Avichal Garg 谈加密投资、AI 与 Ethereum 的前路

Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds, or projects discussed.

All right, everyone, very excited about this. We've got Avichal Garg, co-founder of Electric Capital, back on the pod. I think, Avichal, you might hold the record for most times on Empire. You're at least top 5 now.

Oh, amazing.

1. Final Thoughts

Yeah. There's an incentive in podcasts: if you bring the views, then we'll have you on more, and we bring the views.

Oh, amazing. Great.

And some good times.

You know, I only do your pod. I do Haseeb's. I don't do that many, actually.

Do you see each other as rivals? You're both public figures and you both have good takes.

We're actually really good friends.

Yeah.

But in public—

You've got to get the drama, baby.

But in public, we're frenemies.

Nice, nice, nice.

I really do enjoy going on his pod, too. He's opinionated, and he's not afraid to assert opinions. It's fun, as an intellectual exercise, to disagree with him. You try to steel-man the other side because he's a really smart guy.

Totally.

You're like, "What is the strongest argument for the other side?" I've now spent enough time with him that sometimes I purposely know how to needle him a little bit. You have friends, right? You know how to get under each other's skin a little bit, and so I know how to do that with him. It makes it really fun.

That's great. We are recording this in San Francisco, and you're at your office, so first off, thanks for having me here.

I wanted to do this with you because we're at an interesting moment in time where AI has basically sucked up all of the attention, capital, human capital, and financial capital. We're on the precipice of the 3 largest IPOs, maybe in the history of the world: SpaceX, Anthropic, and OpenAI.

You probably more than any other crypto VC, or at least more than most other crypto VCs, are both at the center of crypto investing and have spent maybe 2 decades at the center of Silicon Valley investing. I think your angel record is pretty good. So I wanted to get your broad sense of how you think about crypto in light of AI sucking up all the attention and capital.

There are a lot of ways to cut that. It's something we think about a lot. Undoubtedly, AI is the center of the universe right now. It's interesting, though, as an investor, because that is very difficult, right? What you really want to do is say, "The right time to be investing in AI was 5 years ago or 10 years ago." It's really hard to do right now unless you're willing to throw a lot of money around and take certain kinds of bets.

For example, investing in OpenAI at $100 billion was still a good investment. But if you're an early-stage investor, what you really want to be doing is investing in the things that are not hot today. I think crypto isn't hot today. Fintech isn't hot right now. Those kinds of categories are actually, from an early-stage perspective, more interesting in many ways than AI right now because AI is so noisy.

One of the lessons we've learned from being on the crypto side for a while is that when things get this parabolic, it's not the time that you want to be putting a lot of capital to work. You want to be really patient, or you want to be investing so early in things that you're practically pre-seed incubating them, because it's going to take so long for the thing to work.

We just did one of those that's sort of at the intersection of crypto and AI. But actually, it's very difficult to invest in AI right now, and I think it's not that difficult to invest in fintech and crypto right now.

2. The Ethereum Roadmap

Yeah. So it pushes us away from, "Let's focus on the things that a lot of people aren't focusing on and that aren't really popular right now." How do you decide what those things are? Do you have big team meetings where you're like, "What's the second-order effect of this, and the third-order and the fourth-order?" Or do you have the smartest founders in the world come pitch you, and you say, "That's a good idea. I never thought of that"?

A little of both. I'll give you a concrete example. We were just talking about this. If you think about the side effect of all these AI tools and Mythos and all these things that are going to be able to hack everything, then clearly cybersecurity starts to matter a lot more. How do you secure the code? There are lots of different ways to do that, and I think one of the ways that would make a lot of sense is through formal verification.

You can think through the consequences of what's happening in the world, the effects of that, and what that means. For us, we try to find things that are going to have some sort of technical moat, or something where it's hard for the average person or the average VC to get up to speed on it.

With formal verification, Curtis, my co-founder at Electric, has gone down that rabbit hole for years. We did a Series A of a company called Certora, which does formal verification for a lot of DeFi protocols and works really closely with many teams across Solana, Ethereum, and the whole ecosystem. Those guys are world experts. Mooly is one of the godfathers of formal verification. He's a professor and was one of the godfathers of formal verification.

Formal verification, for those that don't know, is the idea that you can turn this very hand-wavy—Mooly, I apologize—but basically, you can turn code into mathematical statements. Then you can mathematically prove whether or not your code does what you think it does.

Historically, it was used in places like aviation or space programs, such as satellites or NASA. The reason you would use it in those contexts is that you have a relatively small amount of code, but it's very expensive computationally to do these things, and it takes a lot of human labor to construct the proofs. You would use it in places where you had relatively small amounts of code but where the consequences of a bug were catastrophic.

You send a probe to Mars, and if you have a bug in it, the thing crashes. You're like, "Well, I just lost 18 years of work." You really want to make sure your code is doing what you think it's going to do, and you don't have bugs.

It turns out smart contracts in DeFi are a perfect fit for that. They involve relatively small amounts of code, but the consequences are significant. Aave secures billions and billions and billions of dollars, so that's a perfect fit for formal verification, and Certora works well there, for example.

Now, all of a sudden, those techniques become extremely important because if Mythos or whatever the OpenAI equivalent is going to be become things that can hack everything, you've got to go back and check all the medical-device software. You've got to check every bank's software. You have to think about how to harden your systems from voice emulation.

I can socially engineer people, and now my entire customer-support group can be socially engineered. There are all these points of cybersecurity vulnerability now. All of a sudden, I think formal verification becomes super important. If you have that insight, you say, "That's probably not something your typical VC is thinking about." They're just like, "It's difficult to think about what the hell formal verification is."

So, with an idea like that, are you guys in a room whiteboarding and saying, "Second-order effect, third-order effect, let's go find the best"? Or is it someone you've had a relationship with who comes in and says, "Okay"?

Yeah, both. A lot of it is preparation meets opportunity. Having talked to enough smart people, you start to build some intuitions. It's like some person you've invested in is having a dinner, and you go hang out. They invite one of their friends, their friend is really smart, and then their friend says something. You're like, "Oh, that's really interesting. I never thought of it that way."

You take it back to your other smart friends that you work with, and you have that conversation. It's pretty organic. We try to put some structure around it. It's like, "Okay, let's go do a market map," or, "Let's go have this conversation about this topic." But a lot of it ends up being organic, and you have these moments of insight and brilliance where you're like, "That is a great insight from that person."

