#555 Sam Cassatt as the Degen King

Sam Cassatt is the Founder at Aligned Capital. He is the former Chief Strategy Officer at Consensys. In this conversation, we discuss Ethereum, Decentralized Finance, Degens, Yield Farming, Asymmetric Investments, the dark corners of Crypto, and where Sam sees opportunity. ======================= Did you know nearly 338 million dollars worth of NFTs were sent last year? And in 2021 that number is growing faster than ever. Looking to make your first NFT? Check out NEAR’s fast, scalable, low-cost, open-source platform. Learn why NEAR is the infrastructure for innovation at near.org: https://near.org/?utm_campaign=pomp ======================= Exodus is an absolute game changer in the crypto wallet space, and we’ve teamed up to offer an exclusive discount for you, as listeners of the podcast. Sign up for Exodus today using my promo code Exodus.com/pomp. This is a no brainer for both newcomers and crypto heavyweights - go sign up today. ======================= With 10M+ users, Crypto.com is the easiest place to buy, and sell 100+ cryptocurrencies. The Crypto.com Visa Card gives you up to 8% back instantly, and 100% back on Spotify and Netflix. Also, Crypto.com lets you earn up to 8.5% p.a. on BTC, and 14% p.a. on stablecoins. Get $25 when you download the Crypto.com App with code "pomp". Download the App now: https://crypto.onelink.me/J9Lg/pomppodcast2021 =======================

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Sam Cassatt is the founder at Aligned Capital. He is the former Chief Strategy Officer at Consensus. In this conversation, we discuss Ethereum, decentralized finance, DGENs, yield farming, asymmetric investments, the dark corners of crypto, and where Sam sees opportunity moving forward. I really enjoyed this conversation with Sam, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Circle. Circle is a global financial technology firm that enables

• 0:44Anthony Pompliano?

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• 1:27Anthony Pompliano?

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• 2:10Anthony Pompliano?

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• 2:55Anthony Pompliano?

  access to your funds anywhere. You can instantly exchange around 100 different cryptocurrencies straight from your wallet. Interactive charts lets you view an asset's price history and your portfolio's performance over time. And maybe the best part, Exodus is integrated with the treasure hardware wallet, making advanced security easy for everyone. You can visit exodus.com/pomp for your free download or search Exodus on the App Store or the Play Store. Again, exodus.com/pomp for your free download or search Exodus on the App Store or the Play Store. All right, let's get into this episode with Sam. I hope you enjoy this one.

• 3:29Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 3:58Anthony Pompliano?

  All right, guys. Bang, bang. I've got Sam here. What's up, man?

• 4:03Speaker 02

  Hanging out in Miami doing DeFi DGEN stuff, you know.

• 4:07Anthony Pompliano?

  That's literally all I want to talk to you about is DeFi DGEN stuff. This world is crazy. There's literally a coin right now called Cum Rocket that is exploding. Safe Moon, I'd live one more person messaging me about Safe Moon. I don't think it's safe. I don't think it's going to the moon, but that's what they all keep saying. Let's start with your background. What did you do before consensus?

• 4:28Speaker 02

  So, a long time ago, I was a computer scientist and cognitive scientist. I did a lot of applied science after that. So basically, did a lot of work trying to unify work on human cognition and computation, then ended up working at an offshoot of the Johns Hopkins Applied Physics Laboratory called Sensor Star, where we built like robotics and computer vision, stuff like that. And I was always trying to be at the cutting edge of science. That's actually what ended up leading me to cryptocurrency in general, because I thought that actually monetary technology was one of the cutting edges of human cognition.

• 5:03Anthony Pompliano?

  So you're doing smart shit?

• 5:04Speaker 02

  Yeah, smart nerd stuff. And then, you know, realized that building smart nerd stuff for other big companies doesn't make that much money. And I learned what entrepreneurship was. And then sort of started going in that direction.

• 5:15Anthony Pompliano?

  How do you get to consensus?

• 5:18Speaker 02

  So was into Bitcoin from the very beginning, from the, you know, white paper stage, just from a money nerd perspective. Wish I had bought every, sold all my clothes and bought it.

• 5:27Anthony Pompliano?

  Did you buy any?

• 5:28Speaker 02

  A little bit, but you know, wish I had done more. But, you know, mostly just nerded.

• 5:33Anthony Pompliano?

  We feel really bad for you.

• 5:36Speaker 02

  Sorry. Thanks. So, you know, over time, you know, kind of stopped paying attention to Bitcoin, honestly, because everyone was making like a wallet or an exchange or selling drugs on the internet. I didn't really want to do any of those as a business. But I heard about this in Ethereum. No one could explain to me what it was. And then, you know, I watched it and then I heard there's this guy going to explain what it is in New York. And so met Joe Lubin at that event describing what Ethereum was. Immediately he said it was a decentralized virtual machine. As a computer scientist, I knew what that was. And I was like, oh my God, that's going to change the world. So ended up a few weeks later, joining up with Joe, building consensus. I was chief strategy officer there for like, you know, the first.

• 6:17Anthony Pompliano?

  How big is it when you join?

• 6:19Speaker 02

  It was me and a few other people, kind of a loose group of people, but it was me, Joe, maybe like two or three other people in a room.

• 6:25Anthony Pompliano?

  All right. And what's the vision for Consensus when you start?

