A Global Perspective

cats Ya from Peer to Peer Capital. She has an amazing story. She's lived in Russia, Switzerland and now the US. An amazing story of how she's gone from investing in different asset classes and into cryptocurrencies and why, and we talk about her fund, her thesis, um, how they look at the market, how they're investing, how they look at risk, and so many other fascinating things. There's a lot of really good stuff to get out of this episode. Can't

wait to jump into it. So let's go. All right, guys, welcome to another episode of Art Constructors podcast. I have Catia from Peer to Peer Capital on today, and she has a really unique insight into some sectors of the market that a lot of people have been looking at, specifically about protocols. She wrote a paper on protocols which really caught my eye and I led some really interesting conversations and so let's just jump right in. So Katia, welcome, Hi,

good to be here. So um for for those that probably haven't read your paper, no much about you, just give us a quick um intro on your background and how you got here into the blockchain space, right now? Sure? Sure? So I was born and raised in Russia and moved to Switzerland in my early twenties and started my career in well. I had education and finance and financial managements

and investments. I wrote my diploma and investment climate, and I guess after writing the Diploma of Investment Climent, I realized that investment climate in Russia was not that good. So I moved to Switzerland and then started working in power management and magists after mainly, and that's where I've built my career mostly for the ten years, and always been in finance part of it. And also I've been into startups, very interesting crazy startups and energy storage, battery

grid management, so those kind of things. And in early two thousands sixteen, i've through actually my family business. I've met a team who are doing um watching investments since two thousands fourteen, so they've been in the market for a couple of years. And since my family was in the real estate and we were looking how to uh that's actually a separate story, but we're looking at how to talken eyes real estate investments. But we didn't know

the word talking I yet. We were just looking at the way of making it more easy and accessible and liquid to the market. And then friends said, well, you should look at this blotching thing, and so we started working with like with the teams who can help us with and then when we realized the potential of it, and when I saw what it was this, I was like, Okay,

I'm not interested in real estate anymore. I'm not interested in whatever I was doing in corporate finance in my corporate career in big multinationals, and I was diving in it had had first since two thousand sixteen. So I joined the group of private investors and at the time they were running the fund which is called SATUCI Fund, and then we rebranded to ptop Capital last year, but it was mainly just changing the structure of the fund.

But their investment thesis has been pretty stable let's say since the beginning, so since it's a thousand fourteen, the team has discovered that there can be alternative assets to bitcoin, and they wrote a thesis around it that bitcoin is a store of value, and we realized the potential of it, but they can be other interesting use cases that can have a huge potential, And of course even now we still cannot see what the potential is, but it was

clear that as that it's going to be interesting. So it started investing like very early projects from Ethereum, like the Genesis, Walck, Criterium, bit Shears made Safe all Us like the starting projects, and then I joined and then we started diving into protocols and smart contract platforms. So I'm curious, Um. You know, you have a very diverse background, living in Russia, living in Switzerland, um, and then obviously

in the United States. So those are three different countries, and I think, um, growing up in those are, living in those areas, gives you different ideologies which play into that we'll get into. But I'm curious, Um, And you said in twenty sixteen you were looking at tokenizing real estate. You found out about blockchain and said, whoa forget real estate? Right,

I'm all in. Um. Was there one thing in particular that kind of got your eye, um, that really made you want to just go all in into this kind of blockchain technology movement? Oh yes, I think these are um two things, mainly from again the personal perspective. One is that living in three countries so into I moved to the US into thousand and fifteen, so I was already in the in the States, and just moving my fun personal funds around three countries was such a pain.

It was so difficult, and you can imagine what it is to transfer from Swiss Bank too, I don't know, Russian bank, and then to the US bank. It took me months and weeks and sometimes over a year just to like manage this accounts. And these were like the perfectly legitimate money that I earned for all of my years working in like perfectly legit corporations. So it was just how inefficient the system was. There was one thing, and then when I discovered bitcoin, I was like, okay,

so I just click and that's it. So was it? So was it. It was kind of the ability to have instead of you you dealt with the problems, the complexity of having three different countries and three different sets of policies and trying to move and then bitcoin kind of being that own sovereign money that really doesn't need a country. I guess is that kind of what you absolutely absolutely And within the US, I've changed three states, and even within one country, moving from state to state,

some bank is not present in this state. So when I moved from New York, for example, to North Carolina, the bank that I used in New York that was in the next three to me, there was no branch of this bank in North Carolina, so and certain transactions they couldn't confirm without me going physically in the branch location. So it can you imagine to do a transaction, I had to fly back to New York and it was

like those things were totally ridiculous to me. And then another pivoting point was when we're starting looking at the real estate, the potential of managing our family's real estate through to organization, just the whole process how it works in the US, I guess you know it better than I do. With the title search and all the documents that you have to do, and just realizing the potential that you can have having this records on the blockchain,

