73 - Building a $500M DeFi Fund | Arthur0x

Arthur_0x is a massively successful investor in DeFi, and leads DeFiance Capital. His story is fascinating, as are his takes on the ecosystem and the crypto space from a global perspective. GET THIS EPISODE'S EXCLUSIVE DEBRIEF: https://shows.banklesshq.com/p/exclusive-debrief-building-a-500m ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ 🎖 CLAIM YOUR BADGE: https://newsletter.banklesshq.com/p/-guide-2-using-the-bankless-badge ------ BANKLESS SPONSOR TOOLS: 💰 GEMINI | FIAT & CRYPTO EXCHANGE https://bankless.cc/go-gemini 🔀 BALANCER | EXCHANGE & POOL ASSETS https://bankless.cc/balancer 👻 AAVE | LEND & BORROW ASSETS https://bankless.cc/aave 🦄 UNISWAP | DECENTRALIZED FUNDING http://bankless.cc/uniswap ------ Topics Covered: 0:00 Intro 6:00 Arthur 0x 12:55 The Secret Ingredient? 19:30 Show Up and Do Something 26:00 An Investing Thesis 33:48 Fundamentals Win 38:05 Token Value Capture 46:40 How to Evaluate 50:18 Undervalued Projects 56:35 The AMM Competition 1:00:13 ETH Killers 1:05:43 Layer 2 Scaling 1:14:00 A Global Perspective 1:20:13 Culture and Language 1:24:05 China BTC Mining 1:29:30 What Arthur’s Excited About 1:33:58 Closing & Disclaimers ------ Resources: Arthur on Twitter https://twitter.com/Arthur_0x?s=20 DeFiance Capital https://www.defiance.capital/ ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

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

• 0:07Ryan Sean Adams?

  Welcome to Bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front run the opportunity. I'm Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. David, what an episode. Arthur Zero X, what did we cover today?

• 0:28David Hoffman?

  We covered a little bit of everything. And we started off with the story of how Arthur Zero X and Defiance Capital came to be. And it's already one of my favorite stories in DeFi, favorite stories in Ethereum. And it's something that I feel really, really passionate about is that if you are coming into the space and you see things and you notice things and you start to execute on the things that you noticed, you too, just like Arthur Zero X, might be able to turn $100,000 into $100 million plus fund. Like that option and that choice is available to you if you have the grit and the patience and the foresight to be able to see the things that Arthur

• 1:09David Hoffman?

  Zero X saw and why he was able to turn Defiance Capital into the gargantuan that it is in this space. We covered much more than that. And so I'll leave that to you, Ryan, to explain to the listeners. But that was my favorite part.

• 1:21Ryan Sean Adams?

  Give that back to me. Yeah, look, man, it's my favorite part, too. This story is amazing. Six figures to nine figures, right? And the thing I would add to that is you also have the grit to stick with this during a bear market. I think that's key. If you're looking for that, like 50x, 100x type of return, you have to believe in something when no one else does, right? Right now, we're in a, you know, we're in a hot-ish, warm-ish bull market. It was not that way in 2018 when Arthur was growing up in DeFi. And when he was investing in things, no one else was touching. These tokens were like, Everyone hated tokens.

• 2:02David Hoffman?

  Tokens are out.

• 2:03Ryan Sean Adams?

  Tokens were totally out. Anyway, we covered that. That that story is amazing. We talked about Defiance Capital's focus on fundamentals, which is really cool to hear, not just not narratives, not sentiment, but actual fundamentals of tokens and ignore the rest. Listener, that is an option for you. You don't have to go chase all of the narratives that you hear and see in crypto. You could just focus on fundamentals, refreshing here that. We did an automated market maker comparison. Why are Sushi and Uniswap valued differently? How about Curve? How about Bankor? How about Balancer? Will one automated market maker win the network effect? Will there be many? We also talked about ETH killers. I will not give away Arthur's conclusion there

• 2:46Ryan Sean Adams?

  because I think he had some great conclusions. I even asked him if he had to pick one non-Ethereum Layer 1, which would he be and why? He answered that question. Then we talked about and concluded this with DeFi from a an Asian perspective. So from the perspective of Asia, I should say, and Arthur had a great kind of, I guess, categorization of different areas in Asia that aren't like jurisdiction based, but are more kind of culture alignment that I think was super useful and will be listener useful to listeners as well. And of course, we concluded with price predictions because, you know, we just had to because it's Bankless and it's fun.

• 3:26David Hoffman?

  Well, we also concluded with what Arthur is really excited about towards the end of 2021. And he actually, he actually gave a really interesting answer. And well, I'll tease it real quick here because it was actually the elaboration, I think, was the cool part. He thinks he's really excited for scale, as we all are. We've been beating the Layer 2 summer drum here on Bankless. But Arthur thinks that once we have scale, the floodgates for users just absolutely open. And so we dive into that a little bit as well towards the end of the conversation. But as a recap, that was the whole episode.

• 3:59Ryan Sean Adams?

  Really cool story, guys. You are going to enjoy this. So before we get into the episode, we want to thank the sponsors that made this possible.

• 4:08David Hoffman?

  Bankless is proud to be supported by Uniswap. Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum, which is what Ryan and I call a money robot. No human counterparties or centralized intermediaries, just autonomous code on Ethereum. Input the token you want to sell and receive the token you want to buy. Something brand new in the Uniswap ecosystem is the Uniswap Grants Program is now accepting applications for grants. We have been saying this for a while and we'll say it again. DAOs have money and they are in need of labor. If you think that you have something to contribute to the Uniswap DAO, apply for a grant to Uniswap.

• 4:52David Hoffman?

  Just look at the size of the Uniswap Treasury. It's almost $3 billion. This mountain of capital is looking for labor. Do you have something of value to contribute to the Uniswap DAO? No matter how big or small your idea is, you can apply for a UniGrant at unigrants.org and help steer Uniswap in the direction that you think it should go. That's exactly what we did to get Uniswap to be a sponsor for Bankless and you can do the same for your project. Thank you, Uniswap, for sponsoring Bankless. Balancer is a powerful platform for flexible automated market makers. Typical AMMs just have two tokens inside of one liquidity pool, which can lead to fractured liquidity across the many pairs in DeFi. With Balancer, you can access the full power of multiple tokens inside of one single AMM,

• 5:36David Hoffman?

  which unlocks an entirely new playing field of possibility. This makes Balancer an awesome building block for so many different use cases. Balancer pools can make asset indices, but instead of paying fees to portfolio managers, Balancer lets you collect the fees from traders who use your portfolio for liquidity. Additionally, Balancer smart pools can be programmed to have properties that change according to predetermined rules, such as changing the swap fee based on market conditions, or even liquidity bootstrapping pools, which can help you launch and distribute your token with day one liquidity. At Bankless, we use a liquidity bootstrapping pool to sell our BAP t-shirts to much success. Balancer V2 brings powerful new features that makes your money work even harder for you. In V2, idle tokens are capable of generating yield in DeFi

• 6:21David Hoffman?

  without sacrificing liquidity in the pool using Balancer's asset managers. Balancer's Vault Architecture lets you trade between Balancer pools at a fraction of the cost versus trading on other platforms. Balancer's mission is to become the primary source of liquidity in DeFi by providing the most flexible and powerful platform for asset management and decentralized exchange. Dive into Balancer pools at app-balancer.fi.

• 6:47Ryan Sean Adams?

  Bankless Nation, we are super excited about our next guest. Arthur Zero X is one of the most successful DeFi investors in the entire crypto space. He runs Defiance Capital, which is the largest DeFi-focused fund in Asia. He's based in Singapore, funded by tons of investors, maybe most notably by the Three Arrows Capital folks, Suzu and Kyle Davies. Arthur, we have so much to talk about, man. I'm glad you joined us today. How are you doing?

• 7:14Speaker 02

  Doing well. Been a listener of Bankless since day one, and it's my pleasure to be here.

• 7:20Ryan Sean Adams?

  That's awesome. Well, very cool. Well, we have been a follower of yours for a long time as well. And I want to kind of start with this story, which is kind of your story of getting into DeFi and getting into crypto. I understand that you went full-time into crypto in 2018. So lots of folks managing funds have been in crypto for longer. You tweeted this out, and I think this is incredible. 500 million and 50K followers. What comes next? 5K ETH? I hope so. Maybe 10K ETH? But 500 million, 50K followers. You started in crypto full-time in 2018. That is incredible, man. That's an incredible story.

• 8:04Ryan Sean Adams?

  How did that happen? Tell us.

• 8:06Speaker 02

  Yeah. So it's a long story, but I think there's some useful takeaway, so I'll share a bit more. I started in the space in twenty eighteen, initially I want to run a crypto research startup because I didn't initially. When I came into the space, I realized that there's a lot of focus on the hype. And the promises, but there is lack of focus on what's really happening and. How to value these things properly. So I initially want to run a crypto research startup, but I didn't find product market fit. So. What happened is I decided to focus on investing instead.

• 8:48Speaker 02

  But that was the bear market. So twenty eighteen, you know, Bitcoin went to three thousand, ETH went to the lowest point, I think it was eighty plus dollar.

• 8:57Speaker 02

  But during that period of time, I was always asking myself, so. Besides just trading and speculation, what other use case can we get from crypto and. Coming from someone who went through the ICO bubble, I think that's very important because during that period, everyone who have experienced it must have realized that. We can literally see all the different use cases being experimented, travel, Airbnb on blockchain. Spotify blockchain, etc, etc.

• 9:30David Hoffman?

  Uber on the blockchain.

