← CRYPTO 101
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- [00:00]
A
I'll be honest, once it gets hot out, I'm not trying to overthink outfits. I want something that's comfortable, breathable and still looks like I tried a little bit. That's where Quince is coming for me. And I absolutely love their 100% linen drawstring pants with the matching short sleeve button down that I just got from Quince guys. It's exactly the kind of thing I want in the summer. Super easy to throw on. Doesn't feel stiff, it doesn't feel heavy, it's breathable and it looks clean. Clean without being too dressed up. It's basically vacation energy without looking like you packed in five minutes. And you can have that vacation energy all summer long at home as well. Quinta's high quality essentials without the luxury markup. We're talking linens, organic cotton tees, lightweight sweaters, all the stuff that you actually wear. Their European linen pants and shirts are a great warm weather upgrade. And the price is right. They're starting at just $34 and pricing is a big part of it. Everything at quints is 5050 to 80% less than similar brands because they work directly with ethical factories and cut out the middleman. So you're paying for quality, not just the logo. And they go way beyond clothing. You've heard me talk about how much I love the Quint website. They have bedding, cookware, sofas. It's one of those sites where you go for one thing and end up staying for many more. Elevate your summer wardrobe. Go to quint.com crypto101 for free shipping on your order and 365 day returns to now available in Canada too. That's Q-U I N C.com crypto101 for free shipping and 365 day returns. Quint.com crypto101 are you curious about the economic forces shaping your daily life? The Planet Money podcast from NPR makes sense of the economy in ways you'll actually understand and enjoy. Guys, you love listening to the rundowns. I get some of that information from this NPR Planet Money podcast. Especially recently with the war going on, the straight of Hormuzzi. Uh, you're just kind of getting those updates as they come from these guys. They put out a ton of awesome content. It's a different perspective from crypto101 but still a great listen. So go over there and check out the Planet Money podcast. If stuff like current events and the finance world interest you, each story on Planet Money starts With a question. Recent episodes ask why Pokemon cards are growing faster than your retirement count. Questions about the war. Just like we talked about recently a lot on our program. From the job market to the stock market to prices at the supermarket, Planet Money explains it all. Planet Money is a different kind of world where the complex economy somehow makes sense. Where human stories supersede abstract theories so you can learn, laugh and be entertained. It's econ, but just down to earth. The hosts go to unusual lengths to explain the economy. They've published their own book to track the global supply chain. They've shot a satellite into space to understand the economics of the private space industry. They've gone inside a live book auction to show how ideas get get to market. It's the kind of show where you learn something, probably laugh and walk away seeing the world a little differently. And I think if you like crypto101, you'll enjoy Planet Money. So maybe check that out. Follow NPR's Planet Money podcast and understand how money shapes the world.
- [03:17]
B
All right, ladies and gentlemen, welcome back to another action packed high caliber episode here of the Crypto 101 podcast. I'm your co host, Bryce today joined by my good buddy across the country, Mr. Brendan Veman. How are you doing, Brendan?
- [03:33]
C
I'm doing good, Bryce. I'm doing good. I'm feeling good. I don't know what it is. There's something in the air, a little bit of extra energy, a little bit of extra oomph. But man, I'm excited. It's a good day.
- [03:45]
B
Maybe it's starting to become hurricane season over there in Florida and you're just feeling some tingling electrons in the air.
- [03:54]
C
One too many lightning strikes.
- [03:55]
B
Yeah, no, not too many lightning strikes nearby for I don't know if anybody remembers, we were on a live stream one time and Brennan's house did get struck by lightning one time and it just completely blacked him out and I was left hanging. So we're not going to have that today, but we've got a great guest, a really, really exciting one for me personally. You know, Ethereal Ventures has been pioneering, you know, venture investments in crypto for almost as long as I've been in the crypto industry. And we're joined by their co founder, Min Tio. Hello, Min, how are you doing? Welcome to the show.
- [04:30]
D
Hi guys. Thanks so much for having me on. Excited for our chat?
- [04:34]
B
Yeah, we, we would love to hear the founding story of Ethereal Ventures. You guys are, are pretty og original gangsters here in the the venture capital Space as it relates to crypto. Tell us a little bit about how you guys started up the firm.
