I'm not a maximalist. I believe in a multichain world serving many use-cases where aggregators route to most efficient chain. @LayerZero_Labs interesting as fabric that enables it
Security & decentralization are spectrum not end state. Aggregators will value this more than users
Ethereum - captured mindshare of developers. L2s (Arbitrum, Polygon, Optimism) are here and viable scalability solutions. zkRollups (Starkware, zkSync) very promising
Solana - impressive ecosystem. Dev tooling improving. BD push attracting new developers/projects. Expanding pie
Terra - perhaps most use-case oriented chain. Started with stablecoin to power e-commerce, acquire users and then expanded to savings (Anchor) and investing (Mirror). Reminds me of how weChat expanded from social. Growing ecosystem. Regional exposure to fast growing markets
Near - prob the most underrated chain. See this as an extension of Ethereum (L2?). Team moves fast and is attracting growing # of apps
Cosmos - Tendermint is battle-tested (eg Terra is a fork). IBC took a while to ship but you can see a future where more chains connect to Cosmos
Other chains I'm less familiar with but interested in: Avalanche, Algorand, Polkadot
It's hard to envision a winner-take-all outcome here. Solana, Terra (heck even BSC) are expanding the pie by onboarding more users & developers. We're still incredibly early but innovating fast.
Crypto is very different today than it was 2 years ago & much more than last cycle. It stopped being Bitcoin centric a while ago as we realized that the fundamental properties of Bitcoin could extend to other use cases to disrupt practically every industry w/ middleman friction
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There are two kinds of errors: process & outcome. Focus on fixing the latter. Systematically diagnosing and learning from errors of process is the only thing you have true ownership over & creates winning results that compound over time.
What are errors of process? 👇
It’s the things you could’ve done differently. Obviously attribution is a problem because you may think correcting x, fixes y. But pattern recognition helps. If you’re making poor choices when you’re sleep deprived or around certain people, then that’s something you can fix.
Write down the specific conditions under which you’re operating under. Time of day, food you eat, people you’re around, things you do (and don’t), and that likely sheds light into processes (habits, frameworks, conditions) that lead to successful/poor outcomes.
1/ Web3 games will dominate. Here's some data. Of note:
@AxieInfinity is on pace to generate ~$1.4B in 2021 revenue, up from ~$80M in 2020. @SkyMavisHQ, studio behind Axie, is 3 years old w/ 61 employees making it arguably the fastest growing & most capital efficient game studio
2/ The impressive growth of Axie is, in large part, tied to novel play-to-earn (P2E) mechanics which, much like ride sharing apps, has become a primary source of revenue for gamers across the world. P2E combines digital asset ownership w/ the passion economy empowering users
3/ Another impressive metric is retention. Games struggle with two things: initial bootstrapping of users and retention. The latter is known as half-life and most game studios need to constantly put out new game hits to counteract this phenomenon (Zynga case in point). Not P2E...
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
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