Mehdi (Animoca), Kamran (MH Ventures), and Jonny (BSCN) dive into one of the hottest sectors in the crypto industry today. What is DePIN, where is it headed, and which projects should you be watching?
... and a healthy dose of memecoin discussion too...
Mehdi (Animoca), Kamran (MH Ventures), and Jonny (BSCN) dive into one of the hottest sectors in the crypto industry today. What is DePIN, where is it headed, and which projects should you be watching?
... and a healthy dose of memecoin discussion too...
And so, before we get into all the juicy stuff, just want to mention this podcast. This episode is just three guys sitting down chatting about the blockchain industry as individuals. Right, it's not financial advice from BSCN or from MH Ventures or from Animoca Brands purely, purely for entertainment purposes. So I want to make that very clear before we kick off. Alright, welcome to the very first episode of the BSCN and MH Ventures deal flow podcast. I'm your host, mixed Race Magic, and today I've got with me two very, very special and hopefully very regular guests in. Please introduce yourselves, boys.
Speaker 2:I'm KDot. Thanks for having me. I'm from MH, one of the GPs.
Speaker 3:Thanks, Johnny, for having us. My name is Mehdi Deal all things investment partnership and in Animoca Brands.
Speaker 1:Awesome, two amazing guests. I'm sure you'd agree. So I think, without messing around, let's just dive into our first topic, which is, as Mehdi suggested, meme coins. Absolutely no questions there. I think let's just go in and riff about it. What's your favorite meme coin, cam?
Speaker 2:So I'm going to show my own bags and this is big, I think because of you, because you covered it and I'm still holding it very strong. Cock Inu on Avax.
Speaker 1:I know that they're recently only bought it because of you.
Speaker 2:So you covered it and you're bearish, you're bearish.
Speaker 1:I've never held it. I've never held it. Yeah, it's true, that is true Pretty much. But why cock? Why do you love cock so much?
Speaker 2:Honestly, I don't know. I've never looked at it because basically, you shielded it to me so I bought it. The FTV was super low and I'm just. It's like I have this. Yeah, it's gone up since right like it's gone up a lot since I'm I'm going to the billions with meme coins or I'm going to zero. There's no literally in between. So yeah, you treat it as a loss of capital.
Speaker 1:It's like putting money on a game.
Speaker 2:If it goes to, you know, 2 billion, cool, I may sell. If it goes to zero, yeah, but don't say I shield it you did, I didn't chill it.
Speaker 1:I didn't chill it. I said it was funny, they posted some good videos and it was a fair launch and also I did say I said it was like it was the only guaranteed one on. You know how? Avalanche released their list of meme coins they hold for their culture fund. That was the only one that was like yeah, 100%, that's going to be it, and they only started on. 5th of February was their first tweet. I think. Next, stop to bill. Okay, the predictions in many. What about you? Do you hold any meme coins? Are they not too serious?
Speaker 3:Not financial advice Recently started buying a CFA Literally the reason why I bought it was because I'm a CFA and the community of Treadfive Bro that meme is trending and I feel like with 6 million market cap, that was just no brainer. The community just takes the piss out of all the Treadfive Bros out there kind of memeing about how crypto is overvalued, why they should use DCF and all that stuff. I think it's very memeable, so I just took the punt.
Speaker 1:I've seen a lot of the Treadfive memes going around, not necessarily about meme coins but like the trending. I don't know whether they just recommend them to me because they like somehow extrapolate by working some form of finance, but I guess you'll a lot of that stuff to be fair, but I don't know. I feel like now we should probably dive into our actual topic for the day. What do we want to crack on with meme coins for a little bit? No.
Speaker 2:I think that we should solidify something here, and that is if we all find good memes, we share it with each other. That's the only way to become financially free.
Speaker 1:Yeah, no, I completely agree. I completely agree. That's why I was told at university Anyway what do you do after?
Speaker 2:what do you do with a meme? I don't understand that. So if the owner launches it at a fair launch, what do they do after that?
Speaker 1:It depends on the project, right? So some meme coins. They went fully for utility, didn't they Like? I don't know what am I thinking here? What's a meme coin that decided to try?
Speaker 1:and slap some utility off the oh mate. Yeah, but that's a unique case, whereas there are some meme coins that just completely are just like where we're leveraged, bet on our L1, like something like Pepe, like they have absolutely no intention of doing anything like integrations or use cases for it, stuff like that. They're just like we're a major Ethereum meme coin will probably do well if Ethereum does well. That's probably the ethos. I think that's probably true for most meme coins. Like there's some like I know that Baby Doe is trying to do some some partnership stuff.
Speaker 3:I don't mind that, to be honest, I don't mind that. I feel like the whole thing with meme coin is just to try and capture as much attention as possible. So I think, after the expiry date of a particular meme, how do you kind of extend that lifecycle? So I think doing integrations, partnership, marketing, whatever I think kind of helps them to kind of stay 100.
Speaker 1:Did you see where for a 75750k to get on the last Vegas? That was insane. Yeah, I know, I don't know when it's going to happen, but I think that's good, I know it's great marketing within, inside of crypto.
Speaker 2:Like you know, cool, the dog with hat is on the bloody Sophia. But like does that really bring in the retailers?
Speaker 1:Maybe I remember like I was on a work trip to Dubai in, I think, late 2021, something like that, and Flokey was all over Dubai.
Speaker 2:It was in London it was all over it.
Speaker 1:I don't know, it was on the tube, wasn't it? Yeah, like marketing campaigns, like that, like kind of knew about that token anyway, just because it was all over social media. But that made me like look like okay, what the hell is this? What is going on? So, maybe, but also even those ads they were talking about, I think the asset itself, maybe, or at least the project, whereas I think the idea with the whiff the whiff on the last Vegas sphere is basically just put the meme up.