I still think it's too early. I don't think it's gonna happen anytime, So not in thousand sixteen, not in the thousand nineteen. But when it happens, it's going to bring enormous efficiencies and you can only see it. I guess when you were going yourself this Spain and you just realize how quickly you can manage this if this

was ever on the blockchain. Yeah, you know. Um, I think kind of the same thing that caught your eye was the same thing that caught my eye in where I was looking at setting up like offshore corporations and bank accounts, just I didn't want to have all my money tied up in one thing. I thought, Hey, it's all digital money anyway, why not be in Singapore and Panama? And then I learned about bitcoin and I was like, oh, perfect,

That's what caught my eye. As I learned more about it, I was like, all in kind of like you, I'm curious. So I love that. And so for me, a lot of my content I like to talk about why why bitcoin, not like what is it? But why? And these are the things we talked about, right, I'm curious. Um, Coming from Russia, and Switzerland, because those are those very interesting

places for me. So when I think of Russia, I think about like, I mean, I'm young, I'm old enough to remember before the fall, right, so I kind of just grew I grew up in this Cold War era. I remember like this oppressive regime, which I would imagine it's probably pretty hard to get money out of, maybe even today. And then I think of Switzerland as like the place where people go park their money for privacy.

So you have like this country where it's hard to get money out of, and then you lived in a country where maybe people think about it as like good sound money, good banks and privacy. Um is it like that? And did those do those visions kind of like did that draw you into bitcoin bits and pieces? Um? It's yeah, It's not so much about the ideology and whatever, like

the regime was. It's more about practicality and the bureaucracy that you have to deal with in Russia and in Switzerland to be fair, just to move your money in and out being absolutely legit investor. This is what surprises me, Like how much, how how much time a person has to spend just to have his own funds moving in his own accounts, you know, and like these things. It's not like in Russia. I didn't have any problems were like the regime or whatever. It's again, it's more about

the bureaucracy. It's more about how many papers you have to feel how many times you have to prove why you're moving like funds outside of the country. Oh, because you don't live here anymore, like this kind of thing. So I didn't face any like oppressive measures or whatever. But it's just like it's just the inefficiencies and the fact that the country is don't like their systems, don't talk to each other. I think they're changing it slowly.

I think they're bringing more transparency. There was this I remember when it was enacted, the law that they share the information between the tax authorities between the fact fact that that was I think maybe around twenties. It's it was very recent. That wasn't necessarily a good thing, and a lot of opinions, but of course I like to comply with that. But you know, it's, uh, that's gonna

be interesting and we'll see how that plays out. But I think, you know, the governments are always going to want to try to control that and and so that bureaucracy is part of that, um, so and so. But you also, yeah, like people don't want to share this information between countries for the simple reasons because they don't want to pay their taxes. And I always remind when people say, well, it's like it's oppressive that the country's

required the questless information from Switzerland. I was remind to my US friends that the income tax and Russia, at least when I was living there was thirteen percent. Is how is it compared to the US? I was like, come on, you can paytent right, It's it's like we're here. It's for some people it's almost half of what they earned, so it's it's very different. Yeah, and those are those are much bigger issues which I would love to talk to you about, especially in your background. But we won't

dive too much into those today. We'll save those for another time. But but I get super interested in that stuff as well. But so then you're all in sixteen you started working with this fund so totially fund now, which is peer to peer capital, which is a really cool name. Obviously the technology is that appear to peer, right, and so, um tell us a little bit about the the investing thesis and and how you guys are like looking at the market and approaching the market. Yeah. Sure.

So we have invested mainly in the productal layer in layer one basically since the beginning because we believe that this is where the value creul is going to happen mainly. And so just to give a little bit overview of our work in UM investment portfolios, so started from Ethereum, from the genesis look of Ethereum. We invested in other platforms like Diffinity, like to those like interoperability platforms like Cosmos and Polka dot Um and also in um more

experimental platforms like Definity or Salona. I'm gonna talk about this a little bit later in more details, but this is like the layer one thesis that we outline, and the idea is that UM we believe in poly chain world it's not going to be one chain that's going to rule at all, but that same time, it's not going to be thousands of that so we belief it's going to be skewed around certain use cases because the actually blockchain, the network doesn't need like hundred use cases.

