Reversing aging is the single most important problem for humanity. Sound money is only the second most important problem.
Saw some BS argument against scientific efforts to reverse aging, that "death gives meaning to life". Fuck no. Death does not give meaning to life. Life gives meaning to life.
The most important consequence of longer healthier life for humanity is that it enables truly long term (100+ years) thinking. And that in turn enables us to solve truly important problems (eg, going interplanetary, climate change) because these require truly long-term thinking.
These amazing teams brought to us an amazing Liquidity Demo Day, which 100+ industry professionals attended live, including a fun discussion between @kaiynne and @TheChicagoVC on the future of collaboration between traditional financial firms and DeFi.
The V-shapes recovery of DeFi blue chips back in early November was a big slap in the face moment for me. Because 8 times out of 10 bottoms don’t form that way. I missed the first 50%. But in hindsight this wasn’t all that surprising.
During the month prior to that BTC added something like $50B to the system. Major Defi players hold BTC. And therefore all of a sudden basically a ton of money was injected into the system.
This is akin to the Fed injecting a ton of QE into the legacy system. That money has to go somewhere. It usually goes to the highest quality assets first. V-shaped recovery tends to follow immediately on these assets.
An educational thread on "TWAP", a term you may have seen a few times recently. What is it? How does it work? Why do institutions use TWAP algos?
TWAP stands for "time-weighted average price". Basically, the average price of an asset over, say, a day. A TWAP algorithm is an algorithm that sends orders of similar size at regular cadence, in order to match the time-weighted average price over a given period of time.
Like this guy who spammed Coinbase with orders of $194k this morning every minute or so.
It’s OK if you don’t understand all of it. Neither do I. But I think it’s the best way to start your crypto journey.
If you want to learn more after that, try to understand why Bitcoin is digital gold. Here’s a good resource: casebitcoin.com/bitcoin-is
If Bitcoin as digital gold doesn’t make sense to you, dabble into Ethereum/DeFi instead. Actually, do that either way. If you are someone intellectually curious, at least one of the two will make sense to you IMO.
It doesn’t matter how great the fundamentals your favorite alt has. Lead-lag relationships in markets don’t work like this. It’s always the liquid that drives the illiquid. The higher marketcap that drives the lower low marketcap.
One of the theoretical reasons is wealth effect. When the largest holding in your portfolio goes up 10% you feel richer and you buy other stuff. When the smallest holding goes up 10% you feel nothing. The biggest holding of “market portfolio” is BTC.
Instead of watching in disbelief boomer institutions buying #BTC, here’s a narrative that the Ethereum crowd should consider rallying around and pushing for: “ETH - a call option on a parallel future financial system.”
These boomers all went through the rise and fall and re-rise of tech stonks. They wouldn’t want to miss even just a 10% chance of something big. Especially finance.
Bitcoin used to be called a “call option”, but it no longer is. It’s mature enough to potentially rival gold. But a “call option” is perfect for Ethereum currently. It’s young, vibrant, and risky. Calling it a “call option” shows humility, that you understand the risks.
Observation: there's one asset that's shaping to be the Schelling point of DeFi.
- Fastest horse in arguably the important sector of finance -> being integrated everywhere
- Early adopters made rich -> strong community
- Little early investor sell pressure -> possible sell-side liquidity crisis
- Healthy amount of hype -> reflexively attracts capital/talent
Not financial advice. Not schilling. Just an observation.
I continue to see more and more reasons why ETH could outperform BTC in the next bull run. Perhaps not on a risk-adjusted return basis, but likely on an absolute return basis.
However:
From a portfolio PoV, it may not make sense to own ETH at all. In my mind ETH is 50% BTC and 50% DeFi. So if you already own BTC, it makes sense to add DeFi. And if you already own DeFi, it makes sense to add BTC. But in either case adding ETH may not add uncorrelated returns.
When you construct a portfolio, not only do you need to think about the EV of each bet, but also whether a new addition to the portfolio is independent from existing bets. In this case, ETH may not be as independent from either BTC and DeFi.
I don’t know, I feel like this “double-digit shitcoin” is on it’s way to 4 digits.
Anecdotally, I’m just seeing more and more smart people from both TradFi *and* tech who are total noobs but fascinated by Ethereum and this new parallel financial system called DeFi.
Many of them got into DeFi because of Bitcoin. Many others got into Ethereum/DeFi because they don’t understand Bitcoin. Pretty interesting dichotomy.
(I don't have a PhD barely finished my undergrad so that's a typo there.)
OK I know why it says "PhD" cuz there's a fake LinkedIn profile that says I have an applied math PhD from Buffalo. Bro, if I were to do a math PhD it'd be in pure math.
A non-exhaustive list of DeFi products I'm excited about for the next couple years:
1) Synthetic traditional assets: provide access to high quality assets. Main challenge: regulatory.
2) Decentralized derivatives: on-chain perpetual swaps, futures, options, structured products, etc. Main challenge: will they be able reel in institutional liquidity?
3) Order book-based exchanges: with L2s and ETH competitors coming online, order book-based exchanges can finally scale. Main challenge: same as above, will institutional liquidity come?
Assuming BTC doesn’t moon anytime soon, a -50% nuke is more likely than a +50% from here for DeFi IMO. After that we can begin a 2017-style bull market for the quality DeFi assets.
Make sure you screenshot this tweet if you want to dunk on me later because if I’m wrong I’ll make sure to delete this it.
(No I actually don’t delete bad market calls. I like use Twitter as my investment journal that I can revisit later to see why I got certain things right or wrong.)
Excited to invite you all to the DeFi Alliance (@acceleratedefi) Liquidity Demo Day on November 10. It's an event where the dozen of DeFi startups in the our accelerator program showcase their platform to professional liquidity providers. List of startups below:
@AcalaNetwork : A cross-chain StableCoin platform based on Substrate
@loopringorg : A zkRollup based decentralized exchange
@perpprotocol : A decentralized perpetual contract protocol
There's a lot of ETH bearishness recently. I'm also of the view that ETH will underperform BTC in the next bull cycle. But only slightly. And I want to explore arguments for why this thesis may be wrong, ie, why ETH could outperform BTC.
The pro-BTC argument goes: it took years for institutions to finally get onboard with the "digital gold" narrative. There's no way they'll get comfortable with ETH in this cycle.
What this argument misses is that there's also a significant % of the population who don't get the "digital gold" narrative, but are more comfortable with the "tech platform" narrative that ETH represents.
Though anything between 60%-95% down after a meteoric rise is reasonable. Do look for signs of
- despair, especially from the strongest believers
- flat and boring price action for long enough
- even you being too scared to scale back in
That the Chinese government is hostile towards Bitcoin and crypto has always been a misconception. If there was a parallel financial system that could rival the dollar-based system, they would love to be part of it. What they are hostile towards is fraud and speculative craze.
That said, I do agree with the view that they are against capital flight using crypto, which is pretty obvious.
Anyway there’s a weird game-theoretical dilemma here. But on the spectrum between extreme hostility and extreme friendliness, I’d say they are neutral to slightly friendly.
It all started with COMP. SUSHI was the blow-off top. UNI was the relief rally. Mini-winter is nice though as we can focus on building again. Next year will be a good year. Micro lots of new exciting products and macro risk-on everywhere.
2 added to My Authors
