Unchained - The Chopping Block: Do Kwon Pitches a Decentralized NFT Publishing Service - Ep.333

Episode Date: March 24, 2022

Welcome to The Chopping Block! Crypto insiders Haseeb Qureshi, Tom Schmidt, and Robert Leshner chop it up about the latest news in the digital asset industry. On this week’s episode, Do Kwon, founder of Terraform Labs, also dropped by. Show topics: why Do decided to make millions of dollars in bets that LUNA will appreciate in value next year what Robert and Do, as crypto/DeFi founders, think about Crypto Twitter how the difficulty of building payment systems led to Do launching Terra Gauntlet’s recent funding round (and what it does) takeaways from Yuga Labs purchasing CryptoPunk and Meebits IP, ApeCoin, Otherside, and more how NFTs could change the game for publishing and content IP industries whether an NFT collection’s cultural relevance is similar to an L1’s TVL Bored Ape Yacht Club as the first NFT franchise why Haseeb is so disappointed with Axie Infinity, VCs, and other P2E games what Facebook’s foray into NFTs might look like Hosts Haseeb Qureshi, managing partner at Dragonfly Capital https://twitter.com/hosseeb Tom Schmidt, general partner at Dragonfly Capital https://twitter.com/tomhschmidt Robert Leshner, founder of Compound  https://twitter.com/rleshner    Guest Do Kwon, founder of Terra https://twitter.com/stablekwon    Episode Topics Gauntlet raises $23.8M led by Ribbit, now a Unicorn - congrats Tarun! https://cointelegraph.com/news/crypto-quant-firm-gauntlet-valued-at-1b-following-series-b Do Kwon on a Terra betting spree ($1M, then $10M) https://www.theblockcrypto.com/linked/137832/terraform-labs-ceo-do-kwon-seals-10-million-bet-over-luna-price Yuga Labs launches Apecoin, Apes buy Punks, teases metaverse, plans land sales, closes $450M raise led by a16z https://www.coindesk.com/layer2/2022/03/18/what-is-apecoin-and-who-is-behind-it/ https://twitter.com/yugalabs/status/1505014986556551172 https://twitter.com/yugalabs/status/1502420714527334406?s=11 NFTs coming to Instagram? Minting + PFPs? https://www.coindesk.com/business/2022/03/15/mark-zuckerberg-says-nfts-are-coming-soon-to-instagram/ Info on Axie Infinity https://research.thetie.io/axie-infinity/    Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey, everybody. Welcome to the chopping block. Every couple of weeks, the usually four, but currently four, but three regulars of us get together and give an industry insider's perspective on the crypto topics of the day. So quick intros. First we got Tom, the Defy Maven and Master of Memes. Next we've got Robert, the Cryptoconassur and Captain of Compound. Then there's myself, Haseeb. I'm the head hype man at Dragonfly. And as special guests today, we have joining us, Doe Kwan, who is chief terrorist at Terra. Sorry, I, I, I, I, I, I, I, I, I, I, I, I, I, I, I, I, I, I, I, I, I, I, I, I. I have to do that. No, Doe Kwan, one of the co-founders of the Terra Foundation and the LFG. So the three of us are early stage investors into crypto. Doe Kwan is a founder in crypto. But I want to caveat the nothing that we say here is investment advice or legal advice or even life advice. Doe, how are you doing? And I apologize for the intro.

I was feeling myself. No worries at all. Yeah. Thanks for having me. Yeah, how's life in Teraland? Oh, it's great. I know. I know.

I'm hoping that we don't get taken off the air now that we have you on. I'm in Singapore right now. By the way, anybody who's watching live, I'll have to excuse if the connection is not great, but my connection in Singapore has been a little flaky. But you actually ran into each other. I didn't even realize that you were in town. How are you liking Singapore? It's good.

It's super hot. So I find my sleep schedule all weird. I try to maximize the time where I stay awake when the weather is still cool. So I wake up very early, go to sleep very late in night. And then I take a nap at like two to three, two to four. Yeah. Yeah, I'm living the same way because I, because a lot of my team is on US hours and, you know,

a lot of the entrepreneurs I speak to are in US hours. But basically I get up super early and I work a lot like 7 a.m. to like, you know, it's like 1 p.m. and then my day gets really slow, which I'm not used to. And so then I have time to like nap or like work out or whatever. And then at night it picks up again because then East Coast wakes up and then I have a bunch of calls at night. So I'm getting used to that routine. But it is a little weird when you first get into it.

Yeah, for sure. Well, one of the interesting piece of news that we wanted to chat about this week was, so you've been on a betting spree lately. it was reported there were there were two bets that you made with some some folks in the crypto universe first you made a one million dollar bet i can't remember who it was was some rando on crypto on crypto twitter who was yelling at you and then you made a second bet there was 10 million dollars with another person a traitor in crypto tell us about why you made these bets what was the what was the impulse behind them and and why you're so bullish on the price of tax or why the other

side made the bets and what you're going to prove or disprove them. I mean, so obviously, like, I can't be objective about what I think about, you know, Luna Price is going to be over the next few years, right? So if I wasn't bullish, I wouldn't be working so hard. So I think for me, it made a lot of sense to bed in an interaction that have very strong belief in. But at the same time, like, one of the things that I regret about making this bed is that once I made it, I got hundreds of DMs from a bunch of people asking me to bet on everything running the gamut from, oh, like, can we bet Luna at a different price point? Can you give me different odds? Can you, yeah, can we bet on the outcome of this game? Can we bet on something? But can I be the custodian? And I promise not to

rug. So massive, massive headache. And it definitely wasn't worth a hassle. Yeah. Also, I think it had the side effect of giving, you know, two people that, which are okay, but mild or mildly annoying. Lots of publicity in the process. So that definitely probably has some cost to it as well. Maybe Tara would be the very first protocol to nail the decentralized prediction market, but it'll just be dope. You know, you can place a bet on chain, escrow in a smart contract, and those are going to be, you know, the counterparty for everything. Well, those would be great. So let me ask a very basic markets question just so, you know, because I'm a markets person at heart. Is there a positive or negative carry on, let's say, like Luna perps? Like,

is the expected price of Luna in a year, higher or lower than it is today? And did one side of this bet you or the other folks, you know, enter into this at a very quiet disadvantage based on the sort of like carrying cost of the bet? So I think the second trader most likely hedged his bet. And you're right. From a from an actual cost perspective, it doesn't actually make sense for me. But like for example, like the first bet, for instance, I have I had the luxury. of locking up capital, a significant amount of capital for somebody that's kind of annoying.

