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Why I have zero faith in crypto venture capitalists

bennettftomlin.com

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Re: Why I have zero faith in crypto venture capitalists

#41

Post by saddlerustle »

borrowcheckfml wrote: post #29
slg wrote: post #25

Earlier quoted context omitted.

Except those "exotic derivatives, structured products, etc" do have real investments at the heart of them. What is at the heart of those "DeFi" investments? It seems to mostly be criminal and criminal-like behavior (this includes transferring money in ways the local government doesn't approve of which can admittedly be great if the local government is oppressive).

I think it's arguable what real investments are. How "real" is the stock price of Gamestop? Aren't most prices just driven by imaginary narratives? Investors rarely care about dividends. There are also DeFi projects that are based what you call "real investments" such as stablecoins, synthetic assets for stocks and commodities, etc. When the backing/staking mechanism for these works as intended, they are just as real…

In the short term prices are driven by liquidity, but the fundamental value of a company's stock is the net present value of its future free cash flows. Anyone believing otherwise will, in the long term, lose money.

Re: Why I have zero faith in crypto venture capitalists

#42

Post by wyck »

steveBK123 wrote: post #19

I find crypto super interesting and have dipped my toes in with some small real money just to force myself to try out different products. That said, so far, almost 10 years in, there really are not a lot of real world use cases. Sure there are glorified POCs of things that could potentially lead in the direction of real world use cases. But most of these products/tokens are just extremely meta. Tokens you get paid/pa…

This opinion is really common, I used to have it but what changed my mind was realizing there are not really any "real world" use cases. I look at crypto as actual money, with the same definition: "money is a verifiable record that is generally accepted". Money in of itself does not have any "real world" use cases, money is money. Money facilitates economic velocity and growth in the same way crypto does, except crypto has the potential to be more efficient and secure. One of the key reasons money exists is "currency velocity", crypto improves upon this a lot. Banks make money with money, they don't make money with real use cases. Good crypto projects act like decentralized banks, nothing more.

In other words ignore all the bullshit projects and look at the ones who are structured like banks, financial instruments, or risk management. Then the use cases of cypto become very clear.

Re: Why I have zero faith in crypto venture capitalists

#43

Post by IAmGraydon »

borrowcheckfml wrote: post #29
slg wrote: post #25

Earlier quoted context omitted.

Except those "exotic derivatives, structured products, etc" do have real investments at the heart of them. What is at the heart of those "DeFi" investments? It seems to mostly be criminal and criminal-like behavior (this includes transferring money in ways the local government doesn't approve of which can admittedly be great if the local government is oppressive).

I think it's arguable what real investments are. How "real" is the stock price of Gamestop? Aren't most prices just driven by imaginary narratives? Investors rarely care about dividends. There are also DeFi projects that are based what you call "real investments" such as stablecoins, synthetic assets for stocks and commodities, etc. When the backing/staking mechanism for these works as intended, they are just as real…

> Investors rarely care about dividends.

This one statement reveals that you have zero idea what you’re talking about and are just presenting yourself as knowledgeable. Why do that?

Re: Why I have zero faith in crypto venture capitalists

#44

Post by borrowcheckfml »

slg wrote: post #33
borrowcheckfml wrote: post #29

Earlier quoted context omitted.

I think it's arguable what real investments are. How "real" is the stock price of Gamestop? Aren't most prices just driven by imaginary narratives? Investors rarely care about dividends. There are also DeFi projects that are based what you call "real investments" such as stablecoins, synthetic assets for stocks and commodities, etc. When the backing/staking mechanism for these works as intended, they are just as real…

Let's say Gamestop is shutdown tomorrow. There is real estate, there is IP, and there are physical products that could all be sold to recoup losses. There is intrinsic value there regardless of whether the current stock price has greatly exceeded those values. The overwhelming majority of cryptocurrency investments have no intrinsic value.

And crypto projects that are derivatives on real world assets, like fiat currencies (stablecoins) or stocks (synthetic tokens), have equivalent backing. If the project were to dissolve, there would be assets backing that. Not suggesting this is the case here, but I keep seeing this worrisome trend where people are stuck in the Bitcoin and ICO world from 5 years ago and think nothing has changed and they don't really understand the technical details of how DeFi protocols work today.

In the case where tokens are not backed by anything they are often governance tokens, which are kind of like startup equity. Startups without much IP or real estate are commonly valued at millions of dollars. This is no different in that anyone is a VC investing in e.g. future governance rights.

