A THREAD on insightful thoughts on crypto by @santiagoroel:
1/
I don’t think the world has realized the power of capital moving at the speed of information. #DeFi
1/
I don’t think the world has realized the power of capital moving at the speed of information. #DeFi
2/
DeFi is democratizing finance.
DeFi is the global payment & financial rails of the future.
Most don’t know it yet.
DeFi is democratizing finance.
DeFi is the global payment & financial rails of the future.
Most don’t know it yet.
3/
Crypto is still not obvious to most. Neither was the Internet as late as 2001. Yet here we are - most can’t live without the Internet.
Make no mistake, crypto will be as transformational. We’re headed to a world where you’re in control of your capital, data & digital assets.
Crypto is still not obvious to most. Neither was the Internet as late as 2001. Yet here we are - most can’t live without the Internet.
Make no mistake, crypto will be as transformational. We’re headed to a world where you’re in control of your capital, data & digital assets.
4/
Buffett calling crypto “rat poison” makes me incredibly bullish. He missed the Internet big time & is missing crypto.
I appreciate investing in things you understand but dismissing a new field without learning about it betrays the #1 rule in investing: always be learning.
Buffett calling crypto “rat poison” makes me incredibly bullish. He missed the Internet big time & is missing crypto.
I appreciate investing in things you understand but dismissing a new field without learning about it betrays the #1 rule in investing: always be learning.
5/
What did you think would happen when anyone in the world now has the ability to own, transfer & invest capital the same way they send an email?
Yeah, it unleashes nonlinear consumer behavior. The Internet never solved this problem.
Crypto is the money layer of the Internet.
What did you think would happen when anyone in the world now has the ability to own, transfer & invest capital the same way they send an email?
Yeah, it unleashes nonlinear consumer behavior. The Internet never solved this problem.
Crypto is the money layer of the Internet.
6/
Math regulates crypto.
It’s immutable, predictable, transparent and auditable.
Traditional finance need to be regulated differently because it’s not transparent and so it requires a whole set of oversight which is not necessary in crypto.
Math regulates crypto.
It’s immutable, predictable, transparent and auditable.
Traditional finance need to be regulated differently because it’s not transparent and so it requires a whole set of oversight which is not necessary in crypto.
7/
The median age of public financial infrastructure providers is 53.5 years which means most were created before the Internet happened.
Traditional fintech startups try to patch together fragmented and antiquated systems, whereas DeFi protocol reimagine finance.
The median age of public financial infrastructure providers is 53.5 years which means most were created before the Internet happened.
Traditional fintech startups try to patch together fragmented and antiquated systems, whereas DeFi protocol reimagine finance.
8/
Smart contracts beat bankers and loan officers.
Programmed money thru deterministic smart contract logic renders many functions of banks obsolete.
Smart contracts beat bankers and loan officers.
Programmed money thru deterministic smart contract logic renders many functions of banks obsolete.
9/
DeFi is not a marginal improvement.
It’s a step function improvement - a new operating standard for financial functions where counter party risk is minimized via smart contracts.
That alone is radical and unlocks so much friction in the traditional financial system.
DeFi is not a marginal improvement.
It’s a step function improvement - a new operating standard for financial functions where counter party risk is minimized via smart contracts.
That alone is radical and unlocks so much friction in the traditional financial system.
10/
The rails of the modern financial system are being built by DeFi.
This movement is similar to the railroad boom in the 1800s which connected cities/regions creating a wave of economic activity.
DeFi will do the same but on a global scale.
The rails of the modern financial system are being built by DeFi.
This movement is similar to the railroad boom in the 1800s which connected cities/regions creating a wave of economic activity.
DeFi will do the same but on a global scale.
11/
The key innovation of DeFi is the programmability of money.
Smart contracts execute if/then logic in a very predictable and unambiguous way.
Combine that with transparent and auditable collateral 24/7/365 and you start doing financial functions faster, better, cheaper.
The key innovation of DeFi is the programmability of money.
Smart contracts execute if/then logic in a very predictable and unambiguous way.
Combine that with transparent and auditable collateral 24/7/365 and you start doing financial functions faster, better, cheaper.
12/
DeFi is removing a lot of friction in finance processes & opening new markets/use cases.
This creates consumer surplus, drives non-linear consumer behavior & allows for more competitive rates vs tradFi.
I've yet to meet someone that discovers DeFi and goes back to tradFi.
DeFi is removing a lot of friction in finance processes & opening new markets/use cases.
This creates consumer surplus, drives non-linear consumer behavior & allows for more competitive rates vs tradFi.
I've yet to meet someone that discovers DeFi and goes back to tradFi.
13/
It’s hard for traditional investors to wrap their heads around DeFi because they’ve never seen an asset class be both venture and fixed income wrapped in one.