So it prevents him from making, you know, trades, right? Well, at the same time, he might make a modest return from hedging, but not as much as he would like to, right? So definitely worth it. But if your question is just from like a pure trader's perspective, can these guys hedge their bets and still make money? The answer is yes. Got it.

So like they, right now there's a caring cost of their profiting if they hedged it. And if you hedged it, it would have been losing to just run with it. that for you're hedged. Definitely interesting. Maybe you were going to say the same thing. I'm actually curious why they want to bet with you specifically on the price of Luna, when I feel like so much of the discussion I see around Tara on Twitter is around UST and the price of UST. And there's like these constant battles back and forth around how UST works and if people, you believe in the UST peg. And I feel like that's the interesting bet in my mind versus Luna, like, I think you're great and I think you've been putting out some great product,

but like there's so much, you know, fluctuation in overall crypto markets, it's hard to sort of know. Well, I mean, there's a simple answer to that, right? It's harder to hedge a bet for UST-D pegging, right? Whereas it's very easy to hedge a bet in terms of what Luna's price is. It's a very simple option, right? So I think that's why. In fact, I think for the first person who took the bet, he was initially proposed a bet on USD depegging risk, even though he's been bitching about it for a year. And he wouldn't take it

precisely because it's not hedgerable. I mean, it feels like the real story. So there are a bunch of details about market structure that are interesting to delve into. But the real story here is that, like, there are a lot of annoying people on Twitter and you like, were like, you know what? I'm going to pick you and you and I are going to go head to head and like gladiator combat on crypto Twitter. And the question is like, does that work? Like, do you feel like you have learned something about how crypto Twitter settles fights. Well, I mean, depends what you're going for. But if it's, you know, if you're trying to apply a utility function to my time, my money,

and, you know, net positive publicity, it was probably negative, right? I'm pretty sure I'll make money. So you feel like the publicity was negative? No, I mean, the publicity itself wasn't negative. I think the publicity was net neutral. We got attention. but, you know, there were other things going on in the backdrop leading to that publicity as well. But I think the main cost was now basically my Twitter inbox looks like Polymarket.

It's probably more liquid, so. I see. I see. Okay. So probably this might be the last bet that you make for a while with Twitter critics. I see. Okay. Any advice to folks on how to deal?

obviously, you know, the rise of terror over the last year has been meteoric. And naturally, that's, that's probably gotten you both a lot of supporters and a lot of enemies. What have been your overall lessons on, like, how to deal with the clamor and the noise in crypto Twitter for somebody like yourself? Well, I feel like, you know, when I talk to a lot of founders, one of the biggest sources of burnout is that they tend to take stuff that people say on Discord or on Twitter or in Telegram personally. right and that's a really bad way of looking at things because especially if like somebody's saying that you're you're a scammer or like whatever that you designed is not going to work yeah they're not doing it so that you are going to take it personally right even if they're fighting their bags it's just good business right and even if they're not it might be because it's a part of their job or because they don't know you personally but insofar as like you treat it as an opportunity to potentially like say something clever or to ratio somebody then it becomes massively fun Robert, I mean, you've also been through this, of course, with building compound. What's your perspective on that question? I think it's really simple.

Crypto is more front and center as an industry in, like, the public domain than I think any other industry on Earth. Like, if you look at the CEOs of like Fortune 500 companies, they have like a thousand followers. And crypto, even like the earliest stage projects are like immediately in like the public arena, right, in a way that like most corporations, aren't, or most leaders of corporations just aren't. And I think it's both extremely positive and, you know, extremely negative, especially for the mental health of a lot of the participants. The other thing that's interesting about it is, like, we also live in an industry, unlike every other where almost everyone's anonymous or a very large contingent is anonymous versus

any other industry. And so it makes it a lot easier in a good and bad way to like spar, right? And so I actually think it's a great skill. And I think like the folks that are looking to create something in the space have to just like assume that they're going to get it. That there's a lot of people who are comfortable. And it's helpful for a lot of founders in negative. But like there's a lot of folks that are ready to engage, you know, with like the positive and the negative. And it's just nothing you're ever going to get with Web 2.

Like I founded a Web 2 company. the number of people that were like positive or negative on Twitter about it was like zero right and so that's just it's just so fundamentally different and I think some people like just it's fuel you know and if like it's fuel for you like you should probably like consider founding something and if it's not fuel and if it's scary find a co-founder that like it is fuel for do I mean you know I remember I remember the very, very early days of Terra back when, you know, it was primarily just payments. And, you know, I remember there was Chai, which was the payments company that was kind of the sort of the primary tenant of the Terra blockchain way back in the day before you guys adopted smart contracts. When do you feel like the experience of building Terra really changed from being kind of like what Robert's describing of like, people, you know, it's like it matters, but mostly people are like just.