• 6:28Speaker 02

  Uh, it was to collect the smartest people around in, uh, that knew what Ethereum was, which was probably only a handful of people on the planet at the time that could actually write software, um, start building basically a what we call a hub and spoke model, but essentially, uh, started seeding the ecosystem was our goal, right? Um, it was kind of like 1991 and we know that HTTP is going to be an amazing protocol, but you know, the web browser doesn't exist and the Apache web server doesn't exist and someone's got to build all that stuff. And we know that, you know, we can think of, you know, a social network and we can start building that and we can use that to motivate the construction of those lower layers, which is what we did. We, you know, we funded Truffle and Furo, Metamask, all the stuff that we needed to actually build on Ethereum, allowed

• 7:13Speaker 02

  other people to build on Ethereum. So we basically seeded that whole ecosystem.

• 7:16Anthony Pompliano?

  The entire time you were working there, are you getting paid in Ether?

• 7:19Speaker 02

  Uh, no, in the, in the early days, uh, it was some crypto, uh, but then eventually it became like a normal corporation.

• 7:27Anthony Pompliano?

  We have to like pretend to like have a real accounting. Okay. Just before everyone gets all upset, I feel like if we sat down, everyone'd be like, oh, he's the Ethereum guy and I'm the Bitcoin guy. Fuck all that. That's all labels. It's all stupid. Uh, what is your view of Ethereum and what's your view of Bitcoin today? Like, how do you think of those two assets? Are they competing with each other? Are they two different things? What are they? Just walk me through that framework you use.

• 7:52Speaker 02

  I think they're driven by completely different narratives, right? So Bitcoin, you know, if you talk to someone on Wall Street, you know, the narrative they've heard probably is it's digital gold, right? It's a, you know, not to offend any Bitcoin people, you know, but it's, it's a slow moving asset and that's sort of a feature, not a bug, right? It's not going to change. No developer is going to come change the mechanics of its issuance, right? People get mad about, you know, Vitalik might change the way that it gets issued and therefore it's not hard money or whatever, right? Um, but you can, you can rely on that narrative. The Bitcoin's going to stay basically what it is and it's kind of, and it can be sort of a reserve asset in that sense.

• 8:25Anthony Pompliano?

  So fair to categorize as, uh, if a trade-off is security versus like innovation, speed, et cetera, it's choosing security over the others?

• 8:33Speaker 02

  Yeah, totally.

• 8:34Anthony Pompliano?

  Okay. Ethereum?

• 8:35Speaker 02

  Ethereum I see as a programmatic substrate for a new economy, right?

• 8:41Anthony Pompliano?

  What does that mean? Now it's smart nerding.

• 8:45Speaker 02

  So, you know, so it's, it's, it's, it's the operating system for what you could build on top of it, which is other financial applications, right? Or other trust-based applications. And Ethereum is like the fuel to that, right? It's sort of, if the internet, if HTTP had had a money built into it, or a token of value, it's like that, right? Except it's explicitly a type of financial internet. And so it's the base unit of that, and it's almost like it's a commodity that powers that whole thing.

• 9:13Anthony Pompliano?

  Do you think that they compete with each other? Or are they two separate things? Like, how do you, how do you think about, I think the narrative publicly is like Bitcoin versus ETH, market cap versus market cap, asset versus asset? Is that fair? Or do you think that's misguided?

• 9:26Speaker 02

  In some cases, they compete with each other, right? I mean, it competes with each other for, for mind share, right? Like, some people are, institutions are investing in Bitcoin because they know it's going to be valuable over time. They don't quite understand the Ethereum narrative yet. I think they will. And so I do think they compete a little bit in that sense of like, this is going to be a permanent and important asset, but they do occupy different headspaces, essentially, in different market niches. They also compete a little bit, or are starting to compete a little bit, in the application layer, right? Like, there have been a lot of people that tried to launch application layers on top of Bitcoin. Most of them haven't gone anywhere, but it's been enough years, people are starting to do it. And so, you know, Ethereum obviously is way far ahead.

• 10:07Speaker 02

  There are other competitors to Ethereum too, that also have like added some incremental feature on top of Ethereum, or changed it.

• 10:14Anthony Pompliano?

  Like other smart contract platforms.

• 10:16Speaker 02

  Yeah, exactly. So, you know, so those are, it's starting to compete a little bit in those domains, but in general, they, they're, the Venn diagram is not that crossing over, in my mind.

• 10:27Anthony Pompliano?

  Yeah. So, let's just go right at, I think, one of the big things that the Ethereum community continues to say that the Bitcoin community is like, "You guys are idiots." Like, there's no way that's true. It's this whole idea of ETH is money. I think the Ethereum community is like, "Hey, you guys are idiots in the Bitcoin community for whatever reason around Bitcoin is money." Right? Do you think it is money? And then how do you kind of process, just as currency, those two assets?

• 10:56Speaker 02

  I honestly don't have that strong, like, one of those religious opinions that ETH is money. A lot of people tweet that and it's a point of contention.

• 11:03Anthony Pompliano?

  It's a great tweet. It gets a lot of engagement, right?

• 11:06Speaker 02

  Yeah, I mean, you know, if you ask an economist what money is, right, it's something like fungible, you know, store of value, tangible, or like, not necessarily tangible, but, you know, portable, like, it has these properties, right? I think Ethereum mostly meets those properties. I don't know the US dollar qualifies as store of value, but, you know, it checks a lot of those boxes. You can use it to pay for stuff right now. People do pay for stuff with it. But I honestly don't think that's the most important debate, right? And Ethereum, one of the big criticisms of Ethereum from the Bitcoin community is that it it has no capped supply. And the only way you can kind of estimate how much supply it'll have is by looking at its issuance over time. With the new, with EIP 1559, like, the new rollouts of Ethereum and Ethereum 2.0,

• 11:50Speaker 02

  it actually looks like it might be slightly deflationary or steady state. So, you know, but it's a different flavor. You know, there's, you know, X number of Bitcoins, right?