Then that cascades into, "Oh, yeah, we really should be thinking about that." You have to intersect that with where you're uniquely positioned to win. For us, it turns out that understanding cryptography and distributed systems matters. Curtis and I both worked at Facebook on large-scale machine-learning systems, so we understand that world.

You start to then say, "Okay, if we're going to go try to work with a founder to build something"—because usually we're first money in.

Is there a reason the founder would want to work with us versus Peter Thiel, Marc Andreessen, or Roelof Botha at Sequoia? We have to feel confident that if we go talk to that founder, we are uniquely well-suited to help that person win. And so then you’ve got to intersect those 2 things.

You get some great insight about the way the world is going to be, and you intersect that with what you’re uniquely good at. It turns out something like formal verification is something we’re uniquely well-suited to do.

Going back to just this crypto opportunity versus the AI opportunity, it feels like the only thing to invest in is some variation of AI, right? That’s the moment that we’re in today. Whether it’s the memory stocks—SanDisk and Micron—or retail allocation to SpaceX, or squeezing in a last round of Anthropic before they go public, up and down the capital stack, that is the flavor of the moment.

3. How To Make DeFi Safe Again

The thing that is definitely not the flavor of the moment is crypto tokens. How do you view this idea that you just brought up—formal verification? This is crypto meets AI in a sense, right? How do you view the pure-play crypto opportunities today?

4. How To Build A Breakout App

Yeah. We are still very, very optimistic about that. For us, when we first got off the ground in 2018—we had angel investors before that, but that was when we formally created Electric Capital—our thesis paper, which I think has turned out to be true, was called “Programmable Money.” We said what this stuff is really uniquely well-suited for is moving money around, and that’s what it’s going to be used for. We called that programmable money, and I think that basically turned out to be correct.

When you look at it through that lens, I think both crypto and AI share this thing: At the end of the day, what isn’t AI? What isn’t AI-enabled? It’s just going to be in every business. Similarly for crypto, everything needs cryptography in a world where agents are doing all the things. If you’re talking about moving money around, it turns out money, liquidity, and these kinds of network effects are a few of the only long-term defensible things in any business, which is why every business is trying to become a wallet.

If every business is trying to become a wallet and move money around, and that’s such a core part of their business, then that’s going to happen on crypto rails. We look at it as every business is going to be AI, and every business is going to be crypto, and then the technology sort of disappears.

To your point around the specific crypto tokens, I think the crypto-as-money thing is still relatively early. That means things like Bitcoin and ETH as prospective stores of value. It means underlying rails that move these assets around in various forms, and I think that includes things like Solana or some of the L2s on ETH.

Ethereum-wise, you might build semi-permissioned networks for certain use cases that are compatible with ETH and ultimately settle on ETH in interesting ways. Or even applications that use the idea of tokens as participatory mechanisms. I think we’re just starting to see the beginnings of that when we think of HYPE and VVV as examples of it.

All of those, at their core, are really about moving money and capital formation. It’s the entire fintech stack, basically.

Mhm.

Re is another good example. It’s another one in our portfolio, where it’s a reinsurance business. It’s a fintech.

Yeah.

It’s Cayman Islands-registered and regulated. It’s just an insurance business. It’s phenomenal. If people don’t know reinsurance, Warren Buffett has made billions and billions of dollars on reinsurance. The idea is insurance for insurance companies.

Yeah.

It’s a phenomenal business if you do it right because it’s just the law of large numbers. I’m going to underwrite the insurance companies that do workers’ compensation in Maryland, Florida, and California. What’s the likelihood that all of a sudden there’s something catastrophic that hits all the workers’ compensation policies in these places? It ends up being a spreadsheet formula, and you can make a bunch of money.

The rough math basically boils down to some leverage multiple on top of the Treasury rate.

That’s right.

You can get 5 to 7x leverage on Treasuries, basically, the way the regulations work. If rates are 4%, you’re making 20%, which is pretty phenomenal as an IRR on your business.

What’s interesting about Re is that they built a protocol in the back end that uses the stablecoin markets as their capital-market function. Typically, in a reinsurance business, you have to go raise a bunch of money from Blackstone or from insurance companies—from pension funds—to finance this whole thing.

What Re is doing is saying, “We’ll create a smart contract. Anybody on-chain can deposit stables. We’ll offboard those, finance the business, and you get real yield. You get real 12% or real 14%.” This is not Terra Luna stuff. There’s something productive—

Right.

—happening in the world with this that you get paid.

You look at those kinds of things and you’re like, “That’s real.” That’s what we talked about for a long time, but that’s actually real. A lot of crypto Twitter is stuck in L1 wars or meme coins or things like that, and I think that’s slowly dying.

Yeah.

Meanwhile, I think you have things like HYPE, VVV, or Re, which are real. There’s something productive happening there. There’s something interesting happening there. The tokens and the infrastructure are all actually useful in some fundamental way.

I think we’re just starting to see the beginnings of that. The future is here, but it’s very lumpy, and I think people don’t realize that stuff is real.

Yeah. So what do you think we got right, and what did we get wrong? It feels like originally we thought all things would become crypto-fied, right? We had Uber on the blockchain. We had the idea that all games would become crypto games, basically—you’d own every skin, and it would live on a blockchain.

It feels like that maybe was the wrong idea. But the right idea is that capital markets are 100 times bigger, 1,000 times bigger, than anyone in crypto realized.

Yeah.

And that all capital markets will move on-chain.

That’s right.

Yeah.

Yeah. I mean, to toot our own horn a little bit, I think we were basically right about that.

Programmable money.

Programmable money. We didn’t do much beyond that. We never did social stuff or apps or Uber on-chain. We never did any of that stuff. We basically just did programmable money, and I think we were basically right.

Now, that doesn’t mean I think that stuff can’t happen eventually. It just goes back to this idea that all of these other things may have elements that benefit from this infrastructure. They need to move stables around, for example.

Mhm.

And this is going to be the rails that all the stablecoins move on. Or these tokens allow you to own a piece of the product and the network that you’re participating in.

Right.

And we talked about that a lot in the 2016, 2017, and 2018 era of participatory capitalism. I think it’s actually happening.

Say one more line about that. Go a little deeper into why that’s exciting and what the exciting thing is there.

The intuition always was—it somehow feels, maybe “unfair” is too strong a word—but you have this intuition that the first 100 or the first 1,000 Uber drivers really should have made more than 15 bucks an hour. If the thing ends up being worth 100 billion—

Mhm.

—they got the network effect off the ground. They’re the supply side of the supply-and-demand marketplace, and they didn’t really get to benefit. How would you do that? Do you give those people equity in the thing? Mechanically speaking, how do you even do that?