One to strong use cases is enough for it to approve value for example, Bitcoin, it's I think that the consensus is around it being it's digital gold and ultimate store of value. So even this one use case is enough. But if it if it also grows around the medium of exchange, it's going to be help it. It's going to help it coin too. But having one or two strong use cases enough, Ethereum now shapes as a general trust layer for all the web free stack. This is

how we see Ethereum. But it doesn't mean that there is no place for other change, because they will find other use cases. And I think what's also important is that we don't look at all the changes competitors to Etherium because we don't we should not look at them as we know all the use cases, and that's what they're fighting for. I haven't it exhausted the list of the use cases. We just like peeked into it, and now we're already saying, oh, all this change are fighting

for de fight. Well, we just discovered defied year ago. Wait, we're going to discover something else. We're gonna discover more use case cases with the change as they grow, as they uncover their potential. Yeah, well we're talking about protocols. I'm curious to get your take, because um, really, I think most of seen was kind of dominated by what they call the fat protocol thesis right where the Internet.

To explain it to everybody listening on the Internet, it was the applications that really accrued the value, not the protocol, because the protocols were open source I know, T C, P, I, p UM, and that in this thesis was that the protocols would actually accrue the value, not the applications, UM, so the ethereums and whatnot. However, now that narrative seems to have changed and a lot of people think that

that was a fallacy and that's not the case. But you guys still believe the protocols will accrue the value, or some of them will. I guess yeah. I think it's just that we're going through over simplification of the market to actually understanding how complex it is. So fat protocol thesis was I think in the general sense it was right. It was just oversimplified because it's not just because the protocol exists and their network effects that the token is going to accrude value. And I think that's

where it was the disconnect. And then with all the years to come, we saw that if the token economy is not built on the right way, the network effects will not make the token accrou value. So there will we see we saw it was a lot of networks which are now have like less than ten million dollars market caps that the protocol didn' accrouve value even though

there was valuable code built on top of it. And I think the reason for it is that we see that the fat protocols are only going to become fat if they're underlying economics for the token to accrouve value. And by this I mean, first of all, if the

token can gain certain um store failure components. For example, either will not compete in store failure for bitcoin, but it will gain a store value component, and at least for sure when it's going to be based on proof of steak and proof of stake is an interesting UM is interesting value chrome mechanism, at least for the short term term because it provides liquidity stings, and if you don't have these liquidit testings with taking or bonding or

baking whatever, then it's very hard to approve value for the token because of the high velocity that it has. And the second is what's the usage of the token if you can, if there's a certain usage, like you see for some layer two tokens, for example, I can devil in this a little bit later. How the tokens accroup value on layer two, because we believe they do as well, but only for certain tokens that have the tap talking mechanics, the token economics, the correct tokn economics

behind it. So for certain layer two tokens, if there's a usage where you can build the discounted cash flow models on, like for example, for Life Beer for their LPT token which is used to stake to perform transcoding services, then there are underlying reasons for it to approve value. And and also yeah, if if some of this um if some of the reasons combined in one token, then it even strengthens it. For example, if it's store value

components plus taking and plus certain usage. But only if there's only if this metrics combined, then they will see that protocol value. The producal tokens accrue value, not just because the prodocol is going to have networks networks effect. That's what I think. That's where the flat protocol these has got at not wrong, but maybe too early. Well, I think people thought that just because the token will become the most used token, that it would accrue value.

But velocity doesn't cause it to accrue value, right, So there has to be some sort of mechanism built in that key wants people to hoard it, right, somebody has to store it in order to get that supply demand to be kind of activated. I guess, um, it's kind of what you're saying exactly. UM you talked about you talked about many protocols, not just one. Um. You know

we see in the Internet. I know that when we're talking about an technology here, and I believe this new technology is going to be I I kind of look at it like we've had like five technological revolutions, um, Industrial Revolution, you know, steam engines, electricity, automobiles, and the was this telecommunications where we got the first microprocessor and kind of built this whole all the way to the