kind of using the product to now this is like a you're constantly fighting every single day on crypto Twitter and it's like it's just a war zone when did that change after some point we sort of made a conscious decision that it's not worth a lot of trouble trying to build a payments company across like 12 different jurisdictions there's a reason why it's never been done before and it's more of a compliance business than anything else right so the reason why like all the payment interfaces look pretty much the same, it's not because the entrepreneurs working there are stupid, it's because, like,

there's a lot of red tape and try to get anything done. And actually, the less develop the market is, the harder it is to get things done. So, for example, if you look at, like, Indonesia, they haven't caught a payment license in, I think, over the last decade. And then in order to do so,

and, like, if you talk to the people on the ground there, they say stuff like, oh, you need to know the right people. Or, like, oh, you need to be ready to pay. And I'm like, dude, I'm not going to pride people. So, yeah, I mean, so after a while, we sort of decided that, you know, trying to build a payments company and have that be sort of like the central consumer of a blockchain just doesn't

work for lots of different reasons. So we started to think about what are some other things that you can build with stable coins. And that's sort of when the terror ecosystem started to take off. And when do you feel like that if you guys hit that inflection point of like, oh, crap, now this thing is more than just a product, it's now like a movement? So actually in Defi 2020, we spent a little bit, so like in early 2020, we split the two companies altogether. So Chai, my co-founder, Daniel Shin, he split off and he started to run Chai.

And then I started running TFL. And the TFL had, I think, 12 people when the split finalized. And it was almost all dance. So we said, hey, look, I think we need to, you know, think about different things. that we need to build. So we sat and looked at the whiteboard and twiddled our thumbs for like three hours and then we decided, okay, yeah, we got to try to do this in another ecosystem where there's more activity, right? So we started to spend some time, you know, looking at DFI ecosystems on Ethereum,

and then I think around DFI summer, we anonymously launched a fair launch project on Ethereum. And I think I spoke to more than one of you here, which was super fun because Terra didn't really have a DFI ecosystem back then. So understanding the mechanics of fair launches and what gets people excited about DFI and lots of other new innovations that were coming into the space, that was a huge learning experience. So we took a lot of those learnings and started to launch things like Mirror and Anchor and some other things, which ended up doing pretty well.

Yeah, full disclosure, robot ventures invested in Mirror. Yes, and Dragonfly invested into Anchor. I think we got some mirror through secondary, you know, through secondary markets. So we're also very avid investors in the Tera ecosystem. Speaking of investments, one of the big news of the week that unfortunately Taurun couldn't be here to experience our love and admiration. It's more fun who he's not here, actually. It is more fun who is not here.

We can talk shit and talk about the real stuff. So Gautlet just close around, raising 23,000. $80.8 million led by Ribbitt Capital at a $1 billion valuation, which makes Gondlet a unicorn. So, congratulations to Turun. Crazy, crazy outcome. I realize that a lot of people listening to the show probably don't even know what Gondlet does. So actually, we are early investors into Gondlet. Gondlet, for those of you who are not aware, Gondlet is basically a, how would you describe

Gondlet? So basically they're like a kind of analysis slash simulation company that what they do is they, is they work directly with protocols, layer ones, defi, defi platforms, things like that. And they try to use

actor-based simulations to determine what optimal parameters might be and what the risks are to different protocols. Is that a good description, Robert? Yeah,

I think compound was Gauntlet's first customer, so I'll explain it from the perspective of compound. So compound has all of these parameters to determine how risky it is. to borrow assets from compound or to like provide liquidity and earn an interest rate.

Like how useful is each asset as collateral? Like what are all these different like bells and whistles and levers and buttons and things, right? The parameters of the protocol. Gauntlet built a super smart computer program that analyzed like the one key important number, which is will the protocol suffer losses in the context of all of these parameters and, you know, configurations. And they built like a computer program that. analyzes it and simulates it and runs it through 800 million Monte Carlo runs.

And it says are these parameters good or bad, you know, based on what the market does. Do that for compound. They do that for AVE. They do that for all sorts of other defypike protocols. It's like simulation Monte Carlo box to analyze if a protocol is safe or unsafe. So they could theoretically build a simulation engine to look at UST or different terra things or any other defyphi protocol. but it's a bunch of like PhD types that are building models of how Defy protocols work. And they get paid by these protocols, which is like the new approach.

Yeah, it's actually really interesting. They were the first, I think they were the first company to really get paid in a very significant way by protocols. So I think it was AVE that first did like a doubt proposal to pay them. And I think Compound pays them as well, right? Avey and Compound both pay on them via the protocol itself. Right, sort of in protocol payments, which now I think has actually become more of a thing since Gauntlet kind of pioneered it. And now I think we see like auditors starting to get paid within protocols and other things like that. Do you do any, do you guys do anything like that within tariffs or paying companies within the protocol?

So I think there's been a number of grants, but no, we've never really had an association where like the Dow was paying for a service provider. Some of the things that we've done are things like, you know, for example, like the Washington National Spanors, So like the nationals team made a community pool spent proposal against their community pool. And then the community voted to unlock the funds to give to the nationals. And that was like the only instance that that happened to scale. That's pretty cool, though. That's legit. That's definitely taking it a step further to do like a like a sponsorship via by a doubt proposal.

That's pretty sick. Well, we now we know why Tarun didn't show up today is that he's too good for us. now that he's a unicorn founder. So hopefully we can try to convince him to hop back on the show in the future. But congrats again to Tarun and Doe, do you want to take a bet on what Gauntlet's going to be worth in 10 years? No, I wouldn't bet against him. You can take either side. Yeah, yeah, you don't have to bet for him.

