抄底时机到了吗？

Do you know why Aptos is up 15% today? Because of that reply guy. That’s hilarious. It’s so funny: just some random dude commenting on every post, “Looking good here,” “Looking good here,” and it’s actually going up.

Sentiment in crypto is pretty terrible. Everything except Bitcoin feels like it’s going to zero. Is this going to continue, or is this a buying opportunity?

That’s a great way to start off the pod. Honestly, we’ve been talking about this for a while. Basically, allcoins just got destroyed over the last 2 months. Even this month, they got hit extremely hard relative to BTC, because BTC has kind of gone sideways while altcoins have bled out.

When I look at Bitcoin dominance at 61%, it’s actually come off a little bit from the highs of last week. I look at ETH/BTC at 0.028, and I look at every single altcoin down 90%. My takeaway is that this is actually a really good time to buy stuff that you think has strong fundamentals.

When you look at the market from 3 or 4 months ago, you look at the charts, and basically everything was going up in a straight line. Every single altcoin was up 300% to 500%. You’d sort by top gainers on CoinGecko over the last month and say, “Holy crap, the lowest altcoin gain is 100%.” That’s normally the wrong time to go buy, but that’s when everyone is talking about buying.

Now I’m seeing green shoots. Forget BTC for a second, but things like TAO are actually doing very well because they launched an interesting product that people are trying to use. There are pockets of outperformance right now in the altcoin world. Broadly, they’re still doing poorly, but the stuff that’s actually making progress is doing well.

I’m actually of the mindset that now is a really good time to go through your list and start allocating. I’d be selling BTC to go buy alts here. I actually think that’s probably contrarian right now, but I think it’s the right move. I’d be shorting BTC and buying some alts.

That is a contrarian view. The way I usually like to look at it is: never catch a falling knife in crypto, especially on a shitcoin. Even if something has sold off 80%, it can still sell off another 80% from there.

None of these things, or at least a lot of these things, have any real fundamental value. Some of them do, but most don’t. If you’re looking at fart coins down 90% and thinking, “Maybe I should try to get involved here,” they could easily go down another 90%, and you’d just be caught holding the bag.

I lost a lot of money in my early crypto-trading career trying to do that, because that’s sort of how you trade commodities. When prices get too low, supply gets cut and demand increases, so things tend to revert to the mean more sensibly than they might in crypto. There’s less supply curtailment at low prices. Tokens still get minted with reckless abandon, whatever the price is, and demand doesn’t necessarily pick up when prices are crashing.

In fact, the opposite might be true in crypto because it’s such a reflexive, fear-and-greed-driven asset. It’s not like you’re putting it into factories to make cars. I had the wrong approach in the beginning and got burned.

Now what I like to do is wait for tokens to bottom out and start rallying before I dip-buy. I think what you just said about TAO resonates, because just looking at the chart, it’s kind of stabilized and seems like it’s on the up-and-up again.

The only caveat I would add to your take is that, if there are projects on your shopping list that you like, obviously they’re at better prices than they were a few weeks ago. If you want to start accumulating, make sure the knife has stopped falling. Check to see if it’s bottomed out. If it’s still falling like a stone, it might pay to wait for a little while—wait for it to bottom out and then wait for it to start picking up before you get involved.

I don’t know. What do you think of my approach?

I think it can be dangerous. In this particular state of the market, a lot of these bounces are short-lived. Because there are so many people trying to allocate to the good projects, those projects tend to remove themselves from the pack.

I’ll give you an example. Maybe this isn’t directly contradictory to your point, but it’s something I’ve noticed. Take Litecoin as an example. We’ve been talking about Litecoin as an ETF trade for a while now, and I know a lot of people were saying, “The market doesn’t look amazing right now, so I’m not going to buy Litecoin. Litecoin is correlated to the market, and if I think the market is going lower, then I get to buy Litecoin lower.”

What ends up happening is that Bitcoin trades down 3%, Litecoin trades down 3%, Bitcoin bounces 1%, and Litecoin bounces 10%. Suddenly, if you look at the chart over the last month, Bitcoin is down and Litecoin is up 30%.