• 9:32Speaker 02

  Yeah, yeah, exactly. But I think none of them are really being realized or achieved in a major way. Except for financial use cases, I think at the end of twenty eighteen, I think the first time I heard about DeFi was in. I think January twenty nineteen, but I know the term was coined in late twenty eighteen. By a group of early DeFi teams such as, I think, the Set Protocol, Dama and a few others, they just. Joined together and say, why don't we create a term for this new movement? And then the term DeFi was born.

• 10:08Speaker 02

  Yeah, so I think, and this is also part of the extension of my stablecoin thesis because.

• 10:16Speaker 02

  When, when I was helping some of the new crypto startup initially, a lot of them want to introduce their own token as a payment mechanism. But it should not to be working well. In fact, it's just a, doesn't work at all because nobody want to use a new token to pay for any services. People want to use a common currency in crypto world that will most likely be ETH or Bitcoin. But right now, I would say that a stablecoin is actually the most suitable payment. Just the people want a stable union account. And I think that time stablecoin just started to took off because bear market people want to find a safe haven.

• 10:54Speaker 02

  A stablecoin become a natural selection. And I think that being bullish on a stablecoin also lead me to bullish on DeFi. So because DeFi allowed this whole exchange of crypto assets between stablecoin and a volatile one. And this is a very obvious use cases. And after that, the extension of lending and borrowing. After being a user of this, I can just see how important is to the entire space. So that's why I started to do more research into DeFi, start being a power user and early, early supporter. And obviously being a very early user of synthetics community helps a lot as well.

• 11:34Speaker 02

  And that kind of last me through most of twenty nineteen, being an early DeFi user and community member, especially in the synthetics. And I think what really changed is, I think, so I know the synthetic started to do quite well around there. And I think around twenty twenty, the whole space before the by summer start to grow pretty well on organic level. But then after the five summer, it was just like a explosive moment that everyone realized that DeFi is not a fat. That a lot of people start to really recognize that there's a lot of potential in this.

• 12:15Speaker 02

  And yeah, and I think at that moment, I raised defiance capital. And we have grown very fast since then. So with the support of Three Arrows Capital, we have raised around.

• 12:29Speaker 02

  Round meat egg figures of capital, but Treros and myself are the largest investor. And throughout the off from twenty twenty second half, twenty twenty until now, we have grown tremendously to around around low to midnight figures of capital right now. Obviously, the the that the figures change a lot depending on the market condition. But yeah, that's where we are right now. Um, yeah, I think that that's a we can go deeper into any part we would like to.

• 12:56Ryan Sean Adams?

  Arthur, that's that's a pretty incredible story and bankless listeners. I I want you to to draw out a few things that Arthur said there is as he started with kind of a thesis. Uh, but then he also became a DeFi super user, which is interesting there. Uh, and then turned kind of investor turned fund manager. Um, but but the amounts that you're managing are are pretty incredible, Arthur. And I'm just like curious because I think a lot of people listening are DeFi super users. Also, um, DeFi investors, uh, and they're pretty excited about your trajectory. Because they, you know, want a similar trajectory. They're interested in the path that that you've taken.

• 13:42Ryan Sean Adams?

  So like, what is it? Was was it just this combination of right place, right time, you being a DeFi super user? You applying a thesis at a time when the market was was bearish and then it flipped flipped bullish. What what's kind of the the secret ingredient for your success here? Because I think a lot of listeners want to emulate this.

• 14:04Speaker 02

  I think there's a, um, I would say that I think that there's no secret. It's more like, um,

• 14:12Speaker 02

  after doing your research or so-called homework, uh, a really strong belief in your research, uh, in your understanding. And obviously that is based on the. That you your research is the right research.

• 14:28Speaker 02

  And I think that a lot of time people are very affected by what is happening now, but not not on what has happened or the last. Or is the previous trend and what is ongoing trend. So if you always focus on the current point of the market. You're always gonna draw a very different conclusion because crypto can be a bull market in two months, in the bear market in two months, which is what we have experienced recently. But if you look at the crypto in twenty eighteen, yes, there was the bubble. And yeah, a lot of the misallocation of capital, but the usage of crypto actually has been increasing. And even that time. We see a very small glimpse into the potential N F T. I was also the very early. Player of crypto K D as well. So I think, yeah, obviously, the N F T.

• 15:14Speaker 02

  Whole thing really come off right around early this year, right? But the whole, the first gleam into the potential already happened two years ago. And for DeFi is actually, you can also argue that, yeah, you see the potential of DEXs. When Ether Delta came on the scene, but it just also was two years too early until Uniswap really changed the game. So I think that. By looking into the previous usage in the early sign of a market fee and you look at where the world want to go next. I think you can, you can really, the so-called cliches zoom out, that give you a lot more confidence on where the world is going. So I think that the the biggest. Factor for me is really the persistent, because I think a lot of people drop out during the bear market, but I believe that. What we are doing is just not all hype and just, there's actually something bigger that we are building.

• 15:59Speaker 02

  And obviously, I think being early helps a lot, but I think the entire space is still incredibly early.

• 16:06Speaker 02

  There are some D five project where investors, when the investor is around less than a hundred million market cap. And right now, I think there's still quite a lot of promising D five protocol that are trading at below hundred million market cap as well. And. I have no doubt some of them will become a billion dollar D five protocol in the future. And these are.

• 16:24Ryan Sean Adams?

  Can you tell us which ones?

• 16:26Speaker 02

  I mean, I don't want to, I don't want to be this like a top my back section, but I think most of them that which I mentioned that they actually publicly listed, you can buy them for Uniswap. From some of the centralized exchanges. So yeah, you don't even need to like get into private sale to gain.

• 16:45Ryan Sean Adams?

  Here's the other thing that you were doing at a time when it wasn't popular because in in 2017, it was the era of futility, futility tokens, like pointless tokens that were injected in protocols, right? In 2018, it was not popular to make a bet on a token, like tokens were out, they were dead. I mean, they were useless, right? That this is what the market sentiment held. And that's why we saw even while there was early traction in DeFi protocols. Tokens just weren't being valued probably the way they they should be valued. Was that a core part of your thesis at the time that, hey, these tokens are actually worth something, even though the market is is highly discounting them?

• 17:27Speaker 02

  Yes. So I think there's a, that's where I was quite different with most of the consensus. Back then, because I think first of all, my, I used to be very adamant, and I think right now I'm still have a very strong focus, if you're just on token value accrual. I think especially in a bear market, there's really during a 2018, there was really no bottom, especially especially for so the so-called outcoins. After they drop 90%, they can still drop another 80%. So I think at that point in time, value accrual become excellent because there should be some base flaw in a value. If the token is, if the, if the product is being used and people are using it, so if the product is, there should be some value being captured and this value should provide like a

• 18:11Speaker 02

  flaw to the value of the token. So you know that it will not go to zero. And that gives the token holder a lot more confidence in holding during the bad time. So that was the way I approached it during the bear market. And, and I think that this actually extend to most of the token. I think that some form of value accrual has to be because else what are we really investing? I mean, the so-called futility token, yeah, is The investor doesn't need to hold it. We only need to purchase them and we need to pay for certain tokens. So it's just why the demand factor would be so weak. Um. Yeah. So I think that that's a very major difference. And I think that uh the unique thing about token is uh because I personally did a lot of research.

• 18:53Speaker 02

  So what is the best way to design a good token and how do we make it like integrated in the platform? Uh, I think that there's two main purposes a token should serve. First, it has to have some strong value accrual. The second thing is uh it should serve as a growth catalyst for the protocol and the community. Because I think this is the advantage of token compared to traditional equity. Because you can't really freely give out the equity to your user and community member. Due to like various regulatory restrictions for token, you have a lot of leeway to innovate with this. And this is actually a very strong advantage that the crypto committee should not give up on. Yep.

• 19:32David Hoffman?

  Arthur, one thing I think is really cool about your story and I and I want to go more into fundamentals and we're about to get into that in a sec. But I don't, I want to still uh talk about the story of Defiance Capital and you, Arthur. Uh, you, you, you go through, you, you came into this world in 2017, you go through the, the bear market with us in 2018, 2019 with me. We're, we're both uh students of the 2017 era. Uh, and I, I, I want to impress upon, upon the listeners that you came out of just your first cycle, starting to manage a fund. But I also, I also, Arthur, I want to ask, how old are you? Uh, how old are you? And, and, and, uh, yeah, how old are you?

• 20:12Speaker 02

  I'm currently twenty nine years old.

• 20:14David Hoffman?

  And you're managing a fund, some that's fund where somewhere between two hundred and five hundred million dollars, depending on the emotions of the crypto markets. Does that ever scare you? Does that, is that a scary thing? Because that's a lot of money and you're, and you're, you're twenty nine years old. That's, that's a crazy thing I think we could only find in crypto. Do you ever reflect on just the, the magnitude of the discrepancy between the, the size of the fund and how young you are?

• 20:40Speaker 02

  Yeah, actually, yes, I think there's actually another factor I I'm most impressed and surprised by. Actually, I think even in traditional finance, you do have some of the like a successful trader managing a few hundred million dollar of capital. But I think most of these are not that capital, but I think for crypto, I'll say it's not just for our fund, but a lot of other funds as well. Like the principal capital is probably a majority of the investment fund, same for defiance. So I think in that sense, yeah, it's quite amazing that how how people at our age can accumulate such an amount of capital and just managing such an amount of swing.

• 21:20Speaker 02

  I think this is really brings to the fact that crypto is a major level playing field. And for everyone from different backgrounds, because I didn't come from like a very wealthy family. And it was like, actually, I came to Singapore only 10 years ago. So I think there's a and crypto just really give everyone the opportunity to who willing to put in the effort. And the and meaning willing to make it happen. So I think that that's the that's I'm definitely impressed by.

• 21:53David Hoffman?