Internet age. But I look at this as like the next it's fifty they happen every fifty years, is like the next revolution. So it's it's bigger than the Internet. And sometimes we try to use something we know to compare it, and then it boxes it in too much. But with the with with what we have. Right, when you look at the Internet, we do have multiple protocols, right, one is used for email, one is used for security,

one is used right for different things. And so maybe you're talking like that where we have different protocols and and they're used for different applications. Yeah, exactly. Specifization is one of the aspects of coward thesis. So we believe that it's not going to be just one protocol layer. It's not going to be just one smart contract platform. Let's put it this way. But there's not gonna be hundreds of said, so they will they will find their

niches where they're what they're best at. For example, Tissos is best ats on chain governance, and we're gonna see governance is a separate topic because I'm still like, I cannot shape our opinion if governance is fundamentally valuable. But at least we're going to see this experiment with Tessos. Uh than if the developers and the community finds it fundamentally valuable, then tsos got gets a niche because it's

so far as the only platform. And we've seen this with their recent Athens that yeah, Athens uprate that it works so far it works, so they are finding their valuable niche in this. Then if we look at um platforms like like Tessa's part of our portfolio, but I also I try to speak about different platforms sometimes even if they're not part of our portfolio, so it doesn't

sound like I'm only talking our books. So if we are like if we look at Cardono, their value proposition is deep academic your review and their fundamental value proposition as as I understand it again, is that the other chains are too experimental and not validated academically as strongly

as Cardano is. So in the long term, they're all going to fail because of the technological reasons, and Cardan it's gonna stand, and it's gonna if there are any other like useful features, not the networks, they're gonna pbsorb. But again we're gonna see if the market is gonna take it and if they're gonna be interesting for the market.

If we look at eos Um, eos is like, I don't know, I don't even understand why people compared so much to Etherium because I think they're totally different platforms. Us is not competing for being a general trust layer for the web three as Ethereum is just because of its obvious centralization properties. But at the same time, first of all, it's backed by block one, which has huge exposure to media industry and gaming, and they are supporting a lot of projects that are building on it, something

that Ethereum doesn't have. And then it has it's looking into gaming industry, and this is not something I'm very familiar with, so I cannot again judge how promising this is. But again, looking at what they're doing, they're finding their niche and it might well be that they're gonna find it, especially with the billion dollars that they have in the world chest to support all the projects that are building at it. So this is how we look at the

market and um. So generally our portfolio is split between like certain store of value coins like bitcoin and its rim. We kind of put in this category because we believe it from all the other tokens that's the most proven.

Then the tokens that go into the new trend which is taking which we believe also going to be of the market excluding Bitcoin, will be in proof of steak networks, and so in this bucket with wait so you you say bitcoin will move into a proof of steak Oh no, no, no, I mean except from bitcoin if we take bitcoin, because I don't compare any of these assets with Bitcoin, because I believe they're fundamentally different. So whatever I say seven of the market, I'm talking about the market except bit

got it? Got it? Okay? So yeah, so I believe this fift of the market will be in proof of stake networks. And this is also like one of the largest buckets in our portfolio, which is whereas like Cosmos, Polkad Tisso's our grand new cipher as well. And then also one like the last bucket is experimental platforms. This

is like Salona and difinity. It's very hard to shape the theefs and where these platforms are going to be best at because they're so new and they're so different and their positions themselves so differently from the other than we just put it like, we think it's very interesting technology and we believe it's experimental. So this is kind of the third bucket where we don't know how it's going to turn out about it's different, interesting to look

at it. Yeah. Now, a lot of funds um you know, especially the ones that are more connected VC funds, and we see in Silicon Valley and whatnot are really trying to get more into like equity. It seems like these days, Um, do you guys always try to see if you can get in like seed round equity or do you guys also play open market tokens? We do all of it. So the way we structure, yeah, the way we structure

our business. And again we're private investment firms, so there's not a lot of information I can disclose, but I could speak about the general structure. How how we do it? So um yeah, sure, um so um. It's about half of the portfolio is like a tradable portfolio, and this is we always adjust our positions on the market based on trends, so we're not actively trading. What do we do like when fundamental shift and we see the fundamental shift, we we do portfolio rebalancing. And then the rest of

it is split between the liquid tokens. This means the tokens that are invested or bonded which are not immediately tradeable, and and a venture investing, which is about twenty of the portfolio depending on the time. And yeah, in venture investing, we UM. We started with doing only tokens back in two thousand and sixteen, and now we do both tokens

and equity. But of course the idea is to sometimes we get in equity for the reasons that the project is in the very early stage and they're talking economy is not fairly yet, and actually it's preferential then investing in the seed stage when the project has the white paper outlining the exact mechanics of all it's talken, because sometimes it's too unrealistic to predict how exactly it's going to work, and it's better to get into in equity.