There are SEC rules around shareholders and taking profit interests because you don’t want them to vote on your governance stuff. How do you do that? Tokens actually solve that. You can own a piece of HYPE, and they’re doing buybacks. There’s effectively economic value that gets created by the product, and you could be a heavy user of the product and benefit from the overall success of that ecosystem using tokens.

The real value there, I think, is that it’s about capital formation. It’s about capital flows.

And so, even in that use case, I think it’s programmable money. But really, it’s a type of equity. It’s not equity in a traditional sense, but it’s a share in the profit of the thing, which is enabled by this infrastructure. Those profits can flow across those rails in a way that you just couldn’t with Uber or Airbnb. You can with HYPE. You can with B3.

It’s so interesting you say that. I think a lot of people think that Uber on the blockchain—because everyone’s heard this idea—and people look at it as a thing that didn’t work.

Yeah.

And you would say it actually is working.

It is literally working.

It just turns out it’s really hard to build an amazing product.

Correct.

That’s what crypto folks maybe got wrong: that it’s really, really, really hard. For every Uber, there are 100,000 startups in Silicon Valley that died.

That’s right.

It takes a long time to get to a Hyperliquid. It looks like—yeah, I mean, you mentioned VVV a couple of times. Maybe Venice is another breakout thing.

Yeah.

It’s hard to build a breakout app.

Yeah, Re, I think, is another good example where you can participate. And I think, to me, it’s so funny because if you’re on Twitter all day, you would think that crypto is dying. But it’s because everybody’s paying attention to price charts. But those are lagging, right?

Mhm.

If you go spend time with founders, or you go spend time with the institutions in New York that are talking about moving all their stuff, tokenizing and moving all that, you have such a different perspective of what’s happening in the world. And that’s where we spend all of our time. I always laugh—we talk about it internally. We’re pretty low-key on Twitter and pretty low-key in terms of media in general because I think it’s too easy to fall into this trap of thinking that that’s real work.

Mhm.

That’s not real work.

Mhm.

Right? The real work is spending time with founders. The real work is figuring out how to raise the next round of money. The real work is building a good product. We try to spend as much of our time on that stuff as possible.

Mhm.

If you do that, I think you should have a really different perspective. And so I look at things like Venice, HYPE, or Re, and I’m like, “Wow, it’s actually working.” The stuff we were talking about 8 years ago is working. All the infrastructure is in place. If you have the ability to build a really good product, you now have tools in your toolkit that actually a lot of people don’t even understand yet.

The idea of using stablecoins as a capital market, the ability to have your users actually share in the upside of what you’re doing, and the ability to distribute these products globally—someone from Monad was just tweeting about this. I think they’re totally right: one of the side effects of what’s happened with crypto that people don’t understand is that you now have the ability to build a financial services company, or a fintech, and not have to start it in the U.S.

Historically, if you look at Revolut or any of the fintechs—Ramp or Brex or whatever—they could only really start in 1 or 2 markets. Then you had so much regulatory overhead to scaling that business that it was extremely cost-prohibitive and very, very difficult.

It’s like Revolut was in the U.K., and then they’re not breaking out of the U.K.

Yeah.

They try to go to other markets.

And every now and then you get a new bank in Brazil, but it’s pretty rare.

Yeah.

Most of them actually happen out of the U.S.—Robinhood and Coinbase, whatever—because the market is large enough. You have 1 giant U.S. market; the regulatory regime is the same. You try to do that in Europe, it’s really hard, or you try to do that in Asia, it’s really hard, because the markets are small.

But now with crypto, what you have is a sizable enough global market of people holding—

Mhm.

Stablecoins. They all have EVM or Solana-based wallets. I think you have a large enough market that you can build financial products for, get to scale, and then back into competing against companies in the U.S., which is a huge advantage for startups.

For the first time, you don’t have to go raise $50 million and get all the licenses, figure out how you’re going to compete for CAC against BlackRock or Fidelity.

Right.

Right. Like, all of a sudden, you have tens of millions of people that have stablecoins and wallets that you can reach. The mechanics around how you acquire those customers are completely different. The way you build your business and the infrastructure are completely different. You can actually get to scale. You can build a high-scale business, which is a real business.

And once you have that, if you look at what Jeff is doing, it’s phenomenal execution. He’s got the ETF going.

He’s got the SEC on his side, right?

He is doing exactly that playbook. And typically, when you see that happen, it’s not one and done. It’s not like Hyperliquid is the only person that’s ever going to figure out how to get to scale on a business and then back into the U.S. and have a real, regulated, credible business. I think that’s the first of many, right?

So, back to the idea that I think there’s so much opportunity now because all the things we were talking about 8 years ago—the infrastructure is actually ready to go. There’s no better time. But people who have spent most of their time on social media are not going to realize that that’s happened until it’s already happened.

I agree. And so, 5 years from now, all these people will wake up and be like, “Oh, the right time to be investing in crypto tokens that have real fundamental value was 5 years ago.”

There’s actually—you talk about spending time with founders. I think there’s unbelievable retail alpha in spending time with founders because they’ll tell you what’s actually happening. The last 18 months were really freaking hard. And now, in the last couple of months, most people’s numbers have changed.

Yeah. Stuff’s starting to work.

5. Where Electric Sees the Most Opportunity

Yes. Yeah, stuff is really working. So, what are you guys most excited for? You mentioned Venice, we mentioned HYPE. Are you guys invested in—

Oh, yeah, we should call that. Please don’t listen to me about that. It’s not financial advice.

Yeah, yeah. Of course. Of course.

Can we cut that in the front? It’s just: don’t listen to me about anything. I’m not your financial advisor.

Yeah, exactly. So, you guys have Electric. You have the venture fund and you have a liquid fund.

Yeah, we do both. The venture stuff can also do early-stage protocols and tokens. Pretty much everything that I used as an example, we’re investors in. We’re seed investors in NEAR, we’re seed investors in Reef, and we have a bunch of VVV. Yada yada yada. We have a bunch of ETH, we have a bunch of Bitcoin.

Do you have HYPE?

We have not announced whether or not we have a HYPE position.

All right, fair enough. Something like Venice: did they raise any venture rounds, or was it just you bought the token on the open market?

I can’t speak for Erik on whether or not he’s raised. You should ask him. We just bought VVV on the open market some time ago.

Yeah.

We saw that because we were seed investors in NEAR, and we could see that NEAR Intents started working recently. We invested in NEAR in 2018, so we’ve known him for a long time. And we’ve known Erik for a long time, too.