  I I think that's what listeners should really walk away with right now is is, you know, when Arthur is telling his story about just the formulation of his thoughts in 2017, 2018. As somebody that also came into the world of crypto around that same time, I very much resonated resonated with these these thought structures or thought patterns that Arthur was having about what he thought about the market at the time. And, you know, so I I think listeners should understand that, like, it's possible to come into the world of crypto and look around and formulate an opinion as to what's going on. And then turn that into a fund or turn that into something. Arthur here turned it into a fund. Other people can turn it into something else.

• 22:34David Hoffman?

  But the the how far you have to go into this industry to start really making a difference and doing something cool is not as deep as what people thought. And and that's the opportunity that I think a lot of listeners should come to. Or conclusion that they should come to is that you can come in and figure out what's going on in the world of crypto. You gotta do your homework for a year or two. But then you look around and start formulating an opinion and start to test that and turn that into something viable. And so, Arthur, maybe you could just go in a little bit more and just the details of how you established your own confidence in your ability to call the shots or your own confidence in your

• 23:14David Hoffman?

  that your your theses and your beliefs about the crypto world were the right world. Would did you ever have like doubts or did you ever have like concerns or just tell us the story of just like coming into the the shoes of a $500 million fund?

• 23:31Speaker 02

  Sure. I think I used to say that in the tweets a few days ago. Confidence is the memory of winning and I believe that it should be the same for everyone like when you're doing something and you keep getting certain form validation from your action and then your confidence will just increase. And I think that in the initial phase, I think it took a while because I think that my first was synthetics and it took a while for the thesis to be realized, but I think that

• 24:04Speaker 02

  it's also a come from a fact that sometimes you have to do it yourself, right? I think the early stage where people wasn't recognizing the potential of synthetics. I actually, and it was during a bear market, I took upon myself and spent I think close to one and a half month to write like a very comprehensive report. And actually that report was not perfect and I think even you look at it right now, it's already outdated. So I don't suggest people to go and search it up, but I think you have to do something to a belief for yourself and make it happen to just really put it out there and see what what kind of result you get. And I think the result was actually overwhelmingly positive. And I think after a few months, the market started reacting to that.

• 24:45Speaker 02

  And then I just keep applying the same approach to the different DeFi protocol which I invested in. You know, spend time in a community, how about and you know, have to popularize them. And also just communicate with the team and see if any value we can add as much as possible. And I think that this approach is a it's actually quite universal. It's just that not many people are doing in a crypto that time. I think when you look at a like a traditional venture capital, they also like lend a lot of support to the community and. I think this probably also brings my experience from a stock investing because I think in a stock investing world, there's something called activist investing, actually not just stock, I mean. There's something, uh, there's this in the bond market as well, like the investor will really uh try to effect some changes in the.

• 25:30Speaker 02

  Companies or the the stuff they're invested in and to get value out of it. I think that um. In crypto, similarly, you can actually apply this concept and actually to a bigger extent because um. Most of the crypto on DeFi protocol very early stage and the team will very happily interact with most of the committee members. So you can really uh make your. Uh have a lot of influence on the future on how the protocol is being run. Yeah. So I think. Just, just keep doing this and you, the feedback you get will just help you to build a lot of confidence and this is how you get to that level.

• 26:04David Hoffman?

  Arthur, was there a moment where it just became obvious that the next step for you needed to be starting a fund? Was there, was there ever, or did you always want to start a fund? Um, what, what was the inflection point where it defines capital became a thing? Well, what, what was the signal that you got from the market that you needed to start a fund?

• 26:25Speaker 02

  I think uh the signal was uh the success we have been getting, uh, the growth we've been getting even before the fund was formed. Um, it's a, it was a very strong validation of our investment thesis and approach. Um, yeah, so although we started from a very low base, but uh our return was uh pretty insane uh for most of twenty nineteen and twenty twenty. Because uh no, I mean, if when you look at it most fun, even even a small one, they don't really outperform Bitcoin. Uh for until twenty twenty, uh I think, I think the outperform Bitcoin part only started this year where. You see stuff like Pocahontas and all the stuff start going like crazy, like twenty X or fifteen X. Um, but I think twenty twenty um.

• 27:08Speaker 02

  2019, 2020 was quite hard to upperform Bitcoin.

• 27:12Speaker 02

  Because just because dominance was so strong during that period, but we have managed to did that. And then I just keep doing that for most of the, for most of the time. And we have been seeing our investment thesis being validated like some of our call. It was actually quite public because I was a, you know, I was quite active on Twitter fairly early on. And most of our call was validated in a very convincing way.

• 27:36Ryan Sean Adams?

  So let's talk a little bit about that investment thesis, Arthur. I think we want to spend some time here. So Defiance Capital, you guys say we invest in DeFi eating traditional finance. That is something definitely Bankless listeners are quite familiar with. We talk about it all the time. DeFi is going to eat traditional finance. But I find it striking as you as kind of a crypto super user, a crypto native, have sort of started Defiance as a crypto native fund. So you're able to do things like invest directly in DAOs. There was an interesting post by Kane Warwick, who is the, one of the founders of Synthetix. He wrote a post on DAO first capital formation.

• 28:20Ryan Sean Adams?

  I thought it was really interesting because he makes the point, and this was, I believe, addressed to founders where he says, hey, founders, like, why go their traditional VC route and legal structure route? When you're going to decentralize all of those things anyway? Why not just start with a DAO first and start with that structure? You know, you're going to end up in that structure to begin with. So why not save some time? What's interesting about, I believe, the way Defiance is structured is you can more easily invest or are more comfortable, maybe prefer to invest in crypto native DAO type vehicles like that. Can you talk about the edge that that gives Defiance? And how important it is for investors to look at crypto native capital coordination vehicles like DAOs?

• 29:06Speaker 02

  Yeah, yeah, I think that um yeah, I think we are one of the one of the crypto native fund. They are able to invest in Dow directly because um yeah, we just said because we have been in the space for a very long time. So we are comfortable comfortable with this kind of structure and Dow also in a way that there is some protection to the investors as well. Because most are structured by the way that you need some majority to make some major decision. And sometime the most of the time the investor will also have some some decision making responsibility as well. And I think the importance is especially crucial for the protocol.

• 29:49Speaker 02

  Because I think that there's a reason it's called decentralized finance. And I think with the recent regulatory action, especially the latest I call it FATF guidance. It was recently being delayed to October, but it's still not hundred percent sure that how how is it gonna be? And there's a good the potential to be a very strict interpretation of that which gonna regulate the fiber code the same way as a centralized crypto company. Or you know, but the defy industry is obviously trying to lobby for like a much more sensible guidance. But regardless, I think that it's important to for the default protocol to find a way to gradually decentralize.

• 30:34Speaker 02

  And I think Dow is one of the best structure to do that. So yeah, this is why we we really support this this Dow capital structure formation. Yep.

• 30:45Ryan Sean Adams?

  Arthur, something else you guys have emphasized and we even started talking about it when you talked about token value accrual. Is this focus on fundamentals? And we we've talked to a ton of different crypto native funds and traditional kind of crypto funds on bankless. And I I haven't quite heard the emphasis on fundamentals from the others as as you seem to have. A lot of them talk about sentiment, a lot of them talk about narratives, a lot of them talk about community. Can can you tell us what you mean when you talk about fundamentals? What are fundamentals in crypto? And why are they important in this industry that seems like it's sometimes just based on memes?

• 31:31Speaker 02

  Yeah, that's a, that's a great question. So there's, I think every fund actually do look at fundamentals, but they will probably define fundamentals in a different way. So for us, fundamentals means that the team quality, the valuation of the protocol and to extension to the team qualities that the execution track record, have they built something valuable, what's their previous history, the technical architecture? Because sometime we find it's a whole thing, the design to be unfair or sometimes the design is superior, the community involvement and the token value accrual and the last but not least, the near term catalyst.

• 32:10Speaker 02

  So these are most of the fundamental factors we look at. And to us, fundamental matters a lot because I think even in crypto, right, the correlation very often go to one when the market is dropping. So actually, in a sense, if you are talking about downside protection, there is not, not, not that much reason to be very diversified. Like you want to avoid the risk where one of the protocol got hacked and then you lose hundred percent of your investment. But if you want to diversify just to prevent like the, the correlation risk, there, there's not much reason in that because everything go down at the same time. But when

• 32:52Speaker 02

  in a bull market where the token is rallying, you can see a lot more dispersion like some will do a lot better, like some did around five hundred percent in a Q one this year, but some only did like hundred percent. So I think that by focusing on the fundamental, you can capture this kind of positive divergence when the market is rallying. And I think that market do pay attention to the fundamentals, but often it can get crowded out by the, the very noisy stuff like, like, and I think this is part of the essential the current world we are being in, like there's a meme coin investing in the stock market as well. And to a certain extent, there's like a meme, so meme, meme stock investing in the stock market and a meme coin investing in the crypto world, like the Dodge car and the Sheba and all the stuff. But I think that

• 33:38Speaker 02

  ultimately, there's a very different kind of audience looking at this stuff, like the, the smart money will always look at the fundamental. It's just how they interpret it. It's everyone have a slightly different way of interpreting it.

• 33:48Ryan Sean Adams?

  Arthur, I just looked at CoinMarketCap sometime earlier today. There was some sort of coin dashboard and Shiba was at over $4 billion in fully diluted valuation. And that just blew my mind first. And second, it made me a little bit sad, right? Just a little bit sad because like there are so many interesting assets in crypto. So many capital assets with cash flows, so many DeFi assets.

• 34:18Ryan Sean Adams?

  With protocols behind them that are going to change the world and eat the rest of finance. But people out there are out chasing like meme coins.

• 34:28Ryan Sean Adams?

