter. So please send us a note on how we did. We look forward to being back next week.

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