Ari Paul of Blocktower on maximilism, decentralization, and investing

LinksTwitterShow Partner This episode is presented by FTX. Trade on an awesome mobile interface fee-free, and still get all the great portfolio tracking features you know and love: https://uponly.tv/ftxShow Notes Introduction – Ari bought first Bitcoin in 2014 – Really dove into crypto 2016 – Friend emailed him in 2011 asking to check out crypto, Ari said it won’t retain value, not backed by guns like fiat – Ari: “For crypto you kinda gotta know a little bit about a lot of things” – Got involved with crypto through crypto twitter – Cunningham’s Law – “The fastest way to get an answer on the internet is not to ask a question, but to state something wrong” Ari’s Headspace – Long term mostly thinking about the future of crypto – BlockTower bets on where the world will be in 1-3 years, not 10-20 years – Fascinated by the big picture – Huge believer in giving people defensive tools for overbearing states VC Stuff – BlockTower is a trading firm by nature, so they invest in projects that they can actually be power users in – Ari: “Evaluating seed stage teams is its own skillsets, very different from evaluating something like Microsoft” – Cobie skeptical of a16z’s success in crypto, followed like 4 deals they did and got crushed – A lot of the time, timing is much more important than vetting skill – Ari: “If you were trading NFTs 2 years ago, it almost doesn’t matter if you were good it just matters that you were doing it” Privacy – Ari: “There’s a whole tech stack for privacy that’s missing” – Countries can control the internet very easily – People think the internet is super hard to control – there is literally a bundle of wires that delivers the internet to an entire country – Ari: “zk-rollup chains where you can shield the mempool… there is some super cool math we’re building into the system now that could change everything” – You could fork Ethereum and add it as a rollup chain to Bitcoin – Ledger: “Is there really a market for that?” – Ari: “It seems likely in the next 2 years that we’ll get a soft fork to implement this” – Ari: “There are bitcoiners who are pitching this as humanitarian technology but against adding privacy technology that exists…borderline unethical” Making ETH Maxis Mad – Ethereum is a risky startup competing on tech – The odds it is a market leader in 10 years is under 20% – Facebook didn’t need a single Friendster user or dev – If you have an industry that’s going to 20x, you don’t need to take existing users – Ari: “Solana has something like more than 10,000 active developers now” – Ethereum does not have much of a moat, it has a little bit of brand recognition, a little bit of regulatory head start, some dev moat, but largely the moat is very small – Ethereum cannot move as fast, cannot take as much risk. It’s hard to maintain its lead – Cobie: “Do you think Ethereum should have a canary network, kind of like Kusama?” – Ari: “(pause) I actually haven’t thought about that” – Seems to be a real, good idea Solana – Ari has been recommending Solana for the last 2 years – Well intentioned team, real project, very cool innovation at the communication layer – *Ari still has a long Solana position to be clear* – It’s quite centralized, depends on the team to stay up, has a real path to decentralization – It’s a highly speculative early stage bet BNB – Exchange coins are basically sold as equities – There are tons of regulatory actions which could likely be negative for $BNB – Would not hold the coin Cardano – Ari: “Cardano I actually know very little about” – The only thing he really believed would stick around for 5 years was Bitcoin, DeFi and NFTs – Ari: “I worry that in 5-10 years the winning metaverse will be Facebook or Fortnite, some centralized entity, which scares me because I want a decentralized world” – Ledger: “so Cardano” lol – Ari: “I am deeply skeptical of Cardano” – Ledger: “Dump it” 2017 Bull Market – Ari bought $50k calls in 2017 – Did it to maintain upside exposure while not keeping material risk on – Went onto CNBC to talk about it, they mid-curved his thinking – Ari: “Options are a bet on volatility, not the direction, because you can always hedge the direction with the underlying” – Ari: “If you can’t define skew and kurtosis then you probably shouldn’t be trading options” Crypto Investing – Ari: “If you’re investing with a lot of small bets in alts, it almost acts as a call option” – Ari thinks vol is about fair today – Basically every time Bitcoin vol gets below 60, Ari buys it – Ari: “The crazier the bull market the crazier the retrace” – Ari: “My basic thesis now is DeFi 5-10x’s here and then retraces 80-90%” – Ari: “The biggest value add from crypto over the next 12-18 months is connecting DeFi to real world lending” FINAL ALPHA – Ari: “It doesn’t matter how much money you make, if you don’t keep yourself healthy you won’t enjoy it” – Focus on your health! Notes by Kevin Music by GiovanniPickle