  And that that just kind of makes me sad, I guess, for crypto. But but you're saying you have hope. You're saying that in the longer term, that crypto markets are going to value fundamentals so highly. I guess my question is, how do you explain things like Litecoin or XRP or the Shibas of the world? In that context, are they going to ultimately just diminish while the fundamental assets are going to increase? Or are we just in a world like of funhouse mirrors and narratives? And maybe like fundamentals are kind of pushed aside in this in this new market that we live in.

• 35:08Ryan Sean Adams?

  Like, give me some more hope here on the on why fundamentals matter more than narratives.

• 35:16Speaker 02

  I think that it's a gradually changing process. I want to draw analogy from the stock market. So before Benjamin Graham published the book called Security Analysis. The market for the larger period of time doesn't know how to value a stock properly. So I think the stock like 70, 80 years ago was actually quite similar to crypto now. Like, there was a lot of hype and speculation. And people don't really know how to value it properly. And the discounted cash flow model only popularized around like 19. Sorry, I probably get a year's run at 50 or 60s. And then gradually the process are being refined and people start to talk about the discount rate.

• 36:00Speaker 02

  And what is the equity risk premium? So all these things take time to develop. I think we're in a similar phase in crypto where there was, there's no consensus on how to value crypto asset yet. And as a result, and people also have a very. Like a very surface view, like normal people have a rest of face you on what is crypto. Because when it comes into crypto, they always have a Bitcoin first and this is called cryptocurrency, right? And then to extend, they think all most of it are like currency, currency is crypto. But I mean, you guys are talking about it like a lot of the crypto, especially in the D five space are capital asset. They produce cash flow that what we call the productive asset. So the way you look at him is very different from the way you look at the currency.

• 36:42Speaker 02

  I think that unfortunately, there's still a lot of education we need to do. I think that the D five community over the last few years is really a lot. More focused on building the right product and because the scalability is not software, so we don't do. Onboard the mainstream user too early, but unfortunately the bull market came and then the the retail was always on boarded to the. Exciting stuff and where the opportunist actor was always trying to capture the attention like I look at Shiva, so right, I mean. I think this is my view and my research, but I think that there are some good people behind it. And they are not doing it for altruistic reason. I think they are, you know, they probably have some game plan behind it. And then these people are always at the market here, right? They always know how to capture the retailer's attention and a lot of D five people are.

• 37:25Speaker 02

  Really want to build a good product and they want to make sure their product is good enough before they really start to market it out to the wider audience. So I don't think this is gonna change immediately, but it is a gradual process where markets just slowly. Getting smarter and smarter through various cycle. It might not happen as fast as we hope to be. But I think it's definitely changing because.

• 37:48Speaker 02

  This is how like the fundamental investment approach. We are able to use to generate so much return for us and our investor, right? Let me, we went from like a. Low six figures of capital to around like nine figures of capital and. All these are done through a fundamental investment processes.

• 38:06David Hoffman?

  A frequent metaphor we use on the bankless program is that we are speedrunning the history of money and finance. And I guess when you, Arthur, you say that previous markets had equal amounts of trouble valuing fundamentals. I guess we should incorporate that and as knowledge when we, when we say that crypto speedrunning the history of money and finance, well, it's not doing it in one year. Like, it's not going to happen that fast. It's going to happen in, you know, 10, 20, 30 years. And so we are still likely going to go through a phase where the market is having trouble understanding what the hell it is. What, what is the assets that are inside of these things? And Arthur, one of the fundamental metrics or fundamental drivers that you say that you pay attention to over at Defiant is a

• 38:48David Hoffman?

  token value capture and does the token actually capture value? You know, there's a lot wide range of, of token models that exist out there that we could, and we don't have the time to go through every single one. But I want to, I want, I want to ask you to pull apart two examples that you have seen in the DeFi space of one token that has a really strong token value capture mechanism that you just really, really like, or, or a handful. And then some other tokens that while you like the project and maybe the project adds, adds value to the world, the token just doesn't capture any value. Can you kind of compare and contrast some winners and some losers in this category, just for examples for our listeners?

• 39:32Speaker 02

  Yeah, sure. I think I was a very big proponent of the synthetics token economics from the beginning, because I think they're the one that pioneer using like a token inflation to incentivize the committee and also incentivize the early adopter, because the inflation start from a pretty high level, but is gradually tapered down. So it reward the early user who really believe in the protocol and ticked up the initial risk. So I think this is very, very good design. And also there's a very obvious value capture where by taking the risk of sticking in a synthetics protocol, the token holder are rewarded by the fee generated

• 40:17Speaker 02

  by the protocol at the same time, both in a native token and also in the extra fee income that was generated by people trading on a synthetics protocol. So I think that by taking some of our risks, they also Re-ordered in some sort of income. So I think this is usually the pretty universal principle. And I still think that is a pretty good design. Obviously, that when it comes to hedging the debt exposure, it was always quite problematic. Other design, I think it was very well designed, but until right now, I think not enough people have understand it, which is a bank call. So actually, bank call, they went through a lot of iteration. I think right now they finally arrived at the token economic model that make a lot of sense. So, oh, so many DEX's protocol, actually, bank call capture the most value for the token holder.

• 41:02Speaker 02

  I think forty to six percent of the fee actually go to the bank call token holder. But it doesn't come in the form of of income, it actually come in the form of the burning. And there's also consistent of the so-called inflation or to support a new liquidity pool as well. But actually, it was quite complicated. I think most people don't really realize that. So as a result, they are still not free value highly. But actually, we, our team wrote a blog post on that one, explaining how the mechanism was. So I think for the more detail-minded people, they're happy to take a look. Yeah, so I think both these have a very good design. And I think for lending and borrowing protocol, AV and compound, the value accrue is quite similar.

• 41:47Speaker 02

  They both take a small percentage from the interest on that accrue to the depositor and go to the treasury. I think in the future, the token holder can vote on how the treasury is accumulated reserve is gonna be used. It can be returned to the token holder or the investment into the protocol.

• 42:11Speaker 02

  And I think for AV, the token holder is, it is quite similar for me, because the token holder is also acting as a backstop to the solvency of the protocol as well. So I think this is a very sound economic design. So, yeah, it took them a while to actually come to this design as well. So I think that in terms of the. And then you have a lot of the define protocol that just doesn't capture value at all, right? And they also have no very con- they don't have a very concrete plan how to get there as well. Um, I think. Yeah, so I think those are just the team and committee need to figure it out. So I think another more controversial point I have is I think.

• 42:51Speaker 02

  Uh, I think at this stage, uh, buyback and burn is um, so we know the most optimal solution. Because uh, in a way, I think that the placeholder have a publisher blog post called buyback. And they actually argue that uh, buyback and burn when the protocols do have a lot of growth potential is actually destroying capital. And I really agree with this because when you look at a early stage startup in the traditional world, uh, nobody is just a like. Uh, doing share buyback or like giving out dividend that early. Actually, I mean, giving dividends sometimes, but usually it's one of it's like a consistent dividend policy like. You, when you, when you have a lot of growth potential, you always want to reinvest in the growth.

• 43:32Speaker 02

  And that's actually fine. So, yeah, I think the buyback and burn at for most of the define protocol right now is a bit too early that they should actually find a way to. Uh, reinvest this protocol or even just give back to the token holder that is, I think it's still better than like burning the capital directly. And although I understand there's some uh, tax implication for the like returning the total, the, the dividend, so-called dividend to the token holder. But I think that a better way can still be designed.

• 43:57Ryan Sean Adams?

  So Arthur, so you don't love the, the buyback and burn or probably the um, distributing cash flow to, to early back to token holders? Because your argument is like, should reinvest back into, into the protocol? I, I'm, I'm curious about this because we have uh, some protocols sitting on now billions of dollars worth in treasury, right? So like, one that comes to mind is uh, the Uniswap team, we talk about it often. Um, billions in their treasury and they've got like fifteen, twenty people on their team. And so like, what could they possibly invest back into? Like those billions of dollars, um, they're not like a, a large bank where they.

• 44:41Ryan Sean Adams?

  Have office floors and physical infrastructure and tons of employees and, you know, in suits and in ties and, you know, travel expenses and all of these things. It's just like 20 people in a protocol. So what about that argument that, hey, if the protocols don't have anything to do with the money? And what, what should protocol spend on? Maybe they should push some of those funds back to the token holders. Any thoughts there?

• 45:13Speaker 02

  Yeah, I think that is a very sensible point. I think that. But I don't think that most Devi Protocol would not find a way to utilize their capital effectively. I think you need to outline it just because of how highly valued they are. And as a result, their treasury is massive because the token is worth a lot. But I think most Devi Protocol do not have that huge amount of capital. And I mean, setting aside some for as a reserve for future usages. I think that most of them can find a good way to invest those capital, like you can invest in more education. I think this is always like you're always fighting attention against the meme meme coin, right?

• 45:56Speaker 02

  So why don't the Devi Protocol invest in more educational channel, more outreach effort, more translation, more in the local community? So that not just the English speaking community understand what Devi is about, but the community from all the other work. So I think that I think some, some protocol did it better, but I think generally most of the Devi Protocol we are speaking to are. Because they are early stations, a lot more focused on improving their product instead of like reaching out to the new community. Because, yeah, I, I think that you guys actually, the bankers did a very good job, like by translating your content to multiple languages. To reach out to more community. I think this is what that a lot of the protocol can, could have done better. And actually, these are, it just take a lot of effort and yeah, you might just need to hire a lot more people.

• 46:41David Hoffman?