It won’t be long before staking and LP yields of ETH and DeFi protocols capture the attention...
It’s hard for traditional investors to wrap their heads around DeFi because they’ve never seen an asset class be both venture and fixed income wrapped in one.
It won’t be long before staking and LP yields of ETH and DeFi protocols capture the attention...
...of traditional investors that love stocks with high dividend yields.
14/
Why DeFi?
1.Developers: prefer building on open-source crypto networks bc of trust & security guarantees + value capture
2.Consumers: benefit from + access to products like credit (faster, better, cheaper)
3.Regulators: *will* value an open & transparent financial system
Why DeFi?
1.Developers: prefer building on open-source crypto networks bc of trust & security guarantees + value capture
2.Consumers: benefit from + access to products like credit (faster, better, cheaper)
3.Regulators: *will* value an open & transparent financial system
15/
You never truly understand crypto until you use it.
Until you use ETH to pay for gas, stake and earn.
Use ETH for DeFi protocols.
Use crypto.
Then talk.
You never truly understand crypto until you use it.
Until you use ETH to pay for gas, stake and earn.
Use ETH for DeFi protocols.
Use crypto.
Then talk.
16/
Crypto offers a crash course in finance, economics, psychology, game theory, political science and a few other disciplines in a few weeks.
Crypto offers a crash course in finance, economics, psychology, game theory, political science and a few other disciplines in a few weeks.
17/
We’re lucky for living in what will go down in history as Crypto Revolution - the most important socioeconomic transformation since Industrial Revolution radically changing how we organize & relate w others & capital.
It’s hard not to be in crypto when you see it this way.
We’re lucky for living in what will go down in history as Crypto Revolution - the most important socioeconomic transformation since Industrial Revolution radically changing how we organize & relate w others & capital.
It’s hard not to be in crypto when you see it this way.
18/
You simply cannot beat the level of utility & access DeFi protocols provide over traditional fin institutions.
It's only after you deposit/borrow in Aave/Maker/Compound or provide liquidity in an AMM that you understand the power of programmable money & being your own bank.
You simply cannot beat the level of utility & access DeFi protocols provide over traditional fin institutions.
It's only after you deposit/borrow in Aave/Maker/Compound or provide liquidity in an AMM that you understand the power of programmable money & being your own bank.
19/
Takes less time for me to take out a loan on @AaveAave than for me to write out his tweet.
Can't say the same for my local bank.
Takes less time for me to take out a loan on @AaveAave than for me to write out his tweet.
Can't say the same for my local bank.
20/
When you think it's too late, it's not. This is esp true in crypto.
We're all early adopters - some more than others.
But, at this point, everyone is a beta tester for what will become most transformational revolution - social, economic & likely technological, of our time.
When you think it's too late, it's not. This is esp true in crypto.
We're all early adopters - some more than others.
But, at this point, everyone is a beta tester for what will become most transformational revolution - social, economic & likely technological, of our time.
21/
NFT art is paving the way for a much larger movement of tokenizing illiquid/intangible assets with provable ownership, provenance and metadata to create better better price discovery and more liquid markets.
This will unlock massive friction in markets like real estate.
NFT art is paving the way for a much larger movement of tokenizing illiquid/intangible assets with provable ownership, provenance and metadata to create better better price discovery and more liquid markets.
This will unlock massive friction in markets like real estate.
22/
NFTs are better versions of Web2 cookies considering blockchains are data rich and show the entire activity and purchasing history of a user.
You can’t clear the cache.
Marketing “gurus” will soon realize this and it will be explosive.
NFTs are better versions of Web2 cookies considering blockchains are data rich and show the entire activity and purchasing history of a user.
You can’t clear the cache.
Marketing “gurus” will soon realize this and it will be explosive.
23/
Most people don’t appreciate how valuable the underlying metadata of NFTs is.
Imagine being able to see how Mona Lisa traded hands over centuries. It adds a whole new dimension of value to digital art that is hard to find in antiques. Quite excited to see punks in 50 years.
Most people don’t appreciate how valuable the underlying metadata of NFTs is.
Imagine being able to see how Mona Lisa traded hands over centuries. It adds a whole new dimension of value to digital art that is hard to find in antiques. Quite excited to see punks in 50 years.
24/
What the future holds:
> open source crypto networks become largest employers
> DAOs surpass S&P500 co’s
> money takes on new forms w/ digital scarcity & utility
> on-chain activity becomes your credit score & social rep
> NFTs become digital wardrobe & core to identity
What the future holds:
> open source crypto networks become largest employers
> DAOs surpass S&P500 co’s
> money takes on new forms w/ digital scarcity & utility
> on-chain activity becomes your credit score & social rep
> NFTs become digital wardrobe & core to identity
25/
The most profound innovation of crypto is giving creators/contributors the ability to capture value for their contributions via token structures.