Speaker 1:So there's going to be like I would say like 90% of people that look at it are going to have absolutely no idea what it is and they're probably not even going to have a way to Google it Like it's. So I think you're right, it is inward facing for the crypto markets for the most part, but equally I don't know it's also pretty awesome. But I would say that, like so most meme coins, most of like the big meme coins where I'm talking, like the big ones on Ethereum, like shared Pepe or the rest of it, probably probably one like cock, like an upstart on like another L one they could easily raise 650k to do that and I don't get why they don't, or am I wrong? Do you reckon they couldn't raise 650k? Because I think, like I think they could raise that in a heartbeat. I mean whiffed at it very, very quickly, but with some momentum as well.
Speaker 3:I mean it's difficult to value attention. It's also very difficult to take a better attention. My play is again not financial advice Solana becoming the index player of all the memes going forward. So just buying Solana to kind of get the whole exposure of memes, because let's say, if it does really well, what are people gonna do? Sell all the profits from their meme coins and just put that in some other meme coin or some other stuff happening right. So that's how I'm playing it. I think with this meme coin it's all about tension. Where it cycles, where it recycles. It's kind of tough to take a bet, but I know some of the meme community I can't name them are raising in private market at exuberant valuation.
Speaker 1:Really.
Speaker 3:I'll tell you after the podcast.
Speaker 1:Yeah, there must be like a massive spread in terms of sophistication of meme coin teams. But in terms of so what you said many before, I think, unless I'm wrong is that you, what you're effect to be saying, is that Solana is only useful for meme coins.
Speaker 3:No, I love Solana, but he does gold statements.
Speaker 1:Yeah, that's gonna be an improvement.
Speaker 3:Yeah, so, yeah. So with Solana, I really like Solana and I think, with the whole meme coin boom, if you cannot take a bet on whichever meme coin you want, you can basically just buy Solana, because whatever profits these people make on these meme coins will just kind of recycle within Solana.
Speaker 1:So just kind of make sense.
Speaker 3:Yeah, so it kind of makes sense. But I think I've also heard Solana is kind of facing some degraded integration in terms of performance, because there has been just like so many meme coins and so much meme coin trading that even the most performant blockchain out there at the moment is still struggling. So just tells you how much appetite there is coming from retail People from outside crypto circle trying to enter into a market that blockchain still has a far bit to go in terms of scalability.
Speaker 1:But is Solana the most performant blockchain at the moment? Because I reckon there are some Ethmax use that would disagree with you without the rest of it 100% most performant.
Speaker 3:Three days ago was trying to mint the boxes from caravans. Minted like 15 NFTs, spent like half an hour minting it and spent $1,500 on minting NFTs worth $2,000. Just doesn't make sense. So Ethereum as a base layer just is not performing. Now you can argue the L2s are trying to be more performant, but even if you look at the performance, the best case study is BNB. That's literally Ethereum on steroids and even in that case, it's still not the most performant. Blockchain Can't do more than 30 transactions per second. So I don't think Ethereum right now, at its current phase, is that performing. Now you can argue that L2s might be a little bit more performant than, but then there are issues with liquidity fragmentation. It's not like one stop shop. I kind of feel like with Solana it's becoming like a one stop shop plus performance. So that's why I like Solana Again, not financial advice.
Speaker 3:My financial advisor will be like let's stop talking about meme coins, let's get into the business of deep end.
Speaker 1:Yeah, we did get a bit way late, so we probably should go to our actual topic for today, which is deep end decentralized physical infrastructure networks, probably before we dive into a couple of projects. We'd love to get both of your definitions as to what deep end actually is.
Speaker 3:Yeah, I'll start first. So I think in terms of the actual elaboration of deep end it stands for decentralized physical infrastructure. But in my book the definition is bit more elaborate than just physical infrastructure. For me it basically represents both digital and physical infrastructure. So when I say digital infrastructure, I mean things like storage, compute, bandwidth, all of these things. And when it comes to physical resources, anything that allows us to kind of bootstrap a network of physical things with permissionless access and tokens incentive. That basically comes into the realm of deep end. So things like decentralized Google Maps, decentralized Uber, decentralized Airbnb, anything to do with physical world, that's the physical side and anything to do with the digital things like storage, compute, bandwidth, content delivery, comes into under the umbrella of digital.
Speaker 1:But they both come under the deep end banner in your mind.
Speaker 3:Yeah, in my mind it comes under the banner of deep end, but some people make it over complicated and be like oh, there are two different segments, one is deep end, one is D-Ren. I think just from a narrative standpoint it's kind of exhausting. So I just put all of these things under one umbrella deep end. So even some of the AI play can come under deep end in my opinion. So if you take a bigger umbrella 10,000 fit overview deep end can kind of cover everything.
Speaker 1:So like why? Again, it might sound like a really, really dumb question, but it's a decentralized network that has. You know, I guess to some extent physical infrastructure is a key component. Why isn't Ethereum a deep end network? It's using physical infrastructure for storage. What makes it different from something like Ionet, like HNT?
Speaker 3:I think good question. I think the way to kind of frame it is Bitcoin is like decentralized store of value, ethereum is like decentralized store of trust, and now the component of trust is it can be decentralized finance, it can be decentralized infrastructure, it can be decentralized games, things like that. So I think one subcategory of that is deep end. So Ethereum has the storage component, but it's for purpose of fulfilling its own demand rather than a full-fledged storage, kind of looking outwards to kind of fulfill this. So I think we can break this down further, like why deep end network makes sense, why it doesn't all of those stuff going forward.
Speaker 1:Yeah, sorry, what's your definition? I think I echo what Mehdi said.
Speaker 2:I think the the main thing is, of course it's a physical infrastructure, which he mentioned, like you know, mapping, street, matching and mapping health, tracking, decentralized Wi-Fi. So, just echoing the same as Mehdi, and the difference, why it makes sense or what it means to me in crypto is just purely bringing that stuff on chain and an open ledger is one and then two, you're just incentivizing users, individual users, in a crypto with a crypto token, and that's just the way that it's done, that you're able to now incentivize people.
Speaker 1:So is that the biggest advantage to doing you know, let's call them pins decentralized, right, rather than centralized is that you can wrap an asset in and use in a sense.