  Arthur, we want to keep on going down the fundamentals rabbit hole and I ultimately want to get to kind of an AMM comparison because I think there's a lot to be learned, a lot to be gleaned from talking about all the different indexes and how we see the market valuing these things. But before we get there, we need to talk about all the different metrics that one could use to evaluate a protocol. So, so Arthur, say you are coming up upon this new up and coming, you know, DeFi protocol that you want to evaluate. What are the metrics that you really look to first? Is it, you know, market cap, fully diluted cap, you know, capital efficiency ratios? Like, what are the, what are the basic metrics that you look at first? And then maybe some of the more advanced ones as well?

• 47:27Speaker 02

  I think, I think the basic one, okay, so I think it depends on whether the protocol already have a working product. So I think if you do not have a working product yet, it's really similar to how most VC look at it. The team, the track record, the concept, the verticality of voting, like, are there any precedent and can they, can you value them? So I think these are pretty standard. I probably will not go too much into it because this is really on like how the traditional VC thing about investment and in crypto, you have the token part. You want to think about how the, how the team is planning to distribute a token and what do they plan to do with the token? So I think for those with already a working product, there's a few metric I think matters a lot is actually

• 48:10Speaker 02

  there's also very good post on the Messari recently talking about which the five hundred, which fundamentals of the protocol matter the most. I think that what we look at, we look at first of all, if it's a Texas, we look at a volume. I think that's very universal. How much volume are they generated? And then after that, we look at the fee, value capture, if there's a few value captures, I think right now is pretty standard like most protocol cap. Like for the non-stable coin protocol, they take a 0.05% of the, of the trading volume as a fee. And for the stablecoin, they take slightly lower. I think Curve took like a 0.04% of the trading volume. Or actually the fee as a, as an income.

• 48:55Speaker 02

  And then you look at the total value lock, and this actually represent like how how much capital this protocol is securing, and this is a very popular ratio in the define space right now. And I think capital efficiency is on a case by case basis where I think some protocol is just optimized for more capital efficiency. I think that matters, but we still look at the fee generator. I think that matter the most against the market of the protocol. So I think this is ultimately how like a capital asset is being valued in the traditional finance, like a price to earning ratio and to the like and to the extent of discounted cash flow, how much cash flow you're generating should dictate how highly valued you are. And after factoring the the growth rate and the discovery of the protocol.

• 49:40Speaker 02

  So so these are the the universe factor, but I think one factor that really drive a lot of the price action is the user and the user group. Because I think that at this stage, the people understand that cash flow might not come in really because, for example, Uniswap have no cash flow because they just don't have any value capture at the moment. But they are valued the most among the default protocol because they have a tremendous user base and the user growth is also one of the best in the industry. So I think this is a metric that although that there's no direct correlation with the value accrual, but it's something that the market is placing a lot of emphasis on.

• 50:19David Hoffman?

  So what are some of the assets that you see out there, the protocols or projects that you see out there that would you say are undervalued based on the metrics that you look at? Are there are there any things that really just stand out as a complete outlier between their valuation and the actual fundamentals that the project holds?

• 50:39Speaker 02

  Yeah, I mean disclaimer, this asset might be something that defines whole position in. I think that If you're looking at a pure metrics level, you can actually just go to a token terminal. And then you can just sort the asset by price to sale ratio, and then you can just see. Or price to earning ratio, I think they're coming out of that as well, then you can just see. What is the most under value, I think we have always maintained that social size is very under value because that. I mean, the given the volume they're doing, they should not be such a huge dispatch. I don't know, a lot of people argue that. You know, Uniswap V3 is gonna kill social because. So just like the older version, like V2 design.

• 51:21Speaker 02

  But the fact that that hasn't happened, because I think that what we have seen over the last. One to two months is, Uniswap V3 is really optimized for the active liquidity provider, which right now. Means like the professional market makers, I think it's very hard for retail to be a passive liquidity provider on V3. And I think there are some backtests being run, although the sample size is not big enough, that they actually did not perform better than the V2. So.

• 51:48Speaker 02

  I think there's passive LP still have its place, and as a result, I think that at this ratio that social is trading at this market is basically pricing like. Zero growth, you know, the market, like social is just not gonna grow further, which I think that's not the case, and. I think from a growth stage level, not looking beyond just the ratio, I think. Both our way and compound is under value by the market. Because I think among all the different DeFi verticals.

• 52:20Speaker 02

  Lending and borrowing are the segment that with the most defensible mode. So in a sense that I don't think there is any new lending and borrowing protocol using the similar design. Building on Ethereum can come in and disrupt them. If you've been a year, I think it's just not possible because it take a long time to build the trust. And build the the the the safety, because both they have operated for more than one year, and there was no security incident as well. So I think these take time to build and, yeah, and the it's also. The vertical with the most obvious liquidity and network effect because it's like if you do not have sufficient deposits in the platform, people can't borrow us a huge for and vice versa.

• 53:04Speaker 02

  So it take a long time to build all the network effect. And also because the token is worth a lot more, the liquidity incentive they give out is more effective as well. So it's just very hard for the early stage protocol to compute. I will compound in this regard.

• 53:19David Hoffman?

  Arthur, let's go into a little bit of a case study with all of the AMMs that are out there. Because there's a lot, there's Uniswap, Curve, Sushi Swap, Bancor. We've already talked a little bit about some of these, but I want to go into more detail about specifically the the sector of AMMs, because I think that can really be an illustrative example. Uniswap, you talked about how it has really high growth. Sushi Swap, you said how it is being valued as if it's not going to grow. Then you also earlier talked about Bancor and how it has a really captured, it has captured a lot of value for its token holders. How do you see the market valuing these things differently? It seems to be that each one of them has their own like fundamentals, right?

• 54:03David Hoffman?

  Each one of them is capturing some sort of fees. But it seems to be that the market is telling different stories based off of each of these different AMMs. Could you, do you have a rationale or an explanation of why the, why the market values these things so differently?

• 54:20Speaker 02

  I didn't get, it's just like, right now market is in a way of, like, the most of the investor, when they look at DeFi, they want to invest in the growth. And I think that in, and as a result that Uniswap just captured the lion's share of the attention in the market and and the other pioneer of that model as well, so market have a lot of confidence on Uniswap being able to maintain that dominance and being like the most cutting edge team as well. So I think as a result, their model is always being placed a lot of premium. And I think for other AMM model.

• 54:55Speaker 02

  The the more unique one will be Balancer and Bankor because it's just like the same design as a Uniswap V2. I think the market is a is a want to see like the what better the differences can make up. Can compare with the with the V3 design. I think so. We are invested in both Bankor and Balancer because we think that there is a value to their design and the way they present to the the user. I think it takes time for the market to learn about it and to be convinced, right? Because Balancer was actually, I think the second major DeFi protocol to kick off the liquidity mining. But after that, the the traction got taken away by Uniswap instead. And then

• 55:36Speaker 02

  it it always take time for the market to spend time to understand a specific protocol. So and in you need some catalysts as well. So I as it can become in the form of fundamental, let's say like I think XE Infinity, it is not a DeFi protocol, but recently like the price have done very well, up for most of the DeFi protocol. It's just that because the the revenue they're generating is just way too big to be. So this can be a catalyst event that your fundamental is so superior that the the market just can't ignore it. Or you have some catalysts where people are really amazed by the design. So I think both Bankor and Balancer we they need this kind of event for people to really spend understanding a design, this their design.

• 56:19Speaker 02

  And to come to a conclusion that this design actually is really a very good design and the market should value them in a different way. So I think it, yeah, you usually you need some event to capture the market attention and for market to value you in a different way.

• 56:35Ryan Sean Adams?

  I'd also throw maybe Curve into the mix here. And I'm curious, Arthur, just one other follow up on the AMM portion of this conversation is the market also seems to be somewhat divided and some some folks believe that the AMM exchange world will be dominated by sort of a power law winner. One automated market maker will dominate, say, eighty percent of of the exchange market. Others believe that there will be many different automated market maker designs and you with an investment in Bankor and also Balancer. Kind of more the long tail automated market makers at this point. May- maybe that's more indicative of of your belief. How do you think this shakes out?

• 57:20Ryan Sean Adams?

  Will there be one power law winner? Or will we live in a world where with many different automated market makers?

• 57:29Speaker 02

  I think that there's no power law. Because liquidity is very fungible in this space. And we have to see the scene have changed over the last. Last one to two years. Well, I think IDEX used to be the largest decentralized exchange until they decided to. I think make some changes. I think I think implementing KYC probably affect their fortune quite a fair bit. And then, yeah, Unisoc came to the scene and then have maintained their dominance since then. But it's just that when you look at the centralized exchange, the fit has always changed, right? I mean, Binance wasn't that dominant until twenty eighteen.

• 58:12Speaker 02

  And then you have Bitfinex was used to be dominant and Polonex. And all the time, the Chinese exchanges was the most dominant as well. So liquidity is very fungible. And any in that sense that there's always possible for some AM to come with a new design and improve it. And then just be more dominant for a certain period of time. So I think it's it's actually good for the end user. Because everyone is just trying to come with a better design and compute over time. And I think that you will see a power law for a certain period of time, but not forever. So I think that the situation can always change. And you might end up in an equilibrium where it's just that there's no dominant. And that everyone just have like a certain market share that's not changing too much.

• 58:54Speaker 02

  And I think that if you subscribe to the aggregation theory, what matters is the aggregator anyway. Because they are gonna afford any order that are more than a certain size. You will always use aggregator to get the best pricing rather than just go to one. One AM to to get the to to trade there. So I think in that sense, I I believe that, yeah, the power law is less likely to apply in the AM. Because liquidity is very fungible. They will always move to the. To the AM that give them the most like the best trade off for them. Like for I think right now for passive LP.