You can bet against him. You can bet against him. I promise, there's no carrying cost on this one. So the pure is the only way to do it. Right, right. Well, I am less educated, so I don't think I'll bet on that one. Okay, okay, all good. I was hoping we could hedge some of our gaunt exposure. Well, moving on in news, so that was not the only major fundraise this week. There was another pretty blockbuster fundraise. So there's been a lot of news in the last

couple weeks about Yuga Labs, which is the creator of the BoardApe Yacht Club, as well as other associated franchises. There's a big pile of news, and I'm just going to kind of run through all of it and then kind of hone in on the most interesting bit. So the first of all, Yuga Labs announced a fundraise. So they raised $450 million at a $4 billion valuation led by A16Z. So obviously the second now most valuable company in the NFT space behind OpenC. They also announced that they had bought the rights to all of the cryptopunks from Larva Labs. And what they did is they decided to give the IP rights of the Cryptopunks to the owners of Cryptopunks. So Board of Yacht Club has always had as part of their IP agreement or the licensing agreement

that if you own the Board Ape, you have the IP rights of that board Ape, meaning you can put it on merchandise, you can put it in a movie, you can do whatever you want to with that IP. That was not the case with Cryptopunks. You have the commercial rights. Yes. You have the commercial rights. Yes. And so that was not the case with Cryptopunks, but after Yuga Labs bought up.

the IP rights to Cryptopunks from Larva Labs, they now do the same thing with Cryptopunks, which now gives any holder of a Cryptopunk commercial rights over using those Cryptopunks however they choose. Subsequently, that brought them a lot of fanfare, a lot of cheering, a lot of people were very excited, and it caused a resurgence in trading volume for both punks and for the Board ABI Club franchises.

Then Yuga Labs launched Apecoin, which is a token that is air-dropped to all owners, of anything within the crypto, or sorry, not the crypto pumps, the Bordab Yacht Club universe. ApeCoin did an enormous amount of volume. It was huge event, tons and tons of excitement around it. It is currently trading at $1.5 billion circulating market cap. What's the FDV right now? I think $10 billion or, yeah, $11 billion, something like that.

Yeah, 10 to $11 billion, FTV. Apecoin right now, it's a little bit underspecified what it does. What exactly does Apecoin do? A lot. Okay, so one, it's going to be the primary currency in a project called Other Side, which they're releasing shortly, which is going to be like their universe. Other side, they're going to sell land. It's going to be competing with like, you know, Decentral Land and the Metaverse projects on Facebook one day and all these things. Also, they're really working hard to make it a currency that's usable everywhere.

So like Time Magazine announced that you could purchase a Time magazine subscription. in ApeCoin, it's likely that they're going to be, you know, working on many other use cases for the ape token. But it's meant to really be a currency. It's also a governance token in their platform. And it's also going to be, if you've read some of this community discussion proposals on the ape coin forums, which I have, and I don't know if many other people have, it's also going to be distributed to, potentially distributed to those who stake their board apes, mutant apees.

apes, etc. I think it's going to be one of the most powerful economic forces of NFTs in the history of NFTs, but that's a whole separate conversation. So let me ask you guys this. Why would somebody buy board apes versus like, you know, those like mutine skull things? Like what makes this collection special? Well, the mutant skull things are weird, interesting, ugly, and important. So, you know, I'll just go through why I think they have, you know, an interesting place in the NFT history books. So what really set board apes apart from Cryptopunks and Cryptopunks are OG and I'm an OG crypto punk maxi and I used to only support Cryptopunks and I've over time been converted to someone who also has board apes.

But, you know, Cryptopunks existed. Larva Labs created me bits and gave a large number of me bits to the holders of Cryptopunks. Mutant apes were a similar fork slash airdrop to board ape holders, but they did it in more interesting ways, as opposed to just like you have a Cryptopunk, you get one meat bit. So the mutant apes are, you know, it's a more complex offshoot where there's different tiers of mutant apes. There's mutation serums that everyone got. You basically like, you know, evolve these original board apes into these mutant apes. and where they also have relevance in the ape coin ecosystem, and I apologize ahead of time if I sound like a bored ape, you know, crazy person.

But where they also have relevance is that they're one of the other primary assets in their ecosystem. And in terms of the distribution of ape coin, in terms of the distribution of future, call it air drops of different like properties that they're creating. And they've announced that they're creating many different properties to coincide this universe. you know, these are like the primary identities that they view as having value. You know, they bought all the IP of Cryptopunks and Meibits, but they don't view them as like the primary actors in the ape coin or, you know, Yuga ecosystem in the same way they do,

you know, this tiered system of like board apes and then mutant apes as sort of like the recipients of the economic benefits of their ecosystem. So what's interesting is that board apes and mutant apes and the Kennel Club, which are the dogs, all have sort of like a ratioed economics, which were integrated through the ape token. And so you can see this in like the ratio of value that was given away in terms of how much ape for each of these. You can see it in the proposals around the staking rewards for the different asset classes. There's basically, you know, through the early experience, been like a ratioed value between these different assets. And the interesting thing is to see on secondary platforms like OpenC and looks rare and potential future markets,

places, whether or not they continue to trade in these given ratios and why. I imagine at some point this is like my utopian future, there's going to be a hedge fund that's like a Yuga Arb hedge fund that just like arbs between relative value between like mutants and apes and like dogs, right? And it's going to be an actual professional job title for somebody in like a year. And if you're an up-and-coming person, that could be your future. So I mean, so it, it, It almost feels like with NFTs, you're sort of inverting the IP publishing model, right? So before you needed to create sort of a centralized lore like Harry Potter or the Marvel series, and that there would be one person writing it, one canonical lore that codifies all the stories and the myths and all the fantasies in this world.

