Navigating the Web3 Venture Landscape - TOKEN2049 Dubai 2024

hey everyone I think uh we can just we're going to be talking about VC investing things have changed quite a lot over the last six months why don't we just quickly start with super brief introductions Goin sure yeah I'm the uh co-founder of uh sparton group and um I focus on the investment side of our business where we have a hedge fund and two Venture funds uh we also have an advisory business that works with uh some of the biggest crypto firms to help them raise Capital uh do m&a and do restructuring hi everyone Min here from ethereal Ventures um ethero was set up by the former investment team of consensus we've all been working together since 2018 and we're a generalist crypto fund that's more focused on infrastructure some of our investments include ion layer assets and Flash Bots hi my name is lass Claus I'm one of the founding partners of 1kx we're early stage uh token Network firm uh we started in 2018 first found to focus exclusively on tokens and and the digital assets themselves and have invested in the early days and things like R weave ZK sync wallet connect and safe I'm a managing partner dragonfly we're a global crypto VC fund you you know the Dr so over you we we did a similar panel like this in Singapore like seven or eight months ago and it seems like everything has changed we were talking about bare Market about allocating in a bare market and now you know prices are probably 3x from there how have things changed in terms of what you guys are seeing in the market um what are the valuations looking like how are things different than they were seven months ago and why was it so quick in terms of transitioning to that period we can maybe kick off with Lassa who was of that panel as well I yeah I just think the number of scams that has just absolutely skyrocketed again it was really just shocking uh particularly I was in Hong Kong recently and uh the number of deals um and projects that are raising uh is phenomenal uh so we're we're missing out on a lot of stuff right now which is usually quite hard the good thing is at least we've been uh investing very very aggressively since uh like one quarter before the FDX collapse so not like timed it perfectly but things already look pretty bad after the Luna crash and so at least we are um you know we don't have so much for more because we allocate a lot of money at very low valuations but now I think it's like a very dangerous time because you really quickly have anything decent being immediately bid up to you know one project I won't name it but we were talking about a 200 million valuation which was already like kind of like frothy and then someone offered them um a billion valuation for C deal and we're like okay this is great for you guys and and uh you know what deal was this I'm not going to say it what is it is it line with Stanford Professor the whole thing uh you know and uh and and just okay and we're like okay this is wonderful for you guys and and you know but but that's insane so it's it's difficult now it's because it went so quickly right it was really we're all depressed in the bar market and then boom like you know okay we're so back and and uh yeah maybe Kelvin for you how how is the strategy different in terms of deploying like are you are you doing as many of deals as in the be Market or is is it roughly simil just higher valuations yeah so we were active throughout the entire bare Market because you know obviously we have uh dedicated funds and um to me the bare Market was the best time to invest right because that that's when uh the founders find it more difficult to raise capital and you have a little bit more negotiating leverage so we've been investing throughout the bare Market but we also knew that the market wasn't going to stay in a bearish environment for a long period of time and when crypto moves it moves very quickly right so we were basically trying to deploy as much as we can but in a bare Market environment obviously the deal flow also dries up because generally if the found have a choice they don't want to raise in a bare Market um so I think the environment certainly has picked up since fourth quarter of last year uh and similar to what last say um was saying earlier uh we're seeing certain deals now particularly in infrastructure space where you know the valuations are getting quite frothy to be honest uh there was a deal recently where you know we had to where we were putting we were asked to put in a term sheet uh we did at once the founder came back and said this isn't going to cut it we we went back to the investment committee negotiated for high value valuation went back again still didn't make it went for a third time and ultimately somebody else came in and bid it at 50% or 60% higher valuation than we did um so just gives you a sense of the environment now that's not to say that the entire crypto space is like that there are certain uh areas particularly i' would say the application layer where deals are still um priced quite reasonably and the fundraising environment is still tough so we're trying to focus on areas that make sense from a risk reward perspective Min what uh what sort of deals are you guys seeing now that are the most interesting or maybe the most uh appealing for you guys in in this market yeah so we have a focus on preed and seed and I think this is the area where we maybe haven't seen um I mean Ceda is quite competitive but a lot of preed because of how early it is we you are buffered to some extent from some of the valuation increases that we're seeing and you know for us because we're more private VC folks Focus like good companies are built in Bull markets and bare markets we can't try to be overly queued and time to Market too much and I think ultimately you just have to look at the founders and see are they long-term like do they have strong execution ability like all these fundamentals matter um but sometimes actually funding something in a bull market even though you're