Yeah, from ShapeShift.

Way early ShapeShift.

On a side note, it makes me happy to see Erik winning.

Yeah, he totally deserves to win. He actually—

And Illia, too.

Illia, too.

Yeah.

Which I think is also another good signal, right? I feel like I’m searching for the right words to say this because it’s going to sound too judgmental, but it felt like the wrong people were winning.

You had these brilliant technologists and people who had made these leaps 10 years ago for the right reasons—for philosophical reasons, because they wanted to see certain things happen in the world. They believed in fairness, transparent systems that don’t screw people, and all these kinds of things. And a bunch of these people were just getting punched in the face for years and years, right?

I think that’s Illia. I think that’s Erik Voorhees. I think Ethereum is going through that right now, and Solana is going through that right now. But I think what you’re starting to see is that the people who have actually created real technology and who have actually created things that people use are starting to win. And the people who have not are slowly dying away.

I saw some stuff about the final Litecoin bulls finally capitulating, and I thought, “Okay, this is a sign, right?” Good. This is a real sign that the market is actually rationalizing. If you play this out 2, 3, or 4 years, people will look at the top 10, top 20, or top 30 crypto assets—and this happens in every cycle—and say, “Really? These things are in the top 10? These things are in the top 20? What about this other thing that’s actually really useful?”

Yeah.

And that’s number 100 or something.

I think this could be the cycle where, finally, we—

It actually normalizes. I think it actually fixes it.

Great.

People are like, “Oh, yeah, these are actually the things that are useful.” That’s not to say there won’t be speculation. I mean, there’s tremendous speculation on the AI side, for example, right? So it’s not a uniquely crypto phenomenon. There will certainly be a handful of things, but by and large, value is going to converge into the places that are actually creating value.

I think we’re beginning to see—

Let’s hope.

Yeah, I think it’s going to happen.

The goal.

Well, part of this, too, is that markets aren’t rational in the short term. There’s that saying: in the short term, they’re a popularity contest.

Contest.

And, yeah, in the long term, they’re a weighing machine, or whatever the Warren Buffett quote is. I think we’re in the process of that. The people who have actually created real value over the last 5 years will be vindicated in the next 5 years. You kind of have to suffer through it, but that’s all the more reason why I think those people tend to win.

Look at somebody like Erik Voorhees. He’s had very clear, consistent principles for his entire adult life, which is why he was early to Bitcoin. That’s why he was doing ShapeShift. He’s always acted in accordance with his principles, so he’s never had FOMO.

Yeah. In fact, he was willing to kill his company, ShapeShift—

Yeah, to do what was right. I think when you have that, that’s the only way to do things across cycles. That’s why people who are philosophically minded or technologically minded, or who have some reason other than speculation and money to do the thing, end up having longevity. Then those people win.

It’s not a karmic thing. It’s not like good people win. I think what happens is that the people who are extractive and short-term-minded, yada yada, do their extraction and then leave. The people who are around long enough to create real value are the ones who have something other than money driving them. Over 10 years, eventually people realize that. They’re like, “Oh, they’ve actually created something really useful.” Eventually the money shows up, and those 2 things converge.

Look at OpenAI. These guys have been around forever. DeepMind—these people have been around for 15 years. It’s not like they suddenly showed up 4 years ago. There were people grinding on this stuff for a decade.

Yeah.

They did it because they really believed in it.

How do you think about it if you’re a founder right now building a crypto company? Should you have a token, raise equity, or use the dual structure?

Yeah, we are fans of raising equity and then thinking about how to have a token later.

Even though that then creates 2 structures?

I think it can be done. I think there are certain cases where it may make sense to have both. There are certain cases where you should just dissolve the equity—basically, have the equity go to zero and have it all in the token. I think there will be more and more people who are willing to do that.

Dissolve the equity.

Correct.

Yeah.

I think it makes sense, rationally speaking. The reason I think it makes sense to do the equity first is that, in the early stages, one of the mistakes people made—and we’ve been very consistent about this over the last several years—is that you don’t want to raise venture dollars from the retail market.

Retail doesn’t understand what it actually takes to build something and be patient for 5 years to make it work. That’s our job. A lot of the reason we can exist and have a business is that this is very difficult. Anybody who’s done a startup knows this, and I’ve said it in other contexts.

One day you go into a seed-stage or Series A company and you’re like, “Oh my gosh, this thing’s going to IPO. It’s the next OpenAI. OpenAI is going to be worth $10 billion.” Then you go in 2 weeks later and you’re like, “Oh, yeah, these guys are definitely going bankrupt. This thing’s definitely not working.”

Right.

You repeat that every quarter.

Literally every 2 weeks. [laughter]

When the Pump.fun guys were on a historic run, and then obviously Noah and the crew got humbled by the markets, the bear market, and stuff like that, they built an amazing business, company, and product. I couldn’t help but think: this is just a startup that shouldn’t have a token.

Yeah, that’s right.

It shouldn’t have retail—

Yeah.

—saying that they should do things every week, because this is just a startup going through it.

Yeah, yeah. This is why Stripe doesn’t want to IPO. This is why OpenAI didn’t want to IPO. That external pressure from people who don’t understand, who have not built startups, and who apply short-term pressure is a very difficult thing as a founder.

If you’re getting a thing off the ground pre-product-market fit, and while you’re post-product-market fit and scaling, it makes a lot of sense to have people around the table who give you the money to run the thing, who understand what it takes, how long it will take, and that this is the natural order of things.

But there comes a point at which I think this idea of participatory capitalism is a real thing. Philosophically, you could say that the users deserve to benefit. As a wealth-creation mechanism, owning pieces of things that are working is a really important societal good.

If you didn’t have the public stock markets—and this is something I worry about with things like SpaceX, OpenAI, and Anthropic going public at the scale they are—are retail investors just left holding the bag? Fortunately, we’ve had NVIDIA, Facebook, Google, and all these companies that went public, where you could have participated.

I just saw a tweet about the numbers, but the Nasdaq is up about 6.5x over 10 years. That’s real returns for people. Even as a venture manager, there aren’t a lot of funds that did 6.5x over 10 years. It’s really good.

As a wealth-creation mechanism, that’s really important in society. That’s how average people who are good, hardworking people, who pay their mortgage every month, work their jobs, and take care of their families, deserve to have a good retirement. That’s how they’re going to do that.

I think the idea of people having access to wealth and wealth-creation mechanisms is really important. What’s interesting is that we have that in the United States through the QQQ. A lot of the world can’t access that stuff.