- [04:50]
D
Yeah, absolutely. So interestingly enough, most of us have been working together since 2018 and doing exactly what we're doing today. Incubating, accelerating investing, co building crypto startups. That was back in the day where it wasn't Even clear that MetaMask would have 100,000 users and now they're obviously way, way, way surpassed that. So there's been some really great success stories from the consensus ecosystem. So I've had the pleasure working with my co founder of many of the ethereal team since 2018. And this was before, you know, crypto VC was really as prevalent as it was today. So there weren't as many funders of startups and it wasn't really clear like the, you know, what the technology could do. There was so much promise, but there wasn't a lot of infrastructure. So Consensys was one of the pioneers in terms of building out a lot of the infrastructure with MetaMask, with Infura funding, a lot of Ethereum research, backing a lot of application developers to just test the technology. Many of them didn't survive. But that really wasn't the point of it. The point was that we tried and also we could see the limits of the technology and backsaw what kind of tooling that we need, what sort of Rails did we need, what do people need in order to build really fully functioning applications. So it's through that work that consensus sort of grew a lot became a lot more institutional with the rise of MetaMask and as that became more obvious, every time I spoke to a team, they thought that I was going to get an integrate, they were going to get an integration of MetaMask, which was slightly problematic for the Metamask team. So it was very clear that Consensys needed more of a corporate sort of investment team, a corporate development team and we want to continue doing ventures. So Joe and I had a chat in 2020 and this was just around Covid time and maybe that's part of the reason because we are all like, you know, just nonstop about on our computers during defi summer. But you know, we just realized we had really exciting opportunity in front of us that we could actually spin this out into a venture firm. A lot of our founders that we have worked with encouraged us to do so. They liked our style of investment, they like our partnership model and it was a great opportunity to actually build something with people that we liked working with, doing something that we all love doing, you know, I think a venture fund is ultimately at least a 10 year commitment. So it's very long term. We're backing founders at the earliest stages. You know, it could take them, you know, five years, 10 years, sometimes longer to build out their companies. And so the team needs to stay together. And what better way to know that the Ethereal team would stay together and work well together than having the benefit of working for three years together doing just this. So, you know, we spun out ethereal in 2021 and we've been doing the same thing, working with founders and still loving our jobs ever since.
- [07:49]
B
I love it. And, and you come from a kind of a private equity, private credit background before you came into the wild west of crypto. So much more volatile, much more maybe exciting, but kind of like philosophically or from like an ethos standpoint. What made you jump ship from traditional finance and say, crypto is actually going to be the thing I want to bet my career on? Because at the time there was a lot of career risk, but there was also a lot of other things to invest in. That was the early days of AI, early days of quantum, all these other exciting technologies. So you could have kind of had your pick of the litter. Why'd you land on crypto?
- [08:26]
D
Yeah, so, you know, I've kind of, in terms of my career arc, I've kind of gone full circle. I've gone from traditional investing to then fintech. I helped to build a fintech startup in the UK and then ultimately in crypto. And it's worth noting, you know, I started my career career in 2008. So that was a very exciting, interesting time to be starting in finance. Like, you know, just really seeing things fall apart and seeing a lot of the failures with the existing financial system, frankly, and trying to make sense of everything, trying to pick up the pieces. Everyone was trying to avoid catching a falling knife. So I think I started my career pretty skeptical of financial services to begin with, not necessarily a believer. And you know, it really like honed in me this, this like, mindset that, hey, like when we're investing in something, it's not just investing in the status quo. We're investing in things that should be better, that should drive the industry forward. And you know, I, I love what I was doing. You know, working in private equity and credit taught me a lot. It taught me to underwrite cash flows, assess businesses, be creative with structuring. And ultimately I wanted to be more operational, build a company. I had, you know, a lot of, I Covered financial services and tmt. Really fascinated by payments at the time. Like that was when the rise of, you know, mobile payments was happening in the uk. I helped to build a mobile payments and automated loyalty startup in the UK and how I came to crypto was less about like, you know, when I bought Bitcoin because to me didn't really get it, traded it like too early, you know, it was really when I was helping to build the fintech startup and it's called Yoyo Wallet and working with the engineering team to try and lower out cost of payment that I realized it wasn't possible. And it was crazy to me that we were a payment startup. We weren't making gross margin on any payment and neither was any of our competitors. And that's just because of how antiquated the back end was that we couldn't really do anything in the context of the existing traditional financial rails. And after reading the Bitcoin and Ethereum white papers, I just had this aha moment that payments belong on crypto rails. That's what the modern, modern day consumer needs. 24. 7 Instant settlement, global by design. And it just felt that, you know, we wouldn't really be able to deliver real value to users unless we could offer that. And when you add a software layer that was permissionless and allowed for global coordination on top of financial services, innovation would just become unstoppable. So that's what, you know, drove me towards crypto. And I had the great opportunity to work with Joe at Consensys and really front row seat to a lot of that innovation. And I think it all kind of makes sense, right? Like, you know, in a lot of ways I came from a part of finance that was very opaque and gated. It was almost like, oh, you needed to be very smart to understand all of this and like, you know, being in it, you're like, well actually this is just not that complicated. Actually a lot of it doesn't really make sense. It just doesn't work. Like crypto is the opposite. I think it's, you know, everything is public, everything is transparent. Everyone sort of like has a say at anyone can build anything. And that's really the ethos that drew me to crypto.
