Digital Assets: Big Trends from Permissionless

[00:00:00] Sorry for the delay there. I am joined by an awesome set of friends here who are all on the ground at Permissionless. I'm just going to go left to right on how I see my screen. So we've got Philippe, who is in Boston. I believe you're back home, Philippe? So I'm actually in New York right now.

Oh, you're in New York. Okay, cool. Private equity background. One's a Small cap, I guess call it growth altcoin fund fundamentals driven. Tom, who covers a lot of content on the macro side as well, excited to hear your perspective. And Tom, what's the right way to introduce yourself? I'm still trying to figure it out.

Ex Missouri I'm a current independent advisor, investor for a number of funds. So that's probably the easiest way, but no no moniker right now to put up there. Terrific. Terrific. And also joined by Ishan. So I met Ishan, I think on day two, and then we talked for three hours straight. It was awesome.

It was a ton of fun. And I [00:01:00] learned a ton as well. And Ishan runs a business that provides go to market services for protocols. so much for joining us today, and we hope to see you again in the future. Bye. You may be able to listen along with the Twitter space, so if that works, hey, you can stick to that as well.

All so what are the reactions? Just anyone feel free to jump all, go after it. I certainly have a few too. We can start with panels that stood out for you, key themes, the vibe, energy. New ideas, protocols investment, topics as well, but who wants to jump in? [00:02:00] Yeah, I think I can I'd love to start.

I think one of the big takeaways that I had is, I think as a framing, generally, permissionless was a very, I think, media driven, although it is very DeFi centric it's hosted by Bankless and Blockworks, which are two just large media entities, so there was a lot of media driven focus about like the future of media and things like that.

So I think there was a lot of interesting conversations there, but I think the big takeaway that I found is that if you were to think about like permissionless in 2022 versus permissionless in 2023 I don't think I heard the word NFT or the, I guess the phrase NFT like one time. And I think that's just like a general market apathy.

And I think it's all resultant of the lack of royalties. And so I think that this like lack of royalty the ability to create and maintain royalties on chain is causing this large downstream effect that like, no one really cares about NFTs anymore. So there's like the general large digital assets, digital art space.

And I guess that's cool and interesting, but I think as a whole. Outside of punks there was very [00:03:00] little, the only conversation was about, stoner cats, and they got sued by the CFTC and that was like, as far as the conversation went, on any JPEG, really, so I think, my big takeaway is like, JPEGs are dead.

I can confirm that, I didn't hear much at all on NFTs. Yeah I would so I totally agree, I think PFPs are dead, but if we look at a world where NFTs are, Movie tickets, shipping slots, etc. Almost anything could be an entity in the future. I didn't hear anyone talking about use cases like that.

What I really came away from the conference with is that I'm still not seeing the applications, which is frustrating, right? It was a lot of infrastructure. It was a lot about L2s and you can see it by the people who are spending money. If you went into the conference hall, there was scroll there, there was linea there, there was arbitrum, optimism, all those people, all of those people who fundraised are spending their money.

Just, Putting up conference slots, which is great, and proliferating the narrative of trying to scale, but I'm still waiting for the actual useful [00:04:00] applications that are building on top of what we're trying to do here. My purpose of going to the conference was trying to meet with those founders, trying to find those people.

And I think they're still, we're still trying to find that there, there was not and I'd love to hear other folks' opinions, but I didn't see as much on the application side as I would've liked to.

To echo that, I think Ram and I spoke for a while, there was a lot of a strong Solana presence in the conference, and one thing I really admire about that team, that Anatoly and the entire kind of stack there keeps hammering on is how focused they are around building technology that works for the next application.

And that in the roadmap, that in how they think about things, and whenever you ask there was a lot of infrastructure there, a lot of infrastructure panels, and whenever you ask the different founders what are you focused on, Ben Jones and Dan Grad will talk about MEV and decentralization, and that's very important, we're a mostly ETH fund it happened for a while we really admire those values, But the thing that stands out to me [00:05:00] is when you ask Anatoly, he'll say the most important thing, providing a, a ground that works for the next billion person application, whether that's payments, whether that's emails through NFTs, whether that's deep in decentralized proof of proof of infrastructure that, they are hyper focused on that.

I think it's something that they've been working Focus on this at the beginning and it's starting to show as as the network is really scaling. Yeah great points all around. A couple of instant reactions I have. One is the institutions were there if you look at the, in the expo hall, the booths that were the most busy were the institutional booths, including Circle, Metamask as well.

I led a panel with a few investment banks. The instance, and that was PAC the, by the way, there was a track called, I think it was called Institutions, that was the busiest of all of the tracks. There's another track called future finance, I forget the other track, but the institutional track for me was a key theme.

I asked [00:06:00] the banks that included JP Morgan Stanley, Franklin Templeton, also a company from Apollo, Christine Moy there, I said, when are we going to see investment banks offer prime brokerage? Answered, not anytime soon. The big constraint being regulatory, but also, technology and a few others.