paying a higher price the time if the timing works out where you're you get good adoption you get more experimentation more people coming on change it's actually better than funding something in a prolonged like bare Market where you don't actually see as much net New Capital coming on chain so for us you know we're still very much focusing on the preed I think where you know we're seeing some frothiness and it's total market like you know rational Market behavior is in pre-launch tokens where they're expected to launch in this cycle and hit the cycle narrative so a lot of people are paying for that liquidity that ability to harvest in this cycle um for early stage players like us we're trying to be a lot more disciplined and think about the narratives that will be popular in the next cycle instead want to talk a little bit about uh meme tokens maybe um wait why me no but it's it's related to so so you know the way I see it so much of the price Discovery in the last three four years has happened in private markets right you see layer ones layer twoos listing at 10 plus billion doll valuations almost constantly these days um and normal people outside of Angel Investors just don't have access to those deals before they actually go public do you think that the by byproduct of that is that so much of price Discovery and so much of the upside actually happens in the VC markets in the private markets is that Meme tokens are now so popular that maybe you maybe normal people feel like you know that's the only way to actually make it or to actually collect the upside because so many of the interesting projects already are trading at 10 plus and maybe the upside isn't as interesting um okay so that's I guess that's one Theory you could give for why me coins are popular I think it sort of explains too much um I think a much simpler theory for mem coins is that every cycle there's some speculative game that people want to play and meme coins are the current speculative game that is high turnover it's really fun it's very social it's easy to understand um nfts in a way were a kind of shitty vehicle for that speculative frenzy because they're they're kind they're not very liquid by Design they're constrained only 10,000 people can play the game for any particular asset uh if it's 10K pfps um openc was taking a two and a half% cut on every single trade for the entire cycle that's kind of an insane tax on the entire system so if anything if you if you want to just go onchain and play some like big kind of Casino um it is more efficient if it's just like a picture of a dog and some tokens then like oh we have to like pretend that we're doing art and we have to tell this big story and we have to only have 10,000 and openc has to you have to get on metamask and use openc and all this stuff um and so in some level if you assume that more or less what's happening in memec coins is a more self-conscious version of the same kind of speculative game that was happening with nfts over the the nft Boom in 20212 I think it's it's a different section of the market it's really sort of you know every culture has these sort of like socially accepted little gambling games in Europe it's like Bingo it's mostly old people that play it has an element of chance in there right there's there's tons of these little gambling games and I think crypto can also cover that with meeme coins and then generally if you're talk about gambling or Lottery the quicker the turnover is the better right and that's what has said this is really these things you know it's a little piece of Internet culture that you can bet on on a weekly basis right it's one week it's this one the next week is this one versus that's already the the and the purest form of that is a slot machine right where every 30 seconds you have the turnover like oh did I win did I not win versus the lottery was always a loss against that because takes like a whole week for everyone to kind of find out if they won or like months and so I think it's just a totally segment of the market and then there's this nice element of it's basically internet culture that you're betting on right it's really just like can this become a meme and then can that also be translated to some speculative game but I think it's just very very different from a more professional kind of mindset of okay I'm betting on futility and I think I can outsmart the market because I understand the technology better Etc very different segment yeah the thing that I'll add as well so like what you're describing of like oh you know people don't feel like they can get access to the upside of venture Investments and so they do meme coins um like the way if you remember in the last cycle in the in the defi boom there was this very popular concept of what's know as a fair launch and this was increasingly becoming the way that people were trying to do the same same fundamental story right dis mediating BCS giving access same upside to to the to the the normal folk and uh Fair launches quickly fell out of favor because they all were kind of disasters for the most part besides ur ur was the OG and then you know Andre cronier of course the originator of that uh and then after that most of the fair launches quote unquote were just complete you know uh just it launch and then it immediately crashes because no one's incentivized to actually build a thing um and so Ironically in mcoins there's also this concept of a fair launch okay but a fair launch in meme coins actually does not mean the same thing that fair launches used to mean in the defi era so in the defi era Fair launch means you know no pre-mine for anyone right everything is open access you just get in there you yield Farm you mine whatever it is and you can get access to the Token um in meme coins a fair launch means no VC allocation but there's still a pre-ind the pre is for the team but the in mcoin land this is what's called a fair launch so the reality is that the mcoin game is still quite extractive like there are teams that are