If you’re in Vietnam, Lebanon, or—

You can’t access the U.S. markets.

How do you access the U.S. markets? You can’t. The escape valve for that stuff is actually going to be the tokens. I don’t mean tokenized equities, because I think that gets into some gnarly sort of—

The whole regulatory side of it—

It’s very tricky. Very tricky, right? But I think things like HYPE, NEAR, or Solana—things that have actual fees and fee streams—you can model that.

The thought process for a lot of people in the world is going to be, “Oh, wait a second. I can finally get dollars,” because everybody in the world has to deal with inflation and buying goods relative to dollars. The dollar is a store of value for a lot of people in the world. They want dollars, which is why stablecoins have such product-market fit.

But the natural thought after you have stablecoins is, “Wait, what do I do with this?” It’s great that I can have it, and then somebody comes along and says, “Hey, do you want to make 4% on your dollars? I can give you Treasury yield.”

That effectively flows through to things like Aave. Everybody in the world who has dollars will just want to make 4% through some money market or Treasury or whatever. Then they’ll look around, and somebody will come along—somebody like Re will say, “Hey, do you want to make 12%? It’s reinsurance over here.”

If you’re in one of these markets, you’re like, “Wait a second.

Like 12% in U.S. dollar terms? And I'm getting inflated away relative to dollars. If you're in India right now, the rupee is at historic lows versus the dollar. You're down 10% because of inflation already, and then you add 12, and you just made 22% a year in rupee terms. You're crushing.

Where can you put money if you're in some of these markets where you're going to make 20% plus a year, and your savings are self-custodied, away from your financial system, yours, and in dollars? This is pretty killer.

If you start thinking of this, you can go back to 2021 with 0% interest rates. How did that manifest in the market? When you exist in a low-interest-rate regime or a high-inflation-rate regime, your willingness to pay for assets goes up. The way that manifests in equity terms is P/E ratios going up.

I think there's a huge population of the world—literally 5 or 6 billion people—whose willingness to pay for cash flows is actually greater than that of the U.S. institutions that really dominate the U.S. equities markets. As a founder, I think the right question to ask is: Is this a product that the stablecoin holders of the world will be willing to pay me a higher P/E ratio for, for that same cash flow, relative to what I could get on the U.S. equities markets?

I think in many cases the answer will be yes. Those markets are willing to pay you a higher P/E for that cash flow because they don't have access to alternatives.

Oh, that's interesting.

Right. And so, for some period of time, I think we'll actually be more rational. Maybe this normalizes one day, but I don't think it normalizes for the next 10 years. If you have a really great business, you are better off doing a token launch and getting it into the hands of your users and retail all over the world because their willingness to pay a higher P/E ratio is a function of them not having access to all the other stuff that

Yeah.

6. Why Do Tokens Trade At A Discount?

U.S. pension funds have access to.

Do you have an idea of what the catalyst is that makes that happen? For the first 10 years of crypto, let's say starting from 2015 with ETH, tokens had a premium. There was the L1 premium, there was the L2 premium, and there were DEXs launching that a year later traded at $3 billion.

We are now in an era where tokens are, for the first time ever, trading at a discount to what they probably should trade at—many of them. There are still, I'm sure, some overvalued ones. But I think if you were a founder choosing between a token and equity, if you launched a token, you would be valued higher than if you had equity. Now it's the opposite. I think if you launch a token, you're valued almost lower.

Is there a catalyst that changes that? Maybe it's as simple as needing a couple of tokens to really rip and have things catch a bid. Maybe that's hype—Zcash and VVV or something like that.

I think it's basically the market doing what it's doing right now, which is re-rating the things that actually have product-market fit and are working

Yeah.

and looking at the revenues. That's another piece of infrastructure that didn't exist 8 years ago: How do you actually validate how much money the thing is making? Now you can actually do that on-chain. You can see the cash flows, and you can see the buybacks.

I think HYPE and Venice and NEAR—and, you know, Zcash doesn't have cash flows. I think that's sort of in the Bitcoin-ETH camp of, is this a form of store of value? But I'll put Re into that camp, right? It's just like there's some interest rate, there's some productive thing that's happening. There's value getting created in the world, and the software gets to capture a piece of that. Then it takes that and cycles it back to the token holders in some form.

That's just a spreadsheet that you can model, and I think that's starting to happen. What you need is 3, 4, or 5 examples of this.

An analogy here—it's always risky to reason by analogy, but I think it's useful to understand why things happen—is that after the internet crash, all these internet stocks, Amazon for example, just got crushed. People didn't properly, on a go-forward basis, understand the growth or how to value these things.

In my opinion, one of the big catalysts was probably the Google IPO. Google IPO'd in 2005, and people looked at the numbers and said, "Wait a second. This thing is real. This isn't some internet hype thing. You look at the numbers, and you can put a P/E ratio on that. We know how to value that."

I think that was a really important catalyst, and it took another several years on the other side of that for all the internet stocks to re-rate—for Amazon to be worth what it was worth post-AWS, and for people to say, "Yeah, maybe Facebook could actually be worth money."

Marc Andreessen wrote the now-famous "Why Software Is Eating the World" thesis. I think he wrote it in 2008, maybe.

Yeah.

It was a controversial thesis. It sounds ridiculous in retrospect, but even in 2008, people thought maybe the internet was a fad. You had this overhang from the 2001 crash where people were not reassessing that assumption and saying, "Wait a second. Actually, these things should be trading at a 25 P/E, and when you're growing at 80% a year with real revenue, maybe these things should be trading at a 60 P/E."

Yeah.

But that took a decade before everything re-rated.

Yeah. That's funny to think that that was a controversial piece.

Yeah. People were like, "No, no, no, this guy's crazy. This stuff is never going to—"

What's the controversial piece to write today?

I think it's basically what you're talking about, which is that tokens are useful. Tokens as a value-capture mechanism for people to capture the fruits of a network's success and pass them back to the users are actually a useful primitive.

If done well, that offers access to really good products and the revenue streams of those products to a whole market of 5 billion people who don't otherwise have access to good financial products.

Yeah.

You need 3, 4, or 5 of these things to really work. HYPE might be like Google, where all of a sudden people say, "Wait a second. This is kind of working. Why are we valuing this the way that we are? Should we be valuing this a different way?"

The other good ones?

And who are the other good ones? Then those get re-rated.

Answer the question. We talked about VVV and Re.

Yeah.

Does Re have a token?

Re just announced that they're going to do a TGE with a token.