But regulatory did come up quite a bit as a constraint. So that was one key theme I saw there. On the vibe, what's your old temperature check on the vibe? Sentiment overall, bullish, bearish, all that. Yeah, I, go ahead Tom. No, I was gonna say it's, for me it was maxed down vibes, right? The conference was let off by, led off by Eric, who gave a really rousing speech about the ethos and how we get back to our roots and all of those things.

But it seemed like we're trying to find ourselves still. And everyone's trying to not look at price action, trying to figure out what we're building here. But, [00:07:00] circle back to why we're actually here. The people who are actually at this conference, though, are great. We're the builders, we're the people who are willing to spend money for, a fairly expensive ticket despite a bear market, right?

I think there was the sentiment of, hey, we're down, hey, we can get back to it. But everyone is definitely feeling the pain at this conference in particular. And it wasn't a token 2049, obviously, but I almost see, From Twitter and Instagram and all those other things, it seems like the attitude is very different there.

So I wonder if it's almost like a geographic thing, right? Is it the US is feeling down because of the sentiment and because of the regulatory environment. And do we have other, on the other side of the world the sentiment a little bit different? It felt a little down to me personally.

No I really want to double click there because I think it's almost like a tale of two cities. Where you have this like the, this, I guess in Singapore and KB, Korean Blockchain Week you have this like massive amount of bullishness because, and I think the overarching theme there is just like reg where you just have very loose regulatory [00:08:00] concerns you have very strong, you have very large strongholds from very large entities that really dominate those regions for example, at KBW, you have Korea, which is dominated by the Bybit ecosystem OKEX has a massive spot in kind of Singapore, that Southeast Asia, and then also just China as well.

You see the proliferation of these large, but still centralized entities, but I think you'll, you're seeing this larger regulatory comfort over there. Whereas over here, you're seeing a general uneasiness on the other side of the world, where people are very concerned, no one really knows what's going to happen.

So I think it's almost like a. Regulatory, like the chains are really loose, whereas over here it's pretty tight and so that's why I think there's just that vibe difference of people are very excited in Singapore and people are, tend to be maybe a little bit pessimistic over here, but I think the institutional track and your talk on the institutions realm was definitely illuminating and I think it's going to show people that maybe REG is overrated in the short term, but still underrated in the long term, but I think [00:09:00] we all have a huge credence in it on the day to day when this is it's definitely a marathon, not a sprint.

So I double clicked on that token 2049, I asked a few friends that were out there, hopefully we can get them to do something like this next week, and they're like, yeah, the vibe is off the charts, they're coming back energized, totally different, sharp contrast, and of course you have, Like the Bellagio's of the world and, the Winklevoss were there.

It's just quite a few people were in token, much larger population. And I do think there's a cultural component, like a gaming component, a more speculative component. So when I asked them, like, why is the vibe like that though? I also heard, oh the Bitcoin ETFs are coming. Funny thing is on my panel, I asked everyone on the panel, By the way, that day Franklin Templeton had filed an ETF applicant, that very morning of the panel.

And so I said, thumbs up, thumbs down. Are we going to get a Bitcoin ETF this year under Gensler? I'll get one eventually, but this year under Gensler, which is relevant from an asset price perspective. So I said thumbs down, I don't see it. And then Christine said no. Then JP Morgan said no. [00:10:00] Then Morgan Stanley said no.

Now Franklin Templeton who filed the app said they declined to comment on that one. But I thought that was really interesting. So if there's a lot driven by this Bitcoin ETF, is it legitimate price or not, but I don't know if it's legitimate price. Yeah. So we need marginal buyers, right?

So like we have marginal sellers, we don't have marginal buyers right now. So the Bitcoin ETF is the only bright spot right now that could give us those marginal buyers. And I think what people fail to realize is when you're actually building an ETF, you have to seed it, right? So you have to put an amount of capital down.

You can't just say, Hey, we're starting an ETF tomorrow. You need an amount of capital to actually, buy, sell and trade. From the folks I've talked to, Fidelities of the World and others, the average amount of seeding capital is between 25 and 100 million, depending on, size, so BlackRock may put 100 million dollars down, someone like VanEck or a smaller fund might put 20 to 25 million down, but if you look at 11 different funds that, SNAP approved, All at the same time, which I think is the intention of this administration.

You're going to have almost a billion dollars of [00:11:00] spot buy on bitcoin, which is a very meaningful amount. Right? You can look at the daily active traded amount of bitcoin and you can say, okay, trade's way more than that. But price is set at the margin. And if you're buying spot bitcoin, ETF, 1 billion, that, that is a lot of money but it's the only bullish catalyst right now.

So I, I'm actually pretty surprised to hear those institutional buyers say that, but let's come back to bullish catalysts and investment ideas maybe towards the end, but I think there's more. To be excited about, like I'll share a brief anecdote yesterday, the, I think asset prices went up recently and someone in crypto said why?

I said it's because the Instacart, sorry, the RMIPO took off and Instacart's coming. So if you have a cross asset class perspective, if you look at animal spirits are coming back. And it's, I think there's more than, for every buyer, there's a seller too. So someone's accumulating as they are sales.

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