just professionally going out there I mean at this point everyone knows this it's not this not a secret that there are teams that are going out there just launching meme coins every single day at massive massive scale playing all these games you know people saw was slurf which is this viral meme coin that obviously they accidentally burnt the lp and it became this you know Story by happen stance but the guy who made it um what what people token SLO later figured out the guy who originally made slurf the viral mecoin he originally deposited his own money into slurf to give the impression that people were depositing money to try to mine the thing and like he was he was basically gaming the thing and then he up and burnt his own LP and so the the idea that Meme coins are somehow not extractive but VC Investments are I think is wrong every Market is going to be extractive at scale the job of a VC is to find things that are good but I mean the ultimate person you have to blame for retail investors not getting access to venture Investments is the SEC of course yeah but I also want to add a point there but I think one of the problems that sort of accentuate this right is that you know the media sort of plays on this um you know popularity notion right where they talk about the one or two coins that you know generated 100x returns right or THX returns but they don't look at the other 999 or 98 coins that went to zero right and there a lot of those things that happen right and um and so people sort of come into the game thinking that they're going to get the same kind of returns but by the time they get in those returns don't exist right and they get burnt but in general you know when when let's say you make an investment and the investment is a $50 million round and it lists at 10 billion and trades there is that a problem I think so yeah because you at the end of the day at least what we try to focus on is really ecosystems and networks and what that literally means is that you have a large number of the right stakeholders that are actually using this network that are suppliers on this network that the ownership is distributed amongst and it's still I think the biggest challenge in the space is actually being able to distribute that to the right kind of people uh what makes it a little bit better if your product is live for quite a while and then you have a lot of data on retention Etc where you can try to at least you know air drop it to to the users that are occurring which also is extremely gameable at the end of the day so I I still think the biggest challenge is really finding a way that you distribute Ed to because what you're trying to do is you're trying to bootstrap a network and that also by definition means that you have people that put more value in than they extract out that's the only way that you're creating value in a network and so it's extremely hard but extremely important as well that you actually manage to distribute your token among those type of people uh and I it's it's it's the biggest challenge really that that we see in the space yeah I I would say also I mean the what your question implies is that maybe what people should be doing is they should list instead of at 10 billion they should list at 1 billion and then people can buy the token and then write it up to 10 billion right right the reality is that if the fair value of an asset is 10 billion or whatever it is if you list it for 1 billion it will go up to 10 billion in 10 minutes right and so like the people who will ultimately end up capturing that Delta are the people who are trading on binance in the first 10 minutes right which is not you um or at least not me I me I don't know I don't know about you guys but um so the reality is that there's ultimately no way to solve the problem of that the market is really bullish and now the the way that you mechanically try to solve this is with aird drops and you know giving giving a community an incentive and I think people also I think they also uh maybe draw too strong of an inference and they say well you know if you look at salana right salana obviously has this amazing story you know originally they were super high flyer in the last Bull Run FTX collapsed salana kind of had their value of Darkness they went through it that created a really really strong Community Bond within people who are still continuing on in salana and now those people are salana for lifers right and like it's very hard to make that um and so you know you might draw out the argument and say well you know that happened to Solana so therefore you should list your token at a really low price that way people make a lot of money and then they'll be you know die hard on your token and I think the reality is that what salana has is almost impossible to replicate no one knows how to do that there is no formula to do it if you list your token at 1 billion and then in 10 minutes it goes to 10 billion you didn't create any for lifers you just made you know some binance Traders really rich um creating Community is really really hard it's really really hard creating people who really believe in your project is really really hard and ultimately the best way to get there like there are individual tactics and tricks and no air drop this and farm that and blah blah blah but at the end of the day you have to create a product that's actually useful and if you don't do that whether you get a lot of TBL in day one whether you come at a very high price all those things will go away unless you actually have uh a product that people want but I think one of the problems that um is causing this inflation and valuation is the question of whether or not there is enough circulating Supply right because you look at many of these investing schedules right the investors the early investors are locked up for many many years which makes sense because they should be aligned with the team and you want investors to be longterm but then in many cases you don't have enough tokens in circulation right