• 59:31Speaker 02

  Bangkok is where we want the best place because there's impermanence protection. If you can stick for a hundred days, you're you are not going to get any permanent loss and you get some extra reward as well from the fee. So I think that for passive LP, this actually are in most cases, not all cases, are better. Decision that providing in a V tree because V tree, you need to actively manage it and you need to change the range depending on market condition. Yeah.

• 59:55Ryan Sean Adams?

  Yeah, this is this is interesting. So Arthur, you're saying liquidity, it doesn't necessarily have loyalty. We could live in a world with many different automated market makers. And if people believe in sort of aggregation theory. Then maybe some of these aggregators are more important, the matches of the world, the one inches of the world. I want to ask you another question with respect to network effects and power laws. And this is the question about Ethereum and ETH killers. Or some people call them ETH attempted murderers. What's your take on ETH killers?

• 1:00:31Speaker 02

  My take on ETH killer is. Most of them are not going to be able to chip away at Ethereum's dominance. Except for various selected few protocols. I think my view, if I were to put a number, I will say there's probably less than five. That will be able to chip away Ethereum's dominance, but they will not be able to kill Ethereum. So I think I I've say in a to a few a lot of different people. So I think that Ethereum's dominance. Will probably come down a little bit like I think let's talk about DeFi dominance, right? Or NFT dominance, like. Ninety-five percent of the DeFi and NFT are built on Ethereum right now.

• 1:01:13Speaker 02

  And in the next two years, we might see that coming down to eighty percent. Just because that other protocol start from ground zero. So their growth rate will always be faster than Ethereum. Because Ethereum is already the majority of the economic activity. So on a growth rate percentage, it's always going to be slightly lower because you already bigger bigger stuff always grows slower, right? So but I think Ethereum's dominance still going to stay probably around eighty percent. Just because the network effect is so entrenched and Ethereum itself is also constantly improving as well like. We have the optimism and later in the year, like the ZK Rob deploying as well. And then we have ETH two probably going to happen within the next three years as well. So I think that.

• 1:01:58Speaker 02

  The dominance is gonna maintain, but I do, I would not write off the fate of all the so-called Eve killer completely because I think some of them. They are trying to carve like what we call the blue ocean strategy. They are trying to target a new user. They are not on board into Ethereum right now. And I think the word is big enough for some of them to do well. But I don't think any of them will overtake Ethereum.

• 1:02:23Ryan Sean Adams?

  So I I'm curious about this, just digging into this because you don't believe in a single dominant automated market maker, right? Because you think liquidity is, doesn't have loyalty and is somewhat fleeting. But you seem to believe that a smart contract platform, a open financial platform like Ethereum has more ability to maintain dominance. Why is that? Does Ethereum have like deeper moats? Then a Uniswap and like, why do you think that Ethereum can achieve its dominance and retain its dominance whereas an automated market maker can't?

• 1:03:03Speaker 02

  Yeah, I think, yeah, that's a very good question. I think that it's just a whole, when you look at the multiple factors. I wish I were gonna go through. The network effect of a base layer is just a lot stronger because.

• 1:03:21Speaker 02

  I think when you look at the most successful so-called scaling solution or other chain to gain a lot of users. Recently, it was a Binance smart chain. So what did Binance smart and did well? That allowed them to gain so much user in a short amount of time is using the same block explorer, which is Metamask. And using the same, sorry, same block as well, which is EtherScan. They use the same team built for them called BSC Scan. And they use the same wallet, which is the Metamask and use the EVM. So that they can park in with a Etherscan and a Metamask. So this is the network effect of Ethereum right now.

• 1:04:04Speaker 02

  And why then the Binance previously tried to build their own DEX before, but it feel like we just call the the Binance chain. And they have their own DEX doing because they did not inherit that network effect and Binance right now is likely the largest crypto company with the crypto company with the largest user base. Even with that, they cannot bootstrap their own chain successfully without relying on Ethereum's network effect. So I think that's that's a very good case study on how strong the network effect of Ethereum is. And I think the infrastructure that on a base layer, it's just a lot harder to migrate on because when you talk to the technical guy, you have the subgraph you need to build. You have the Dev toolings, all this thing.

• 1:04:45Speaker 02

  It's not like you build like a DeFi app on a E layer one, like that the user can easily migrate because it's just like a front end, they just have the Metamask. But using a new layer one is like a totally new user experience. Uh, and and the infrastructure that you need to use is also very different. It's like using to, um, I think the best analogy will be like a App Store analogy, like right now the two most dominant, uh, App Store is like a Google and Apple. So a very big Microsoft tried to compete in this, they tried to have their own App Store as well. But even a company of this size couldn't do it and they uh, they just retreat in the end, like they just no longer doing this. Right now the market is just between Apple and Google.

• 1:05:29Speaker 02

  So I think this is probably the best analogy to understand the the network effect of a base layer like Ethereum and VOD app. Uh, like it's a lot easier to like, you know, to migrate between different layer one platform, right? Yeah.

• 1:05:44David Hoffman?

  I think perhaps to expand upon the answer, we could also include Ethereum layer twos where once you have your protocol built, as you said, like, once you have AVE built, once you have a Uniswap built, it's easy for you to deploy that on Binance Smart Chain. Or any EVM compatible app and it's also easy for you to build that on Ethereum's own layer two, right? And so Ethereum as a base protocol can have Ethereum flavored derivatives, one of which could be Binance Smart Chain, another one could be Polygon, another one could be Optimism or Arbitrum. And these are all, these are all different, you know, chains that could be your app to be deployed upon,

• 1:06:25David Hoffman?

  but you're stuck inside of the EVM ecosystem while building the actual Ave, the application, or Uniswap, the application, or, uh, you know, any of the other DeFi apps that we know and love. Building that from scratch is actually the hard part. And once you do that hard part and you do it on an EVM compatible chain, then you're kind of stuck inside the EVM compatible world, no matter, no matter what chain you're on. And, you know, usually Ethereum itself obviously benefits from EVM compatible stuff, but also most importantly Ethereum L2s also benefit from EVM compatible stuff. Arthur, how do you, how do you view Ethereum L2s as playing into Ethereum, the Ethereum mode conversation?

• 1:07:11Speaker 02

  I think that, um,

• 1:07:17Speaker 02

  it's just very obvious that they are major, um,

• 1:07:21Speaker 02

  major help to the Ethereum on a, especially on a scaling roadmap. And I think this is also come from the community wanting to find a way to solve the scaling issue before Eve 2.0 is live. And I think all these are actually just a very entrenched, further entrenched Ethereum state work effect. Because all this layer two solution, you need to adopt Ethereum's base infrastructure, EVM compatible to make the adoption happen much faster. And also having a very supporting similar infrastructure and dev tooling, we just have them go a long way. So this definitely have to entrench the network effect of Ethereum. So actually I also want to come back a bit on something that I didn't mention on,

• 1:08:06Speaker 02

  why do I think the network Ethereum is so entrenched? I think there's also two, another two thing, which I think is very specific to layer one. One is the distribution of the ownership. I think, uh, right now, most of the new spot contract platform is a proof of stake based. And I think that, uh, I I think most people agree that a proof of state, there's a lot of advantage or proof of work, which I'm not going to go into repeat that. But I think one thing, uh, there is one slight disadvantages, which I think is it's harder to decentralize the ownership of the proof of state. Blockchain over time compared to Provo, because Provo, the miner will always need to sell their coin to uh to cover the operating expenses.

• 1:08:51Speaker 02

  But for proof of state, um, the selling pressure is a little bit lesser. They did the holder will still sell that. I think everyone have a take profit point. I think like for people like us, we'll be like, we see that when Ethereum is at twenty thousand, twenty K or fifty K or hundred K, then we will start to sell a little bit more of our Ethereum. I think it's the same for Prostate, if they will gradually decentralize over time, but the selling pressure will not be as strong as the proof of work base. So any new proof of state blockchain will take a much longer time to decentralize and distribute their ownership compared to Ethereum. And I think that is a part of the the advantage of Ethereum compared to other proof of state blockchain, because when ownership is very concentrated.

• 1:09:33Speaker 02

  It's always lead to a slightly less censorship resistant, right? Like because they know a few token holder have most of the state. And it also take a time for a lot of the proof of state. Platform to achieve a me, what I call the minimum viable censorship resistant level.

• 1:09:51Speaker 02

  Because I think that um, I think decentralization is a spectrum, but uh what. Really, but you can't have to be like the extreme end of the spectrum, like we only have ten nodes and half of the nodes are run by the same parties. So I think that is definitely you do not even cross a minimum threshold. But I think for when you cross the threshold, then I think people can start to trust that, yeah, there's some form of sensor resistance. Built in and people can really start to see where is it going to on the decentralization roadmap. And I think both on both these factor, it's very hard to compete here, because Ethereum has a very clear roadmap on how they plan to decentralize further.

• 1:10:35Speaker 02

  And yeah, this whole ownership distribution is just a very strong mode that's very hard to overtake.

• 1:10:40Ryan Sean Adams?

  So you think Ethereum will continue to be dominant, but other layer ones will still have some role to play. I I'm curious about this. If you had to pick one non Ethereum layer one to bet on, what would it be and why?

• 1:10:58Speaker 02

  Yeah, I I think I'm gonna get a lot of hate for this, but um as as investor, I I have to say, after doing our research, I believe that um. Solana right now has uh has has some potential, um because I think that if you want to compete Ethereum, you can't compete on uh on factor where Ethereum is the strongest at. I think that you can't compete Ethereum on being the most decentralized. And you can't compete Ethereum on the same design and architecture. So I think if I really want to bet on the Eve competitor, I want to bet on a. Protocol that is taking a completely different approach. And I think a lot of the other Eve killer, they actually are just making some minor tweaks to the Ethereum.

