Seeing as this is a daily newsletter, a lot of what I write is by necessity whatever happens to come to mind that day. The oddball mix of 1980s movie references, historical quotes and trading desk stories are just how my aging TradFi brain attempts to make sense of crypto. So that’s what you get.
This week I’m at Permissionless, so that’s what you’ll be getting.
I’m not sure that's great for you, dear reader, but, so far, it’s great for me as a conference attender: A few hours in and I’ve already learned tons.
More importantly, there’s a lot of energy that you don’t get from crypto Twitter.
And most importantly, the swag is amazing.
I was so busy stuffing a large tote bag full of crypto-branded t-shirts, hats, socks and water bottles that I missed most of the first panel.
Which is unfortunate, because it was a really good one.
Here are some snippets of what I half-heard Justin Drake saying as I sat down: “Snarkifying the EVM ... we need meme upgrades … mimetic shelling point … use Web3 to create a more regenerative world.”
I’m not entirely sure what those things mean, but they’ve motivated me to spend less time thinking about token prices and more about what’s being built — and Permissionless is a great place for that.
Justin ended his panel by handing out green pills, which may or may not have been Tic Tacs. Regardless, I’d have happily taken one after his inspiring talk.
The State of Crypto in 2022
The next talk, Chris Dixon and Ryan Adams on the state of crypto, was a green pill of sorts, too.
Dixon offered a succinct bull case for crypto: Whereas Web2 is defined by monopolistic network effects, Web3 gives power back to users. That, I thought, was a timely reminder that crypto is about much more than just numba’-go-up — which is handy, because the numbas have been going down.
Dixon says crypto is now where the internet was in the early 2000s: After the dotcom crash, people thought there’d never be enough demand for all the broadband capacity that had been speculatively built.
The parallel to crypto is obvious: We’re still just in the infrastructure build-out phase.
In, say, 2003, no one was thinking about the use cases that would quickly use up all that broadband capacity: Netflix, AWS, eGaming.
In crypto, we are only now building the infrastructure and are similarly clueless as to how people will eventually use it.
Dixon noted as well that with the internet, there was no transition stage between skepticism and acceptance: It went straight from, “What you’re doing is a toy, a bubble, etc” to, “Oh my god, this is so important we have to nationalize it.”
Building for Web3
Surojit Chatterjee, Coinbase’s chief product officer, was the perfect segue from Dixon.
Surojit also has a big vision: namely, bringing the next billion users into crypto — and talked about how Coinbase is working on making it happen.
Being a recovering trader, I associate companies entirely with their stock prices. So, hearing about what Chatterjee’s group is working on was a reminder that Coinbase is not just a squiggly line on a price chart.
I couldn’t type fast enough to keep up, but, big picture, what they are working on is making DeFi safer, friendlier and easier to use.
Among other things, they are rethinking digital wallets, solving for identity and KYC, as well as seed funding all sorts of protocols.
It was great to see a Web2 corporation building amazing Web3 stuff — a lot of tourist money will be leaving the space post-Terra, so we can use all the help we can get.
DeFi: The Financial Backbone of the New Economy
On a panel about DeFi and DAOs, Josh Goodbody of Qredo reminded us that we are still in the “extremely early days” of crypto, so we should expect things to break.
What broke last week was the tokenomics model behind UST and LUNA. What didn’t break is the rails DeFi runs on.
Net-net, that is pretty good news.
Despite UST breaking, Konstantin Richter of Blockdaemon said he’s “incredibly excited, even about algorithmic stablecoins.”
I can’t say I share that particular enthusiasm, but I’m glad people are still thinking big.
DAOs were similarly said to be at the very earliest stage of what they could be, and panelists had high hopes for what they could become.
DAOs are “decentralizing human interactions” and allowing people to “get back to working together as humans.”
A note of caution: DAOs for the sake of DAOs were said to be “a recipe for disaster” — I’d argue that DeFi for the sake of DeFi is as well.
Investing in the on-chain world
The last talk I’ll cover here started with the worst dad joke you’ve ever heard (talking muffins???) — and that’s coming from me! — but the panelists managed to rescue it.
Haseeb Qureshi of Dragonfly Capital cut through a lot of DeFi smoke and mirrors by asking, “Where do yields come from?”
Risk, of course.
Soona Amhaz, Volt Capital’s founder, succinctly explained the market crash from a VC perspective: “You were taking on pre-seed risks at Series A, Series B prices.”
But she views the correction as “incredibly healthy” and ended on a hopeful note: “The bottom of the bear market is where the real substantive building happens.”
I’ve only just scratched the surface, but I’ve got a happy hour calling my name, so here are a few hot takes to give you a taste of the rest:
Konstantin Richter: “Prepare for a crypto winter, but the ice won’t be as thick this time.”
Stefan Goslin: “If you’ve made a trade on Uniswap, you’ve been sandwiched.”
James Wang: “I missed DeFi summer, because I wasn’t a citizen in DeFi winter.”
Josh Rosenthal: “Martin Luther was a great shit-poster.”
We also had a Nixon-to-China moment in Ledger announcing a new browser-extension product.
And Robinhood unveiled a new Web3 wallet, which I’m hopeful will inject some fresh degen energy into this bear market.
Day 1 takeaway: It’s still very early in crypto and DeFi — we’re only just building out the infrastructure and don’t yet know what we’ll be doing with it in a few years time.
Today was a reminder that crypto is a lot more than just pumping and crashing token prices: Builders keep building.
After last week’s events, I suspect I’m not the only one that needed a reminder.
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