At 10B, punks brand would be worth about the same as Starbucks. At 5B, just shy of Ferrari. Again, this is just one subjective valuation by Interbrand.
But my thesis is that some NFTs will capture & accrue a lot of value as they become essential parts of our digital identity
The nuance here is IP. Larva Labs own IP but still you own the NFT. I’m assuming the value of the CryptoPunks brand is a collection of all punk NFTs. Discount May likely warranted due to lack of IP rights as a punk owner.
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1/ We need to design better token mechanics of DeFi protocols. Specifically, tokens used for insurance/managing protocol risk (AAVE, PERP etc). Problem w/ current designs is correlation. If protocol insolvency, value of collateral token drops wiping out insurance fund. Solution?
2/ DeFi insurance solutions suffer from correlation risk. Risk increases as DeFi is tightly integrated and composable (you’re only as strong as your weakest link).
Current solutions try to contain risk by isolating it thru silos (Kashi) or capping aggregate exposure (Nexus)
3/ One idea to improve the security module of @AaveAave is to diversify the insurance pool. But how do you do this gracefully without dumping Aave for a basket of uncorrelated tokens?
One way is thru options. Strat could be: sell calls, collect premium, build stables reserves
1/ Some thoughts on portfolio construction (each section expanded below):
> think in probabilities
> think in risk units
> don't forget about duration
> don't fall in love with positions
> have entry/exit strategy
> don't try to be a hero
2/ Think in probabilities:
Position sizing should be based on probability relative to another asset/theme.
Example: What is the probability Solana surpases Ethereum? Likely not zero or 100%. If probability is x%, then size SOL relative to ETH according to x
3/ Think in risk units:
How many incremental risk units are you taking by investing in x vs. y, where y is inherently lower risk or beta.
Example: investing at the dApp layer is a levered bet on a base protocol. Factor in illiquidity, execution and technical/dependency risk
1/ Crypto teaches your lessons quickly. I've you've been around for a few years, you've seen compressed - but no less severe - market cycles in a span of months/years that most traditional investors only see once or twice in their careers. A 🧵on some of my crypto lessons 👇
2/ Cutting winners too early & rotating to laggards expecting them to catch up.
This catch up trade typically underperforms. I've made this mistake when my thesis is not sound and/or I don't follow the project as closely. Expect things to move non-linearly and update your model
3/ Example: your bull case has [DeFi protocol] reaching [x TVL] [y volume]. Important to keep tabs of your "exit scenario" but also key to adjust your model if things are working. Admittedly, I wasn't expecting DeFi TVL to grow from <$1 to $80B in 1 year. Lean in & understand why
Investing in crypto for me is the ability to connect w/ founders & a passionate, global community. It requires engagement & collaboration. It can be an intellectually enriching experience and/or a very humbling one. Over the years I’ve questioned why I’m here…
The “why” can be lost in the midst of bull market noise. Bear markets weed out tourists, the wheat from the chaff. But then I realize I wouldn’t want to be doing anything other than crypto. Crypto is not perfect but I believe it’s the most fascinating & important socioeconomic…
Transformation since the Industrial Revolution. It’s changing our relationship w/ money and, moreover, how we coordinate as species. It’s transcending artificial, man-made boundaries & connecting us leveraging the distribution of the Internet & power of open source networks…
Last year was a trial run for DeFi as core money legos were put in place. In spite of the suboptimal user experience (UI/UX, gas fees), DeFi saw a marked YoY increase in adoption & usage across the board (see👇).
L2s come at the right time to support more users & use cases 🧵1/6
Total Value Locked (TVL):
- 75x growth in TVL from $580M to $43.5B
- 4x growth in ETH TVL from 2.5M to 9.8M
Note: 75x growth in TVL is USD denominated so factors underlying asset price appreciation. Therefore, the figure is overstated. Likely closer to ~10-20x in underlying
Active Users:
DEXs are among the most popular DeFi protocols & saw a ~20x growth in 24H active users from ~3k to ~67k
1/ A few thoughts on algo stablecoins. Touching on DSD, ESD, Frax, BAC & Fei.
These systems rely heavily on game theory. The most important thing to monitor is sentiment
Seeing these algos in the wild leads me to believe some game theory is good. Only game theory is not enough
2/ On coupons:
Been running thru various scenarios and second-order effects of coupons expiring OTM. Judging by secondary market prices of DSD coupons, it seems that probability has been growing. Next 10 days will be key
We have yet to see what happens if coupons expire OTM...
3/ Point of no return:
If coupons expire OTM, then I think it will be a blow of confidence too big to recover from. Theoretically, it benefits non-coupon holders and clearing that debt helps restore the peg. But just evaluating on that basis misses the point...