But it's important to have the exposure to the underlying asset because if UM and by that I mean having convertible equity or any other like talking options. There are different types of arrangements you can have, but we usually don't do pure equity because most of the projects, I guess all of the projects were investing. They have the underlying assets, they have the underlying talking and we want

to have exposure to it. But we also want to have the product, want to give the project time to figure out the talking economy, and we actually don't only give them time. We work very closely. Well, our portfolio companies on this to help them structure talking economy and then gain exposure to the underlying said. So that's that's pretty much how we co over. So since you believe in your your view is kind of that multiple chains will be you know, all kind of coexisting in the future. UM,

I take it. Maybe you believe that bitcoin is probably has the best chance of survival and being there in the future, but maybe some of these other chains maybe present better investment opportunities, meaning over the next you know, five years, they'll probably increase faster than Bitcoin. Well, so maybe bitcoin is a safer play, but the other ones are more explosive. Uh, it could be. But still bitcoin

is our larger, largest bit on the portfolio. And um, I think that bitcoin bitcoin has not reached its explosive growth either. So it's just to me, it's like even if you look at your traditional portfolio, you keep some of your funds and equities, someone bonds and someone gold. It's just very different as and some you might be investing in some hedge funds or vcs. If you are in the credit that investor and you have exposure to it, I view it the same. Wait, so I think, yes, yeah,

let's talk about that harbor. Yeah, it's a safe harbor, but it hasn't reached it school potential yet. Sure, yeah, and I agree. I mean I I see it much much higher than it is today. I'm just thinking some of these, you know, other projects might go up faster, right because they still have they're still we don't know where that's going to go. But curious kind of what you just said. UM So, I believe in acid allocation I talked about all the time, right, Like, nobody should

be getting wrecked in this market. You shouldn't put all your money into it. Um So, you should only be putting a you know, a portion of your assets into this and whatever that percentage is for you. But within that allocation that someone puts into crypto, UM, do you really think there's a way to diversify that or is it really just all lumped in crypto um or how

do you guys look at that? Well, crypto market is still very correlated, even though we've seen them this this year that bitcoin got separated more from the other assets as we've seen in the recent kind of bull market. UM, we've seen that bitcoin has really separated itself from all the rest of the market. But I still think it's very correlated. And why because the main use case is

still speculation until we get to use it. Until we get these tokens uh used as they were intended to instead of being speculated on, then we're going to see the uncorrelated market. Then we're going to see that you can really diversify for now. Yeah, I think diversification is a big word for crypto because it's still it's still mainly about speculation, and I think it's not there's nothing wrong with it. This is how markets evolve. They start

with speculation, they start with trading. But until we see most of these tokens being used and being traded and purchased for their intended value, we're going to see them being highly correlated. And that's why I think that's a poor diversification strategy. If you're diversifying in different market platform tokens, that's put it this way. Yeah, so I agree with you. Right where we're at right now, we're in a spect

reulation phase and it just is what it is. Um So I guess what you're saying is then you know, only take a percentage and allocate towards crypto, but then it's not really diversified. It's just it's just kind of in crypto. Maybe you know, maybe some is more into like bitcoin etherium, which is a little bit safer, and then some is into more like moonshots or whatever. But for the most part, it's still pretty correlated. So it's all kind of not very diversified. Yeah, it depends. It

depends on whom you're talking to. If you're a professional crypto investor, of course you look at it differently. And that's like if we're talking about professional crypto investors like like Austin, like yourself too, then it's very different because you're diving into the details. But most most investors, as you see them, and like as I talked to that like more in the traditional investing business, they see cryptos one a st class, and that's how I usually tell

them to look at it. Like I usually don't have an advice to get anything beyond bitcoin and etherium, because otherwise you have to form an investment these that's around it, and you have to like you cannot just buy tokens just to diversify. You have to perform an invest some pieces are you investing in smart contract platforms. Are you investing in identity LA you're are you investing in defy? Are you investing in decentralized computing? They are already different

these that's forming around this asset class. And yes, of course in this sense there is a lot of diversification opportunities. But again, if you're a professional crypto investor, not if you're an outside investor looking to diversify your portfolio, then I guess that's point and ether are the best bets. I think even the way we talk about it shows how early we are. Right For example, right we're calling it an asset class and talking about investing in the crypto.