Internet pre-crypto never allowed you to do this & value concentrated among few.
The most profound innovation of crypto is giving creators/contributors the ability to capture value for their contributions via token structures.
Internet pre-crypto never allowed you to do this & value concentrated among few.
26/
Crypto is capturing the imagination of younger generations who are digitally native and more willing to question the status quo.
The future is decentralized.
Crypto is capturing the imagination of younger generations who are digitally native and more willing to question the status quo.
The future is decentralized.
27/
Every technological paradigm shift has been faced with opposition (steam engine, Internet, ride sharing, crypto).
Changing the status quo is not easy or welcome by some (see Luddites) but it’s an inevitable and unstoppable force because innovation improves human condition.
Every technological paradigm shift has been faced with opposition (steam engine, Internet, ride sharing, crypto).
Changing the status quo is not easy or welcome by some (see Luddites) but it’s an inevitable and unstoppable force because innovation improves human condition.
28/
At its core, crypto is a global community/network where anyone, anywhere can be discovered for none other than quality of their ideas & execution.
It’s perhaps the best manifestation of the American Dream, which has been fading. Crypto brings us closer to that promise land.
At its core, crypto is a global community/network where anyone, anywhere can be discovered for none other than quality of their ideas & execution.
It’s perhaps the best manifestation of the American Dream, which has been fading. Crypto brings us closer to that promise land.
29/
19th century marked the separation of church and state. The 21st century will be defined by the separation of money and state.
It may be a rocky transition but ultimately states will become corporations competing for talent. Security will be privatized and DAOs will thrive.
19th century marked the separation of church and state. The 21st century will be defined by the separation of money and state.
It may be a rocky transition but ultimately states will become corporations competing for talent. Security will be privatized and DAOs will thrive.
30/
A user anywhere in the world downloads a game, plays, earns, collects & uses tokens/items.
Meanwhile in background, they build up a savings account that automatically optimizes yield & asset utilization, wraps funds w/ insurance contract.
Welcome to the future of finance.
A user anywhere in the world downloads a game, plays, earns, collects & uses tokens/items.
Meanwhile in background, they build up a savings account that automatically optimizes yield & asset utilization, wraps funds w/ insurance contract.
Welcome to the future of finance.
31/
It’s hard to be bearish on Ethereum when you see the growing developer community, applications being built (DeFi/NFTs/DAOs), & migration from PoW to PoS.
In 3-10 years from now those here today will be the early adopters who bought a piece of value layer of the Internet.
It’s hard to be bearish on Ethereum when you see the growing developer community, applications being built (DeFi/NFTs/DAOs), & migration from PoW to PoS.
In 3-10 years from now those here today will be the early adopters who bought a piece of value layer of the Internet.
32/
We talk too much about Layer 1s and not enough on Layer 0 - the communities underpinning these L1 networks.
Let's not forget blockchains are coordination mechanisms and that requires a thriving social layer of trust among the community.
We talk too much about Layer 1s and not enough on Layer 0 - the communities underpinning these L1 networks.
Let's not forget blockchains are coordination mechanisms and that requires a thriving social layer of trust among the community.
33/
When you can’t keep track of an industry being full time, you know it’s going places.
For a while DeFi felt like a small community and a handful of protocols, now it’s an ever expanding universe.
When you can’t keep track of an industry being full time, you know it’s going places.
For a while DeFi felt like a small community and a handful of protocols, now it’s an ever expanding universe.
34/
You’re telling me you can own a piece of the Internet?
As in every transaction that gets processed on this Internet settlement layer - every single action requiring computational resources - you get to participate in that upside same way a toll/railroad operator does?
Yes.
You’re telling me you can own a piece of the Internet?
As in every transaction that gets processed on this Internet settlement layer - every single action requiring computational resources - you get to participate in that upside same way a toll/railroad operator does?
Yes.
35/
Few DeFi & related themes I'm pursuing
> Intersection of DeFi, NFTs & gaming (play-to-earn, metaverse economies)
> DAO tooling (governance & resource mgmt)
> Cross-chain interoperability
> Capital efficiency (cross margining, lower collateral, credit scores)
Few DeFi & related themes I'm pursuing
> Intersection of DeFi, NFTs & gaming (play-to-earn, metaverse economies)
> DAO tooling (governance & resource mgmt)
> Cross-chain interoperability
> Capital efficiency (cross margining, lower collateral, credit scores)
36/
DeFi is not only transforming operating flow of finance.
It's also creating new business models, means of living, & organizational structures (DAOs) that, at the core, empower individual.
In short, DeFi is connecting & optimizing creative energy w/ global capital markets.
DeFi is not only transforming operating flow of finance.
It's also creating new business models, means of living, & organizational structures (DAOs) that, at the core, empower individual.
In short, DeFi is connecting & optimizing creative energy w/ global capital markets.
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