Speaker 2:Yeah, I think that's one component, is it being you're able to incentivize them with these tokens, and that's the way to, like I get, I would say, reel them in, and I think the the the other thing, what makes it, you know, decentralized or want it to be, to come on chain is purely the efficiency, the resilience of it, because it reduces the like, the single point of failure.
Speaker 2:So, if we're talking about mapping, for instance, let's say Google Maps, if they were to, you know, let's say crash, or in other words, they wanted to put a cost on it. You know we are now in a centralized environment where they control, control it, where, if we bring this on chain which I think HiveMapper is doing with there, they actually built their own dash cams people to use and then incentivize the users that way. But you know, now that's with the people to actually bring that story, that mapping, together and everyone's working together to do that, and then they incentivize that way. So there's, you know, way more components other than just incentivizing them with tokens, but I think that's one of the biggest things and right general question but how much of its hype?
Speaker 1:I mean honestly, like we all watched we all watched Game Fire in 2021, like some really really cool stuff coming out you know from certain projects now but it was definitely overhyped, it was definitely overfunded. It was in like whatever stage one, stage zero of of a hype cycle. Is that the same for deep in? Is it same crypto AI or is it you know?
Speaker 2:my personal view is every narrative that comes up in crypto is is always overhyped and he's always overfunded. Right, and that's because one there's a lot of money in the ecosystem to there's, that being said, is a lot of money to be made, so a lot of your projects will come up and trying to solve a a problem and then you just have these bubbles right Like people fund it. The narrative comes the the biggest projects that succeed last and then the other ones just burst.
Speaker 1:So yeah, so I'm hearing now it deep in is a bubble. That's what you're saying here.
Speaker 2:Every narrative is a bubble. The D5 was a bubble, the game fire was a bubble, and if he was a bubble? But out of that bubble there's certain projects that actually last, right. So out of the, let's say, deep at the moment it's got 650 Tokens that alive at the moment or startups are alive. Out of that, maybe 10% stay around and the same you see with D5. Right, like they may have been Thousands, but only a certain percentage that stay and actually last through a bear market or that narrative.
Speaker 3:Yeah, I wouldn't say it's a bubble. I would say there's over excitement, hundred percent like. But I think the way investors kind of think about it like similar to Amazon web services, right, like few years ago, like in 2008 9 it Everybody thought it was, it was over expensive, nobody should touch this, and then it went on a massive Bull run, similar with Nivedia, right, like nobody was looking at it and then it did like I don't know, 200, 300x. So I think, even with deep, and I think what markets are realizing that this is a big, big opportunity, even though it's difficult to pick winners. So, because of that excitement, just valuation tends to go up. So you can say it's a bubble, you can say it's a hype, but I think big winners will come out of this and there are a few reasons why. I can I can elaborate on that, and I think some of the deep in networks have been there since 2017, like Filecoin in my book.
Speaker 3:Is is is one deep end project that has been around since 2017. 18 Started as a, as a file storage. Now you can do compute on it and you can do retrieval and it's 20 billion FDV. There's genuine use cases. Has the biggest decentralized file storage network. Gives you permission less excess if you are AI agent to kind of do interesting stuff.
Speaker 3:So I think their merits that there is a lot of excitement, both in private market. But then there is this element of winner take most or winner take all. Dynamic that kind of makes that formation of bubble. So even with, let's say, hive mapper or even with helium, this is like a three-sided marketplace, similar to Uber, eats or or similar to grab right. Once you are able to establish a moat with these three-sided marketplace, it's very difficult for entering to kind of breach your moat. So because of that reason, I think investor realized that this is going to be a big time, even though they don't know whether this, this is a project to back, but they are willing to kind of pay that premium. Both in private and public market. There is a big opportunity. Don't know whether we are betting on the correct horse or not, but, yeah, because of that there is a select. Too much excitement, like Simon, sometimes overruns the actual fundamental.
Speaker 1:But you're right, like with even if you look at web to three-sided marketplaces is, once you hit critical mass, once you establish that mode, then it's, you know, money machine on in a lot of instances right, or at least revenues up even if profitability isn't. But Establishing that mode and setting up like proper depth in a three-sided marketplace is fucking difficult. Yeah, and it's the same for web three, except the user base is smaller for web three right now, which makes me think, like from a cynical point of view, who's going to be kicking around at the end of it? And this is yeah.
Speaker 3:So this is where it gets really interesting. So when we kind of break deep into physical infra and digital infra, the three-sided marketplace I think more difficult to establish in in digital, in physical one, so things like high mapper, in helium, that's where the difficulty lies. I think with the digital one the marketplace is going to be much simpler. So it's not going to be winner-ticket most and I think we're already seeing that in GPU markets we have render Akash, io, dot, net, ether, like multiple players coming in. But I think well, let's say, things like high mapper helium, I think even the devs realize it's a difficult piece to crack. So you don't see that much competition but you don't see, yeah, you don't see many investors also taking a bet. So I think you're right.
Speaker 3:But I think if you kind of break the deep end into two parts one is more difficult and one is more easier the More difficult part will, I think, have when it take most dynamic. The easier part with the digital resources. I think it's going to be a competitive like, like similar to a dex. There's going to be multiple dexes and fragmentation and competitive landscape.
Speaker 1:Yeah, once you get like gravitational pull for liquidity or user depth or whatever it is, can what do you think?
Speaker 2:I just want to clarify what I'm saying about the bubble I think more about. I wanted to clarify this. I wasn't calling like you, just worried that all the portfolio project is sat there like what.
Speaker 1:Come explain what you meant by bubble, please?
Speaker 2:Like this. The hype now of the narrative is a bubble, like the narrative is just a bubble, but the actual deep in itself is here to stay. Like I think there's space for it and there's a need for it. What I'm saying, out of the 650 startups that we're seeing, plus maybe a lot more now, is that not everyone's gonna survive. So that bubble will burst. That's what I meant, not as in like it's you know. Yeah, yeah, hope that clarifies it.
Speaker 3:I think 90% I would say in deep end not even 90%, I think 95% will fail, especially on the physical side. So I Agree with you like not everybody's gonna survive.