You wouldn't say, like, I invest in the Internet right now. In you would in ninety nine you would say that I'm investing on the Internet. Um, I was young, and my roommate and I we thought we were day traders all of a sudden, and we're playing these Internet stocks, and so we did. But today you would never go, oh, I invest in the Internet. Just that that doesn't work. And so I think that just shows how early we are.

We Yeah, we we look at cryptos and asset class, but really it shouldn't and that just shows how early we are. UM. Yeah, so it's interesting. UM, but I agree with you, right, it can be dangerous and so just practice asset allocation if anything else. What do you think about I think we both agree on like how early we are we talked about, Um, really it's speculation

right now. UM. I see people talking about bitcoin, even bitcoin being you know, one of the longest running chains, and trying to still call it a money, a medium of exchange, or even a store of value, which I think is all too early. UM. What do you think about some of the maybe use cases that we're starting to see. Do you think we're gaining any traction or do you think we're just still maybe a year or

two away from seeing anything really start to take hold. Um. I think the main mistake, but maybe misunderstanding of the market that most investments have me included, UM, is that I think we get the general trends right, we get the timing wrong, and like looking at the market at the thousand sixteen, I remember what we're talking about, Oh, this is this is going to happen in two or three years. Well, two or three years have passed and

very little has happened. So I think like, as you said, when you were looking at the Internet, you should look in ten fifteen years ri since if you're looking into like real shifts in the use cases. So yeah, like I don't like now, I don't even say, oh, in two or three years, X, Y and Z just gonna happen, because it's probably not. And it's to some extent it's disappointing that it's moving so slowly, but I understand that that that's how it's probably gonna work, and that's how

it works for most technologies. So I think also, it's like we're like watching paint dry, Like we're sitting there watching it every day. But if you really step back and look what's happened in the last two years, for example, it's it's kind of moving pretty fast. It is if you're inside this industry. It is if you're if you're an insider, you're like, oh my god, there are hundreds things of happening. Look defiled, look make dolls, CDPs. But

we can do so many things. But if you talk to an outsider and say, and the person will tell, well, how can I use it, You're like, um, well, look, this is making down. This is like you cannot open the CDP. It's still it's super exciting if you're inside this industry and you're playing with this, and I agree with this, like all the defied movement excites me. If you're asking about the trends, I think this is one

of the most interesting trends. Then. Um, of course, the staking and the governance and how all this proof of state network is gonna launch and play out. This is super interesting to watch. We just had Cosmos launched, we had Tasos launched last year, and we're gonna have Palka Dot launched this year. So I'm very excited to see

how this is gonna play out. Again, all the games, theory and all of this is going to evolve in years time when the network is going to grow in value, when there's the security budget, let's say, the network is going to be much higher, and it's going to be

much more interesting to watch this all unfold. What else I'm very excited that about is Interiorum two point zero, of course, because they have such an um crazy ambitious roadmap, and again where now only talking about the roadmap in and you know how software development goes, it's never going to be completed in two any twenty one. So it's like it's going to be completed later, and then after it's going to be completed, it's going to be a period of adaptation of people moving to the new change.

So if we're gonna see all this new trends taken on but slowly, and in terms of bitcoin, I think a lot of maybe it's a little bit controversial, but I think a lot of them. Um, A lot of the projects around bitcoin spending, bitcoin paying and whole foods, I think there are a little bit of distraction. They're good marketing effort. It's nice. It's nice to see it in the news. Oh now you can pay for your groceries with bitcoin, But honestly, I don't want to pay

with my groceries with with bitcoin. And yeah, I think this is not a primarily used case. Um so yeah, like if talking about the advantage of bitcoin, I'm more interested about privacy about it's the like the improvements in bitcoin that the core development wasn't working on. But this like little marketing thing. So I think I good for the general public to see the US like, oh, this big chain accepts bitcoin, but I think it's more like noise over signal. I I would agree with you. I

think there's definitely pros and cons to that. Um. I think it's nice because I guess it does increase awareness, but it pushes the wrong narrative. And really, I think we have to understand that there's this evolution, right, and and we're kind of going from like a collectible and we'll eventually get to this store of value stage. Bitcoin is not even a good store of value. It's too volatible right now, but it's getting there, and it will get there, and then after we get to the store value,