- [11:43]
B
Yeah, not, not a question, but just a comment. It seems like all these high finance folks are up in their ivory towers, you know, nose in the air and crypto is really for the people and so I love that you kind of picked up on that and that was attractive to you. But what do you think Brendan?
- [12:00]
A
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- [17:51]
C
Yeah, no, it is. And it's, it's always interesting hearing people come from the traditional sense. I was just thinking to myself, it is a little bit funny. You came in 2008. Bryce is like, what made you jump ship? And you're like, well, I was starting my career in 2008. It's like, oh, that'll do it. If you're in 2008, you're dealing in tradfi. It's probably got to put a bad taste in your mouth. But I think what it really does is for everyone, like that was an eye opening moment that said, hey, prior to that, people thought it was invincible, it was invulnerable, it was this infinitely scaling, foolproof machine. And what that did is it created a very humbling and eye opening moment for I think everyone. You didn't have to be an expert on Wall street to see it. You could be a normal kind of mom and pop shop individual. And everyone around the world saw the flaws in our system and their flaws that there was just no solution to. And so I think here we are now, right, 15 plus years later, pushing. We're getting close to 20 years later and we have something that can help us against that, right? And it's continually growing and it's scaling. And I think that that's the allure of crypto and overall, you know, beyond just crypto blockchain tech is that it's, it's been tremendously fast at creating new technology and adopting it. And that makes the space Volatile. But I think that that's a real reason why people like it in the first place, is because it moves at a million miles an hour. People acknowledge the fast, that the fact that some things are going to break, some things aren't going to work out, but the parts that do will become transformational. And I think you've seen that with a lot of these modern blockchains and, you know, Bitcoin, Ethereum, Solana, you know, Hyper Liquid here recently. And the stuff that sticks, it sticks and people really, really like it and use it. And so, you know, from something like that, opportunity is born. You know, enter Ethereal Ventures. And that's kind of what you all are about is saying, okay, well, we know that there's going to be some big things that come out of it. So I guess for the listeners out there, can you just walk us through how you approach venture capital and what makes Ethereal Ventures different from other venture firms?
- [20:06]
D
Yeah, absolutely. And, you know, our team are an interesting mix of know, we come from across the globe. A lot of us have backgrounds in financial services and sort of are in the space for a reason because we do think, we do believe that things can be built better. A lot of us also have been founders ourselves and try to build businesses and have a pretty strong idea of like, oh, I wish, you know, I had this type of investor when I was building my business. And we have many sort of, you know, computer programmers and researchers on our team as well. And I think everyone has, you know, somewhat believes in the original cypherpunk vision, which I think you clearly identified. There's a lot of overhang from like, distrust of government. Like, we see like, you know, the rise of zcash today. And I think it's, you know, that sentiment is very alive and well. Right. Like, so I think oftentimes when people ask, why build a venture fund to just invest in crypto, isn't it just a flash in the pan? I think we're just getting started. There's going to be so much more that we can do to actually accelerate financial innovation. And I think our central thesis as a fund is just that blockchains are the trust settlement layer for money movement globally. Now we're seeing it play out in earnest across institutions around the world with retail, many different types of market participants. And in terms of differentiation, firstly, we're Day One Capital. We like to go as early as possible. We're back, people. So we want to be your partners. From day one. We have a global approach. So we meet founders where we are, we don't really care where you're from, we don't really care where your team is based. All we care about is that you have global ambitions to build software that really transcends borders. And lastly, we are operationally hands on. Like, you know, we can't help but get involved. Ultimately we see ourselves as co builders rather than passive investors. So where, you know, we want to be right beside the founder, helping them with whatever they need, getting their first customers, getting their first products, making their first hires. Like these are all things that we work actively with our portfolio companies on. You know, we invest in both equity companies and token networks. We see the value in both. And ultimately, ultimately we really focus on concentration over spray and pray. We look to back a small number of foundational companies. We stay with them rather than chasing different things that recycle. And we hope to be right about a few of them as opposed to just shallowly involved in a very wide bench of companies that we don't really have any relationships with. So that's Ethereal Ventures in a nutshell.