We talked about HYPE, VVV, and ZK. Who are a couple of others that you guys like? Who are either companies with tokens or without tokens—crypto companies where you think the market may be asleep on them?

I think what I would do, rather than calling out specific examples of tokens, is look at basically any fintech or marketplace

Yeah.

and ask: Are the users of this thing potentially global from day zero? Are there a bunch of people who understand this in the markets where stablecoins are held? If that's true, you might want to run the exercise of what would happen if this thing had a token.

Hmm.

I think there are many such cases where it's either a fintech or a marketplace where people all over the world would be willing to buy into that cash-flow stream because the product is real.

Yeah.

You need a couple of examples of that. For example, I'll use Re as an example. If Re does well over the next 3 to 5 years, I don't think it's crazy. A lot of weird, esoteric reinsurance is a strange thing. That's not something the average person experiences day-to-day.

I think founders will look at that and say, "Oh, wait a second. Maybe my commercial paper thing, or my thing that sits in between all the banks, or my private credit"

Sure.

tokenization thing, or my real estate thing—whatever—would benefit from having a token, being on-chain, accessing those stablecoin markets, and paying 10%, 12%, or 14% yield out to those people.

All the profits that I make get passed back to the token holders, and I have tokens as well. But now, actually, the multiple I'm going to get on my revenue will be higher. That would be the thesis.

Mhm.

7. Why Avichal Is Still Bullish On SOL & ETH

I think we'll know in the next 3 to 5 years if that plays out. If it does, then a whole bunch of fintechs and marketplaces will say, "Actually, this is rational." It's like, "Do you IPO, or do you launch a token on-chain?" The rational thing to do as a founder would be to pick the place that gives you a better multiple on the revenue that you have.

Mhm. It's a good take. Let's talk about the majors.

Sure.

Bitcoin, ETH, SOL.

Yeah.

We kind of talked about Hyper already.

Yeah.

Is Hyper a major? We can skip that. Bitcoin, ETH, SOL. What are your thoughts? Maybe we can skip Bitcoin. I'm curious to hear your take on ETH versus SOL today. Those were the podcasts that we were doing years ago—you, me, Haseeb, and Santiago. ETH versus SOL.

Yeah. I'm still very optimistic about both.

Yeah. I think the thing with these markets, too, that people don't understand is kind of what's happening with the foundational model companies. I think this is true with, let's say, SpaceX. Again, not financial advice, but it's rare that you just have 1 thing that wins. There's usually some sort of power law.

If the thing that wins—if you think Bitcoin is worth $20 trillion one day, like gold—then why wouldn't the next best thing be worth $3 trillion or $4 trillion? That's not at all crazy, in my opinion. I actually think these markets are still young enough. How many people today own Bitcoin, ETH, or SOL relative to the market of people who will? There's actually very little exposure right now.

I don't think these are at all settled. You're seeing that with Zcash, right? I think people are saying, "Wait a second. Maybe the early adopters have figured out that privacy really matters, and so they should have some Zcash exposure as well." Then the mainstream will figure that out, right?

It's just so early in the evolution of these markets that I think people are really underestimating what the TAMs are and what the ceilings are. I think the other thing people are really underestimating is that I don't think you're going to have the L1 wars continue. I don't think you're going to get another 100 that come in.

Especially when you're talking about platforms, or when you're talking about moneyness in the case of BTC and ETH, Lindy is a thing, and it's going to take a long time for these things to get displaced. They'll just continue to compound for a long, long time.

I think people are short-term bearish on them because they don't understand how compounding works, and I think they don't understand how slowly institutions move. There's a stat that Hunter at Bitwise told me once, so I might be misremembering it exactly, but it was roughly that after the gold ETF was launched, inflows into the ETF went up every year for about 12 years.

It just takes forever for institutions to really move. Every wealth manager in the world has to reallocate, and this is going to take a while. If you look at it on a dollar-weighted basis, that's where the money is. Wealth managers control something like $25 trillion. The institutions of the United States have another $25 trillion.

They're not going to allocate 50 or 100 basis points overnight. It's going to take a couple of years.

The sheer dollar amounts that you're talking about are 100 times bigger than what Crypto Twitter has brought to the table thus far.

It's maybe 1,000 times bigger. I think people are just—it's hard. In the moment, it's tough, right? These things go sideways for a while, and then the world changes. The market realizes it, and then everything gets re-rated.

8. Who Wins The Crypto Exchange Wars?

Yeah. Do you have thoughts on the brokerage platforms that will win? I don't know if you have skin in this game or if you have a take here. Is Coinbase or Kraken, as a crypto-native U.S. exchange, the winner? Is it someone like Robinhood? Is it maybe Charles Schwab and E-Trade because they already have the boomer distribution? What about the Asian exchanges right now? Bybit, OKX, and Binance are all pushing into the U.S. Is it one of them?

Yeah. We're investors in Kraken, so hopefully it's Kraken.

Arjun—he's doing a great job.

Arjun, I will say, is doing a phenomenal—

Arjun—he's doing a great job.

Phenomenal job.

Yeah, he's doing a really good job. I agree.

Jesse's another good example. Jesse started that company for the right reasons and held true to their principles for a long time. Arjun has really stepped it up to the next level as a business.

They just acquired one of our portfolio companies, Bitnomial, to do all the derivatives work. We're sizable shareholders there now because that's a pretty sizable acquisition.

I think it'll be relatively fragmented, actually. I don't think it's going to be 1 winner. I think it's going to be several very large winners.

If you look at the banks in the United States, for example, there's something like 1,000 banks, and there is a power law there. JPMorgan is obviously really big, but you have 5 to 10 actually very sizable businesses. That's because so much of what those businesses become at scale is a set of similar offerings.

Every bank gives you a mortgage, a credit card, and a savings account. Every crypto exchange—not just a crypto exchange, every exchange—will give you access to BTC and ETH, tokenized equities, some leverage, the equivalent of a money market account, and lending against your collateral, or collateralized lending.

The offerings will be the same. The question is which group of people you really tailor your product offering and customer acquisition channels toward. Where does your business learn to acquire customers? How do you speak to them? What is that brand? How do you speak to those customers?

You can't have a one-size-fits-all. You need Amex, Capital One, Discover, and Ramp. The markets are so large when you're talking about equities, dollars, or these lending products that I think you probably get 15 or 20 winners, and they just all sort of come out of—

The market is so much bigger than people realize.

Yeah, that's right.

Yeah.

I think now, too, the most interesting question there is incumbents versus startups.

Mhm.