If you’re waiting for the market itself to start doing well again, you’re actually missing the opportunity. By the time the market starts doing well again, all of the premium that that coin is supposed to have might already be baked into the price.

I’m seeing that across a couple of different assets, including TAO. TAO is back to where it was a month ago, when Bitcoin was at $102,000, even though Bitcoin is at $96,000.

Let me ask you a follow-up question to what you just said. I totally hear you, and I’m not necessarily convinced about my waiting-for-it-to-bottom-out-and-then-buy-the-rally theory. I’m kind of testing it out with you.

1. Ads (Kraken OTC and Ledger)

You said you like selling Bitcoin to buy alts. TAO is where it was a month ago, and Litecoin is at the highs of the year, basically at multi-year highs. Do you like selling Bitcoin here to buy Litecoin at multi-year highs? Do you like selling it to buy TAO, which is trading where it was a month ago?

When you frame it that way, I actually do think the Litecoin trade is kind of played out at this point. I wouldn’t be a huge buyer of LTC. I think a lot of the premium in that trade has been juiced, so I’m not as confident in the LTC trade.

For example, if you’re thinking, “I want to get an allocation to AI coins, and I think AI coins are going to do well. How should I start to allocate?” One way to think about doing that is buying the stuff you like and shorting some BTC against it. At this point, I actually think that’s a reasonable pair trade.

I know that sounds nuts.

Yeah, it doesn’t sound nuts, because for the last 6 months it’s been completely nuts to even think about doing that. I actually think a lot of these coins are beaten down so much at this point that it might make sense.

One thing I will say is that we were kind of right—just to do a little lap, not that we could have made any money on this—but remember when we talked about AI coins and said the composition of the market cap of AI coins might grow substantially, but the composition was going to change dramatically?

If you look at AI coins in general, the darling, Virtuals, has done horrifically badly. Now people don’t even buy it for a bounce anymore. It hit $1, Bitcoin bounced 4%, and VIRTUALS didn’t even move. There are so many people selling it.

ARC had a 40% move off the lows because that’s where the mindshare is now. According to the market, they’re doing a better job of delivering the product that people want to use, and by all accounts it’s actually quite good.

I think this is just a cautionary tale for people who get wedded to their bags in an up-and-coming sector. You always have to be willing to realize that whatever coin you’ve chosen in the moment can be disrupted in a week, and you need to move around.

You’ve got to be in and out of stuff, or at least have an index. Just add the new stuff and put it in your index.

That’s just really hard. It’s so hard to trade like that. People aren’t wired to churn through different tokens and buy and sell things quickly. That’s usually a recipe for retail traders to chop themselves up and end up in a hole.

You pay transaction costs. All this trading is on-chain. These things are illiquid, and it’s not necessarily clear how much bid-offer you’re paying at all times. It’s dicey stuff to trade actively, especially in the illiquid alt space or an emerging pocket of the alt space, like AI coins.

But you have to. If you hold on to stuff, you will just get carried out on a stretcher.

You and I got started with Virtuals. We realized pretty quickly, building our agent, that a no-code agent platform sucks. The content that a no-code agent puts out is terrible. It’s spam. People block it, and it gets 2 views per tweet. It’s terrible.

Then we switched to the Eliza framework to build our own. The Eliza framework is a repository in GitHub that allows you to do more customized things with your bot. We switched to that. It has a token. I bought that on the highs. Mea culpa—we all screw some of these trades up.

It was good at first, but then that very quickly became obsolete. We scrapped it, and now we have a completely custom stack. What I should have done over the course of that time was realize, “I’ve got to sell Virtuals on any pop,” recognizing that the no-code framework was garbage and was going to lose mindshare.

AI16Z ripped hard. I should have sold that when I realized it, too, wasn’t good enough. I just held on too long. I think it’s hard to do that. It’s hard to move around.