and therefore the question is is there proper price discovery that is that is happening in market so if you're thinking of buying anything please look at the fully diluted Network valuation FTV don't look at market cap look at you know full token Supply I would think if something if something has 2% float and it's valued at $60 billion right because you want to buy something that's good and cheap and the way you find out if something is cheap is by looking at the fdv and so something has 2% float and therefore it has an fdv of uh of uh you know 60 billion is not cheap anymore I so I disagree with this but I'm C we should probably we should probably go around and get the take on FTV because I think FTV is one of the most um misused Concepts in crypto so FTV I mean I assume most people probably know what FTV is but FTV is fully diluted valuation right basically look at all the tokens that will ever exist multiply by the current price that's FTV right usually the current circulating supply of a new token is much smaller than the fully diluted Supply right the problem with looking at FTV is that FTV compresses a lot of information into one number and that information includes for example how much uh how long will it take to get to a certain uh total circulating Supply right if you take the FTV of something that's an inflationary token but it takes 100 years space 1,000 years okay yeah so some things take 100 years to get to their fully deliv Supply some things will get there in 3 years right uh some things 50% of the supply is uh Community treasury which basically means that like it is unspent it's almost like unissued shares right so you would you would you actually should be canceling those out because the only time they would be sent out is when it makes sense for the rest of the protocol to actually benefit from those things um some of them are for liquidity programs in which case like again so you you have actually have to look into the details to understand what is this FTV representing and how long does it take to get there so so for the audience listening here and you know thinking about deploying Capital to whatever tokens like what is the most important metrics that you're looking like is it like percent emission each year is it is it like detailed breakdown of where the emissions are going and is that information even available to normal users so almost every token project will give you that chart that shows like the curves you everyone probably knows what I'm talking about the curve that like here's the supply over time here's the investors here's the team here's the like this thing and the unlock over time that chart is the chart that you care about the FTV compresses all that information into one number but ultimately that number does not tell you enough to know when is that Supply coming online who owns that Supply who are the investors what's their behavior right so if you look at something for example where andr uh for example is an investor okay Andre you know most people in this stage know they have super super long fund lives right it's like 13 year 15E funds and they don't care about returning Capital to their LPS and so they'll just be like yeah we're going to hold this for 10 years and as a result if Andre is on your cap table it might be a very different story than for example some random Chinese pump and dump fund is on your cap table in which case okay that supply is getting sold the moment that it comes online so as an investor it's it's kind of on you to think about what does this chart tell me looking at the underly composition of what's happening in this chart as opposed to just well FTV is 50 billion you know salana is this much this is that much this is not 20% of salana therefore it's a bad bad investment like just to give an example we have a liquid fund right so we have hedge fund uh we have a hedge fund and we have two Venture funds so when we do the Venture investing I mean obviously we're getting in at a very early stage it really doesn't matter for us right we just need to know what valuation these projects are raising at but in the hedge fund where we can invest in this new tokens that get listed we have to think about these issues a little bit more and I agree with um a in that um that one number probably doesn't tell you everything and you need to look at you know what the vesting schedule looks like so there are many tokens out there that we look at and we we know the fully diluted valuation the fdv doesn't make sense but we wouldn't short them right just because we know that that Supply is not going to come to Market anytime soon right and and in certain cases where we think that there are near terms so the caty that may play out we may even go long those tokens um so it's not that straightforward um if if it's if it's one number that you're trying to figure out whether this is cheap or expensive look at FTV don't look at market cap we literally have this now tons of tokens that have 2% float uh you know circulating Supply people think it's cheap and and actually the real valuation is is is whatever 60 billion then definitely go into new on if you go deeper than that you definitely have to look at the things that I see was saying particularly what kind of investors are on there what the unlock schedules are but if it's one number that you're looking at try to figure out is this cheap or expensive look at ftvm I think one thing to also think about is in this market everything is extremely reflexive like you know trying to look at any sort of fundamentals like traditional sort of like price price sales or even like you know just fdv over tvl like it just doesn't really make sense but at the same time you see like you know numbers keep going up there are few reasons for this I think you have like very obvious mean coins like the whiffs and the slurs but even a lot of l1s like you know a lot of just High fdv tokens are kind of meme coins there's just proxies for retail to get access to something we really seeing this with