Speaker 1:No, I was gonna say is that and many touched on this a little bit is that the way that I see it from, from maybe a new perspective? I'm sat here with two big boy investors, so correct me when I'm wrong. But you can kind of split the deep in industry into what you call like the OGs and the new entrance. So OGs, like you said, stuff like helium, render render has been a personal favorite, mine for a while Filecoin and then the new entrance like Ionet being, I think, probably the purest, most digestible example of that. Like, if you're if you're a retail investor sat at home, you don't necessarily have access to private stage deals. Should you be looking at the OGs that have survived cycles already and they're, like you know, have been quote-unquote innovating for years? Or do you take bets on on some of the newer entrance that are maybe doing stuff? It's a bit more up-to-date but maybe some more risk involved? They haven't reached, you know, whatever fdb, whatever market cap? You need to feel safe.
Speaker 3:Yeah, this is very good. This is a very good question. I Think in some cases I Feel like you have to just bet on the horse that's keep on winning. So I think, with like things like Filecoin, I would say they have established a mode, but I think in some of the cases there is still a little bit to go.
Speaker 3:So you mentioned render, my, my, my, my concern with render is this is it's very good for creative economy, like gig workers, but they are not utilizing Enterprise GPUs. So from that perspective, you have new entrants coming in right. So we have couple of entrants, one being ether that just focuses on enterprise, the other one being IO net that Focuses on both enterprise as well as consumer GPUs, and then on top of that, are applying software to kind of cluster different types of see, like GPU, compute power as well as geography. So I think from that perspective, you have elements where the private entrance are being really thoughtful and methodical in terms of how to kind of come in and and do something novel or capture a niche. But I think in some cases you have a public market which is kind of well set and they are kind of innovating. So Filecoin is also innovating. It was just storage. Now they have a FEM which allows retrieval and compute on top of Filecoin.
Speaker 3:So I think it's bit of both and in both the cases we are just seeing that, yeah, just valuation being steep, even in the public side, even in the private side. So as as as we were alluding to earlier, there is just a lot of excitement. So because of that, in both the cases the excited excitement is too much. But there are genuinely, especially on the AI side, they're definitely new, interesting Novel project that are coming up and I think you should still take a bet on them because they have not become a trend yet, while some of the projects like like your OGs, like helium and and render and High-remember, it's already become a trend. So I think, from a private market investor perspective, taking, taking bets where it's not a trend yet I think this is where AI comes in, I think becomes interesting my perspective would be for the public side and we're looking at, they say, a Filecoin.
Speaker 2:From an investments perspective Does it make you know they could have the best tech and be the leading in terms of users and and Big giants using them. But from investment perspective, does it make sense them sitting at such a high fdv, like people trying to invest and turn their money If 2x, 3x, 10x, 100x? I don't think it's viable in something like Filecoin, where it's already super high, whereas you look at these new plays that are up and coming and they're fresh but they've got a lot of hype. Just from an investment side, it would make more sense to, because it's more upside right, like investing them because it is way more upside, whereas I feel like on a, something that sits, you know, in their billions, like for the Filecoin, you just the risk reward is just it's just better what you're saying.
Speaker 2:Yeah, of course, but of course then there's there's a lot of, like you said, risk reward with that where I could file coin. Of course you're gonna see that they, these guys, are innovative and they're they're already established in the market, so you're safer on that bet. But yeah, so I would just say New, like maybe we're saying there's new narratives, new plays. From investment perspective, personally, I would just go and look at all the new stuff that's coming out, rather than something that is already really, really priced in.
Speaker 3:Yeah, but we have excess some of the retail. Yeah, I might not have excess. So I think from that perspective it just makes sense, right, just to take a bet on public pockets. I think another thing is when we talk about 2x, 5s, 10x, I think traditional market is not used to these types of returns. So what they are typically looking for is 5 to 10 percent. Kdot, 10 percent, they're happy, right? So my financial advisor will be like happy, just give me 5% and I'll leave you alone, right? So I think, from that perspective, and also from a perspective of excess, I mean, why not?
Speaker 1:I love that. Yeah, now there's not enough return there.
Speaker 2:I'm just sold on these 100x. What's the yield?
Speaker 3:Fair enough 10x, 5x, 100x. The market is killing each other just for like 5% return on animal basis.
Speaker 1:That's fair, but they also don't have all the meme coins and NFTs that we have as well. But maybe you make a really, really interesting point, which is actually that you know because you guys are big-boy investors and I'm basically just another retail investor is that you know, retail doesn't necessarily have access to all these deals. If I wanted to get exposed to Ironnet, I couldn't do that yet, aside from like following them around, engaging and hoping that I'll, you know, be able to get exposed, maybe not for free but, you know, in some way, by initiative or a campaign, like. The options are maybe limited at the moment, but I do think that's almost definitely going to change over the next sort of, you know, six to nine months for sure, but there's still two things on that right like to get access and even talk about upside.
Speaker 2:And one is you know the new narrative is point systems and airdrops. That's a huge thing and all the projects are doing that so retail can actually get involved for Zero money is one. And then two when it does, you know, list or launch, they can still get in there and then you know there's less risk as a Private investor. You have risk of them never going to launch because they just couldn't find product market fit or they just run out of money. All these different risks that you know play a part. So they just you know the. The retail side is, you know, now getting something that is more secure because they have been able to List, and there's still a lot of lot of upside if the you know the hype and the narratives there.
Speaker 3:Yeah, yeah, 100%. So, yeah, cam, just hit the point With the hammer there. So retail can participate in airdrops. The other thing retail can do apart from investing is you can accept about your own GPUs, right like you can contribute the GPU to your network or storage and and and and still Make money. And I think, with IOnet, that their incentivize Points is is running. So, since we are at the early stage of the network, you can still earn Relatively higher rewards just for providing that compute services. So, in effect, with the beauty of web 3 is it's actually democrat like it's very democratic in a way that let's say, okay, if you're not an investor, you can provide this resource, take participation in the network and become Equity owner of in this network. So, let's say, if you don't want to invest in public market, you can contribute your resources and on on rewards, similar to like a BTC miner right like you mine, you, you get BTC.