- [22:52]
B
It, you know, I've heard with venture capital it's, you know, you make a hundred bets and maybe 10 of them pan out, but those 10 or 5% maybe kind of pay for the rest of the losers. Have. Has it been in your experience the same? Because I see a lot of folks on your portfolio list, you know, Eigen, you know, Billion Dollar Firm now or Protocol Aztec Drift, Blue sky and you know, dozens of others. Tell us a little bit about that dichotomy in your business.
- [23:26]
D
Yeah, the power law is very, very strong in crypto portfolios. I do think like, you know, if you look at sort of 2018 to maybe 2019 vintages, a lot of things like, you know, just pop because there were not as many tokens as there were today. Now there's like thousands of tokens being minted every day. Back then there are only a handful of tokens. So you know, people, if you are right about timing, you everything could be a hit in your portfolio, maybe if you select it correctly. But it's certainly very different today. You know, these are ultimately companies with and you know, early stage companies. The number one challenge is people problems. Just, you know, founders deciding that they don't want to do it anymore, they're tired, they have founder fallouts like, you know, change in life priorities. So you know, it's really a game of odds. And you know, Marco Andreessen has a quote that our, you know, the failure of a VC is not failure of a mission commission, it's failure of a mission. So we're not really too hung up about the companies that don't make it. We know that like it's a very challenging thing and like, you know, ultimately people just have to try their best. But we get hung up on the winners that we actually missed. And I have a lot that we can probably spend another podcast on. Oh my goodness, I wish I invested in that company and this company. You can't get it all. But this is why I think you really have to build independent conviction. And when you do so, you have to really double down. I mean, you mentioned Eigen, that was, we co led the seed and that's actually our biggest investment out of our first fund. And you know, it took a while for it to pan out, but we really worked with Sriram to help build a narrative around shared security and restaking. And I think that's why conviction really matters. You know, when you're building a portfolio, if you just have, if you just sort of follow the crowd like your portfolio will neither be here nor there. And maybe you could have a couple of like outcomes that are say maybe 2x or 3x, but you really need to hit that sort of, you know, 20x50x to make money. As a venture investor,
- [25:38]
C
you know, when it comes to what you look at, you've said a couple of things. I noticed that you said that you're investing in people. What are some of the key things that you look for? Because like you said, I mean, the crypto space has changed a lot. People who traded prior market cycles, even in the larger side of market caps. Right. Not early stage, not micro caps, none of that. I think they've experienced a change. To your point, there have been millions and now tens of millions of new projects made. I think that's changed the landscape a little bit. What's hot has also changed over the years. You've also just seen the technology itself maybe get a little bit more competitive. Right. Creating a layer one, creating a layer two, creating a simple defi platform or a decentralized exchange is no longer flashy and new because anyone can do it. And there's been a lot of them made. So it's a fairly competitive competitive environment. What are you looking at when you're making an early investment beyond maybe the team? And how do you kind of prioritize what's important?
- [26:43]
D
Yeah, I think it's worth mentioning because we are really a founders first sort of investment firm at the stage we're investing in, it's all about the founder, like, you know, because they, they have hopes and a dream on like you know, a PDF and you have to bet that they can execute on it and bring it into reality. And when we talk about like strong founders, I think that's also changing in the age of AI, right? We used to, especially for crypto. Crypto is considered deep tech. You do need technical excellence and like, you know, really good engineers. However, I do think AI is a great equalizer in many ways. So like technical, technical mode maybe is becoming less important than, you know, having really, really strong business development sense and commercial ability to make something a reality. So that's what we look for. Because ultimately founders need to be the biggest evangelist, the biggest storytellers for what they're building in order to attract the top tier talent to onboard clients to raise capital so they can keep going to build the brand of the company. So we're really looking for people who can tell that story and tell it in a very compelling way. When we're looking, when we say we're looking for top founders in terms of like, you know, sort of specific qualities around the idea, we want infrastructure that is becomes a dependency. Things that, you know, other applications are forced to use, they're not optional. We also want real wedges into large and growing markets and we have a good understanding of where the moat actually is. Obviously we prefer blue ocean categories to red oceans, but we're also not afraid of investing in competitive spaces as long as they have large and growing markets and the founder can convince us that they have a compelling strategy to gain share. But again, we're investing so early, so we try not to get too hung up on ideas like founders will pivot or pirouette into new categories. We have to trust the founders to be the best arbiters of their time. It's their opportunity cost at the end of the day. And the best founders only dedicate themselves to products, have a big outcome and where they're solving real problems. You mentioned USD AI. They actually pivoted many times before they land on their current product. They sort of started in the NFT space doing NFT financing and you know, I think right now their current product of providing on chain credit for GPU financing is a product of their learnings through their various iterations. I don't know if they have gotten there, if they didn't have like, you know, all the prior learnings from their prior products. And now the timing is right and it's really cool to see them compete with traditional lenders for GPU financing and to bring to market the first AI link, stablecoin. So I think that's some of our example of like, you know, that's an example of a long term sort of partnership model. We understand sometimes it takes like, you know, a couple iterations to land on the right idea and ultimately we're backing great people.
