Podcast Summary
Identifying Opportunities in Crypto's Volatile Market: Principal Asset Management explores crypto's volatility, recognizing ongoing investment and innovation, despite price declines, with a focus on web 3.0 and DeFi.
The crypto market is experiencing extreme volatility, with falling prices but also significant investment and innovation. Principal Asset Management, a real estate manager, uses a 360-degree perspective to identify investing opportunities across various markets. In crypto, despite price declines, there's ongoing investment and building of new things, such as web 3.0 and DeFi. The narrative in the crypto space changes quickly, and there's a tension between the price and the actual activity. One unique aspect of the crypto world is the prevalence of pseudonymous experts and voices, adding complexity to the conversation.
A decentralized investment collective called Egirl Capital invests in Web 3 projects and NFT-based protocols: Egirl Capital, an independent group of diverse Web 3 experts, invests in transformative projects and NFT protocols without external pressures or quotas
Egirl Capital is an amorphous crypto investment collective made up of various individuals with diverse backgrounds and experiences in the Web 3 space. They came together organically and operate independently, investing in critical decentralized primitives and projects that have the potential to fundamentally change technology and innovation. Members include leaders of projects like Alchemix and Saddle Finance, as well as traders and security engineers. They prioritize investing in NFT-based projects and protocols, such as Yats, Unisox, Connect, and Radical, with a belief in the long-term value of early DeFi goods. Unlike traditional investment funds, Egirl Capital is not beholden to any expectations or quotas, allowing them to make investments based on consensus and shared interests.
Egirl DAO: Decentralized Investment Group in Crypto Space: Egirl DAO is a decentralized investment group in the crypto space, prioritizing projects with significant impact, utilizing anonymous members, and conducting internal research for deal-by-deal investments, embracing the pseudonymity of Web 3 culture.
Egirl DAO, a Web 3 investment group, prioritizes projects with the greatest impact in the crypto space and utilizes a unique, decentralized approach to identifying and evaluating potential investments. Members, who can remain anonymous, lead deals they're passionate about, and the group conducts internal research and due diligence. The group does not have a pooled capital element and operates deal-by-deal. The pseudonymity aspect of Web 3 and crypto is embraced, allowing participants to create their own identities on the blockchain, separate from their real-life identities. The term "e girl" is a reference to the anime and cartoon culture prevalent in the crypto community, representing an anti-establishment, anti-suit meme.
Web 3 and crypto: Reputation matters more than appearance: In Web 3 and crypto, reputation and expertise matter more than physical appearance or established identities. Building a reputation requires more effort but can lead to success for individuals and firms.
Web 3 and crypto offer an alternative to traditional structures where reputation and expertise matter more than physical appearance or established identities. The speaker, who has a background as a management consultant, emphasized that in the Web 3 world, one can still be taken seriously, even while wearing a hazmat suit or using a pseudonym. However, building a reputation in this space requires more effort than in traditional industries. The speaker also mentioned their investment firm, Documents Capital, which includes experienced individuals who have been in the crypto space for several years and have managed to secure deals with established VCs despite not wearing suits or having public identities. The speaker also discussed The Graph, their day job, which is a decentralized protocol for organizing and retrieving on-chain data. They also touched on the excitement around Ethereum and DeFi applications, explaining that institutional capital seems to be more interested in Ethereum due to its suitability for such applications. Overall, the speaker's message highlights the potential for individuals and firms to succeed in the Web 3 and crypto space regardless of their appearance or established identities.
Decentralized indexing solution for blockchains: The Graph provides a standardized API for developers to access blockchain data efficiently, enabling the creation of various applications like search engines and dApps, while handling indexing and processing through a network of indexers.
The Graph aims to make it easier for developers to access data from blockchains by providing a decentralized indexing solution. This is currently a challenging task for developers, who would otherwise need to run their own nodes and become experts in the specific blockchain. The Graph achieves this by offering a standardized API (subgraph) for developers to define what data they want, while the actual indexing and processing are handled by a network of indexers. The project aspires to be the "Google of blockchains," enabling efficient data retrieval for various applications, including search engines and decentralized apps (dApps). The team behind The Graph has recently raised $50 million, which will be used to bring on more teams and continue building on their ambitious decentralized vision. Concrete examples of apps that could benefit from The Graph include trading platforms and automated market makers, as well as NFT marketplaces and search engines. By decentralizing the indexing infrastructure, The Graph enables greater security and decentralization for dApps, making it a crucial component in the blockchain ecosystem.