You know, once you make that story successful, you now get to sell, you know, little tokens that represents some associated value. of this IP. So you could either sell like Harry Potter ones or caves or, yeah, I don't know, whatever people buy or like a little scar sticker or whatever. But I think NFT is like it has the same value capture mechanism or maybe even saying value capture mechanism is sort of the middle of the bell curving it. But the idea is that you sort of publish these tokens first and then like you sort of rely on the community to create provenance and lore around it in a way that doesn't really have a

canonical center, but it almost feels like the value of these collections, the collections with more provenance, with more, more lore, more culture built on top of it is going to eventually be more valuable. Am I looking at this the right way? So I would disagree with that. I think that's true for some NFT collections, right? I think it's very true for Lute. I think Lute is the canonical example of that. I think it's somewhat true for Cryptopunks. But I think apes are probably the least, probably the polar opposite of that, where I think Yuga Labs actually done themselves a tremendous amount to create that lore, to create the universe to actively market, to build those relationships and kind of build

relationship with celebrities, like get this thing into TV spots and make news and do really dramatic things in order to keep the lore going and make it really powerful. And so it does feel like there's some NFT collections whose valence has been built in a very bottoms up way. And it's true to an extent, like every NFT collection can only be successful if there's bottoms up engagement. But of all the NFT collections, it feels like the, the ape universe has been the most top-down and the most successful in large part because of that, right? Like there are some, you know, if you sort of compare NFTs to luxury brands, there are some luxury brands that become really, really powerful, like, sort of in spite of

themselves, right? They sort of, because, like, oh, this one, like, woodmaker from, you know, however many years ago, only made, like, 200 violins, and that's the, why, like, these are the most famous violins in the world or whatever. And then there's Rolex. And Rolex just goes out and they just do the freaking work to make Rolexes what they are, right? They get into all the rap videos. They make sure that people on TV are wearing Rolexes. They make sure that the most famous people are flashing it when they're, you know, on late-night talk shows. Like, that's, to my mind, what Yuga Labs is. And they've shown that execution can get you there, can get you into that central spot in the NFT ecosystem. It's manufactured, but it's

brilliantly manufactured. I think, I mean, you're not showing a point with, like, the Rolexes and with the Mutant Apes, which is like, I think in my mind, it's, I feel like a lot of brands struggle from this issue, especially in NFTs, where, you know, supplies are so limited of wanting to be broadly desirable and, you know, recognized, but also being, having some level of accessibility, right? Like, you know, a Ferrari is kind of more accessible than, like, a Paganiwira, even though, you know, it's, like, more expensive, but there's more Ferraris.

And so people kind of know about it more and as like more of a legacy or something like that. And so I feel like there's, you want to sort of find room for yourself to go down market. And if you're Supreme, you know, sell a box logo shirt for $80. But not everyone can buy the $10,000 jacket or something like that. And so you have some amount of accessibility without ruining your brand. But still sort of, you know, preserving that, that your top tier status. I think that's what Mutinabe is like trying to, they're trying to explore that line right now. I think a lot of people were really excited about the larva labs acquisition for, you know,

sort of the commercial license reason that you mentioned. But I think if anything, it's in my mind, sort of a big advertisement for CC0 and sort of, you know, IP, on-chain IP native NFTs as opposed to having IP live in this sort of weird meat space and be arbitrarily reassigned, you know, at the whim of, you know, VCs or entrepreneurs. And instead of have it like live with the NFTs themselves. So, you know, who's to say that, you know, the commercial licenses cannot be revoked or changed or sold somewhere else? And so it's, it's weird that it's been given.

but it can also just as easily be given away or taken away. Oh, so the question that I was going to ask is, regardless of the method by which collections get this metric, but would you say that there's a similar relationship between NFT collections to cultural exposure and, let's say, relevance to layer one blockchains and their TVL? It feels quite different to me. It feels very different to me.

I'd say, you know, NFTs, like, you know, getting a lot of cultural cachet and getting a lot of attention is not enough to make your TVL go up. That just seems obviously true. Is that, you know, there are things like... Andre disagrees. Who disagrees? Andre disagrees. Like, look, they're a platform, like, I mean, take Cardano, for example, right? Cardano has an enormous amount of cultural attention and awareness and, like, eyeballs.

and users who like own Cardano token and are excited about Cardano relative to its TVL. Its TVL is like infinitesimal, right? Well, that's because the blockchain doesn't really work yet, you know, if it was actually a functional L1. Sure. I mean, take even Ethereum Classic, right?

Ethereum Classic is a good example of a blockchain that way punches under its weight relative to the number of holders of ETC. I think there are plenty of examples of this where there's a divergence between the actual, you know, because the number one thing that's going to give you TVL is builders, building things that actually require TVL, like that there are reasons to put money on there,

right? TVL is more a function of whales. To those point, this is what I agree with. They're both vaguely like hype derivatives in a way in that like, you know, how successful it is is sort of like, you know, a derivative of just how much attention and excitement there is for it. And there will be, you know, things that don't fit into that model like Cardana, right? But I think in general there's a high correlation.

I want to push back on that. Like I think you need more than hype to get TVL, right? Just getting hype doesn't get you TVL. It gets you eyeballs. It gets you trading. The blockchain has to work. If Cardano was like Avalanche, let's just say it was like as functional as Avalanche.

I guarantee you would have crazy TVL. Yeah, there's a lot of latent TVL for Cardano. Just because I think I haven't moved it in yet does not mean it's not TPL. I know. The thing is, I think like the abysmal. ability, like the willingness to like buy Cardano and trade it is very different from the willingness to put your money at risk in the protocol, right? Like there's a much smaller number of people who can actually deposit TVL into protocols

than who can buy tokens. You know, guys, I was actually just thinking about this one thing. So it almost feels like if there was a service provider like Yuga Labs, but they make, they sort of do this thing of creating culture and stories around the NFT collections as a service instead of doing it just for that one collection, this company would be massively successful. Kind of like a decentralized Disney, if you will. No, Disney owns the IP.