• 11:59Anthony Pompliano?

  So there's set issuance, obviously, with Bitcoins, programmatic, transparent, all this stuff. With Ethereum, I think that is the big knock from Bitcoiners, right, is, hey, whoever can change it, expand or contract the supply. I think the Ethereum community's argument is, like, there's security-related issues as to why you would do that. And so, like, it's fair to just, like, say, okay, that's the line in the sand, and, like, whichever side you agree, you agree. Fair?

• 12:26Speaker 02

  Sure, yeah.

• 12:28Anthony Pompliano?

  Like, if you think one's more valuable than the other, then, like, that's where you're gonna kind of oscillate around, right?

• 12:34Speaker 02

  Yeah, I mean, you know, they both solve the same problem. You know, I think a lot of the distinction is religious more than intellectual.

• 12:42Anthony Pompliano?

  All right, now that we got that out of the way, I want you to tell me what the hell is going on in the most degenerate DeFi corners of the world. And I say that, so for those that don't know, there is this entire world of, some of this is outright scams, some of this is outright, like, moonshot ideas of, like, let's go take down the financial system. Some of it is, like, we just built cool technology, we don't even have a use case for it. I mean, there's all kinds of stuff happening here. But when you think of, like, DGEN, DeFi slash Ethereum world, like, what is happening there? What does that constitute?

• 13:16Speaker 02

  Yeah, so, I'll start by saying, uh, DGEN is actually, like, a compliment.

• 13:20Anthony Pompliano?

  Yes, yeah, yeah, yeah, okay, we should start, that's a great.

• 13:23Speaker 02

  So, you know, it is degenerate and, and it, you know, refers to the fact that people are, you know, throwing lots of money around in different smart contracts and doing things that like really are fairly financially degenerate in, in the normal world. But there's also a tremendous amount of value that's being created because people are creating new financial primitives and they're bootstrapping liquidity of those primitives. I can explain what that means, but, you know, essentially what's happened is over last summer, there's this, this era that people call DeFi summer happened. And a lot of it was instigated by this, uh, the protocol called Urn Finance. And what they did is they, they really changed the game of how you can launch a protocol within DeFi. Right? So one of the problems anyone has when they're launching a company that has infrastructure

• 14:07Speaker 02

  involved in it is you need to get people to use the infrastructure. DeFi has the same problem where if I make a protocol for lending or I make a protocol for, you know, tracking some synthetic asset and no one's using it, there's no liquidity in the, in the program. It doesn't work. Right? So founders need a way to get liquidity in there. And if you think about the capital markets, you know, people need some of the same stuff in normal companies too. Right? That's why we have underwriters is because they, they introduce liquidity. They help, they help write the price of, you know, correct the price of something when it launches. And so, you know, you need those things. You need to set the price. You need to introduce liquidity. You need to get the thing launching to issue the, the new asset, whatever. And so what Urn did is they figured out a new mechanism that no one had thought of before. The people call liquidity mining.

• 14:51Speaker 02

  And so, well, maybe some people have thought of that idea, but they hadn't used it in this way to completely bootstrap something.

• 14:56Anthony Pompliano?

  And this is really just going after the cold start problem, right? Is we want to do this, but we need the liquidity or it won't work. And so how do we incentivize people to come in, give us liquidity and give them some sort of economic incentive for doing that? And then we can get to kind of scale and have the liquidity that we need.

• 15:12Speaker 02

  Yeah. Yeah, exactly. So.

• 15:14Anthony Pompliano?

  That actually doesn't sound so crazy when you say it that way. DeGen DeFi sounds ridiculous to most people, right? But go ahead.

• 15:22Speaker 02

  Yeah. I mean, the, the part where it gets really degen is that, uh, when, when people started designing these mechanisms that, that essentially reward you for providing liquidity, sometimes they don't know exactly how to set. The issuance rate, like they set it in the smart contract and you, you know, say I put, I put a million bucks inside the smart contract, which they want me to do. That might give me $10,000 or it might give me $10 million back as a reward. And it depends on how they set the parameters and what other people are doing. And so sometimes you can get these really ridiculous returns, right? You're putting something in a smart contract where it's 1500% APY return, right? Which is absurd from a normal finance perspective, and that's why it's degenerate. But some of those things are scams and you lose all your money and you know, distinguishing those things is hard.

• 16:04Anthony Pompliano?

  How do you know, how do you specifically know when it's a scam versus like, oh, this is just great, DeFi returns?

• 16:11Speaker 02

  So, you know, there's a larger story there, which is, and I have an organization that works on this called Alignment Engine. And what we do is we're, we just helped launch and service this thing called the Neptune DAO. The Neptune DAO is a liquidity providing DAO. Uh, and we have engineers that are excellent at auditing smart contracts that actually have probably audited those specific contracts before. Uh, and we can look at them and make sure it's not a scam, but.

• 16:36Anthony Pompliano?

  Okay. So hold on, back up, back up, back up. A liquidity DAO, what is that?

• 16:40Speaker 02

  So essentially, uh, people have realized, especially people on the forefront of the DGEN game, uh, have realized that they want exposure to this, this new game, right? And it's a new, it's a new type of market participation that actually has real value and helps protocols bootstrap. Much like venture helps early protocols, you know, helps early founders.