then eventually we'll get to that medium of exchange. Right. Um. But uh, but to try and push it as that today, I mean I look back because I started in two thousand and fifteen and and I was I bought a lot of bitcoin. They're cheap back then, and through like the tweventeen run, I started just spending bitcoins like they were just chicklets, like oh yeah, bitcoin, bitcoin, bit pin, and then all of a sudden, you know, it hit wherever it's tied. I'm like, what did I do with

all these big Why did I spend them? You know, Uh, you don't want to be the big point pizza guy, right, No, yeah, you don't want to be the bitcoin pizza guy and you spend it. You spend an inflationary currency, you don't spend a deflationary currency, right right, Yeah, you know it's good for adoption, it's good or good for awareness, but definitely too really for a for adoption for sure. So but the DeFi space is one that I like, I like, I like that, As you said, I think that's kind

of exciting. Are you guys looking at that at all? Or just really more in the protocols, because there are some defied protocols that we're starting to see, Oh yes, for sure, and most of them are built on ethereum. So again back to our thesis, we believe that if this protocols became valuable, etherium becomes valuable and our underlying

investments become valuable. So there's some layer two or reason I heard the term security layer and execution layer and like it even more than layer were one on layer two because it's different. But so some of these protocols on layer two will be able to capture value separately from ethereum, and we do invest in some of them, like for example, life beer is one of those um

or the reacts. Uh, it's they're they're improving ethereum, they're improving the ecosystem, but they're also separate layer two networks that can also gain value and prove value because they're holding some valuable states in it. So I think it's

important to see defy. It's a very interesting trend, but I think each it's important to look at each platform and see if the underlying asset is going to improve value because the platform itself and the software itself may be extremely interesting, but the valuable still still complete ethereum. So yeah, so I think we look at it separately. We think all of these protocols like DOHRMA, like d I, d X, Maker die. Of course we use it extensively.

We use make a dial and that's what I'm excited about. It's one of the few blockchain tools that you actually use for its intended purpose, not like not the speculation, and very excited about this use cases. So we've been using Maker Doubt for a while. We've been using their CDPs and looking for the multichollateral dye to come on to come on boards so we can use like for example, digits tokens like goldback tokens to CDPs. So this is very interesting. But again we'll look at it separately as

a use case or as an investment. As a use case, they're all extremely exciting. As an investment, you have to see like we're we don't own, for example, maker tokens, but we do use maker dow extensively. So that's the difference. Okay. Um. One last topical that dip into just a little bit is UH is risk and and and risk management. Um. I think obviously every single project is going to have its own set of risks, right, um. Whatever that may

be risk from the team, risk from other competing. But then I think we have maybe we have a risk over kind of the asset class from like regulations and stuff like that, Like where do you see risk and how do you guys, um kind of plan that out in your investing thesis. Oh, I don't like this topic. I'm kidding because there's just so many risks in crypto now. It's just like full of risks. But to be serious, um, the different buckets of risks. One is the inherent risks

of the token economy being not thought through. And this is the very obvious one, and this is what we look at the first place. It's like the on the micro level. UM. If you look at the project, the risk is that the token is not going to prove value.

And we can draw models as long as we can, but until you invest, if you invest in the token that's not treated yet and not used for its intended purpose, you have no idea if the token economy that's been drawn on the white board is actually going to work in practice. That's why we do invest a lot in the tokens that traded on the market. And we talk to projects sometimes and we love the project and we love the token, and we say, guy, we're gonna invest in it at the higher price, but we want to

do risk. We want to do risk your token economy. We want to do risk, your um, your mechanics, who want to see how it works, And that's what we do. We do a lot of market investing were by tokens on the open market too, So we don't only do venture deals for the specific reason, because sometimes we believe if it's all very theoretical and bettery, new is just too risky. UM. So this is one of the office risks.

But of course the regulatory risk that you're talking about is another big one because we're based in the US and you're based in the US two and you know how unpredictable it can be. But also at the same time, it's unpredicable, but it's predictable. If you are issuing a token.

Most of the projects have to think that they have highly like likelihood of being deemed the security at some point in time, and they should start I guess they're thinking from this point of view because we heard so many projects that they're saying, oh, we're utility token that this is why kind of like, well, you haven't got any approval from the legislature for being a YouTube. It's a token. It's what we have invented, like the industry

have invented instead of itself. And some lawyers had said that yeah, that works, I mean yes and no. Right, So, like you take like a storage application, like a file coin or storage coin or whatever. Right, so I could have like decentralized storage I could store instead of using Dropbox, I could store my files decentralized. In order to use that, I have to use their credits or their tokens um.