Disney, like, makes it very genuinely part of their universe. It's not like a, if Disney was outsourcing their creation of the IP, like that company that did the outsourcing would be worth a lot less than Disney. Right? Like Nike has a bunch of suppliers, but Nike is the thing that's valid. not the suppliers. Right, but what you could do, what you could do is that in some ways, by being a service provider, instead of issuing all the IP yourself, you sort of subscribe to the game publisher

model. So if you look at game publishers, they don't actually initially come up with the game scripts or the initial game IP themselves. They wait for indie game developers to pitch the games to them, and then they see early traction. So they have the comfort and the ability to use the data that they see from that early traction to publish multi-billion-dollar games. And what they can do is that they make an investment right before they publish

such that they take a meaningful stake or meaningful loyalty, royalty cut of the potential revenues that are generated. And this could be exactly the same thing. So, I mean, for example, like off the top of my head, and I'm kind of like definitely not an NFT expert. But what if we just like got a collection, hired a bunch of novelists to write fantasy novels about, you know, 10 different characters. and then just made like a Simpsons like TV show by gathering a village of 30 different

NFTs together and then we got like four guys and then made a girl group out of it, you know, hire like, you know, four girls from Asia. Actually, you can hire 12 and have three groups compete. I don't know. I feel like there's a publishing model here that could potentially make money. I agree that there's an opportunity to expertly manufacture NFT experiences in a way that's more than just like, here's 10,000 pictures that I, like, pseudo-programmatically generated. I like Do's point here, especially on the Disney topic, there's this phrase inside of Disney,

Feed the Beast, which is the idea that, you know, the way Disney makes money is not by, like, selling movies. It's by selling merchandise and parks. And that's where they make all their money. And so in reality, it's like you generate the IP to sell all of this other stuff. And the IP is almost like secondary in a way. And so really what Disney's been doing lately over the past, you know, a few decades has been buying distressed IP and then like Marvel Star Wars, which no one really cared about. And shoving it through the Disney machine and, you know, making insane amounts of money by busy taking this distressed IP and, you know, showing how to make money on it. And so I don't know if there's like a comp here for NFTs. Like maybe the question is, what would you guys buy as like distressed IP in the NFT space?

Like what do you think are underrated gems that you think deserve polishing from like the sort of community and like, you know, merchandising and narrative side? Well, I think the key point, though, that you were just bringing up is that those brands had fan bases that were passionate, right? And ready to like vote with their wallet on those brands. You know, what makes them distressed is that the price that the market was valuing them was too low relative to how many like diehard and loyal fans they had, right? I don't know if the same model is going to work with NFTs, because most of these, at least today in 2022, and we're in chapter one of NFTs,

which is going to be like 100-page, 100-chapter book. But, like, as of right now, like, there's so many of these things. They've all been around so short an amount of time. And in very few cases, you have, like, loyal fan bases for them, right? There's no loyalty there because there's nothing to be loyal to. Like, there is no content. they're just, you know, profile picksets that are pumped out, you know, in short amounts of time. And so I don't think it's the same thing yet.

Maybe in 30 years, someone's going to look at Bored Apes or Cryptopunks as like, wow, that's an undervalue brand because, like, people are still die hard about their punks, but like it's worth almost nothing on the market. Maybe the realization here is that, like, Bored Apes is the first real franchise that we've seen within NFTs, right? They're the first real kind of full stack, not just, you know, four dudes get together and, like, pay a bunch of service providers to, like, mint at 10,000, you know, PFP collection. But they do something much more, much more muscular and much more like what we would identify as, like, what Disney might do with Star Wars. That feels like the thing that Yuga Labs really got right that almost everybody else gets wrong in this industry.

Yeah, they onboarded celebrities and through events and through parties. And, like, they took what otherwise would be, like, every other. profile pick 10,000 NFT set and actually made it awesome. Yeah, Yuga Labs, I guess, Disney'd crypto punks, right? These neglected punks and they're pop up into the Yuga Labs machine. You know, I saw the Yuga Labs deck and obviously, you know, they're now teasing other side, which is like this metaverse thing that they're going to do. And it did feel very disappointing to me.

And I guess this is like the other side of the Disney machine. You know, if you sort of take seriously the idea that's like, okay, these guys are good at creating, you know, these sort of, this brand identity. That's what these guys are good at. Building a metaverse, building like a game universe, is, like, incredibly hard, and it's, like, obviously going to take many years, and it's not their proficiency. It's not what got them here. But then straightaway land sales, right?

There's 200,000, or what is it, 10,000 or 100,000 plots of land in, like, a metaverse that's currently unspecified. It feels, like, just incredibly money-grabby to me. It is. I don't know if anybody else felt that way, but I'm just like, this is, like, you jump straight to the end of the Disney line of, like, now you're, like, pre-selling tickets to your theme park and like you have no ability to even build theme part like you never built a theme park before or maybe a theme park has never even been built before and you're just like oh yeah you obviously you're you're going to want season passes to my to my future uh you know ape themed theme park and um it it just kind of i don't know yeah it is a bit triple dippy in that they sold the

apes and they sold equity in the company that made the apes and then they drop the token which is non-deluded for whatever reason, and now they have a bunch of the token. And so it's like, yeah, they just kind of keep dipping. It's Godtier. Which is working. Yeah. God tier. It is God-tier. It is definitely God-tier monetization for a company that launched three PFP collections or four, four PFP collections. But to your point, Tom, that is the power of Disney, right? Disney is not the massive company that it is because the IP is so creative and generative or whatever. it's because it's really freaking good at monetizing the IP that it does have. And maybe that's the ultimate takeaway from Yuga Labs is beyond just the execution and the creativity,

it's the fact that they were somehow able to ring billions of dollars out of launching, you know, a bunch of apes. What do you guys think about like these Web3 games that are launching? So how does everybody feel about something like Axi and, you know, like it's kind of interesting watching a bunch of AAA Web 2 gaming publishers trying to jump on the bandwagon because they saw the Axi success story and they think they can do better. Axi was the success not because the game, the game sucks and is horrible and is not fun. It's completely stupid. But because of the economics of the game, what they really launched

was a DeFi protocol with a better pixel front end. They didn't launch a good game. you know, candidly, the game sucks, right? But the economics are what made it interesting to the world, right? I think there's going to be a lot of people that launch Web3 games, and they're all going to suck. I think at some point someone's going to launch a game that's absolutely amazing, and it happens to coincide really well with, like, cool crypto-economic systems, and it's going to, like, win the whole world.