Speaker 1:It's a really fair point, like I literally just forgot the whole point. Yeah, I was like the only way to make money with deep and is is through gambling on it, obviously. Okay, right, here's a question what's gonna increase more, both in terms of percentage terms and real terms the market cap of deep in projects or the market cap of meme Coins next six?
Speaker 2:months meme coins are too strong man.
Speaker 1:Which I mean too strong already or too strong is in lights. It's up only.
Speaker 2:I think it's not so from now until the six months, I'm gonna bet on Meme coins. I just think there's so many of them. See, the landscape is huge. There's like we're talking now and probably 50 have just been launched as we're speaking and people are just there might be a meme coin called mixed race magic. No, I've got. No, no go, that's fine yeah my bet is meme coins.
Speaker 1:Yeah, actually, yeah, I'm Eddie. What's yours?
Speaker 3:I am there with Cam here. I think it's very difficult to kind of fun like value culture and meme coins are culture intention.
Speaker 3:Yeah so definitely, I think, far higher Market cap than then deep in network, at least in short, to medium run. So even if you look at US economy right, look at US economy Majority the US economy is intangible. So those intangible in a way is a meme right, so so those memes can be expressed and through me, me going in crypto. So from that perspective doesn't, yeah, it doesn't see why meme point wouldn't have a mark higher market cap then All of deep in AI stuff combined, because it's culture.
Speaker 1:Such an eloquent, smart. So why would you do that to me, man? I've seen no need to do that here, for sure, but I mean. So I've got like a lot of friends, a lot of friends, minor in traditional finance. They're working for investment banks, hedge funds, quantitative funds and all the rest of it, and a lot of them are sort of like last two or three months, obviously getting a little bit more turned on by by crypto, by blockchain, all the rest of it, and I'm explaining to them like how even you know how a deal to you works, or just just how how Bitcoin works, for instance. It's like a really simple proof of work stuff and it's going really well and you know they're taking it really seriously. I'm making the case for a store value and then they're like, yeah, but how big is Dogecoin? I'm like, oh yeah, it's like 24, 25 billion.
Speaker 3:I really quiet that store of culture that's store of culture.
Speaker 1:That's what I'm gonna say. Okay, okay, okay. Store culture, it is do, it is doge gonna get dethroned this cycle.
Speaker 2:No, it can't. Elon is just the biggest shiller, so no, he's he yeah, that's fair, that's fair.
Speaker 1:But what about one like shit?
Speaker 3:Oh, you don't think no, where's that?
Speaker 2:Inviction came, nine come out.
Speaker 3:Yeah, yeah, yeah yeah. They have she barium, they have a very this is what I meant about.
Speaker 1:Mean coin utility. That's what I meant. That was an example at the beginning. Yeah, yes, that makes sense.
Speaker 3:Yeah, I've also heard that they're doing interesting things on three sides. I can't disclose much. Yeah, so there's a lot of partnership that they're working towards getting that attention. And yeah, so they're going down the route of utility. They also have an NFT collection. They have their own L2, so they're definitely cooking in terms of expanding the attention everywhere.
Speaker 1:Yeah, you guys are too big as mean coin maxis in the entire space and you're both institutional investors. I love it, oh my goodness. So I think. Last question on deep end, if you think we've got time. So cam met a. You guys with mh ventures and animoka brands two of the most well-respected Investors in the space as an umbrella and you guys are really leading on those fronts. If you had to pick, let's say, let's say to to deep in related projects that you have an awful lot of conviction in For 2024, right, the real sort of projects to watch, quote-unquote what would they be?
Speaker 2:my first pick is gonna be I oh donnet, and I say that because We've spoken at one about deep in and we've Also touched a bit on AI, and I think that there's an overlap right with AI and and deep in. And what I own Donnet is actually achieving, or he's trying to achieve, is bringing all of the GPUs in a decentralized fashion where users, miners and other Places where they have big GPU storage to facilitate their GPUs on Ionet and then allow Big machine learning tech people to use their clusters. So they're not looking for individuals to play around in their services, they're actually looking for people that are. You know, they want 10,000 GPUs in a cluster in whatever region, and they can select a certain region and and then put them to use. And you know, with that narrative, I think I'm like super excited for one a, the AI section and then I own it actually Powering that, that, that sector. So I think that these guys are gonna they're already established before they've even launched their token, the products already being used and Now we're seeing huge Mining facilities actually putting up their GPUs onto I donnet. They're recently partnered up with render, as well as file coin, which we've touched on as well.
Speaker 2:Some of the you know, two biggest already established Deep-in products out there which you would. You know people would look at them and argue that they're two competitors, but actually not. They can they able to work together in in certain ways. So that's one and the second one I would say I am shilling my own bags as well. We're investing to Ionet and the second one is peak.
Speaker 2:Again, we're an investor and peak is an L1 but is actually structured on being a blockchain for deep-in, so people are able to build Different Infrastructures on on top of peak and that could be, you know, ride sharing or vehicle sharing, street mapping, it could be health tracking, green energy farming all these different things that we grow up. We don't know anything about green energy farming, but that's something that people can build on and it's gonna be huge right, and I think People can argue the fact that why does deep in even need to be on chain? But I think it solves so much and I think we have to think about the bigger picture of, you know, our everyday life and what we do and the data that we give away and where we're just when do we're in prison to these big, big Companies, and I think this is setting us free and I think that's like the biggest takeaway. It's a bubble, yes, yeah.
Speaker 3:Cam is also shilling any mocker's bag. We're investors in both I, your net as well as peak network. Very, very well, well said, cam. I would just add, like to our previous point, right, it's very difficult to sometimes Pick out winners which which are in the deep end sector because of the three side of marketplace, right, like it's of the physical infrastructure. So a lazy man's approach would be try to pick L1, like similar to the index play of Memes is Solana, so index play of all the deep end project building on top, not picking a winner.