• 16:59Anthony Pompliano?

  Rather than raise a seed round, you go and you get liquidity bootstrapped.

• 17:02Speaker 02

  You do a liquidity deal and I, and in fact, you know, there's a new whole type of deal that's emerging where founders will approach us, you know, privately even say, hey, look, we need to guarantee this much. Will you like help us out? Um, or we need to move our smart contracts from L1 to L2 and we don't have enough money to do it. Um, can you help us out? So like we're, we're kind of a new type of market participant. But essentially it's a bunch, it's a pooled vehicle. It's a Moloch contracts. If anyone's familiar with those other DAOs like the Lau or the Flamingo DAO are the same one, but it's a pool of money.

• 17:33Anthony Pompliano?

  I'm gonna laugh the whole time at the names because it's only in crypto, but go ahead.

• 17:36Speaker 02

  Yeah, we get weird, but you know, it's a pool of money, it's a pool of liquidity that we can do whatever the governance mechanism says we can do with it. But mostly what we want to do with it is help protocols bootstrap their liquidity and get rewarded for it. So we're almost like we're an early-stage capital markets liquidity provider, but we're doing it in this weird on-chain way that we did with engineers instead of, you know, guys in a stock market or something.

• 18:02Anthony Pompliano?

  Okay. What's the craziest thing you've seen happen? Like the absolute most insane thing that even people who are into crypto will be like, that's nuts.

• 18:13Speaker 02

  Uh, that's an interesting one. A lot of weird stuff happens.

• 18:19Speaker 02

  You know, there was a, there was a protocol that launched over last summer called Based, and it was very explicitly a game theoretic game. You know, I think their words were designed to transfer money from the, the weak hands to the strong. But it, but essentially, you know, they designed the mechanics such that it would go in these extreme oscillations, like up a thousand percent or 2,000 percent and then down to nothing. And then the liquidity would get pulled out and then you couldn't sell it. And then it would drive it back up, etc. So like, people had figured out this extremely new unheard of game that caused wild price fluctuations and actually does end up benefiting the owners over time. If you hold on to this token because they've

• 19:03Speaker 02

  done other airdrops or whatever. But basically, the emergence of a new type of financial game. It's a little bit like gambling and a little bit like investing and a little bit like engineering, all in one.

• 19:11Anthony Pompliano?

  Is it fair to say this is all entertainment? Like literally when they create that thing, Based, right? I've never heard of that before. But the fact that it goes up so much and it goes down so much is like almost a, a toy, right? It's like, one, you can sit and watch and I'm sure people love watching like, oh, we're up 2,000 percent and went down, whatever. There's an economic element of like, I'm sure people try to sell at the top and buy at the bottom. And sometimes you're right, sometimes you're wrong. But then there's this other element of like, it's so freaking crazy that you probably get entertainment and like talking to your friends about it.

• 19:42Speaker 02

  Yeah, I mean, definitely. I mean, that that was very much like very meme heavy like, you know, a little bit like gambling, but it also that project specifically, I think, has some real merit to it. But but a lot of these things like

• 19:54Anthony Pompliano?

  Wait, why does that one have merit?

• 19:56Speaker 02

  Uh, cuz they keep, well, it was a game and is a game, I think, but they are launching some real stuff. And they're sort of secretly doing it. It's anonymous project and they and they sort of slowly roll out these things. But then you're like, whoa, actually, that is a real utility.

• 20:09Anthony Pompliano?

  Do you know who it is?

• 20:10Speaker 02

  Platform. Uh, no.

• 20:11Anthony Pompliano?

  No. Alright, so like real anonymity.

• 20:14Speaker 02

  Yeah, it's it's, yeah, it's anonymous. And and you're seeing that a lot now, right? Because partially because the regulatory clarity is not there to be able to launch stuff.

• 20:21Anthony Pompliano?

  But sometimes it's like fake anonymity. Like sometimes it's like, oh, Sam launched a new project. He's using, you know, I don't know, based whatever is his, you know, pseudonym, but like everyone knows it's Sam.

• 20:32Speaker 02

  Yeah.

• 20:32Anthony Pompliano?

  And other times it's like, literally, nobody knows.

• 20:34Speaker 02

  Yeah, no, this is like, nobody knows. And it's, you know, partially because it's, uh, you don't, you don't know what's going on, right? And and also, you know, uh, liability comes from identity, right? So it's, I I think we're seeing an era of a lot of anonymous founders, right? And to the extent that there's not regulatory clarity and to the extent that, uh, you know, people want to do things that might be beyond regulatory understanding at all, they're going to be more and more anonymous people. So, um, but so, you know, another ridiculous one is Tendies. That's definitely a game, right? It's basically a pyramid scheme. And it, and if you run out of the top holders, then money flows up to you. And it was, you know, in in our Wall Street Bets, uh, famous for pumping like GameStop, you know?

• 21:16Anthony Pompliano?

  We like to say identify a market structure issue and short squeeze hedge funds.

• 21:20Speaker 02

  Yeah, okay, there you go.

• 21:24Speaker 02

  I'm sorry, I I'm corrected. Um, so, uh, you know, Tendies is what they call money in their parlance. And so Tendies is like a play on that. That's very explicitly a game. Uh, some of these things, though, are real, right? And and a lot of what we're doing within Neptune DAO is we're actually, we're trying to take a long term position in these assets. And these things, sometimes, uh, like venture capital has gotten a bad rap, uh, within crypto, deservedly so in many cases, because, you know, uh, the distribution is concentrated. Uh, the thing launches, it gets dumped on retail, uh, the project suffers for that. And it's it's retail investors suffer for that. And and people think that's not a healthy distribution. So actually, a lot of projects launching will say, we don't have a venture around there. No VCs involved. That's actually, that's a feature, not a bug, right?