Decentralization is key to open, permissionless dApps: Decentralization ensures resilience, empowers users, and fosters innovation and cost savings through community-maintained public goods and the ability to exit platforms
Web 3 applications, or true decentralized apps (dApps), are defined by their openness, permissionlessness, and decentralization. Decentralization is important because it ensures that apps are resilient to censorship, server downtime, and the need for a single team to manage complexities. The use of decentralized protocols like The Graph enables the creation of public goods like APIs, which can be used and maintained by the community, fostering innovation and cost savings. Decentralization also empowers users with the right to exit platforms, as seen in the example of Ethereum Name Service (ENS) and the transition to subgraphs during the ConstitutionDAO auction. This decentralized approach not only improves the user experience but also has philosophical and moral value attachments, such as promoting freedom and ownership.
Decentralized Web 3.0 projects offer new incentive systems: Decentralized Web 3.0 projects use blockchains and cryptocurrencies for new incentive systems, allowing anyone to contribute and earn rewards, contrasting with traditional, centralized systems where a company manages the platform.
The decentralized nature of Web 3.0 projects, with their use of blockchains and cryptocurrencies, offers new incentive systems that allow anyone to contribute and take ownership in the networks they use. This contrasts with traditional, centralized systems where a company may have the sole responsibility for managing and maintaining the platform. Critics argue that decentralized processes may not be as reliable as centralized ones, but the benefit is that anyone can earn rewards by staking tokens and contributing to the network's productivity and value. Furthermore, the potential for decentralized alternatives to popular Web 2.0 platforms like Twitter and Discord is exciting. These decentralized versions would allow for easier switching costs and more competition, as users can simply send funds or tokens to another wallet or marketplace. The future of Web 3.0 also holds the promise of coupling on-chain actions with social platforms, making discussions and voting more integrated and efficient. Overall, the decentralized nature of Web 3.0 projects offers new opportunities for ownership, incentives, and innovation.
Decentralization and new monetization patterns: Decentralization makes data less valuable for ads, but new monetization methods like staking, yield farming, micropayments, and layer 2 solutions offer opportunities for income and value creation.
As decentralized applications become more prevalent, the traditional business models of companies like Twitter and Facebook, which rely on user data for advertising revenue, may need to evolve. Decentralization makes data more accessible, transparent, and openly available, which could make it less valuable to companies. However, there are various ways that decentralized services and transactions can generate profits. These include people participating in protocols, providing services, and earning income through staking or yield farming. Additionally, there's potential for micropayments and microtransactions, where users receive payments directly for their contributions or interactions. As the technology becomes more mature, we can expect to see new monetization patterns emerge. This includes the use of layer 2 solutions, such as Oracle and IPFS, to enable micropayments and charge for smaller interactions. Ultimately, the decentralized economy offers opportunities for new and innovative ways to create value and generate income.
Long-term focus in crypto despite volatility: Long-term investors see volatility as an opportunity for growth, with bear markets providing time for improvement and the arrival of innovative projects, while institutional money enters the space to fuel growth.
Despite the recent volatility and selling in the crypto market, including Ethereum being cut in half since November, long-term investors like those in the egirl collective continue to focus on building and investing in projects with a long-term perspective, often decades. Bear markets can even be seen as beneficial as they provide time for mistakes, iteration, and the arrival of innovative projects. Additionally, there is an influx of institutional money entering the space, providing opportunities for projects to raise capital and grow. The power lies with good projects and teams, and there is a need for that much capital in the crypto industry.
Identifying potential 'killer apps' in crypto: ENS as a universal login solution could bring web 2 users into crypto, cross-chain universe expands access to DeFi and other activities, NFT avatars as a due diligence test for crypto investors
The crypto space continues to evolve, with new use cases emerging and existing ones maturing. Eva Baeryswyl identified Ethereum Name Service (ENS) as a potential "killer app" for bringing web 2 users into the crypto world, as it offers a universal login solution that everyone can relate to. Another underappreciated use case is the cross-chain universe, where Bitcoin holders can access DeFi and other activities on Ethereum and other chains through wrapped tokens. Tracy Lu agreed, adding that the Egirl Capital investment collective's use of NFT avatars as a due diligence test is a unique and potentially effective way to evaluate the seriousness and intelligence of crypto investors. Overall, the conversation highlighted the importance of staying informed about new developments in the crypto space and approaching investments with a critical and thoughtful mindset.
Understanding the Challenges of Decentralization in Crypto: The crypto world's decentralized nature challenges traditional notions of credibility and poses a challenge for platforms. True decentralization and the right to exit with data define Web 3.0, but the transformation of web 2.0 companies into profitable decentralized entities remains uncertain.
The crypto world challenges traditional notions of credibility and decentralization. Anonymous voices in the crypto space, particularly around NFTs, pose a challenge for platforms like All Thoughts. The idea of true decentralization, or the right to exit with one's data, is a simple and intuitive way to understand Web 3.0. However, the transformation of web 2.0 companies into profitable decentralized entities remains a question. Despite recent market volatility, the impulse to build and invest in crypto remains strong. It's becoming its own belief system, making it difficult for it to fade away completely.
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