Can Schwab win, or can Fidelity win? By and large, I think the incumbents will not win. Schwab is in a really tough spot. It's the classic—I think it's a Marc Andreessen phrase, so I want to credit him for it—question of whether the incumbents will figure out innovation—

Yeah.

—before the startups figure out distribution.

Yep.

I think in the modern world, it's increasingly easy for startups to figure out distribution and acquire all those customers as the world has gotten wired up.

Agreed.

It's harder for organizations to change and change their culture. I think the one exception to that is a founder-led organization.

When a founder has moral authority, Zuck or Elon, for example, can go into an organization and say, "We're just not doing that anymore. By the way, we're going to take a short-term revenue hit. We're going to lose half of our revenue for the next 5 years in order to reboot the business and get out of this local maximum that we're in."

Think about it like a 3D surface. You're at some local maximum, but in order to get to that higher point in the search space, you might have to go down, traverse the space, and then go back up.

Yeah.

But an organization is unwilling to do that.

It's tough to do that if you're a hired CEO.

It's very, very difficult. Is the board going to give you 5 years to do that? Is your team going to give you 5 years to do that?

Yeah.

Founders tend to have moral authority. Fidelity is interesting because it's a family-run operation.

If you take another domain, like journalism, it's interesting because Bezos bought The Washington Post, and he has that founder mentality. He's just like, "No, we're going to do that."

You look at who's managed to navigate that transition. The Chicago Tribune, the L.A. Times, the Seattle Times—all these things died. But The New York Times survived, and The New York Times is thriving now. It's because it's family-controlled.

I think there's something to that. The things in the legacy world that might be able to pull that off are the ones where the leader has some sort of moral authority to take the hits for 5 years before you hit the next upswing. Fidelity might have a shot.

Fidelity, Franklin Templeton, the other one?

Yeah, yeah. That's right. VanEck, right? There are these businesses where the person running them has moral authority.

Yeah.

And therefore, you can retool the organization. But you look at Walmart. Walmart's had 30 years to try to catch up to Amazon, and they just can't.

Yeah.

And it's not because the problems are unknown. How do you change the organization? How do you reboot the culture? How do you hire the right people? How do you fire half your people and get a totally different group of people?

How do you change the compensation structure? How do you suddenly have a bunch of people who used to make a bunch of money now need to make half the money, while a bunch of people who should make twice the money are probably not the right people?

Yeah, yeah.

So you've got to get rid of all these people, find a bunch of people that you pay twice as much. Meanwhile, you've got to somehow retain these people and cut their comp in half.

Yeah, yeah.

How do you do that?

Yeah. Talking about changing organizations.

Yeah.

You'll see the pivot I'm about to make. [Laughter] Tell me your views on Ethereum.

[Snorts] Ethereum, I think, is probably—well, we're very optimistic. We still own all of our ETH. I think they're just going through this transition. I think what ETH has that is very difficult to reproduce is that credible neutrality.

Yeah.

If you think there's going to be some sort of global financial system settlement layer and transaction layer, I think that's the critical thing. That trust and neutrality is basically irreproducible. Bitcoin has it for some reasons, but the technology platform is not really set up to do what the global financial system needs. It's phenomenal as an asset. ETH has that.

If you step back, just outside of the crypto world for a second, what's happening in the world? You have essentially this proxy war with China, Russia, Iran, and the United States. You have tensions in Asia and Southeast Asia. You have tensions in the Gulf. There's a question of whether the United States is trying to have influence over Latin America. There's all this stuff. What happens with oil? You have Russia-Ukraine. All these things are happening.

For me, the turning point for ETH actually was when the United States decided to seize Russian assets in dollar terms and weaponize the dollar. There are 2 forms of weaponization of the dollar: 1 that the market is willing to accept and 1 that the market is not willing to accept.

The one that the market is willing to accept is sanctions. You did something bad, Iran or North Korea, and we, as a collective global governance body allied with the US, think that you are doing something terrible, so we're going to try to freeze you out of the financial system. We can do that because the financial system runs on dollars.

There is a different version of this, which is, "We are going to seize your assets." That starts to feel really scary when the United States did that to Russia.

If you're allied with the US, but you're not basically the UK or Australia, which have really historical ties for reasons—if you're Germany, France, India, Turkey, or Brazil—you're looking at the world, and this is, by the way, most of the world, and you're like, "Okay, I don't think I want to be allied with the Chinese." India certainly doesn't. "But now I'm worried that if I ally with the US, and they want me to do something and I don't do it, they're just going to take all my money?"

What you really want is a US dollar-denominated system that the US cannot single-handedly decide to boot you from and where the United States cannot just take all your assets. That's literally what Ethereum is. It's a US dollar-denominated system that nobody in the world controls, that anybody can mutually agree to transact upon, where the United States can't steal your assets.

There are ways to structure dollar-denominated synthetic-dollar assets that are not sitting in US banks, just like the Eurodollar system. What is that worth? I think it's worth a lot of money. That's a very different thing than Bitcoin, but I don't see anybody else that can do that.

If you're any bank, any country, or any central bank, this is the only place you can do that. How does that get valued? Does that mean ETH becomes a store of value as the endogenous backing asset for the thing, which can be used as collateral? Yada yada. We tend to think those things are true, and we've written about this.

But for that to happen, don't you need a leader who wants that to happen? Haven't the Ethereum Foundation and Vitalik shown people, through their actions, that making ETH the asset a priority is not important? ETH the network—great network. But ETH the asset, I feel like they've shown you with their actions that it's not important.

Well, I think there are a couple of things there. Specifically on the Ethereum Foundation, I thought it was interesting this week with Vitalik's tweet where he basically said, "ETH is a financial platform, and it secures—it's a credible-neutral financial platform. The most important asset that it secures is ETH."

That was the killer line in there. I was like, "Finally. 10 years later, this is what we wrote about in 2018." It's a financial platform, and that's the most important asset. I think there's now a tacit acknowledgment that that is the case.

Then the question is, do you need an organization, a central organization, to evangelize that? Maybe. Bitcoin didn't have one, and they managed to have a bunch of people who were economically aligned to that pull that off.

I think our opinion is, at this point, between, let's say, Bitmain and the Ethereum Foundation, early ETH holders and people in the ICO, and all the VCs that have invested in the space—you know, us, Andreessen, Paradigm, and Dragonfly—there are enough people who can evangelize that. So I don't think you necessarily need a single person to do it.

I think the fact that you've gotten to the kind of scale that you have—you have ETFs, and you can go talk to anybody on Wall Street. Where are they building? Everybody's trying to build on ETH. Where's Coinbase building? Where's Robinhood building? Where's SoFi building?