AI where they all these like bogus AI projects or anything that has some sort of linkage to like Sam Alman like just displays of extremely high valuation that doesn't make sense but you know um at the same time like because a lot of funds and a lot of big investors you can't actually buy a low market cap token there's not enough liquidity so if you see more funds participating on chain you know some of them have restrictions I can buy top 20 coins it has to be like market cap of above a billion so you then create more Network effects within like you know those coins that fit those criteria so in a lot of ways I think like you know just having a lot of being vigilant having a lot of flexibility um trying to make more money then you're losing in this phace I don't know I'm not a Trader but when we look at the liquid Market it's like I don't M be celvin right now so so in in in Bull markets you guys obviously compete more with Angel Investors there's generally just more Capital to be deployed um there's now also a new platform that's trying to kind of create syndicates of a lot of Angel Investors is that something that you guys you know compete with directly or is that just something that's kind of supplementary to the rounds that you're seeing I mean every every bull market you see this concept sort of being recycled of democratizing access to investment and and whether you know it was Angel list and okay they had to be credit investors but at least they got like larger distribution you got icos like and and and you know and I get it it's a little bit it's it's regulation it's Gary GSA that's basically disallowing anyone from from participating in in giving folks money and then depending on them that they create something of value for that on the other side like this is pretty brutal and it takes a long time takes like three years like software is very complicated crypto software is extremely or cryptography is extremely complicated this takes forever 90% of the time this looks like it's just going absolutely nowhere and you know it's going to die you have all these calls with these Founders and 90% of the time it's just really rough out there I'm that's why I'm also wondering whether these are really you know letting anyone invest and we saw this at the end with icos it got so overrun by people who honestly just expected that in one week this thing is listing at 4X on binance and if not I'm going to Y yell on the telegram that you know they they they you know I'm going to sue them whatever so I I I get this always it's a great great meme in a in a bull market that yeah you have all these new people coming in and of course they want the returns that VCS do but I don't think you see the work that VCS do which is over you know three years doing a bare Market uh you're dealing with Founders that are borderline depressed that are really you know the team is quitting left and right they're running out of money like this is really hard awful work and I think you might not be seeing that and what you see at the end the bull market is like hey these guys you know they made like 50x on their investment like I want that and of course I understand that everybody wants that and you know we should in a way be able you know be open to competition so so every every just every cycle we see this kind of concept coming back in a different uh kind of format and and it's again it's like how do you filter for valuable investors because even within the VC Community you can get funds that honestly just don't help you and and that's that applies to anyone is if your project you really need to get people that are actually helping you and not are sort of entitled and wanting a Forex on binance next week I mean I oh sorry no no no please please yeah so I I think there are um a bunch of um Angel Investors in in the ecosystem who truly have that kind of network right where they've been in space for X dozen of years and they um they go to these developer conferences and they've build relationships over the years where where they can get access to these deals um but that group is a very small group and I think some and some of them maybe in the early days uh don't have enough capital on their own um and they may sort of adopt this model I had a guy who used to work with me um who started doing uh these steps of investing and he could get access to to good deal flow but the moment he sort of Clips one deal and he realizes that he can do this it quickly became apparent to him that he's much better off deploying his own Capital than trying to aggregate capital from other people right so I don't think the model is very scalable especially at the early stage that you're playing in and the kind of check sizes that that people are deploying and and the other point sorry uh to to also add is that you know I think people sort of invest thinking that um all you need to do is Provide Capital to these uh projects but increasingly what we're hearing and seeing from many of these early Founders um they don't just want your money or even just your brand but they want a lot of help from from the VCS that invest in them you know whether that's through helping Partnerships helping them with marketing helping them with connections to exchangers market makers and so on and so forth right so it's questionable whether some of these other competing platforms can provide the same kind of value at yeah I mean the thing about Venture Capital generally is that uh everyone's money is green at the end of the day and uh so some level the job of a VC is the job of branding money so how do you make my money worth more than someone else's money and if you're an angel investor you have that problem doubly because you don't have the scale to be able to say great great I'll I'll handle at least all your fundraising needs so I'm your One-Stop shop for your fundraise if you're an angel investor you're like well you need me and like five other angels and then you actually go find a lead investor um so I think it's it's doubly