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Jan 1 56 tweets 12 min read
1/ On how to make it in crypto as a normal person.

There is one rule only: SURVIVE!
2/ Survival means four decisions:

a) Should you invest?
b) How much you invest?
c) In what should you invest?
d) Are you levered?

All of these are hugely personal, relate to your view of the world, your financial situation and, most of all, your psychology
3/ The purpose of this thread is not convince people who are not invested in crypto to invest in crypto.

Nor is it to convince you to invest more in crypto.

On average, anon, I am trying to get you to invest *less* in crypto so you can survive over the long-run
4/ The other purpose of this thread is so I can refer to it when people ask me what they should do in crypto.

My short answer is: "let's talk about the ballgame" (most people are still not mentally ready to not rekt themselves in crypto)
5/ If they insist, the slightly longer answer is: "Buy a bit of BTC and ETH every month and forget about it for a decade"

If they really insist, this is my longer answer, so I want it for my reference and maybe it will be useful for others too.
6/ Anyway, let's get back into the theory:

Crypto is a bet on a form of digitization, that we will represent value digitally and decentralized in the future.

That value can be digital gold (BTC), smart computing (ETH), cultural objects (NFTs) and many other forms of value.
7/ Today about 0.5% (~1/200) of global asset value is represented by decentralized digital crypto assets.

We have about $360T in global assets (including real estate, but not including intangibles). The real total is comfortably above $400T.

Crypto market cap is about $2T
8/ The details of the market cap calculations do not matter so much.

I think of it as $2T/$400T, but you can substitute whatever numbers you prefer.

I think you will struggle to get the crypto % above 1% or below 0.1% right now
9/ For me, the macro question is:

"In 2030, will the % of global asset value represented by decentralized digital assets be more or less than 0.5%?"

For me, the answer is: "probably yes from a technology perspective, but maybe not because of regulation / the centralized system"
10/ My first form of analysis is an "expected value" analysis. e.g

Say there is a 50% chance that crypto % of total assets goes to 1% and a 50% that crypto literally ends and goes to 0%.

In this case, we should be neutral.

50% x 1% + 50% x 0% = 0.5% = where we are today.
11/ My view is that chances that crypto doubles are significantly higher than it goes to zero, which means the expected value is positive.

Therefore I would like to have an investment in crypto, even today.

[I first did this analysis when crypto was 0.005% of global market cap]
12/ "But 6529, this is the dumbest expected value calculation ever, you should draw the whole distribution curve of outcomes, with probabilities at each level and sum them together"

Answer: No, you don't.
13/ The point of this analysis is "do I want crypto exposure at these general levels?"

My dumb expected value calculations answers that question just as well as your super-fancy distribution curve
14/ The second question is "how much should I invest in crypto?" and that is a very confusing question.

I think of it this way:

[your total off-chain net worth]/[total offchain assets ($400T)]
vs

[your total crypto net worth]/[total crypto assets ($2T)]
15/ If you are neutral on crypto's chances from here, these numbers should be the same.

If you are positive, the crypto % should be bigger

If you are negative, the offchain % should be bigger.

No-coiners, for example, are the extreme case of the negative position.
16/ For me, the crypto % is much bigger but:

a) My off-chain net worth is fine. Crypto can go to zero and I will still have a nice life
b) I spend some time professionally on crypto topics, so it would be strange if I did not have skin in the game
c) I can take the volatility
17/ So the first stage is to answer for yourself, via some form of expected value calculation, if you want any crypto exposure in the first place.

If the answer is "yes", we go to the second question which is "how much?"
18/ The correct answer for most people is "not so much that your life is impacted if crypto nukes, but enough so that it improves your portfolio performance if it does not"

e.g. you invest 2% of net worth. If it goes to 0, you can take the loss. If it goes to 4%, happy times
19/ The longer answer has to do with my "Levels" framework



If you are L1, you are not in this discussion

L2 is really tricky bc you need the money to pay the bills
20/ Most people asking this question are L3 and L4.

I think L4 can afford to take more risk than L3, on average

L5 are playing a different non-financial game altogether, it is strictly personal - could be anything from zero to a huge number
21/ Keep in mind that most big crypto personalities, including yours truly, are some version of playing a L4/L5 game.

Few of us are wondering how to pay the rent and our actions and comments have to be taking in that light
22/ When people ask me this question, I tell them the following:

"Whatever you invest, write it off to zero the next day on your balance sheet and don't look at it for 10 years"
23/ Usually, they look at me shocked and then I say "OK, so invest less until you can say this to yourself and not freak out"

It is an excellent test of if you are over-invested relative to your personal situation and personal psychology
24/ The personal psychology aspect of this is huge.

I have historically been much more invested in crypto than friends with similar net worths.

Both answers are right because I don't mind volatility in my net worth as much as they do.
25/ The biggest risk to the average person's long-term returns in crypto is "crypto nukes for years, they freak out and sell the bottom"

Of my 2013-era friends who invested in BTC, almost all of them today own no crypto for this reason.
26/ They bought at $300, felt great at $1,000, panicked at $300 (the second time) and now are no-coiners.