It’s hard to move around, like you said. If you buy something and think, “I’m really confident in this AI theme. I’m really confident that people are going to be using agents. I’m super confident that this is a sector that’s going to grow,” and then you allocate to Virtuals because it was the leader—not even 2 months ago, it was the clear leader—it’s difficult.

If you did something like that in the traditional stock market, in an analogous framework, you found an industry that you think is going to blow up and you found the leader. Very rarely are you going to be disrupted in 2 months. It’s just not going to happen.

People aren’t wired for this, but you kind of have to be in crypto because these tokens are not delivering consistent value. That’s why it’s so easy to lose money. The most dangerous thing you can do as a trader is marry your bags.

I think it’s very easy to do that in crypto because there are 2 psychological phenomena that happen. One is that you buy something, it’s the leader, and it does really well for you. Then it goes against you, and suddenly you’re in a position where you’ve lost money on this thing. Psychologically, you don’t want to give up on it because you want to make that money back.

You end up holding in the hopes that it will go back up, not admitting to yourself that it’s been disrupted. We see this play out over and over again. It’s the lack of ability to admit that your project is no longer the good project. That’s something you really have to fight against.

It’s true. One other thing makes it even harder. Crypto is a very tribal asset class. If you’re a Virtuals holder, your tribe on Crypto Twitter is going to see their content. Everybody is going to be helping each other feel good about bag-holding, even when bag-holding is a terrible idea.

The tribalism, that communal sort of sense of community, keeps people in positions longer than they should be. It psyches them out and creates little psychological bubbles of groupthink that screw up your trading process.

The second thing that happens is that projects are aware when they’re losing mindshare. They’re aware that their token prices are going down. They have stakeholders, employees, and developers who want the token—and want the number—to go up.

What they do is release things on their roadmap that will make the token price rally: news, changes in tokenomics, buybacks, buy-and-burns, and all this stuff. They’ll basically attempt to psych you out of selling when you should be selling.

That’s a bad idea because, at the end of the day, none of these projects are legally allowed to deliver earnings per share to their token holders. Unlike the stock market analogy you drew, when you mention tokens or projects getting disrupted, their core product isn’t necessarily getting disrupted. The probability of future mindshare increasing is getting disrupted.

Mindshare is a much more fluid, transient, evanescent thing than actual underlying business viability. That’s why these shifts happen so quickly.

We could sit here all day and pretend to always be right about everything, but that would be dishonest. I’ve lost some money on AI coins. It’s not a huge part of my portfolio, and I can pat myself on the back for being mostly in Bitcoin, but for the little piece that I try to learn with and gamble on, I’ve definitely lost some money.

Rather than clinging to this idea and marrying my bags, as you would phrase it, I think it’s best to sell most of those positions and move on to the next thing.

There are a lot of next things right now. There are a lot of tokens like TAO that have been heavily beaten up and could rally. It also pays to try to bet on things with more convexity, where the market cap is so low that you don’t have to risk a ton of money to reap a huge reward.

You can bet on really early-stage projects or projects with a clear, deep-bottlenecking narrative, like Litecoin, even though you wouldn’t recommend doing that. There are all sorts of other opportunities. If you’re married to your bags, the biggest disservice you do to yourself is not the money you lose, but the future opportunities you sacrifice by not having that capital freed up to capture new opportunities.

A big issue, going back to the core problem of things getting disrupted too quickly, is that everything is open-source. If somebody makes a huge innovative leap in crypto, everyone else can see and immediately understand how they made that leap, incorporate it, and compete with them.

The way to think about it is that the 4-minute miles are constantly being broken in crypto. For the longest time, nobody ran a mile in under 4 minutes. Then, the moment 1 person did it, hundreds of people did it over the next 10 years, because it was just a psychological thing.

A lot of these breakthroughs—or things that you build in crypto, or new products that you build—don’t even need to be breakthroughs. You build a new AI-agent platform, and everyone can see, “I understand. This is a useful product, but I can build it better and faster.” There’s no moat because you can see how it’s built.

That’s incredible because you get extremely fast iteration on products in crypto, which is awesome. But it makes the life of a team extremely hard.