• 1:11:41Speaker 02

  And have some marginal improvement. I think that alone is not sufficient. So I think what I think uh Solana has a, why I think Solana has a potential is because. They are taking a very different approach. They will not be as decentralized as Ethereum, and they they actually accept that trade off. But I do, they they do have a roadmap on how do they decentralize it, but they they actually accepted the fact that they will not have like no. Few hundred thousand nodes running their uh few hundred thousand nodes in the future because they require a certain level of hardware requirement. But they want to find that like the the the more enthusiasts, hobbyists, they're willing to spend a few thousand dollar to run their nodes. And they accept that as a fine trade off. And their scaling is really a lot rely on the hardware.

• 1:12:25Speaker 02

  And which I think is a very different approach compared to Ethereum. So we should, if I want to bet on something, I want to bet on something that's totally different, not where you're making a marginal improvement to Ethereum. Yep.

• 1:12:36David Hoffman?

  Hey guys, I hope you are enjoying the conversation with Arthur Zero X thus far. In the second half of the show, we ask Arthur's opinion about Ethereum killers, ETH killers, and whether he thinks that there is room in the market or not for them. I thoroughly enjoyed his take there. He's got a very specific opinion about this. And then we also ask Arthur about the different ways that the East approaches Ethereum, Bitcoin, DeFi versus the West, and how different areas inside of the East, the Chinese-speaking languages, the English-speaking Asian countries, or Japan and Korea, how they all approach Ethereum and DeFi separately. And a little hint there is that they each kind of approach this industry as a reflection of the culture that they have at home.

• 1:13:20David Hoffman?

  You know, shocker, the culture dictates the way that we approach things. And Arthur goes in and talks about the way that different areas of Asia look and have a stance towards DeFi and Ethereum. Really enjoyed the second half of this conversation, so don't go anywhere. But first, we have to take a moment to talk about some of these fantastic sponsors that make this show possible. Gemini is the world's most trusted cryptocurrency exchange. I've been a customer of Gemini since I first got into crypto in 2017, and it's been my main exchange of choice to make my crypto buys and sells. Gemini is available in all 50 states and in over 50 countries worldwide. And on Gemini, there are markets for over 30 various different crypto assets, including many of the hot DeFi tokens. And it's one of the few exchanges that has liquid D I markets.

• 1:14:05David Hoffman?

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• 1:14:50David Hoffman?

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• 1:14:57David Hoffman?

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• 1:15:39David Hoffman?

  interest rate option, but I could choose the stable interest rate option if I wanted to lock in that interest rate in permanently. V2 also features the ability for users to swap collateral without having to withdraw their assets, trade them on Unswap, and then deposit them back into Aave. With Aave, users can do this in one seamless transaction, saving you time and gas costs. Check out the power of Aave at ave.com. That's A-A-V-E dot com. Arthur, I want to turn the conversation to a more global perspective about crypto and DeFi and Ethereum. And while we are this global internet-based industry, we all come from our specific parts of the globe. And we come into DeFi, we come into crypto

• 1:16:21David Hoffman?

  with our specific backgrounds and specific ways of viewing things. And one thing I've always been curious about and never really been able to get my finger on the pulse of is how the East generally at large views crypto and Ethereum differently than the West. And I'm assuming the East is a very large place. There's subdivisions inside of the East. Overall, how is the East viewing this industry perhaps differently? Or just prioritizes things in this industry differently than the West? And again, how is the East also subdivided into different sectors that view this industry differently?

• 1:17:01Speaker 02

  Yeah, that's a great question. So yeah, I I was categorized the the Asia or the East community into different parts. First of all, you have the English speaking region, which basically counts India and most of the Southeast Asia. So I think these are actually, I think, due to the language, the lack of language barrier. So the adoption of DeFi actually has been, I think, fairly, fairly calm, I wouldn't say common, but among the crypto community, I think they are one of the fastest to understand DeFi and actually use it in a pretty significant way. So actually, from our understanding, a lot of the Southeast Asia country have a pretty

• 1:17:41Speaker 02

  decent DeFi community. They might be a bit localized, but yeah, they are using DeFi application in a pretty major matters. And then you have the Chinese speaking region, which is basically China, Hong Kong and Taiwan. And these country, I think initially, they were a bit skeptical because I think China back then in twenty eighteen have a big like a transaction mining trend among the central exchanges, which is quite similar to liquidity mining currently. And as a result, they were quite skeptical for most period of time, but in twenty twenty, after the DeFi summer, a lot of that have actually start to use DeFi app in a major manner. And I think there's a lot more

• 1:18:27Speaker 02

  user up as a result of that. And then you also have the, I think, the two other major crypto user, which is Japan and Korea. But I think, I think largely due to language, language barrier and a cultural factor. These two region have not really been using DeFi that much compared to the other places. So so this is how I would categorize them. And yeah, they

• 1:18:54Speaker 02

  When you come to China, I think the Chinese speaking region.

• 1:19:01Speaker 02

  What we have seen is they are usually a lot more practical and I think like slightly less focus on the ethos. I think what they really cherish about the the the DeFi is the self custody of the asset. Because I think that they have seen the trouble of OKEX recently, which like nobody can withdraw any balances for like, I think, two months. And I think that by by using DeFi, they this really prevent this issue from happening again. But I think on the decentralization aspect on like how decentralized this protocol is. I think they assess a lot more trust in the in in in a in a team and to the player itself.

• 1:19:46Speaker 02

  But for I think for the English speaking committee, we just want to have a lot more built in check and balances. So I think this is probably some of the more obvious difference we can see. Yeah, but I think most of them have accepted the the benefit of using DeFi apps compared to to like a centralized change. And I think everyone just like the fact that they are they are being rewarded by being an early adopter and user of DeFi protocols.

• 1:20:12David Hoffman?

  Hmm hmm. I I I think that's really interesting. There's there is a a common ethos of crypto that you're going to find no matter what culture or background that that you come from. But I I think in your answer, I think it's and maybe I'm hopefully not trying to just create something out of nothing. But I I think what I'm seeing is that everyone is coming to crypto for the reasons of the merits of crypto. They're the same universally, but different regions of the world or different regions of Asia emphasize something that their legacy financial system that they're coming from is really lacking. For example, you talked about how in in China, people really, really value that bearer asset nature, being able to hold your own keys.

• 1:20:53David Hoffman?

  Well, China is a a top down authoritarian uh yeah a region. You know, like you would want that power to be able to control your own keys, especially coming from that that region. And you talked about how Japan and Korea. Don't really go into the protocols as as deep as maybe what what we might do in the West and they kind of stay on focusing on exchanges. And that also makes sense from countries that don't have that deep of a history of financial markets or financialization. They don't, they aren't too comfortable going that deep into the world of crypto because that's just not where they came from, from their their legacy markets. Am I reading too far into this or or do you agree with that take as well?

• 1:21:36Speaker 02

  I I think I largely agree with that take. I think the historical and cultural factors. Likely will dictate the pace of adoption.

• 1:21:48Speaker 02

  Yeah, I think I think that's definitely definitely true.

• 1:21:51Ryan Sean Adams?

  How much of this is just like language translation stuff though to Arthur, do you think like? I don't know, not not, I don't know what DeFi actually looks like in say Mandarin, for instance, are there DeFi interfaces? That are that are created in native Chinese or is that something the DeFi community can work on more is internationalization and non in English speaking education, communication, interfaces?

• 1:22:24Speaker 02

  I I think that um it has to be taken as a holistic approach. I think by just doing a translation, that's a very good start.

• 1:22:33Speaker 02

  But I think ultimately it makes sense to have some people in the community to speak to them and just gradually build that. So I think I want to bring an example. I think Maker Dow is probably one of the most successful DeFi protocol when it comes to adoption in the Chinese speaking region. So I think one of the reasons is because they hire a very strong Chinese community lead that really know the market there very well and as a result are able to communicate with a lot of crypto user in in China. But actually, most of the other DeFi protocol do not have such a person to on the to sit on the ground and able to do that to their community. So I think that.

• 1:23:15Speaker 02

  That is probably a more important factor. You have someone that area to like promote and evangelize the stuff. I think this also happened to you, right? I mean, Vitaly at the very early days, go to went to China, a lot to evangelize. If you and as a result, it used to have a very big community in China, but a lot of the other protocol just did not do that. As a result, they just do not get the same mind share. Yeah. So I think that you always need a few evangelists to help to order protocol. So I think, and yeah, I think language translation is a good start. Having a good interface is a good start, but you always need some local evangelists.

• 1:23:55Ryan Sean Adams?

  It's funny. It always comes back to people as the layer zero in crypto. That's what this entire industry is is based on. Yeah, fascinating. So really quick before we leave sort of the the Asia perspective here, I'm curious your thoughts, Arthur, on all of the the Bitcoin mining stories that we've heard from China of, you know, legislation, regulation, the Chinese government coming down hard on Bitcoin mining. How should we interpret that? And what does that mean for crypto in China and DeFi?

• 1:24:34Speaker 02

  Good question. I think that the interpretation should be fairly straightforward.

• 1:24:39Speaker 02

  I think right now, China, they just want to have a lot more control over the financial market. And in their view, crypto is part of the financial market and actually it might affect their ability to further regulate or control the financial market as well. So as a result, they want to prevent this activity from happening. So the exodus of Chinese miner is real. So we know a few major Chinese miner and a mining pool. They are all going overseas to find, they can look for a new home. So yeah, I think that you can also see from the hash rate as well. I don't think these are coming back

• 1:25:23Speaker 02

  because it take a long time to build all this infrastructure. So I think the exodus will you just continue and you're gonna find a new home elsewhere. And you're gonna see the concentration of hash rate in China.