The most successful investors from this era are those who did the least. They bought once or they bought consistently over the years and did not worry about the price.
27/ This is much harder than it seems.

Everyone is George Soros or @cobie in theory.

Very few people are this in practice.

When the dip comes, the usual answer is not "let me do a detailed analysis of my future options" but more "oh shit"
28/ In other words, your psychology is the KEY factor to survival.

You have to know thyself.

You have to know how much risk you can handle and you need to keep sizing down your position until it is at a point where you can be long through dips.
29/ When you can look at yourself/your wife/your parents/your kids/your banker/your landlord and say:

"BTC/ETH/SOL/BAYC is down 80% and I am cool"

then you are in an OK place for long-term survival
30/ What should you buy?

I have no idea but if i was pushed by someone to answer, IMHO, the beginner portfolio today is still 50% BTC:50% ETH.

The intermediate portfolio is set aside 10-20% of your portfolio for other big fungible tokens.
31/ Which other fungible tokens?

Which ones? I have no idea. Will AVAX perform better than LINK next year?

I dunno and I actually think pretty much nobody knows.
32/ Many people will take directional bet on various tokens and then, next year, the ones who bet right, will explain how smart they were and the ones who bet wrong, won't.

This is what is called "survivorship bias" - people only tweet and blog their winning trades.
33/ But what about NFTs?

Well, NFTs are the riskiest, most immature, most volatile sector of the riskiest, most volatile asset class in the world (crypto).
34/ NFTs-out-of-your-entertainment budget are fine.

If you buy a AB piece for 1 ETH to hang on your Frame TV in the living room and you have the same investment goals for it as your Pottery Barn spending or going-to-Vegas budget, that is completely fine.
35/ If you are buying NFTs to improve the returns of your retirement portfolio, you should be:

a) Wealthy & crypto sophisticated

or

b) A full time NFT collector (most of whom are actually in category a)

or

c) An artist who is getting NFT exposure through your work
36/ "But 6529, look at all these ordinary people who bought a BAYC and have made $500K this year"

This is also survivorship bias.

Hodlers of 99% of the other new PFP collections this year that are down 75% aren't tweeting "#blessed, NFTs changed my life"
37/ I have been in crypto a long-time.

The volatility in NFTs is breathtaking. 10-15% moves are daily moves in most collections.

The illiquidity dynamics are also very different.

NFTs-as-an-investment belong ONLY in the high risk part of your portfolio
38/ Last question, should you lever?

The answer for 99% of you is "NO, YOU SHOULD NOT LEVER"

You simply cannot get liquidated if you don't lever up.
39/ "But what about if I only lever up 10%, isn't that OK?"

The problem with this logic is "I am going to lever up 10%" is like "I am only going to smoke one cigarette per day"

In theory, it is fine, in practice, leverage is a hell of a drug and one day you'll be rekt and sad
40/ "OK, but I read @zhusu's tweets and he was long new assets"

A few things:

a) @zhusu is an elite professional trader. You, statistically, are not

b) @zhusu has already made it. You, statistically, have not
41/ "OK, but I read @cobie's medium posts about what trades to make, how to think about trades and so on"

A few things:

a) @cobie is an elite professional trader. You, statistically, are not

b) @cobie already has made it. You, statistically, have not
42/ I am, statistically, vastly more sophisticated and experienced than you in crypto and crypto markets and I still don't think I can compete with the professional full-time traders

I read @cobie's posts with great interest and, they in fact, were very interesting
43/ But I also was aware of all the trades that Cobie mentioned in his year-end essay and did not put them on.

Because in real-time, they are scary. It is obvious in retrospect that that AVAX will 100x. It was much much less obvious at the time of launch.
44/ course, some of you, a vanishingly small % of you, are the @cobie and @zhusu of tomorrow.

This thread is not for you and you should be aware that you are probably not that person.
45/ This thread is for "normal" people who don't watch crypto charts all day, who do not have the psychology of elite traders, who want to live their regular lives.

But, despite this, still might want to have some exposure to the thesis that decentralized digital assets are real
46/ Trading is exhausting for most people, including me, and I have more crypto exposure than 99.9999% of you.

Like I am pretty comfortable with the bet that crypto will go up as a % of total world market cap.

But if the price is going up or down today, I have NO IDEA, none.
47/ So I want to give you "permission" to not worry about the day to day price moves, the great trades you did not make.

Nobody, literally nobody, gets them all right.

It is OK.

If you are not a full-time trader, it does not matter
48/ What matters if you are a civilian is, if and how much you believe in the crypto thesis, how you can implement it relative to your own position in life and psychology, and how you can do it with a 10 year time and not wrecking your health with worries!!!
49/ There is no right answer.

I have good friends who know my views very well and probably even believe them, but whose psychology cannot handle any of the volatility.

They are happy to learn about crypto and watch it from a distance.