I’m trying to figure out the right way to say this, but basically the incentives are for a founder to go build an L1 specifically because it’s harder to disrupt an L1. You’re accumulating a community of applications, and regardless of what applications are built, you win if you can convince people to build on your platform.

2. The LIBRA Fallout

If you build an application, you’re kind of stuck because it’s much more competitive. The valuations for L1s are also much higher, so that disincentivizes building applications. The people who do build applications get to live in a very competitive and fun world.

Fun with big air quotes around it.

That’s a great transition into the topic of L1s. Solana is taking a lot of heat right now because the memecoin frenzy hasn’t necessarily been constructive for society’s view of crypto.

Before we get to that, the memecoin frenzy has been really bad. Have you talked to anyone about Trump Coin or any of these memes—anyone outside of crypto, in the real world?

The people in the real world stopped talking to me about crypto when prices came off the highs. For a while, it was, “What should I buy, Jonah? You’re the crypto guy. What do I do with my bags?”

Now that prices are nuking and Bitcoin is off the highs, I’ve stopped having those conversations. Maybe you’ve got a different friend group, though. Tell me.

It pops up in politics now. I’ve had quite a few people talk to me and complain about Trump Coin and how much of a massive grift it is. These are Republicans who aren’t in crypto. They’re saying, “Dude, what is this scam that he launched? How did this happen?”

The Javier Milei thing has turned into a Category 5 hurricane in his home country of Argentina. I don’t know if you’ve been paying attention to the news there, but he’s getting lambasted.

It’s really sad, because I actually think that if world leaders had embraced crypto from a building perspective or from an incentives perspective, that would have been really cool. Imagine if Elon had said, “We’re going to open-source all of this government-spending data, and we’re going to launch a coin that’s going to get 1% of all the dollars saved. Go buy this coin, dig through the data, and try to save us money.”

He would have created a mass army of people incentivized to dig through government data. They would own this coin. It doesn’t have to be that big; it could have been a lot smaller. But something more interesting would have been awesome.

That is a brilliant idea. I hope somebody who knows him hears that suggestion. It’s exactly the right way to incentivize people to help grow a project that’s worthwhile, like cutting waste.

He did suggest putting all Treasury spending on-chain so that everybody could sleuth through it and see where the money goes. With the exception of some confidential military or defense projects, that’s probably a worthwhile experiment.

I agree. I don’t understand why these politicians fell for launching scam coins. Let’s not call them scam coins—memecoins are what they are. If you buy WIF, POPCAT, MOG, or BONK and expect the team to deliver real value to you, the joke is on you.

These are just memes. Don’t think any deeper than that. It’s sad that politicians have sunk to the level of memeing instead of suggesting real policy or using blockchain for its actual merits, which are creating trustless, decentralized databases that are more trustworthy and transparent than the closed-source, monolithic systems governments use.

They’re often more technologically up to date than those systems, too. I’d call myself a libertarian in that sense, and I think politicians could have embraced that. This is a sad turn of events, but Trump and Milei have done some interesting and good things, and they can always pivot back to that later.

The take that’s bothering me right now, related to those tokens, isn’t that the world leaders who engaged in that conduct have disgraced themselves. They’ll bounce back. It’s more about what this means for crypto and what it means for Solana.

All of this is taking place on Solana, and there’s an increasingly consensus viewpoint that it’s bad for Solana. I have the opposite take. I don’t think this is bad for Solana.

The bad part is that these people are clearly surrounded by value extractors. At the end of the day, there’s nothing you can really do about that. These people—Trump, Milei, Dave Portnoy, all of them—don’t have any knowledge of crypto or any ability to navigate crypto, so they rely on “trusted advisers.”

In crypto, it’s so easy, if you have that kind of reach, to make so much money. You need an extremely morally upstanding person not to take advantage of that. I guess that’s a metaphor for broader government. You put 100 people in that situation, and 99 of them are taking some money for themselves, and a lot of it.