I think all signs point toward that. Actually, underneath it all—I'm not talking about price action, and I'm not talking about crypto Twitter energy—underneath it all, all the activity for that sort of behavior, which is critically geopolitically, central-bank-level important behavior, is happening right now in this space.

I think it'll take some time for people to appreciate, underwrite, and reassess that. Does that happen in 1 year? I don't know. Does that happen in 5 years? I don't know. But I think probably in 10 years, people will look around and be like, "Oh, wow, that's really important, and I should own a piece of that."

Yeah, yeah.

And so, I think people are—I said I don't know when it rerates. But at some point, people will get their heads around the fact that there is something unique to this thing that nobody else will be able to reproduce, and that thing is valuable.

Yeah.

How do you think—the thing that ETH is winning by far is both DeFi and institutions, I'd say. On the DeFi side, the scary thing about DeFi right now is AI. Anthropic is coming out with Mythos soon. How do you think about—how do we make DeFi safe again?

Yeah. It's interesting, because I think DeFi is going to be scarier in the short term but much more robust and secure than TradFi in the long term. It's because it's open source. This is the way open-source systems work: because they're open source, they're easy to attack, but the more they get attacked, the more you patch all the holes. Once you patch all the holes, there are no more holes.

Short-term pain, long-term gain.

Yeah. I think openness and transparency are painful in the short term, but in the long term they're actually much more resilient. They're less efficient but more resilient.

For a financial system where you more or less understand the primitives—there's trading and lending and equities—we understand the building blocks that you need and the instruments that you need. Building them in an open-source way, where you can formally verify them, find all the bugs, and prove that those things are fixed...

That produces a system that's much more resilient. So I think if you play this out 5 years, DeFi is going to be far more secure than any of the traditional financial systems. And I think even the way that people will think about AI-level risk—not just the hacker risk of something like Mythos, but voice models are getting really, really good.

Real-time voice generation can synthesize somebody's voice off of a 1-minute clip of them. Can somebody call the bank and pretend to be you? Can they convince the representative on the phone to do a thing? I think rebuilding all of that infrastructure from the perspective of, “Today we know that AI exists, so how should we do customer support around DeFi?”—how should Coinbase do it, or how should Robinhood do it? I think they're actually going to build those systems in the right way.

Yeah.

Whereas it's not clear to me that Schwab is going to be resilient to attack. Right? Over the next 5 years or so, the code gets audited, the code gets formally verified, and the DeFi open ecosystem is going to move way faster. So in 5 years, I think these systems are way more secure, and then the dollars will sort of follow.

Do you think we'll figure out some way to prevent North Korea from hacking these things?

I think so.

Yeah.

Yeah. Short answer is yes. Now, I think that the biggest challenge in getting to that end state is who's putting the money in today.

Mhm.

Right? And are you being properly compensated for the risk? I think there's a very strong argument that you are not being compensated for the risk that you're taking today in these DeFi ecosystems.

But it turns out you don't need that many people to take that risk.

Yeah.

You know, a couple billion dollars is enough of a honeypot for North Korea.

Yeah.

And then you just put a patch to the system.

I think it might be one of these things where, if you look at DeFi TVL and transaction volumes, there's actually a lot of things that are trending in the right direction. The systems are actually way stronger than they were in 2021 for all sorts of reasons.

Even so, if you didn't see parabolic growth for 2 or 3 years, as long as there's enough assets in there, I think you'll actually make the systems very, very, very resilient. And then when the assets come, it'll just go vertical.

Yeah. All right, that's the security optimism that we needed.

Yeah, yeah.

Avichal, this is great. Is there anything that we haven't talked about that you think we should talk about? Or, as you look out—you have a unique place in the industry—is there anything that feels very obvious to you that you think maybe Crypto Twitter and the general public aren't seeing yet?

Yeah. I just think the biggest thing is this recurring theme that we talked about: there's a really, really big disconnect between the sentiment on a place like Crypto Twitter or in Telegram groups versus when you go and talk to founders, and they're like, “Yeah, the stuff that was really hard 5 years ago is trivial now.”

Or you go talk to people in developing markets, and they're like, “I can finally get dollars, and I want to put them to work. What can I do to put them to work?” Or you look at the aggregate metrics of the things that are working, like Hyperliquid.

People are too caught up in the sentiment of it, and they're not looking at the fundamentals. But that's frankly why we have a business, right? That's hard to do. I think if people actually started looking at fundamentals, looked at where the founders are and what's getting built, and went and talked to people on Wall Street or to people in Indonesia or India, the perception is just so discordant with reality.

Yeah, yeah.

Perception and reality tend to converge, and it's perception that collapses to reality, usually. So I think people will figure this out, but I think it might take another 2 years.

It's funny, right? The people who draw the lines and triangles on the charts are like, “Yeah, it's a 4-year cycle,” yada yada. There is a cycle, and I tend to believe it, but I don't think it's for technical reasons. I think it's for human psychology reasons.

That's approximately the amount of time it takes for everybody to have forgotten the pain and the lessons of the last bull cycle. For humans to emotionally process everything that's happening takes 2 years. At the end of those 2 years, we've processed the emotions, and anybody who felt bad enough and depressed enough to leave is gone. Anybody who's left is here for some reason.

Then you look around, and everybody who believed in something is just building.

Yeah.

Then everybody looks around and is like, “Wait a second. This is actually all real now.”

They're still here, and the products got better and the tech got better.

And then it just sort of kicks off again. So I think it's not for technical reasons. I think it's purely a downstream human psychology thing.

Yeah.

That's what we're seeing play out yet again. It's just the same human psychology every 4 years.

People sometimes question crypto VCs, right? But I think professional investors tend to make their money in bear markets. Anyone can make money in a bull market, right? You look at all of our friends—and I'm sure your friends too—making gobs of money with AI, and everyone thinks they're a genius right now. They're buying Micron, and it's up 20% day over day, right?

Yeah.

But it's in the bear markets when human psychology can get in the way. And when retail oftentimes pulls out, that's actually the best time to invest.

Yeah, yeah.

That's how I feel about the token markets today.

100%. Yeah, yeah. It's the difference between trading and investing. Bull markets are great for trading. Bear markets are great for investing. You've been finding those founders who are going to have a 10-year vision.

I just think the world is going to look so, so different in the next 5 years, and a lot of the things that are going to make it really interesting and different are the things that people are essentially creating right now.

Yeah, I agree. Beautiful. Thanks, man.

Good to see you.