• 22:10Speaker 02

  And so when these things launch, they launch with often no liquidity and they call it a fair launch. There was also this movement last summer to fair launch projects, meaning that anyone can come to participate in the very beginning by providing liquidity. And if you help bootstrap the thing, then you're one of the early participants, one of the holders.

• 22:28Anthony Pompliano?

  And the teams don't take tokens in those fair launches or they still take tokens sometimes?

• 22:32Speaker 02

  Often no. I mean, I'm sure the teams have probably figured out some way to help farm it for themselves. And that's one of the things we might want to do, right? It's like, what do founders need? You know, like, maybe we want to help them farm it or whatever, but I don't think those mechanics have been completely determined. And what's fair, I think the market probably isn't necessarily demanding that people have no founder tokens. But, you know, more towards that edge, not like a venture round where the founder has like 75% or something. It's like the founders get like 10%, right? But, but essentially what's interesting for us is in the beginning of these protocols, if you wanted to buy a venture style, like an amount, an amount significant to a fund, you can't do it. Because the tokens come into existence through this process of providing liquidity.

• 23:16Speaker 02

  So the only way you can get these tokens is by helping them bootstrap.

• 23:21Anthony Pompliano?

  And when you say, uh, help them bootstrap or provide liquidity, are you talking about taking ETH in most cases? And basically providing it in some smart contract, you know, uh, or some kind of liquidity pool? And then leaving it there and you're almost earning yield on your assets. And then that's you're giving them the liquidity, you're earning that yield, but that yield is paid in the token of the.

• 23:43Speaker 02

  Yeah, yeah, essentially. So it's a little bit like, you know, Amazon credits given to startups or something. They, they want to incentivize, uh, people to come provide liquidity. So it's an example, like, let's say, uh, let's say I'm building a new swap, like a competitor to Uniswap, right? Which is an automated market maker swapping facility. So you go to it, you put one asset, another asset comes out, but you need, you need people to have staked or like put in both sides of that asset pair for it to work. Sushi Swap came along last summer, wanted to have that same functionality, but there's, you know, there's billions of dollars in Uniswap. How do you get billions of dollars in the new protocols that the people can actually use it? What they did is they said, if you take your Uniswap liquidity and you move it over to Sushi Swap, we'll start spinning out Sushi Swap tokens

• 24:28Speaker 02

  into your wallet, right? And by doing that, you know, and if you calculate the yields on that, it's really high. It's like hundreds of percent or something, right? So people said, of course, yeah, I'm going to migrate that liquidity over. And hence Sushi Swap was born, and that's how they got their liquidity.

• 24:41Anthony Pompliano?

  So I was telling you beforehand, the way that I view this has changed from a framework standpoint. At first, it was everyone's saying yield, but they're not actually generating yield. What they're saying is Sam, you know, take your liquidity out of one place, put it with me, and then I'm going to give you yield. And what that insinuates, right, for the legacy world, is that they're going to take your assets, they're going to go, they're going to lend it out, right, rehypothecate it, they're going to generate rate of return, they're then going to take a percentage of that rate of return, and they're going to basically then give you a piece of it, right? So I generate 10%, I give you 8, I hold on to 2, and that's how the system would work. Here, what they were basically doing is they just created a bunch of tokens, right, put it into treasury essentially, and they said, Sam, you should come here and

• 25:25Anthony Pompliano?

  give us your liquidity, and when you do that, we're just going to take tokens out of our own thing, we're just going to dump them on you, right? And we're going to give you hundreds of percent, and then over time it gets commoditized down. One, the rates were unsustainable. I think everyone kind of understood that. Two was, it wasn't really true yield from like a lending or rehypothecation standpoint, it was just the use of the tokens, these airdrops or whatever. What somebody said to me that I think is actually a fair point is, wait a second, that's just customer acquisition cost. Now, the difference is, rather than take money, let's say if I had a normal company that I raised money from venture capitalists, and then I use it, and I pay Facebook and Google for advertising to acquire users, or I say similar how PayPal said, you know, $10 for every person you invite, and you get $10. Here,

• 26:09Anthony Pompliano?

  you're not using dollars or capital that you raised, you're actually using some currency or asset or whatever that you created, right? And so that would be like Amazon saying, hey, here's $100,000 of Amazon credits. It's not necessarily dollars, it's just something they created. All right. So all that is out there. Agree or disagree that that's the right way to look?

• 26:27Speaker 02

  I, I agree. And I think it's also, it also has the byproduct of distributing your asset and creating your asset. So it's not necessarily that they have it in the treasury already and they dump it on you. It's that that is the, the event that generates the token to begin with, which is something needed to do. And they need to have some distribution schedule or logic of how that gets created. So it does that for them. And then it puts the, you know, the, the base asset of the protocol in the hands of lots of different people, which people believe is a healthy distribution economically for that thing. So it, so it, so it's like customer acquisition and it's also like some other capital markets kind of functions.

• 27:04Anthony Pompliano?

  If we take a hundred percent of this world and I said to you, what percentage is scams? What percentage is games and what percentage is real? Are we 90% real in your opinion, 5%, 5% of scams and games? What's like the breakdown or 90% scams and 5% real? Like, how would you, from your opinion, break down, uh, between those three buckets?