It’s hard to solve that problem, to be completely honest. They could have been pushed in a better direction. These people aren’t necessarily in the bottom 5% of humanity, but they’re pretty bad. They’re egregious scammers.

Avi, what are you saying? Are you saying that people in government do things for their own personal gain?

No, no, definitely not. Trump—no, Trump would never do that. Trump is different from all the other politicians. Don’t worry.

In that sense, I think these memecoins have exposed the broader grift going on in government. What’s the difference between Trump’s crypto adviser pumping and dumping Melania tokens and Elizabeth Warren taking money from Pfizer and then lobbying for their vaccine?

To me, this activity humanizes these politicians. Think about it: if the president of the United States can do something that dumb, that grifty, and that bad, he’s no different from you or me. None of these politicians are any different from us.

Look at the way society acts around us. Have you ever gone to a parking lot in New York where, when you park, you give the guy your keys and he has to park the car for you because the parking lots are really complicated? Then you come back and there are 3 people in front of you, so you slip the guy $20 and say, “Can you get my car first?”

That’s how society works. That’s just how society works. Politicians are no different.

It’s funny. In New York, you used to be able to grease any bouncer and get in pretty much wherever you wanted. I don’t know if it’s still that way, because I’m out of that game now and have been for a decade.

In Europe, they’re much more principled about it. In Paris, if you try to pay the bouncer €500 to get into the nicest nightclub in Paris, he’ll just say, “I don’t care if it’s your birthday. I don’t like your face.” If you try that at Berghain, you’ll just get sent home.

The Europeans are much more principled about this stuff. In America, the whole system is just different. The hardest club to get into that I failed to get into was an empty club in Belgrade, Serbia.

I’ve been clubbing there. Which one?

The Tube. You could see inside, and there were 6 people in there. There were 2 massive Serbians—Serbians are huge, by the way—and we tried to get in. They just said, “Nope, not today.”

I asked, “Why not today?” They said, “Nope, not today.”

I know why you didn’t get in there. You’re not a Serb, and you weren’t in a group with a Serb. You have to go with Serbs. I went with Serbs, so I got everywhere.

You know what? I should have gone with a Serb. That was my huge mistake.

3. Ads (Kraken OTC and Ledger)

If you want to get into a nightclub in Belgrade, bring along a Serb. If you want to get into a nightclub in New York, bring $200. If you want to get into a nightclub in Paris, don’t. Just stay away from Paris altogether. Wait in line like the rest of them.

4. The Fat Protocol Thesis

Bringing it back to crypto for a second, I think the fat-protocol thesis is alive and well. Applications aren’t going to retain any value until sweeping regulation allows application revenues to get passed through to token holders.

Maybe the fat-protocol thesis gets turned upside down after that, but between now and then, all of the value is going to accrue to L1s that matter. Right now, those L1s are Bitcoin and Solana. Maybe ETH has a play in the future.

Even if this memecoin frenzy dies down, builders trying to build high-throughput applications are going to look at Solana and say, “Wow, Solana survived the memecoin frenzy without getting bowled over even once.” That’s a far cry from the days when Solana got bowled over by a walking app back in 2022 or 2023.

Solana has really battle-tested itself for high-throughput applications at this point. There’s no bridging between an L1 and an L2. It’s all there. I think the story for Solana looks good.

I’m dip-buying. I nibbled in the $160s, and I’m still nibbling at $170.

5. Are Memecoins Grift?

The biggest worry about Solana is purely the fact that there’s $1.6 billion coming in terms of unlocks. I think a lot of it is not hedged, and the price was around $60 when people bought it, so they’re up a ton.

Once that supply is cleared, I think the outlook is very positive for Solana. They’ve just been such a clear winner. All of this nonsense is going to blow over.

When I say nonsense, I mean all the worry about these insiders. Solana didn’t do anything. It’s not Solana’s fault that it was such an amazing chain that people decided to build on it, all the activity happened on it, and that activity happened to include grift.

If Solana sucked, the grift would just happen on a different chain. It’s not like Anatoly and Raj were standing up there grifting themselves. It just so happened that Solana was a great chain to do grift on because it’s a great chain.