And it's going to be like the greatest game that's ever been created, and like everyone's going to be obsessed and play at 24-7 and like economies around the world will collapse and like people won't leave their house anymore. But like I think that might be like a long way away until like someone just like nails like an incredible game and an incredible economy at the same time. Yeah.

Yeah, I find Axe Infinity incredibly cynical and very like very, I think it was an incredibly bad precedent that taught a lot of people the wrong lessons about what crypto gaming will be and what it'll be about. And I think I actually, placed a lot of the blame at VCs as well, because I think a lot of VCs were kind of amplifying this narrative because it sounded good, and it got a lot of attention that, like, this is the future of gaming, this is the future of economies. You know, people in the third

world are going to stop, you know, growing crops and going to stop, you know, attending stores, and instead they're going to sit around and, you know, do repetitive game loops all day and, like, just mine fake currencies and fake universes. And, like, this is just obviously, like, not only bad for the world, but it's also just like a very, it's like a perpetual emotion. machine level understanding of how economics works. And there can't be a game where everyone makes money. There's no economy where everyone makes money. Some people must spend money for other people to make money.

And the idea that everyone in third world is going to get paid to like play some dumb game over and over again that doesn't actually produce any net value to anyone else is unsustainable. Like I had this tweet a long time ago that was a little tongue in cheek but also very genuine, which is that. You can't show your own to poker. It's our show. I can show whatever tweets I want.

All right, all right. There was somebody from Dragonfly who tweeted that poker is the original play to earn. And I think actually this is a, the more time I've thought about this, the more I actually really strongly believe this, is that poker is a good example of a game that works within play to earn because some people make money, some people lose money, some people don't, you know, some people break even.

But like, that has to be how the game works. There cannot be a game. And poker manages to make that fun. And that's a good understanding of what the game probably will feel like if there is this economy inside of it, right? There can't be a game where everyone's making money. That doesn't exist. There is no game like that.

And so the idea that there is a game. Yeah, ask people who bought it. As people who bought it in January. Over any long period of time. Like, come on. You can have things that aren't zero sum. I agree. There are positive some games, right? But in order for there to be a game where people are making money, there has to be spending and there has to be value creation. And so it's like, okay, where is that spending coming from in Axe Infinity? Very unclear. Most of what's happening in Axe Infinity is basically like digital sharecropping. Sure. But like here's like the whoa man like, you know, vision. What if you just put a game layer on top of the actual real world economy, okay? Like what if you just have like, like, what if you just have like, you?

a sick, like, metaverse on top of a real economy, it's not zero-sum, right? Where you're not, like, in a zero-sum, like, mining and spending loop, but where you're, like, actually running, like, the corporations that exist in the real world, you know, like some, like, end-darts game-like thing. Like, you don't even realize that you're playing the real world. And, like, you're controlling the corporations and business units of, like, things. Like, what if the play-to-earned is, like, you're running a corporate treasury of some corporation in Argentina and you don't even know it, right?

So like basically this right now is the metaverse. Well, what I would say is that, like, look, if you imagine jobs in the metaverse, right, here's one of my core complaints about the, you know, kind of play-to-earned vision, is that the jobs that are conceived of as being the jobs you'll do in the metaverse are extremely repetitive, simplistic tasks, right? Like, you know, mining in Axi Infinity or, you know, growing your axes and battling them and whatever. And basically, you know, in Axi Infinity, I mean, Here's the first telltale sign that, like, your system is fucked up, is that in Axe Infinity,

you cannot run bots, right? If you run bots, they have like an anti-bot detection mechanism. Okay. Why? Why do they prevent bots? The answer is because they want you to do it manually. They don't want you to write a bot that will do this very repetitive, stupid, mind-numbing thing over and over again because otherwise there'd be too much mining too fast and they're

like, no, no, no, we can't do that. We can't automate things and make things more efficient. We have to make things inefficient so that we slow down the rate at which this Ponzi ends up getting unwound, right? That's why you're not allowed to bought in Axi Infinity. In the real world, right, like if you can't bought this thing, of course you would bought it. Because that is the way that we've improved the world is by having human beings not telling the fields, but machines selling the fields, right? So human beings get freed up to do more complex things like, you know, design Ponzionomic games. So, you know, the jobs that you'll do in

the metaverse that will actually pay you will be things that only a human being can do. Like, for example, you know, being like a, you know, like a virtual host, you know, where you like, you come in and you like entertain people and make them excited to like come into your virtual cafe and meet other. Like that's the kind of job. It's very hard for an AI to do. Probably you will need a human being to do that. And it's more like a real job. It's not like a rote clicking buttons over and over again. That's what every play to earn game today is like.

I'll visit the cafe that you're the virtual host. That sounds awesome. To see, once you are a virtual host, let me know. There you go, there you go. I had a more colorful example of mine, but I went with virtual host. All right. I hope I don't think that is what I think that is. No, don't worry about it.

Don't worry about it. It's, anyway, let's move on. So last piece of news that we'll run through is Mr. Mark Zuckerberg, who actually Tom used to work for. I don't know if everyone knows this. Tom used to be at Facebook and Instagram. So he's very close with the Zuckerverse. Mark Zuckerberg announced at South by Southwest, which is a big, you know,

sort of multimedia conference in Austin, that NFTs are coming to Instagram. So he was a little bit vague on the details, but supposedly there will be minting of NFTs, and presumably there will also be PFPs that can be used natively on Instagram. So Tom, given your insider's perspective on the Zuckerverse, what do you think of this announcement about Instagram?