• 27:28Speaker 02

  I think there's like a sliding scale that depends on.

• 27:31Anthony Pompliano?

  That scares me that that's your answer.

• 27:34Speaker 02

  Well, you know, it, well, it's, it's a time, a time slider, let's say. So like when Ethereum started doing this, a lot of the projects that were launching were, were legitimate. And they were experimental because no one had ever thought of this before, but they were legitimately trying to do something. And then, you know, a month goes by, two months goes by, everybody and their brother has the source code of that and can launch a new scam one. And then that turns into 90% scams, right?

• 27:58Anthony Pompliano?

  Okay.

• 27:59Speaker 02

  Same thing just happened on BSC, which is, uh, Binance. Binance basically took Ethereum, ripped out all the decentralization and put it.

• 28:07Anthony Pompliano?

  Is Binance going to disrupt Ethereum?

• 28:10Speaker 02

  I don't think so.

• 28:11Anthony Pompliano?

  No, why not?

• 28:12Speaker 02

  Uh, well, you know, there's a. There's a small group of people that can turn off Binance Smart Chain. And so, you know.

• 28:20Anthony Pompliano?

  Are there a small group of people that could roll back Ethereum?

• 28:24Speaker 02

  Uh, not physically, no. I mean, you have to get every, or you know, 51% of all the miners in the world, or more than that even. I think you could argue, um, but, uh.

• 28:33Anthony Pompliano?

  I don't know enough about BSC Ethereum differences to know what to ask there.

• 28:38Speaker 02

  So, so BS, I mean, Ethereum has like, you know, thousands of, of node operators all over the world that don't know each other. Right. Like 10s of thousands at least of miners that are all mining it. And they all have to agree if they wanted to change something, right? Which generally isn't going to happen unless it's something really important, like upgrading to Ethereum 2.0 or something. Right. Um, with BSC, what they did is they ripped out all that stuff that makes it so that there are thousands of, uh, unaffiliated nodes all over the world. And they just made it some like servers that Binance owns. But it still is compatible with like MetaMask and like other Ethereum, like Ethereum code can run on it, stuff like that. So, so what you had was BSC launched, it's much cheaper to run stuff on BSC because the gas prices of Ethereum got really high. Uh, so you could launch these farms.

• 29:23Speaker 02

  Initially, there are probably some people, you know, building real things like PancakeSwap is a real thing.

• 29:28Anthony Pompliano?

  I've actually heard of that one.

• 29:29Speaker 02

  Yeah. Uh, yeah, it has a big market cap, like it has real utility. If you believe BSC has real utility, but, uh, and then, you know, and or people were saying, well, it's too expensive to launch on Ethereum. I'm going to launch on BSC and maybe I'll move to Ethereum later or something else later. Right. So it has that real utility. Um, and, uh, but then, you know, that's so cheap and so easy over time. You know, 90% of that was eventually scams. I think it probably is right now.

• 29:54Anthony Pompliano?

  Okay. Uh, when you think about this entire world, I'm going to ask you for the bullish view and then the critique. We'll start with the critique first and then we'll move to the bullish view. Uh, the Ethereum slash smart contracts, like, uh, all the platforms that are not Bitcoin. What's the biggest critique or like the biggest risk? So if you said, hey, you know, uh, in order to be bullish on something, I also have to be the one who can like articulate the, the other side of the argument the best. What do you think is like the fair critiques of Ethereum or like this whole world?

• 30:29Anthony Pompliano?

  And maybe you say there are none.

• 30:31Speaker 02

  It's perfect.

• 30:33Speaker 02

  Vitalik is a god. Well, so.

• 30:37Anthony Pompliano?

  That's gonna be a meme. Somebody meme that.

• 30:43Speaker 02

  So, you know, I think some of the criticisms are probably rightfully around the edge cases of of trust and the things that we build into the real world for human error and jurisprudence and gray areas, right? Like, a lot of people are on this sort of kick of code is law and, you know, this can actually completely replace everything about the trust infrastructure of humans. And the fact of the matter is, there's a soft side to why humans trust each other and how they trust each other. And there's a clause in every contract that says, well, if this contract doesn't actually specify what to do and we dispute it, then this is how you dispute it and you go to arbitration and you go to this court and you talk to humans about it, right?

• 31:26Speaker 02

  So I think while we can, over time, dramatically make more efficient and faster and cheaper, a large part of the trust infrastructure of the world, like court systems and law enforcement and lawyers and stuff like that, we can't totally eliminate it. So I think, you know, I think that immutability and that sort of, that hardlineness about the way it behaves is both a feature and a bug. And it makes it probably not rise up to completely replacing everything about how we deal with finance and trust. But it can take us farther than we are right now, for sure.

• 32:06Anthony Pompliano?

  Okay, what's the bullish case? Like, is ETH the global reserve currency in the future, in your opinion? Is this the protocol on which every financial application in the world runs on?

• 32:20Speaker 02

  Yeah, so, you know, to, yes, I, possibly, and, you know, not

• 32:26Anthony Pompliano?

  To both.

• 32:27Speaker 02

  Yeah, to both. I mean, either Ether or something like it, and, you know, not to talk my book, right? Like, I have an open mind. I personally really like Ethereum, and I think it has the strongest case for taking that on. Now that we've realized that there can be this decentralized trust infrastructure that is dramatically cheaper, right? And people talk about, you know, the environmental impact of crypto or whatever, but the right comparison is not crypto or nothing. The right comparison is Ethereum slash crypto versus like every bank building in the world, every court system in the world, all the miles driven to those court cases and by lawyers and police forces and all the money you spend on military to like enforce the rule of law and

• 33:09Anthony Pompliano?