hard to find a way to make your money more than just more valuable than anybody else's money um and the work there like you said uh is around you know value ad and figuring out how how I can be uh of service to the founders that I'm interacting with a lot of angels are value destructive as you said like it's only ever Angels who run around saying I'm going to sue you because you didn't ship the thing on time or the price went down or whatever um and you know on some level I don't blame these people they're scared they've lost money they can't afford to lose um and the the value ad of a VC is often times the fact that they're they're Pros right we do this for a living like if uh a start in our portfolio fails and they fail for the right reasons it's okay like we we expect the startups are hard most startups fail most crypto startups fail um so it's normal that somebody builds something it doesn't end up going anywhere in the long run as long as they made a good faith effort to try to get to that finish line um but uh I think you know to most people who think like hey if I get into investing in crypto I'm also going to make 100 x's and 50 x's and whatever um the other dirty secret Adventure is that most VCS don't do that right so like you're on stage for very well-known VCS who are running very successful funds on a relative basis most funds in crypto do not do well most ones in crypto invest in projects that are not the famous ones that you've heard of and they don't end up getting the really great returns so it's hard it's hard to be a good Angel it's hard to be a good VC as well um and the only way that you can really do it is by just being of absolute service to the people who you work with yeah we have 26 people working their asses off seven days a week I'm constantly worried that they're going to burn out like really like this is really really hard work and there's 26 people that are doing this on different areas from engineering to uh you know financial math to dealing with the exchanges dealing with the market makers that whole listing process is absolutely brutal um so I've you know I've um a friend of mine he's a Founder he played uh college football he tanked a startup he he successfully sold a startup like he's almost done it all and he said the hardest thing you will ever do in your life is launch a token like you don't understand how complex and rutal that is and and so so you really need like support uh for that and it it seems from the outside it all seems really really easy but it's a lot of really hard work to flip the p a little bit uh looked at top 20 tokens this morning and I think 19 of them are layer once um if you look at top 50 I think there's only like four application layers in in top 50 so when you guys invest like if I'm in your shoes I would think yeah it's just another layer one but hey you know guaranteed 100x because they all AC value really well how do you guys navigate that like looking at the potential return and effectively like in some ways almost guaranteed but at the same time knowing that there's so many layer ones a lot of them have no activity and maybe it is the application layer that should be funded now so that we actually bring in users that use these blockchains use these layer twos you know is that is that something that you guys think about or is it you know is it just pure like return based investment I think if you are invest if you are a venture investor and you have a utopian mindset about how you're going to allocate Capital you're going to die very quickly so now that is not to say that you shouldn't be thinking about these kinds of things you absolutely should and it's not to say that infrastructure Investments are obviously better than application Investments that's that's not true it depends on your entry price and depends on the the possible return Ms right you got to do the math it it depends on what you're paying and what you think you can get um it sounds like the the kernel of your question is almost like why why are L1 valuations so high is this a bubble are we in an L1 bubble is this going to go away can you bet on this continuing to be the case um my answer is more or less yes I think that it is correct for l1s to be valued very highly um because the prize of being a winning L1 is absolutely massive right it's like asking the question uh is it does it make sense for Snapchat to be so valuable when they make almost no money you know they're losing money um does that make sense well the answer is well if they become the next Facebook then then yes right if Facebook loses young people and Snapchat ends up taking it up then it's going to be incredibly profitable but right now it's you know it's not um and so of course it's a small fraction of what Facebook is worth in the same way you know some layer one that's you know number 50 on coin market cap um has very little activity compared to ethereum or salana um it's also valuable valued at a very small multiple of ethereum or salana um and so in a relative basis it's more or less a parallel uh argument it probably will be more clear in 5 years who actually has a shot of becoming a dominant L1 and who doesn't but right now I think it's still early and I think it's a large part of the reason why the market is pricing things as probabilistically as it is so so I think it's um uh it's it's also a chicken AIC problem right because um you know I think some of the larger web 2 applications you know who have interest in web 3 and I've looked at web 3 stack would say that hey you know actually the infrastructure is isn't quite ready you know I can't build something that scales hundreds of millions of users right and I'm not going to do anything in web 3 until that infrastructure is ready right so if we don't invest in the infrastructure then you're not never going to attract all of these millions of users and all these application developers that are going to build great things right so the infrastructure has to be there but at the same time if you don't have