This is fine too!
50/ For 95% of people the simple answer is the right now, if and only if, you want to make a crypto investment:

a) buy mostly blue chips
b) in amounts that don't stress you
c) don't lever
d) chill until 2030
e) have fun and enjoy this vastly interesting experiment
51/ For 95% of people in NFTs, it is the same but even more so.

a) buy things you like
b) expect them to be totally illiquid
c) with no real expectation of an investment return
d) in the 'high risk' part of your portfolio
e) in amounts that do not stress you at all
52/ The important part of the "open metaverse" is not:

a) "all-in the retirement account on crypto or NFTs"

but

b) "we spend our time, attention and building efforts on decentralized and open protocol systems"
53/ If you over-invest, your likelihood of survival drops a lot given how volatile this asset class is.

Also, you won't have fun along the way, if you are constantly worried about financial risks.

"Using Instagram" does not require "going long 300% Instagram stock"
54/ Or to put it differently, I want you all around in 2030.

If you are a bit chill on the financial side and don't ape it, there is no reason why you can't make it until then.

So we can build an open, web1-like metaverse, not a closed web2-like corporateverse
55/ When I was a little kid, my grandmother would make me clean my room and do a bit of homework on 1/1 because "whatever you do on Jan 1, you do for the rest of the year".

My 2022 version of this is, well, here is a tweetstorm

HAVE A GREAT 2022 everyone!!!
56/ If you just got here for the first time via this thread, this account is all about the open metaverse.

40 threads on the topic and, separately, a game plan are here:

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More from @punk6529

May 15
1/ While I would be happy to be proven wrong, I don't think undercollateralized algostables can work

I have been thinking about this for almost a decade and have not come up with a plausible solution that I believe in - otherwise 6529USD would be a thing 😂
2/ Making your token = 1 dollar is a subset of a broader question of 'pegging your currency to another currency"

In freely convertible currencies, even major nation-states fail at this regularly.

(you can do it if your currency is not freely convertible but defeats the purpose)
3/ As far as I can tell, the viable design space is:

a) Centralized collateral like USDC. This can work, will be regulated, has 'nation state risk'

b) Decentralized overcollateralized like +/- Dai
Read 10 tweets
May 14
1/ On Bear Markets

You are down bad? Working at McDonald's? Your ATH net worth is only visible with a telescope? Your gf is wondering where all the money went?

Now what?
2/ First, some a couple of background threads that I may reference.

What this all means is different based on what "level" you are at in life and what type of game you are playing.

Levels 1 to Levels 5 described below

3/ Also, because I do not want to rewrite my thread from January 1 on "how to make it in crypto?," I am also posting it here.

The title is: "There is one rule only: SURVIVE!" and this still holds. We are going to talk about this today.

Read 35 tweets
May 1
1/ On the Otherside licenses (there are 2)

Because 6529 reads licenses, the tl;dr

- much worse licenses than prior Yuga licenses
- no rights in Otherdeeds
- restricted rights in Kodas, 100% revocable
- if punks license ends up looking like this 😬

otherside.xyz/license
2/ Otherdeeds are the first object in the Yuga universe with no commercial rights.

They are non-commercial rights only, with Animoca as your counterparty.

Also, LOL to physically printing out your Otherdeed
3/ Kodas have commercial rights, but the agreement is much stricter and more limited than prior Yuga language.

This is the key part, making it explicit that the rights are only available as part of a license and subject to the agreement.
Read 26 tweets
Apr 26
Genesis Museum Video Challenge vote.

The team has narrowed down the entries to 4 finalists (video links below)

Vote here over 24 hours.

1st place 0.69ETH, 2nd place 0.2ETH, 3rd place 0.1ETH
2/ Ank

Read 5 tweets
Apr 24
1/ On The 6529 COF (Cultural Object Framework)

So I have a framework on how I think about cultural objects.

I will share it. It is neither right nor wrong, like all frameworks it is just a tool.
2/ Let's start with Dunbar's Number which is the concept that we can only have about 150 stable social relationships.

en.wikipedia.org/wiki/Dunbar%27…
3/ Researchers argue about whether the number or the mechanism is right, but I think none of that matters.

I think it is pretty clear that you can't have 4,945 stable relationships.

The number for most people is a 3 digit number, probably a lower 3 digit number
Read 38 tweets
Apr 22
1/4 I used to think USA/EU -- with 12 years now to think -- would be capable of producing a sensible approach to crypto/web 3 that allows society to gain the benefits of innovation and broad participation in business building.

I'm still trying, but I'm increasingly worried...
2/4 ...that we either end up with a full misguided state assault, "War on Drugs" style that kicks innovation back for years and decades.

Or we end up with a @balajis-style disorderly transition with some light forms of state collapse.

Or both: the former, then the latter
3/4 We should do everything possible to avoid these two scenarios.

They are bad for society, they are bad for people, they are fever-dreams of both sides ("I will regulate away math") and ("I will live in my Citadel alone while the poors suffer outside").
Read 4 tweets

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