Exactly. Grift is a feature of any new technology. Even PayPal had to solve for grift and fraud as a big problem in the beginning.

I still don’t think memecoins are grift. People should go into these trades with their eyes wide open. You can call them investments, but that’s not what they are.

How on Earth would you feel grifted if you bought DOGE, WIF, POPCAT, or MOG at the highs and they went straight down? The teams didn’t have to deliver real value to you. There’s no SEC registration required to launch a shitcoin.

Trump Coin and LIBRA are shitcoins. Why would you ever feel grifted if you bought the highs on WIF and it went straight down? Maybe the guys on Twitter said it was going to be on the Sphere. The dog did not go on the Sphere, so you were lied to by anonymous accounts on X.

You weren’t lied to by the CFO of a publicly traded company who has actual fiduciary obligations to you. What am I missing? It’s not really grift. You’re at the casino.

It’s like being at the blackjack table with 19. You’re supposed to stay, but you double down, go bust, and then complain that you got grifted by the dealer. The dealer is probably going to look at you like you’re an extraterrestrial.

That’s how these memecoins go. You’re buying Trump tokens at a $70 billion valuation, hoping for what? Are you hoping for Trump Coin to subsume the global economy? I don’t know. It just seems unfair to call these things grift. They are what they are.

I do think memecoins are going to evolve over time. Right now, obviously, memecoins do nothing. In the future, people are going to try to tie some level of value to them.

One thing I’m really excited about, specifically for us, is taking this THX token that we built and turning it into our own personal creator coin. It becomes a way to track our careers and our success, in addition to also being an awesome AI agent.

You can bundle up all of these sources of value in a coin, and it’s super valuable to us as well because we have a community built around it that’s engaged with us.

Our coin is trading at $3 million. It’s not trading at $70 billion, so in terms of the risk-reward equation, it’s entirely different.

6. Social Tokens

I think the broader point, whether you buy it or not, doesn’t really matter. I apologize for that little shill-fest. The point I was trying to make is that more stuff like this is going to start coming out.

We had a little bit of it in 2021, but I don’t think the tooling was there to make it good. Today, it’s much easier to create a coin, tie it to your activities, and create a community around that coin.

I think this is inevitable. We had Friend.tech and BitClout, but those things didn’t really work. I think it was because they were too commoditized. You had to be on a specific platform for value to be assigned to you.

What’s changed is that, because you can launch a coin kind of anywhere, you’re not tied to providing value on a specific platform. You don’t need to create new behavior or switch your habits in order for a coin to have value.

I think that’s coming, and it’s going to be a really interesting area. I’m trying to invest in it right now.

That’s a really interesting point about being locked into a certain platform or ecosystem in order to have a social token that’s tradable and liquid. I never thought about it that way until you brought it up.

Let’s take it to the extreme. Suppose Meta announced that it would allow anybody on any of its family of applications to launch a decentralized social token that wasn’t locked into the application. It could be bought and sold on Binance or on-chain, transferred from any jurisdiction to any other jurisdiction.

Even if Meta went bankrupt and WhatsApp, Facebook, and Instagram all died and went away, that token would still be live, liquid, and trading. You could link the token to the number of likes you get on your posts or the number of followers you have on a particular platform.

I think that would blow up. People would love it. There is a desire for fans and creators to be linked via tokens. The process has just been too clunky, and the user experience, like many things in crypto, has been too flawed.

If you think of any good ways to invest in that, maybe it’s an area we should be looking at where we can get some early-stage bags, rather than buying the fastest horse in a leading category with a multibillion-dollar valuation and watching it trade down 90% on absolute vapor.

7. AI & Deep Research

Maybe that’s the takeaway from this AI parabola that we just witnessed. To be fair, I do expect AI to recover. I still think AI mania is coming. The iteration will just possibly be different from the iteration that just traded up and down.

Have you used Deep Research yet?