But like if I use in the traditional sense, I use let's say I use a shutter stock for stock photography or video block for stock videography, And to use those platforms, I have to buy credits and then I redeem their credits for those photos. I redeem those credits for That's how it works. And those credits I buy

are not securities, and those credits are not attacked. So if I buy a token to use on video or file coin, they're treating that as a as a security, of treating that as a as a as an ASCID, as a taxable event. So we we have like real world This is where I lose it. It's like we have this real world example. I get reward points at target. Those aren't taxable, right, but all of a sudden, because it's now a token, it is. So what do you

think about that? Well, I totally agree with you. But what I'm saying is that's what we think the legislators are gonna say, and that's where the risks are. So it totally makes sense. But then because it hasn't proven itself. And now actually with the skin Kick case, you've seen

it yesterday, the SEC decided to see you. I mean it's it's kind of was expected that they will see them but at least it's gonna show some clarity because for now it's more what the industry inside of itself thinks, what's going to happen and what makes sense, and that's what we hope is going to happen, because yeah, most of these tokens are intended for its intended purpose. But you can see the the kin token, for example, it

also has an intended purpose. But I have no idea how it's going to turn out because there have been a lot of gray areas how it's been sold, how it's been marketed, what the team members have advertised, what they've said. So until we have one, two, three, ten cases like this which are public and open and give

a public precedent, I think there's still high risk. Even that the recent fence and guidance that was issued a couple of weeks ago, it had a lot of new points that were not mentioned before because before I remember, there was only the main concept was that if your network is fully functional at the moment of sale of talking, it shouldn't be considered a security. That was kind of the general understanding, but now they have added many more

points to it. They were like, it's it's not supposed to be traded for example, remember they were they were saying, like nobo, what what the exact term was, But it was not supposed to be openly traded on the market, only through like your designated app or something. But that so that's where the regulators are gonna that's the threat at I see, because um, I see this token economy

where it unlocks value. So right now I have value stuck in my airline rewards points, and I have value stuck in my whatever target reward points, and I have value stuck in all these silos and it's stuck. But if we can tokenize that, then all that value can freely exchange. But what what that Fincent as you're pointing out specifically says is you cannot you can't exchange that. And it's like, well, and so all this we're talking

about like n f T s and video games. So now I could earn this skin from my video game and I should be able to freely exchange that. But what that regulation says is no value has to stay in a silo. And so that's very scary. So we'll see how that how that we're just in the beginning, Yeah, because it's to the guidance, then this is not a

court key. And this is also important, and that's I think what they said themselves, like, this is a guidance, it's a framework, but until it's been tested and coured, we cannot say that this is a rule said and still so yeah, we have. At a recent conference I was at, there was someone from the SEC talking and they said, look, you guys are all waiting for us to come out and tell you what you can do. That's never gonna happen. We don't tell you what you

can do. You're allowed to do whatever you do. We'll only tell you when you can't. And so, as you said, right, we'll have to see it playing out over court cases, and it's just going to be a slow, slow role Out's going to be interesting to watch exactly. But we should also shouldn't forget about the rest of the world. I mean, it's it's very said when the projects have to exclude the US because of this regulation, but there's still a big white world there and some countries I

believe will be pioneering very open legislation. It's going to be very interesting to watch. And I'm not only talked about like Malta but also I think maybe we're going to see more innovation coming from Singapore Hong Kong because their legislators are going to move faster than the US legislators. So yeah, it's it's also interesting to watch what's going to happen on this side of the world. Yeah, as Ah, you're you're more of an international citizen, having lived in

three countries. Um, I think a lot of Americans, uh don't. Seems like a lot of Americans don't really travel that much and they just kind of stay focused and so um, it's definitely gonna be a lot scarier for them. I'm not thinking globally, But great stuff, gotcha. I I really appreciate this. It's been been a fascinating conversation. Um, there's so many areas that I'd love to dive in deeper with you. So hopefully we'll get together and be able to talk about that. But I don't want to. I

don't want to keep keep you too long. We've already gone over past what I told you. So anyway, it was it was great. Uh nice talking to you. Yeah, it was super nice and thanks for having it was a great discussion. Yeah, I'm happy to talk again. Yeah, we'll have you back on soon. All right, thank you, all right, thank you. All right. Hey, if you like this episode of the Market Disruptors Podcast, please help us

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