You know, I was going to say, I think our portfolio company founder Alex Messwage might say instead that Instagram is coming for NFTs. You know, it was a showtime joke. Do you mean NFTs are coming for Instagram? No, because that's what he said, NFTs are coming to Instagram. It was a joke about Showtime trying to do Instagram stuff. Instagram is coming to NFTs, I think is okay. Yeah, yeah. Sorry, that's what I've got. We got the joke.

Great too. Anyway. 10 minutes. It didn't really land. Anyway, yeah, I've heard about this, you know, coming for a while. I think the impression I get was this was initially sort of designed or started as like a creator monetization movement within Instagram, which has always been sort of this conflict with a lot of these social media platforms now of how do content creators get paid. Some obviously platforms pay up pretty generously, like a YouTube, others such as Instagram less so and they sort of do it on like a more ad hoc basis with respect to, you know, negotiating contracts and things like that. And the idea was this going to be a way for Instagram to sort of uplevel its game here and, you know, get Instagram creators paid.

And I think since basically the pivot to meta, Zucks become much more interested in this area. And so now it's becoming almost more of a metaverse kind of play that Instagram is a part of. So I'll be curious to see how this plays out. I don't quite know what they have in store. But I mean, at this point, you know, Twitter has already sort of broken the gates open. And so we'll see what happens when it comes to, you know, like Z-Tech adopting NFTs. So how is the meta-mediverse going? Because I keep seeing like these like tech demos come out every once in a while, but it seems very

underwhelming to me. Yeah, I don't really know, to be honest. I don't really know what everyone's doing. I do say, you know, I think what Facebook does better than than any other tech company is growth. They can pretty much build mediocre products and then just like grow this shit out of them. And so I really have complete faith that they were able to get a shit ton of users on whatever it is that they build, independent of the quality. I think it's a question of what is it going to look like?

When does it come out? You know, all those sort of, you know, nitty-gritty details around it. I think they're going to fail and instead partner with the Yugaverse. Wow. I think they're going to buy something. They're going to buy something. What would you buy if you were Zuck? If I were Zuck.

I mean, to be honest, I would not buy Yuga or Apecoin because it's probably too expensive. but you buy like the sickest early stage team in the entire space. You buy five of them, right? By 20 of them. I don't know if that's Facebook style, though. They buy like a category leader. Yeah. So maybe it's like something like OpenC.

OpenC would be really good. OpenC would be a great. Also very expensive. If Facebook buys, sorry, if meta buys OpenC, you heard it from Dell. You heard it from Doe Doe do you want to Do you want to take a bet on the value of A point in 10 years Not at all

Well zero I'll bet on Atecoin with you Doe Okay I'll bet on zero Doe says going to zero Oh you bet zero I'll take way higher than that Oh really? I'll take the current price

Higher in one year than the price right now Oh wow You think higher one year than it is right now Let's say 10 months Let's say 10 months to be specifically. Ten months. What do you think is the terminal value of Bitcoin?

Honestly, I think it's a very asymmetric situation, but like I actually would be long in. Personally, I am slightly long. Not materially, but like, wow. Did you see the Yuga Labs round? Yeah. Did you invest or no? No. You did not invest.

Okay. Are you open to sharing your rationale of why you passed on Yuga Labs? Listen, I only invest in things less than like a $50 million value. I'm a pre-seed person. You're pre-seed. Okay, got it. I was looking at some of the, like, some of the big luxury goods companies or like the valuation of like Nike and LNVH and, you know, all these companies that maybe you can think of as like the non-metaverse analogies to what UgoLabs might be here is trying to be. Now, obviously, if they do build the metaverse, then the comp is really different.

But Nike is the most valuable company in that category is worth 36 billion. today. And right now, Apecoin, FTV is like 11 bill. So that's like a third fully diluted. I mean, I think, to be clear, I think FTV is kind of a nonsense metric in a lot of ways. Like I don't think it's like really that comparable to looking at the market cap of a traditional company. But because of the differences around dilution and how to actually understand what dilution means in crypto versus traditional companies. But it does feel rich. But, you know, with Apecoin right now having 1.5 billion circulating, that actually seems. If you just take the nominal circulating market cap, it actually seems very reasonable to me.

Yeah, I mean, I don't know how you can say it's rich when they just created $11 billion dollars out of value out of thin air, you know. I think if anything, it's kind of like people underestimated, you know, tech companies in the early 2000s compared to, you know, sort of brick and mortar, you know, legacy businesses and, you know, sort of doubted the ability for these companies that maintain software-like margins at scale. And so they turned into, like, the biggest companies in the world. And I think, you know, we could see something like that for luxury goods where, yeah, maybe Nike just isn't a great business because, you know, they have this sort of, you know, lower margin, brick and mortar, you know, high upex sort of business. Whereas, you know, if you just have only the IP, and that's pretty much your only cost, maybe you can actually just get way bigger than all these other sort of legacy, you know, luxury businesses.

I mean, the best counterpoint is I don't think I've bought any luxury good ever. Like, the most expensive watch I ever bought was like $1,100. I don't buy nice shoes. I don't buy nice anything. But dropping a hilarious amount of money on a picture of a monkey, I'm like, yes, give me that digital monkey now, right? Like hundreds of thousands of dollars, right? In a way, I've never over like a lifetime spend that much on luxury goods offline.

Shouldn't you only invest in pre-seed NFTs? Great question. What happened to being a pre-seed investor, Robert? Yeah, what's up with overpaying for NFTs when you should be getting pre-seed? exactly that's that's that's that's my approach i mint only that's my approach i'm very i buy the lindy effect once the nfts awesome and everyone agrees it's awesome that's when i'm like aping in about it aping in indeed okay well on that note we i think we're at time um so want to thank you do for coming on board and jamming with us on everything going on in the apvers

thanks that's it that's it for this week see you everybody on uh on the other side