Yeah, I’m a subscriber. I love it. I’m using it to learn about a business I want to launch out here in California. It’s insanely good—truly, truly amazing.

I was trying to figure out how to invest most efficiently in the Chinese stock market. Obviously, there are some pretty simple ETFs you can allocate to, but I wanted a broad view of the market: the drivers, the top companies, the top industries, their collective revenues, and their balance sheets, all put in one place.

I asked ChatGPT to do it, and it did it in 8 minutes. It produced a comprehensive report that I would have expected to get from a bank, or from McKinsey, in 8 minutes. It was insane.

What’s so great about—

Sorry, go ahead. I didn’t mean to interrupt you. I was going to say that this is coming to crypto. One of the issues is data availability, and the question is where it will source the data from. This is coming to crypto. It’s kind of what we’re working on.

We’re basically building Deep Research Lite for crypto trading, and hopefully for other forms of trading too. I’m super excited. Our developer is about to ship a new update to our product that will allow the bot to have more context about what comes in and out, decide what’s most relevant, pick and choose, and provide summaries of market activity.

It should be a little bit better with correlations and consistency of market views. I’m excited about that.

Back to Deep Research, I think the overall Deep Research meta is good for crypto traders like you and me, and for our listeners. Anybody listening out there: this is good for you, and I’ll tell you exactly why.

The pendulum is shifting from analysts to doers. When I was in college 20 years ago, the hottest careers were working at McKinsey, Bain, or BCG and thinking for other people who would do. The doers were considered functionaries, while the thinkers and academics were the big brains, the people with the big vision.

Now anybody can develop a really elaborate, well-researched, well-informed vision with 8 minutes of computation on OpenAI’s platform. Anybody out there in the trenches experimenting with something like crypto trading is, by definition, a doer.

If you’re listening to this podcast, you’re a risk-taker. You’re trying to better yourself and your situation by taking risks and doing your own thing, rather than making becoming a wage earner your goal.

This entire trend benefits you. It commoditizes the analysis paralysis that so many thought middlemen have profited from for decades and serves it up to you on a silver platter.

Whereas it used to be difficult for traders like you and me to get smart on fundamentals, now it’s extremely easy. The role of the fundamental analyst is becoming commoditized across all industries, not just trading.

Deep Research isn’t perfect. In my experience, as I’ve been doing research for my own personal investing and entrepreneurial activity, I’ve noticed that it hallucinates sometimes in pretty significant ways. You can’t just take it all at face value, much as you can’t take advice on a trading podcast at face value.

It does synthesize the firehose of information out there much more efficiently than anything seen in human history before. None of this is financial advice.

I think the hallucination part is a bit overblown—not because it doesn’t happen, because it absolutely does—but because, in the past, you had to look at multiple sources, cross-reference, and double-check anyway.

You could never take 1 source as a Bible of truth in the first place. Obviously, you should be double-checking numbers and making sure things are true.

The real benefit is having it all collected and put in 1 place so efficiently, cleanly, and quickly, with a reasonably high accuracy rate. It’s not 100%, but that’s okay for now.

I haven’t really started using it in crypto yet, but I’m pretty psyched to start. This world becomes more competitive every single day, and you need to stay on top of these tools if you want to remain competitive.

8. Do We Need More L1s?

You don’t need Deep Research to do anything for you if you just want to hold on for dear life and have Bitcoin in your portfolio. But if you want to understand the inner workings of these chains, or try to forecast which technology might take off and why, it would help.

Speaking of which, going back to L1s, no amount of research is going to convince me that we need more than a couple of L1s at this point. Our friend at Empire, Santiago, just launched an L1 for his private-equity fund. Hyperliquid launched its own L1 instead of doing everything on Solana, which it probably could have done.

Do you think we’re going to enter a world of app chains, like Cosmos forecast way back when, where every chain or every application has its own L1? Or do you think we’ll end up in a world with a couple of big L1s and the rest are useless?

The app-chain thesis is nonsense. I feel like we’ve discussed this. Nobody has solved the issue of seamless integration. There is no seamless integration between app chains, and for some reason nobody has solved that yet. Maybe one day, if it gets solved, it can take off.