Speaker 3:I think peak network fits here really well and my another thesis is, since it will have an ecosystem, they'll do a airdrop so they'll actually facilitate the, the projects building on top to kind of bootstrap that flywheel of setting up and bootstrapping a network. So imagine you are a ride-sharing company, you get incentives to just do what you're doing as as a user. On top of that, whilst they're using that DAB, you get the peak token. So you're getting attacked by two like from both sides in terms of token rewards and that just allows you to just Join the network faster and just literally use the service. So I think for that reason I'm particularly Polish. On on on peak. Just just to add, and I your net, yeah, I mean the cloud service is. It's a monopoly right Like, and we have so much spare capacity and so much demand out there, it just makes sense to kind of leverage people like us who have excess capacity in our compute, to kind of provide that.
Speaker 1:I mean, I'm the only one of the three of us that isn't involved In iron it, but we met the team in Denver and they're they're like, they know what they're doing, like, so it's a really, really serious extent. But just that, boys, that was awesome.
Speaker 3:So I think we're happy to call it there I. Haven't shared mine.
Speaker 1:Yeah, I thought you had just said you guys could share.
Speaker 3:Yeah, I think we are both investors in this, so we we can Shill our backs together like tag team a little bit of tag. Another one I'm particularly excited about is humanity protocol. So with humanity it's trying to Be a competitor to world coin and this is a big, big damn out there. I just think about from a crypto native standpoint. There's so many agents, there will be so many agents. There's so many bots already in in in in web three chains, but it comes to air drop farming, dow working and things like that. So one element that will become really important is that you can prove that you're human and you're unique. So, based on that, you can get air drops, you can get like universal basic equity and you can also enjoy application that are just meant for actual human consumption and entertainment. So this, I think, can prove to be a huge catalyst for on-chain gaming, can be a huge catalyst for RWA enterprise DeFi, where you have to prove you have to do KYC. It can be a be interesting play for network state, where you have to again prove that you're human you're not just being a citizen or trying to hack your way in and also human centric deep in. Imagine a network where you can get Extra rewards just because you're human. It's kind of like a subsidy that government gives right. So I think from that perspective, humanity protocol is interesting. Also, look at world coin it's 110 billion With with Sam or just giving its face and not working. So I think from that perspective, also Interesting play.
Speaker 3:I also like ritual. I'm not gonna yeah, we're not investing in ritual yet but I also like ritual. I think it's an interesting open source AI network play which kind of connects both the AI model side and also the GPU network by allowing the inference to be done in an open source way. So I think we'll see a lot of projects integrating that from a model training perspective, model creation perspective, as well as inference perspective, where these GPU networks are providing compute for this inference and all the blockchains Out there connecting. So I think in private market those are like few names I would say I'm actually excited about. Keep an eye on for sure.
Speaker 1:So we saw with with, I don't know, game files, a very obvious one. Some would say that we're seeing similar stuff with AI, but we talked about hype cycles, right, so 2021 actually infinity triggered it very much a hype cycle for game five, blockchain, gaming, all the rest of it. Is that what we're seeing. With deep end. Is it something slightly different? Are we in that initial phase? Are we due, you know, a reduction in valuations at some point in the midterm, or is it up only for deep end?
Speaker 3:I'll have a first crack at this.
Speaker 3:I I think what I'll say is I feel like there are a few projects that will survive beyond the hype and we have already seen some signs of it, like first one being file coin has been there since 2017, has interesting storage, retrieval and compute play there, has their own Virtual machine, so I think that that's project is public, keeps on getting market share, so I think that will survive.
Speaker 3:I also feel there are other interesting plays like bit tensor that have kind of Use polka dot Subnet system and it's Software kid to kind of like spun up this whole AI and crypto team where other projects, rather than launching their own chain, will launch a subnet on on bit tensor. So I think these are the two projects even beyond hype. I'm excited about that thing. Will will keep on compounding, at least For for near term, even though valuation might be on the high side again, not financial advice. I feel like the way they have kind of structured themselves and the way the incentives and and the architecture of the, I think there's a definite product market fit and some compounding element there.
Speaker 1:That makes no sense, I think. Yeah, those are two very, very interesting projects which, even though you know bit tensor, maybe a little bit on the newer side, is A lot of people you'd say it's reached a critical mass now where to some extent it's probably de-risked right again. Not financial advice, can? What about you? What do you think about the public market deep end? We talk a lot about private.
Speaker 2:So maybe I can just share, like the negative side. So with game, if I, what we saw was, you know, games propping up the token on model was the issue right.
Speaker 1:I love how you say game fire, by the way, gives me little flutters. You see, game, I love that. I just a game fire. Yeah, game of fire prefer it. Sorry, carry on man, that's so rude.
Speaker 2:So I just so, yeah, go to get a game if I game fire. The two token model was an issue right, which we saw, and in the last bubble, which just every game died because of it. Incentives run out, so there's no point in these people playing. So now we move over to deep in and what incentivizing users that are providing infrastructure, whatever it may be with tokens, if the token models are not done right, or what happens during a bear market and when these tokens do go down, do we come to an issue where people are like, oh, there's no point in me sharing my infrastructure or there's no point in me having this dashcam on my car, like HiveMap is doing, because I'm just not making as much money as I used to. So that's where I see a flaw and I think we're during this cycle we'll find out if there's any if and how we solve that. We are relying on individual users to provide this infrastructure so that we can actually become in a decentralized way. That's the approach that we want.
Speaker 2:So I think and that's like the biggest issue right, like because we're in a financial transaction, everything that we're doing, crypto everyone's just expects these certain returns which we spoke about earlier. Like my mind frame was I need a 10X, I need a 100X. So I think that's like the flaw, that we'll see and we'll just. The saying goes, if we fuck around and we'll find out. And even to now, maybe we'll know more on this. But in the gaming side, have we solved the two token model? I don't think we have, but I think everyone's just gone back down to just one token.