users then infrastructure is going to be worth nothing right but obviously Venture investors are always optimistic we have to be right it's part of our business business and so I think that foundational layer has to be built I think it you know as H said it makes sense that they're valued um very highly because the Tam is huge um but I I also think that uh there are um in every cycle uh money that goes into these application layers right if you look at the last cycle there was obviously a lot of uh money going to nft projects a lot of money going to gaming projects and also defi projects and I think we'll see the same thing happen in this cycle um and then for ourselves obviously we have two dedicated Venture fund one focuses on defi the other focuses on gaming and so we're also aggressively investing in those areas and my hope is that in this cycle we will see a repeat of what we saw in the last cycle where a couple of application layer projects do very very well and attract a lot of users and the market cap grows and then that brings in the VC money you know towards the later part of the cycle one one more thing I would add just I I don't want to speak too much but um I think there's also a little bit of a category in the framing of the question which is well if there aren't tokens in the top 50 that are applications then aren't we overbuilding infrastructure and underbuilding applications the reality is that if you have a chain that people actually want and that they use a lot of the applications for crypto they don't require tokens right like if you want to trade or move stable coins around or you know send assets or trade on Unis swap there's no new token that needs to get created and go in the top 50 for that to happen right the reality is that we already know what the killer apps for crypto is right like stable coins defi moving assets around um we we already have this stuff we don't actually need another thing in the top 50 to justify why we need more blockchains so the the question of do we need all these layer ones probably not we don't need 50 um but each of these blockchains is trying to be a better version of what we already have and in that sense we clearly do need better versions of what we already have yeah so the product Market fit basically question which is really scary is is solved right we know that we need this we know that we need this at scale and the and the yeah symetric upside there um then also you know you guaranteed that it's basically meme that works sort of I think also from from I would say you know there's a broader one thing is an investor you know you're you're if you're purely rational you're not investing in if it's a beauty contest you're not picking the girl that you think is the most beautiful one you think you're picking the one that you think the rest of the judges thinks is the most beautiful one right and so you have to consider that as well when investing in the space that you you might think this is the best one and everyone else is missing it but if the rest of the market never comes to see that this is actually the best thing category what ever to invest and and therefore the L1 things makes it easy because okay the rest of the market already thinks this is the winning kind of category you have to you know consider that or weigh that with the fact that for example we have like very long-term investors and the reason why they messing us because they think there might be actually something real in the space after all eventually like this will actually have some like real utility and so this you know it's very embarrassing for us to invest in something at high valuations that just nobody ever uses right and so you do kind of want to you want to combine this this acknowledgement of what the rest of the market thinks is valuable and that might not always be based on any fundamentals whatsoever but you also want to have something where you think okay over five years and particularly in bare markets the traction the usage of this thing is actually growing um so we try to weigh these things sort of against each other so one last closing question so running out of time for everyone in the panel which application do you think currently has the largest chance to actually bring in a lot of users to crypto uh a lot of users that are not currently using crypto consider CL yeah I would have to go with gaming um just because I think the number of Gamers globally you know that's a pretty huge pull and I think that the next versions of web 3 games are going to get to a quality level that's you know pretty good compared to the web two games and that will start to attract more users into the space cool good um we think there's going to be an explosion in payments already we see a lot of people using stable coins for as a transfer mechanism for you know crossb payments also for settlement credit currencies I think you'll also start seeing you know Neil Bank start offering it to retail users and you know Merchants will start saying like hey I can actually lower my interchange like you know maybe let me start accepting usdc and I think it'll be really cool because you know how many times do we pay for things a day it just bring a lot of users on chain I think we we don't the final form factor we can't predict it it's same thing rdit in Twitter nobody kind of fores all that it just took the existing concept of reading news in a newspaper and there were funds that invested in companies that cre PDFs for newspapers so people could read the PDF but you should have gone straight to Reddit in Twitter so we think the same way that an existing format is going to be reinvented in a completely different form factor and we don't know yet what it is I would plus one to Min I think stable coins will take over the world tether is like the most profitable business in the world right now it's crazy yeah it's phen cool well um run out of time thank you everyone for listening thank you for the panel I think it was a great discussion appreciate it m