• 1:25:37Speaker 02

  Becoming a history, that's my prediction, because I think even if they say this is relaxing the further. The the answer that they will just prevent all this big miner for reinvesting back in the region, that that's my view. And I think that another big factor is the fiat on RAM.

• 1:25:53Speaker 02

  In China is being curtil further, so it will become harder and harder to convert. The local currency, which is the renminbi into crypto, or vice versa. Going forward, because they just want to clamp down on all the O T C trading activities. In fact, one of the biggest O T C trader was actually put into jail, I think. Yeah, yeah, he was, I think, a guy called Zhao Dong. So, so I might get a fact wrong, but that's why I heard.

• 1:26:21Speaker 02

  And so, yeah, but I think so we can expect, I think it's reasonable to expect the growth from the Chinese side to slow down a little bit. Because they just have a harder time to fear on RAM. But I think that the community, that those that are initiated, will continue to stay like, the sound of them do just. Always keep some of their balances in the crypto space, like some of their net worth. In this, in the stablecoin, in some Bitcoin, Ethereum. And some of them, they probably just, they would know that it will be hard to. Like, convert this money into fiat, but they will okay with it, and I think this is what gonna happen going forward.

• 1:26:58Ryan Sean Adams?

  I will say, Arthur, it seems like your jurisdiction, Singapore is absolutely crushing it when it comes to. Response to to crypto, like the Singapore government seems to be. Handling crypto with a very open mind and also very soberly. Is is that what it's like on the ground? Are you impressed with what Singapore is doing, or are there more subtleties there?

• 1:27:23Speaker 02

  Uh, I'm, I have to say, I'm definitely impressed, so. But there's some subtlety as there as well. So I think that first of all, the regulator, even up to the top one, really. Try to understand what is it about? And they did, and I think right now their understanding is. Probably one of the top, when it comes to from a like a global regulatory problem, so they understand what DeFi is. They understand the advertised benefit of DeFi. They also understand the problem right now. But whether they fully buy into. The so-called the benefit of DeFi, we are not hundred percent sure yet. Say they do know the benefit that we've been talking about.

• 1:28:04Speaker 02

  But whether they believe it or not, I think that remain to be seen. So I think they are waiting to see more evidence because I think a key thing to convince them right now is that most of the traction in DeFi is just restricted to the crypto space. It doesn't touch the mainstream user yet. So I think and that regard, they are still skeptical that whether the benefit of DeFi can translate to the real world activities. Which I think all of us believe will be about, I think, just the roadmap towards that happening. But I think when it comes to regulation, Singapore ultimately is not a very big country. So if you follow the the FATF guidance and the major

• 1:28:43Speaker 02

  key law being drafted by the major, like the bigger country like US and EU. So in that sense, yeah, it's definitely a lot friendlier and they are understanding. But yeah, the subtlety is that that doesn't mean that they're going to regulate this thing in a completely opposite manner compared to the guidance issued by the global financial policy setting body. Yeah. So I think that's a subtlety there. But I think the entire approach is also a lot less prosecutorial and less aggressive in the sense that when you're doing something, there's not hundred percent compliant and in great area. The first action is not to, you know, going after you, but instead of trying to understand what you're doing and

• 1:29:25Speaker 02

  make you compliant. So yeah, so is, yeah. So I think that's the difference in the approach there.

• 1:29:31David Hoffman?

  Arthur, as we come down to the closing this conversation and thank you so much for giving us some of your time. This has been, I've already learned so much. I want to ask you what you are looking for out of the crypto industry in the second half of 2021? What is really missing that would, that you really think needs to be here as a part of this industry? What are the, what are the next innovations that you see coming that you are really looking forward to?

• 1:29:58Speaker 02

  I think it's really about scaling. I think we have seen the success of Polygon and also Binance Smart Chain. I think more scaling solution will just help Ethereum to scale and more DeFi app to be able to onboard more users as well. I think we have, I think the DeFi protocol on Ethereum just cross, I think, I think 2 million, also, I think definitely have crossed 1 million users over time. I'm looking forward to this crossing 5 million and 10 million probably by end of the year. I think it's possible if you have a very successful scaling solution. And just more and more users starting to use a DeFi application. Yeah, so I think we went beyond the 0 to 1 phase in DeFi.

• 1:30:39Speaker 02

  I think next step is really about growing the user face, growing the user base and just getting more and more product to the hand of the the normal crypto user and just the mainstream user.

• 1:30:50David Hoffman?

  Did you say that you think that we can 5 to 10x the users of this industry by the end of this year?

• 1:30:59Speaker 02

  Yes, I think it's possible. If the scaling solution is a, is a, yeah, is good enough. Yeah, I think it's definitely possible.

• 1:31:08David Hoffman?

  Why is scale such a, such a crux? Why is that? Why is everything hindered on scale?

• 1:31:15Speaker 02

  Because I think that you can look at it from like a traditional tech company, right? I think the user experience on the initial user experience matters a lot. So I think if you do not have a good scaling solution, the initial, like, if users are being turned off by the first impression, they're just not going to come back. So I think it's important that we are able to onboard them with very good first impression and then they continue to stay.

• 1:31:40Ryan Sean Adams?

  That, that, that is a pretty bold prediction and I also love it. So 5 to 10 million DeFi users by the end of the year is possible. Just let's end with a couple more predictions, Arthur. If you're willing to indulge us, sir. We love predictions, so please indulge us. What do you think the total locked value in DeFi is going to be? And then how about the price of ETH at the end of 2021? Again, fun predictions, maybe right, maybe wrong, just fun.

• 1:32:11Speaker 02

  Okay, so, hey, do you count BSC TVR as part of TVR? Do we want to count that?

• 1:32:19Ryan Sean Adams?

  Do we count it, David? I, I, I kind of count DeFi, whatever is on DeFi Pulse is close to being counted.

• 1:32:27Speaker 02

  Okay.

• 1:32:28Ryan Sean Adams?

  Counted.

• 1:32:28Speaker 02

  Okay, let's use.

• 1:32:29Ryan Sean Adams?

  Probably not Binance Smart Chain.

• 1:32:31Speaker 02

  Okay, let's use DeFi Pulse as the oracle.

• 1:32:32David Hoffman?

  Unless they added that, if they added it, then we'll count it.

• 1:32:37Speaker 02

  I think we will hit, I think we will hit 80 billion, yeah, 80 billion by the end of the year.

• 1:32:44Ryan Sean Adams?

  80 billion, so just a little bit up.

• 1:32:46Speaker 02

  That's a bit less, that's not very bullish, okay, let's, let's do 100 billion.

• 1:32:51Ryan Sean Adams?

  100 billion, double, okay.

• 1:32:52David Hoffman?

  It's gotta be a bullish prediction.

• 1:32:54Ryan Sean Adams?

  Give us price of ETH.

• 1:32:55Speaker 02

  Price of ETH, um.

• 1:33:00Speaker 02

  I think it's very possible we will hit, um.

• 1:33:05Speaker 02

  I, I, can I give a range?

• 1:33:07Ryan Sean Adams?

  Yeah, give a range.

• 1:33:08David Hoffman?

  Absolutely, please, yeah.

• 1:33:09Speaker 02

  I, I think 5 to 10,000.

• 1:33:11David Hoffman?

  Wow, all right, retaking new highs.

• 1:33:14Ryan Sean Adams?

  Do you guys, do you guys hold ETH? Is that part of the DeFi portfolio or is that?

• 1:33:18Speaker 02

  Yes, we hold ETH because ETH is, uh, ETH is money and ETH is a major asset within the DeFi space. We hold it a lot of time to provide liquidity to the protocol that we are supporting. Because most of the pair, even with the dominance of stablecoin, are still against ETH like, um, yeah, like for, uh, let's say for Balancer is against ETH and for a lot of other liquidity provision we do is all against ETH. So we always hold ETH in our fund, um, to, yeah, for various reasons and also from a investment reason as well.

• 1:33:49David Hoffman?

  Gotta hear it here first, ETH is money.

• 1:33:53Ryan Sean Adams?

  And not the first time you've heard it here. You definitely heard it here first. Well, Arthur, it has been an absolute pleasure to chat with you. You're just full of insights, man. I, um, wish you best of luck getting to a billion dollar mark with, uh, Defiance Capital. That, that seems like the next milestone. Congrats on all, on all your success and thanks for joining us on Bankless.

• 1:34:17Speaker 02

  Thank you for having me guys, I really appreciate it and yeah, I hope you guys have probably one million subscriber and listener soon as well.

• 1:34:25Ryan Sean Adams?

  There you go guys, that's what's in store. In order to make that happen, let's get to action items. Give us that five star review. David, how are we doing on five star reviews on iTunes? We could always use more.

• 1:34:36David Hoffman?

  We don't have a million yet, so we definitely need a few more five star reviews. Wherever you listen to podcasts, if you could go into that podcast player and give us those five star reviews, that is how Bankless climbs up the charts in the worlds of finance and investing on iTunes and Spotify and how the Bankless journey reaches as many ears as possible. So if you have enjoyed your journey westward on the Bankless journey, help share it with more people by giving us those five star reviews.

• 1:35:01Ryan Sean Adams?

  The other action item I have for you today is to go follow Arthur0x on Twitter. Arthur, could you give us your Twitter handle? Make sure we get that correct.

• 1:35:10Speaker 02

  Sure, my Twitter handle is Arthur underscore zero X.

• 1:35:14Ryan Sean Adams?

  All right, guys, give that Twitter handle a follow. Arthur is always tweeting out insightful DeFi intelligence. Of course, risks and disclaimers, guys. DeFi is risky, ETH is risky, all of crypto is risky. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.

• 1:35:35David Hoffman?

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• 1:36:16David Hoffman?

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