One thing you don’t hear anything about these days—something you simply do not hear about—is decentralization. In 2020 and 2021, and especially back in 2017, that’s all anybody could talk about. Every project had a decentralization component.

What’s interesting now is what people used to get mad about versus what they get mad about today. People used to get mad when projects weren’t sufficiently decentralized. Today, people get mad about whether the tokens are sufficiently given to the community and whether enough tokens are allocated to the community.

Nobody cares about decentralization anymore. At the end of the day, this is seamless technology, it works, and the ability to move value around is so much easier with crypto, regardless of whether it’s decentralized or not.

The app-chain thesis is built around decentralization. It’s a way to scale effectively while still being plausibly decentralized. When you have a high-throughput chain like Solana, the big attacks were that it wasn’t sufficiently decentralized.

Those attacks are gone. Nobody attacks chains for not being sufficiently decentralized anymore. Otherwise, they would attack Hyperliquid, which isn’t decentralized in any meaningful way. Nobody does that.

Because we’ve lost decentralization as a guiding star in crypto, which I don’t necessarily think is a bad thing, the app-chain thesis is destroyed. There was probably too much emphasis placed on decentralization relative to the fact that the technology was better.

Back then, crypto was staffed exclusively by libertarians. Today, it’s not. I don’t think that’s necessarily a bad thing, but it makes me bullish on high-throughput L1s.

High-throughput L1s, or just a couple of them? There are a bunch now.

High-throughput L1s relative to app chains. Cosmos is done. Nobody talks about it. Polkadot is done. I think the L2s are done. Personally, I think Arbitrum and Optimism are done. I would short a basket of those against a long basket of high-throughput L1s.

Even Aptos is up 15% today. Do you know why Aptos is up 15% today? Because of that reply guy.

That’s hilarious. It’s so funny. Just some random dude commenting on every post, “Looking good here,” “Looking good here,” and it’s actually going up.

Having built a reply guy with our bot, it’s pretty hard to do that. Either this guy is sitting there, taking Celsius to the face all day and all night, never sleeping, and manually replying to everything, or he’s paying Twitter a decent chunk of money. He’s probably paying Twitter thousands of dollars a month to have the bot reply to literally every single account and every single post.

“Aptos is looking good here.”

But getting back to the main point, I think an app chain in and of itself is not decentralized. It’s obviously run by the team that manages the application. Each app chain isn’t that decentralized.

A constellation of app chains is, in theory, decentralized, but interoperability hasn’t been solved, as you said. I don’t think we’re going that route.

I think people don’t care about decentralization anymore because there haven’t been any major chain rugs. Once you start putting a lot of financial infrastructure and a lot of TVL onto a chain, decentralization matters.

Nobody wants to trust hundreds of billions of dollars worth of assets to a centralized group. When you’re just messing around on Hyperliquid, in theory, you don’t care if the Hyperliquid team controls the chain. But if you’re an institutional player, you’re probably not going to stake significant LP capital on a centralized chain.

That’s my take, too. People don’t care until they get rugged.

As more and more of the world moves on-chain—which I still think is going to happen, so I’m very bullish on the space—and more value moves on-chain, the rugs will start to happen. As we discussed earlier, if you put 100 people in a room and ask how many of them would do something scammy, I’m sure that as more value goes on-chain, we’ll reach the threshold where closed, centralized ecosystems face an increasing cacophony of voices calling to rug the project and walk away with hundreds of millions of dollars to a nice villa in Ibiza.

I think it’s going to happen. As more of the world moves on-chain, these rugs will occur on centralized ecosystems. Then decentralization will become a topic, but not until that point.

Let the buyer beware.

It would be kind of fun to have one of these chains blow up. It would be an interesting trading opportunity. RUNE kind of blew up. We haven’t had a good chain blow up since Luna.

All right, Jonah, I think we’ll leave it at that. I’ll look forward to the next chain blowup and the next podcast with you.

We’ll talk about it then.