  Do you know the energy consumption of the meteor, uh, industry?

• 33:13Speaker 02

  I don't, but I would love to.

• 33:14Anthony Pompliano?

  It is way too high. It should be a national crisis. Like, somebody should write about that, right? They literally print physical papers. How many trees get killed?

• 33:23Speaker 02

  Yeah, yeah, totally.

• 33:25Anthony Pompliano?

  Right? I mean, like, just so we're very clear, being facetious to a degree, but like, that is the outrageousness of the argument, right? Is if we basically said, look at how many trees the media industry is killing, we should shut down the media industry. Like, people would be like, that's absurd. Like, well, okay, then that's exactly what you're saying about crypto.

• 33:43Speaker 02

  Yeah, and it's like, if you don't understand that cutting down those trees has some value, then yeah, maybe it seems, makes sense, but it doesn't because it's really useful. So people, people haven't yet grocked that this could be a replacement for large parts of that stuff that we spend lots of resources on, right? It can replace, as I was saying, like, the trust infrastructure, all that, all those police and courts and lawyers and whatever that we need in order to do business with each other and trust each other. If that were, uh, if we could replace all that with something cheaper and better, faster, that looked like the internet, and that internet had a money built into it, or a, you know, something of value built into it, people get upset about the word money,

• 34:22Speaker 02

  but if it had a native asset built into it, if HTTP, if your web browser since the early 90s had, had a money built into it, that would probably be pretty freaking valuable. I think that's the bull case for it.

• 34:35Anthony Pompliano?

  What are the odds that what I'm about to say is true? Bitcoin, first digital currency, right? Uh, people want to do more with it. They can't. Smart contracts, composability, etc. They go in the build Ethereum and then a plethora of other smart contract platforms. The belief is that you can scale on layer one. They don't. Move to layer two scalability. At the same time Bitcoin is layer two as well. Uh, now that there's smart contracts on Bitcoin, smart contracts on Ethereum, uh, they both coexist. Some people will choose to have vertical integration between what they deem is the hard sound money with these digital decentralized kind of smart contract based DeFi applications uh, on Bitcoin.

• 35:16Anthony Pompliano?

  And then in the Ethereum world, people see Ethas money and they go and they vertically integrate digital decentralized smart contract, you know, DeFi applications on that Ethas money thesis. Does that seem like where we're headed?

• 35:30Speaker 02

  Maybe.

• 35:31Anthony Pompliano?

  You sound like you don't agree.

• 35:34Speaker 02

  Well, you know.

• 35:35Anthony Pompliano?

  You're allowed to disagree as much as you want.

• 35:37Speaker 02

  So you, you know, honestly more about the Bitcoin ecosystem than I do. Like, you know, I obviously.

• 35:41Anthony Pompliano?

  Cause you know more about Ethereum than I do.

• 35:44Speaker 02

  So, you know, so I like, I spent many years like pretty much only thinking about Ethereum. Uh, and, but that was the only thing that was doing anything like that for many years in, in fairness. So, and anything else trying to do that was basically trying to copy Ethereum, right? So, um, is it the case that people are building smart contracts on top of Bitcoin? Yes. Like what makes a smart contract platform successful? A lot of things. One of the things is community, right? Um, another thing is liquidity. You can't really fork community or liquidity. Um, and, and it's very difficult, especially between the Bitcoin and Ethereum communities to get that crossover.

• 36:19Anthony Pompliano?

  Should I ask you the million dollar question? Which community is, uh, is, uh, more vibrant Bitcoin or Ethereum?

• 36:26Speaker 02

  Well, you know, uh, if you like, like unicorns and, uh, you know, anime and also the future of finance, Ethereum. If you like, like steak and like Ludwig von Mises, probably Bitcoin.

• 36:42Anthony Pompliano?

  We're both, we're both in trouble. That was actually a very good answer to a nearly impossible question.

• 36:55Anthony Pompliano?

  By the way, Bitcoiners do like steak and Mises. So like, yeah, that you correctly identified. They do not probably actually like unicorns or anime. So like, okay. When you think about the institutions are coming, right? That was a whole thing. I think Bitcoin was kind of the first asset. That's the one everyone's really focused on. Institutions now are starting to buy Bitcoin. Is your expectation that they'll eventually buy Ether? They'll go into Ethereum-based DeFi? They'll go participate in all these lending and liquidity stuff? And they'll like, Wall Street will become degen over time? Or like, or is that all fantasy land and like, they're just gonna buy Bitcoin? Maybe they'll buy some Ether and like, that's it?

• 37:36Speaker 02

  Yeah, I mean, I think, I think there's a few layers to that, right? They're obviously already buying Bitcoin.

• 37:41Speaker 02

  If you looked at the last few days of Ethereum, you know, it looks like somebody big is buying a bunch of Ethereum. I'm not sure. But I don't think it's very long and I, and I think it's probably already the case that people have said, okay, what's the second biggest one? Bitcoin just went up. We should have done what Elon did. We should have done what Paul Turner Jones did.

• 38:03Speaker 02

  Maybe the smaller one has some room to run. That's already happening, right? So that's easy. That'll definitely happen and is already happening a little bit.