Speaker 3:Yeah, one token model, one token model and one soft currency. Inside the game that's more of a utility hyperinflationary. But that two token model was eye opener ride. So there were a lot of lessons learned and then now we're seeing huge projects emerging like Pixels and Maverick that kind of learn from those lessons and trying to innovate. What's interesting is even the two project I mentioned, they were not actually physical infrastructure ones, they were digital resource ones. Right, bittensor is AI and crypto Filecoin is storage. So I think that goes back to Cam's point.
Speaker 3:With decentralized physical infrastructure, you have a three-sided marketplace. The economics is very difficult to figure out. That's what happens with helium, and HiveMapper is trying to innovate from some of the lessons learned and we are yet to figure out whether physical infrastructure could kind of bootstrap it, because there's a chicken and egg problem. Right, in order to bootstrap, you need a token. Token needs to do well in order for people to have incentive. But for whatever reason, the token doesn't do well. Or let's say, you give out too many tokens initially and then at the later stage, the newer people coming in, they don't have that much tokens, like similar to what happened with helium. Then you have issues. So I think tokenomics is something that I'm actually looking out for. In terms of the physical infrastructure plays, as Cam mentioned, that needs to be sorted. I think the digital side will be much easier, but the physical one, because of the three-sided marketplace, nature will be difficult.
Speaker 1:It does sound like you're much more bullish on the digital infrastructure side.
Speaker 3:Not, really, not really Not really.
Speaker 3:Physical infrastructure more bullish Because of the three-sided marketplace you can have like far like more compounding, but difficult to know which one will be the winner. The digital resource side only bullish on those names that have kind of established mode. So with Filecoin and BitTensor I feel like they have some sort of a product market fit. But the newer ones I think the competitive landscape is it's a bit like a dex right, like there's too much competition there. Yeah, if they were, if they're able to figure out the tokenomics on the physical infrastructure side, more bullish on those projects. So going back to Cam's thesis on peak network, I kind of share the same Like difficult to take a bet on the physical infrastructure.
Speaker 1:You basically take a bet on the L1 that gives you the One of the many ways that deepen projects are like the physical on top.
Speaker 3:So things like peak network.
Speaker 1:Cam, did you want to add anything there?
Speaker 2:Again, I saw my bags on BitTensor, just to let you know.
Speaker 2:But on that right now it's super expensive to hit up a subnet, right Like I think it's somewhere between two mil or plus just to have a subnet and then for people to create any sort of machine learning on there, they'll need to use GPUs right Again maybe you can correct me if I'm wrong here which, again, is expensive.
Speaker 2:So if you look at like OpenAI and I know this is like on a different scale, but OpenAI they had like 300,000 CPUs and 20,000 GPUs just to train GPT-3. And right now for people to run that model and build stuff on top, I just use it in general. So people just to use OpenAI or chat GPT to just ask a question and it should return something. They're spending like $700,000 per day, right. So now we look at BitTensor and people building subnets and then they want people to use their infrastructure at the end of it and they're gonna have to have all this compute power, your GPU, cpus or whatever. That's costing them money. What, like my whole thing, is what happens when a bear market comes and how do these guys survive paying all this? Because people still wanna use their stuff.
Speaker 1:Cynical view but it's probably fair to be fair, like when the setup costs are that high. It's just that's like your first barrier to entry before you get to anything else, before you get to like nailing, tokenomics or providing like a decent product or anything like that. That's kind of hurdle one. So if you're gonna trip up there, then potentially some difficulties for sure. Was there anything else that we? Oh yeah, but I'm gonna be more bullish. I was gonna say we gotta change your nickname to bubble man and I'm gonna say what like?
Speaker 2:let's like, let. I actually did a podcast or like a Twitter space is not long ago and I did it with Linera and I swear I came away from that and I was like, wow, I'm like the most bearish personaries. But I'm actually not like I'm bullish. I just look at things on both sides of the coin right Like the bull narrative and then also the bear narrative. Anyway, what like? Maybe we could just like now, maybe bearish, but talk about things that we think are gonna survive and yeah, I think being BitTensile will definitely survive. Super bullish on it.
Speaker 2:I think the tokenomics model that I did, you know it just mirrors Bitcoin and I love that and I think the whole thing, for that is amazing. Morpheus again didn't raise a penny and they're building out all their AI stuff on there. So, people, I think in the first 24 hours they put was it 40 million? Might be wrong, maybe more than that. Yeah, I think bullish on that, like actually being trying to go decentralized and then you know, she'll in my own bags, peak, and I own it and my picks.
Speaker 1:I think will survive. Very wise. What was your? I don't want to say worse, but I want to say, if you could go back in time and not make the investment, that's exactly what you would do. Worst investment of 2024, 2023, rather.
Speaker 3:Your mind was just buying a studio in Dubai to only. I should have rather put that money in Solana.
Speaker 1:Why? Just because of valuations, or because you don't like it?
Speaker 3:Bro Solana did 20X from 2023.
Speaker 1:At 20, 20x I had I made a lot of money on Solana but my regret is easier to do in hindsight is I didn't buy aggressive enough Because I should have put it in Solana or Coquino or something like that. I feel like that's a difficult one. He brought a studio in Dubai with extra cash Not coming out of my food budget, mate.
Speaker 3:It was extra cash. I was like yeah, and that's what it is Not giving that much returns.
Speaker 1:OK, that's a good answer.
Speaker 3:Yeah in hindsight, and don't even get me started on some of the investment in 2021, 2022, like some of the game fire and NFT stuff.
Speaker 1:But it is what it is and it's going to get exposed in the NFT and game fire sector in certain places for sure. Cam, what about you?
Speaker 2:So, going back to, let's say, the last bull cycle, with the game fire coming up to its peak, and then we had the NFT renting right Are you talking about guilds, just really quickly.
Speaker 2:I was super, yeah. So I was like, of course, balls to the walls of building our own companies, but the part of me was also missing the fact of investing. I wasn't able to really degen or do shit trading or whatever you want to call it Shitcoin trading. So I was like fuck it, I want to do something fun and gamey fighter me was like cool. I was like, oh my god, I can buy these NFTs and rent them out and people can work for me, have fun and make some money on top. I literally am bought. I'm not going to name the project because the guy is actually a cool friend and so I went and bought.