Re: Why I have zero faith in crypto venture capitalists

#45

Post by [deleted] »

runawaybottle wrote: post #4

Honestly, all these cryptos have to do is bake themselves into in-game currency for any video game. Fortnite crypto could be a multi billion dollar market. I would love to just buy an army in Starcraft, pillage your base and take your crypto, then sell it on Coinbase. If we are truly to live in a job-less world with basic income, I’m gonna need shit to do.

[deleted]

Re: Why I have zero faith in crypto venture capitalists

#46

Post by lottin »

borrowcheckfml wrote: post #22
steveBK123 wrote: post #19

I find crypto super interesting and have dipped my toes in with some small real money just to force myself to try out different products. That said, so far, almost 10 years in, there really are not a lot of real world use cases. Sure there are glorified POCs of things that could potentially lead in the direction of real world use cases. But most of these products/tokens are just extremely meta. Tokens you get paid/pa…

I think of it like this. Various tokens give you certain types of exposures with different risk profiles. Yields are so high because of the risk. This really isn't so different from the centralized financial system where we have built complex structures (exotic derivatives, structured products, etc) to give you certain types of exposures. The difference is that DeFi is globally accessible and permissionless. Even if…

DeFi can't do much financing at all since smart contracts can only replicate a small subset of financial products which aren't very useful to begin with. Even calling it "finance" is a bit of a stretch.

Re: Why I have zero faith in crypto venture capitalists

#47

Post by [deleted] »

wyck wrote: post #42
steveBK123 wrote: post #19

I find crypto super interesting and have dipped my toes in with some small real money just to force myself to try out different products. That said, so far, almost 10 years in, there really are not a lot of real world use cases. Sure there are glorified POCs of things that could potentially lead in the direction of real world use cases. But most of these products/tokens are just extremely meta. Tokens you get paid/pa…

This opinion is really common, I used to have it but what changed my mind was realizing there are not really any "real world" use cases. I look at crypto as actual money, with the same definition: "money is a verifiable record that is generally accepted". Money in of itself does not have any "real world" use cases, money is money. Money facilitates economic velocity and growth in the same way crypto does, except cryp…

[deleted]

Re: Why I have zero faith in crypto venture capitalists

#48

Post by vmception »

The author has faith in their ability to make money

He has no faith in seeing their presence as validation in the project

That’s an accurate view and he shouldn’t limit that to crypto VCs, its the same in other venture capital. Crypto just helped lower the distortion field, while non-crypto VCs just still have better marketing unbeknownst to him

They all get discounted and preferential liquidity if they’re any good at deal making. That’s what you hire a VC to do

The crypto VCs are absolutely crushing it in deal flow, some of the things they negotiate are phenomenal such as perpetual block rewards that never get diluted, while node operates are all competing amongst each other for their own share. Fund performance decks are way below reality as it is very dependent on the limited partner’s time in the fund, unlike in a liquid fund strategy a private equity investor only has exposure to the positions and contracts they got exposure to from after they joined the fund and exited the fund.

Re: Why I have zero faith in crypto venture capitalists

#49

Post by lottin »

borrowcheckfml wrote: post #29
slg wrote: post #25

Earlier quoted context omitted.

Except those "exotic derivatives, structured products, etc" do have real investments at the heart of them. What is at the heart of those "DeFi" investments? It seems to mostly be criminal and criminal-like behavior (this includes transferring money in ways the local government doesn't approve of which can admittedly be great if the local government is oppressive).

I think it's arguable what real investments are. How "real" is the stock price of Gamestop? Aren't most prices just driven by imaginary narratives? Investors rarely care about dividends. There are also DeFi projects that are based what you call "real investments" such as stablecoins, synthetic assets for stocks and commodities, etc. When the backing/staking mechanism for these works as intended, they are just as real…

> There are also DeFi projects that are based what you call "real investments" such as stablecoins, synthetic assets for stocks and commodities, etc.

All these are examples of DeFi parasitising conventional finance products. Also none of these are decentralised or "trustless". Notice how all the main stablecoin issuers have to provide regular third-party attestations assuring that the coins have appropriate backing.

Re: Why I have zero faith in crypto venture capitalists

#50

Post by latchkey »

I concur with this article quite a bit, but let's also talk about solutions instead of just problems. Projects need to get funded to pay people salaries. The current VC alternative solution to this is to form a DAO.

Recent example of a fairly successful DeFi DAO:

https://medium.com/badgerdao/badgers-in-the-sett-a-dao-treas...

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