• 38:12Speaker 02

  The second phase of that, though, is DeFi degen stuff, right? A lot of this stuff has the regulatory clarity of, you know, mud and the, you know, when they have their limited partnership agreements and they have their regulatory, you know, compliance guys and, you know, they look at that, it freaks them out, right? And so some of the stuff that's completely decentralized, there's almost no way that you could, you could touch that from the current perspective, right? That said, I often talk to large, well-capitalized hedge fund guys. They're like, I really wish I could work on this. Can I work for you, actually? So. I think, I think the, you know, the people are, especially the, the younger generations are pulling people in that direction.

• 38:55Speaker 02

  Um, and there's gonna be, there's already so much yield, there's so much money being made. There's, you know, just like Bitcoin was five years ago, just like Ethereum was three years ago, or whatever. It takes a while for them to catch up, but they're gonna realize that there's so much money to be made. And there's also, you know, the future of finance to be constructed and to be a part of. And, you know, Wells Fargo, their logo is a horse drawn carriage, right? They figured out they needed to do something different. I'm sure, I'm sure they'll figure out, you know, the next thing too. Uh, it'll take time though.

• 39:28Anthony Pompliano?

  That's actually a great point. I always forget that. You've thought about this before.

• 39:34Anthony Pompliano?

  All right. I know we gotta go. Uh, I got three questions to finish up. You'll get to ask me one. Uh, first is what's the most important book you've ever read?

• 39:42Speaker 02

  The most important book I've ever read? I think you might've asked me this before, so I'll probably, I don't know if I'll say the same book, but, uh, probably a book called Synergetics by Buckminster Fuller.

• 39:54Anthony Pompliano?

  Why? I don't think that's what you said last time.

• 39:56Speaker 02

  Um, yeah. Uh, so in terms of like it being an important book, it's basically his like magnum opus of everything that he's studied in science and looking at the structure of nature and how nature informs design. And if you want to essentially, if, if evolution constructs reality,

• 40:15Speaker 02

  uh, the phrase, I mean, any sufficiently advanced technology is indistinguishable from nature, I think is true. Because over time, evolution will wear down anything that doesn't meet certain, uh, efficiencies, certain design patterns that nature has discovered over billions of years. And this is his explication in deep scientific detail of why you see the same patterns in plants and stars and galaxies and subatomic particles and metal alloys and whatever. And it's just a beautiful scientific representation of that. And I think is, contains a lot of the design patterns of where our species will go if it survives.

• 40:50Anthony Pompliano?

  That was actually a great answer. Great job. Uh, next one's from 8Sleep. Uh, they've got thermo-regulated bed. Basically, I make it cold as shit and go to sleep and sleep forever. I used to not do that. Uh, what's your sleep pattern? Like, do you sleep a lot? Not a lot? Is degen world, you know, uh, allow you to sleep?

• 41:08Speaker 02

  That's a funny question. Yeah, degen world is a 24/7 world. And like last summer, I was probably, I, I would like, you know, uh, pass off the baton to my wife. And when she was getting up, I'd probably go to sleep. Um, so I sleep in short amounts. Uh, I like it to be cold and, uh, but not nearly enough. And I don't think I will over the next, uh, you know, year as we build out the degen ecosystem.

• 41:32Anthony Pompliano?

  So usually I would ask about aliens. We've already talked about it, uh, previously. So my question to you is, is it fair to call you the king of the degens? Is that, is that an applicable title here?

• 41:43Speaker 02

  I mean, you know, I don't know. I don't want to.

• 41:45Anthony Pompliano?

  That wasn't a no.

• 41:46Speaker 02

  I, I don't want to name myself that. That's a, you know.

• 41:48Anthony Pompliano?

  All right. Well, if I name you that.

• 41:49Speaker 02

  But if you name it, I would accept it.

• 41:50Anthony Pompliano?

  Okay. So the king of the degens.

• 41:52Speaker 02

  You know, I mean, degens, I think what I do is I bridge the degens. Right. Because, because I'm, I'm in the chat rooms with, with teenagers that are working on DeFi protocols in the middle of the night. And I'm also, you know, by some people's estimation, a normal business person, financial professional. And so I try to bridge those worlds.

• 42:10Anthony Pompliano?

  All right. That's fair. But I'm still gonna call you king of the degens. You could ask me one question. What you got for me?

• 42:17Speaker 02

  Um, what is, uh, what is the best answer you've received about whether aliens exist?

• 42:27Anthony Pompliano?

  Um, probabilistically, yes, but they're also probabilistically too far away. Therefore, their existence won't be recognized by us because we'll never be able to communicate with them. They'll never be able to communicate with us for, you know, hundreds of thousands of years. And I think that's probably the best answer because that's the answer I believe. Right? Of like, just like, yeah, like, the, the galaxies are too big. Something's probably out there, but we can't even get to Mars, let alone anywhere else. So like, we're never gonna know about it.

• 42:55Speaker 02

  Yep. Fair enough. Or they're already all around us.

• 42:59Anthony Pompliano?

  You could be an alien. You could be the alien of the degens. All right. Where can we find people to find you on the internet? Uh, where do you want to send the people?

• 43:08Speaker 02

  Uh, probably my Twitter is the best. Just at Sam Cassatt. Um, and, uh, check out the, the Neptune Dow, neptune.dow.xyz.

• 43:17Speaker 02

  The Neptune being the god of liquidity.

• 43:18Anthony Pompliano?

  I can't believe I'm allowing this right now. All right, man, listen, thank you so much for doing this. We'll do it again.

• 43:23Speaker 02

  Thank you very much. Very cool.