Speaker 2:I actually do this in many projects. I went and bought some balls to the NFTs, rented them out and just didn't know the bubble that was going to happen. And I swear to you one of these projects that was there was a horse project In Zedrun. I don't know if it was in Cornhorses or whatever had over no, no, it wasn't. Zedrun had over maybe 300 horses that at one point were worth nearly a million.
Speaker 2:And I was like and I was actually doing this with my brother, you know, my brother was doing it just for fun and I was like, look, we just need to get out, let's just get out. This is a good time. We've made good money. Nah, we'll make so much money with the coin that we're gaining. Let's just keep going, keep going. We want to be the biggest guild for the name. And I was like I don't really care about that, this is personal. Just do it for fun, make some money. Anyway, I think within two weeks the bubble burst and I think they're worth the zero now somewhere in my wallet. Yeah, that was my yeah, that's true.
Speaker 3:Should have bought the real horses.
Speaker 1:I mean talk about not seeing the bubble about to pop on. I think a lot of it was triggered by certain external events, right, terra Lunar and FTX being the obvious ones, but probably a few more beyond that but nobody saw it coming, or at least I think that nobody saw it coming in the way that it did eventually happen. But, medli, did you, because you were such an expert on game five tokenomics you did.
Speaker 3:Yeah, I did. I wouldn't say I saw the catalyst. I didn't see the FTX. But with Terra Lunar, when the deepX started happening, I was with token metrics venture. I saw it coming. I kind of saved the fund like a lot of money as well, because when the deepX happened I told them like let's just get all the exposure we had with Terra even though we are losing a couple of percentages, like take it off the books. So the reflexivity involved with Terra Lunar I saw that happening.
Speaker 3:But both the Terra and the Lunar market can combine meant contingent on a lot of different hedge funds. I think this is where 3AC, this is where FTX, all of that they were involved in and that kind of came to debunk them. So combined market cap of both the stable and Lunar was $140 billion, $130 billion. It got wiped in a matter of days. You can't even restructure it because everything was in smart contracts and they had the treasury of Bitcoin and some of the other tokens which they were also selling in the market. So everything that happened after that I think the catalyst was the Terra Lunar. So I kind of saw that happen. But I didn't imagine the impact would last for about two years. And I wish now, I wish in hindsight.
Speaker 3:I wish some element of the bear market were back so we could study. And yeah, that makes no sense.
Speaker 1:So do we think the WITS spot another coming, exclude Black's one event or the rest of it? Do you guys think you'd be able to extrapolate when things are about to go really south, really quickly and in line with that really?
Speaker 3:I was in not for macro standpoint. I think with the macro standpoint nobody can. If he can, I wouldn't be having a podcast. I would be chilling in some sort of a yacht, yeah. So I can't be. I don't see. But I think one of the biggest innovation to come out of crypto at the moment is EigenLehr, but it also involves a lot of leverage in the system. So I'm keeping an eye on that. Let's see how that evolves. If there was a big, big grace on a bend, I think could come from EigenLehr. Or potentially EigenLehr doesn't have that and just takes the crypto market to like 3x from here. So yeah, just let's see. Let's wait and watch, see what comes out of that. But I think that is one thing to kind of keep in close eye on. It could go either way.
Speaker 1:I guess it's anywhere you've got really concentrated Capital which is like a centralized exchange, a decentralized stablecoin ecosystem. It's just really, really concentrated pools of capital. And my understanding was that part of the reason that bridge has always got attacked is just because you have a very, very obvious concentration of capital, like just somewhere to nicked, somewhere to get damaged. All the rest of it Cam. What about you? Could you see it coming this time?
Speaker 2:I lich, but one thing I do, one thing I 100% do, just because I think it's literally impossible to know. I just keep deleveraging as market goes up, I just deleverage and it's something that we do at the fund as well Like, as market keeps going up, ftvs keep going higher. We just deleverage on investments, meaning as in we slow down investing Just because some of the FTVs are just getting ridiculous. Even now we're seeing FTVs getting ridiculous and there's talks of us thinking do we start to slow down?
Speaker 1:Well, that was one of my next questions. Are you guys still full swarming ahead at the moment? Because I know that Bloomberg pointed out that you were a top five most active investor for the last quarter, the last half, so we know that. Have you guys slowed down yet? Or do you think we're still so early on in a cycle that things are still pretty active from your side? Because I'm guessing there's going to come a point where you switch from really looking at deployment to really just helping out the port codes that you deployed into.
Speaker 2:Yeah, exactly, and that Bloomberg was, I think, from last year I think it was.
Speaker 2:So that was like our bear market investments and it was so much easier to analyze actually get really good gem because FTVs were great, people were actually building real stuff and they wanted to build. They weren't just doing it because of the narrative. So great investments out of that Coming into the bull market. How we slowed down. I wouldn't say we've slowed down. I think we've done a lot of investments recently but it's just sifting through all of the crap, right, because there's so much deal flow that's comes through and I think that's what slows it down.
Speaker 2:And the thing is wearing such an environment that people just want to, like I was saying in the beginning, people just want to throw money, people just follow on because of other backers and that's something like we have to take a bit of time because we actually want to know that the founders are good, the products go, they can build what they want to build. It's not just purely a white paper that never comes through to you. So it's a little bit slow on that side and it's like we become a little. I would say we become a look slower in a bull market just because everyone else is trying to move 10x faster because they don't care about doing the DD, because they just follow one from other VCs. So have we slowed down? Looking back at the bear market, no, but it looks like we've slowed down just because of people trying to push. That makes a little sense.
Speaker 1:Makes a little sense, yep. So before we call it quits there, guys, just another reminder that nothing in this podcast episode is in any way intended to constitute financial or legal advice, anything like that at all. Again, three guys sitting down talking about an industry that we're all really, really passionate about, and in no way do we represent our respective organizations in this particular context. We're just three guys having fun and chatting.