- [29:52]
C
Well, you know, one of the big standouts, speaking of great people, is your fellow co founder Joe Lubin. For the listeners out there who don't know, you know, Joe is also a co founder of Ethereum. And because of that, you know, obviously you all have had a lot of investments inside the Ethereum ecosystem. That's been a big part of Ethereal Ventures history. But you've also backed some other really big projects outside of the Ethereum. You know, you all are investing all over the crypto space now and you're not just limited to that. Where do you think the, maybe the Ethereum dominance kind of ends? You know, where do you start looking at other chains? You know, is that again, is it founder specific, is it purpose specific, is it sector specific? You know, at what point do you start looking at some of these other ones? Because I know you've had investments over in the Solana ecosystem, the Avalanche ecosystem, you've done stuff with Osmosis and Yala and Utexo and there's a handful of others outside of Ethereum. But would love to get your thoughts.
- [30:56]
D
Yeah, absolutely. So, you know, working with Joe is awesome. Like we learn from him every day and he's a great resource for a lot of our founders and um, it's great having him in our ICs every week and he does attend every week too. You know, we always joke that Joe's allowed to have a favorite child, but he does believe that there will be many children. And that's part of the reason why we started Ethereal too. You know, it enabled us to invest in multi chain opportunities more easily. I think for us as a firm we're pretty chain agnostic. You know, we're not L1 maxis, we're not L2 maxis. Like we're more interested at the application layer in many ways. Like, you know, and I think different chains enable different applications. For example, you mentioned Solana. I think they've really indexed heavily on performance and usability and they've done a great job on it. So you know, we've invested in Drift and other Solana projects where we do believe the performance aspect is really important and Solana brings that out. You know, that performance best for their application. I think there are a ton of L1 teams that have done a fantastic job like, and we've looked at investing in many of them. You know, hyperliquid is an ecosystem that we've actively invested in recently too. And ultimately I do think, you know, value will accrue to the biggest applications that often have multi chain and cross chain developments, deployments. I mean, so it's. In a lot of ways it kind of doesn't really matter. And if you're a really big application, maybe you decide you want your own chain at the end of the day, why would you pay rent? Why don't you? This way you can sort of manage your own onboarding, you can manage your own infrastructure. I do think the calculus has really shifted as you mentioned earlier. Like building a new L1 is not that it's more challenging per se, but it's a lot more competitive. And I do think we. It's amazing that, you know, builders today just have so many options to. And it the ease of getting started, you can just deploy to see if your idea actually works and if you want to build a new wild one. That's not to say that they won't exist. Right. I don't know, maybe someone will build something in like quantum, quantum related that will really resonate with the market. Or maybe we'll have like, you know, more space chains or something. I think it's still very early to say, but ultimately we're here for it. We're here to see all of it.
- [33:25]
B
I love it. Yeah. Maybe there's going to be a completely AI generated protocol one of these days. I know there was a lot of scuttle about Opus 4.8 that apparently White Hat hacked Zcash and found some bugs. I don't know if that was just a meme, if it was actually Opus or if it was something else, but these AI things are getting really, really impressive. But I want to kind of backtrack here on Ethereum just from a sentiment standpoint. I mean you're very close with all these teams.
- [33:57]
D
You.
- [33:58]
B
A lot of these teams raise Treasuries. In Ethereum. Is the sentiment down because price is down and this is just cyclical or is sentiment down because there's just so many competitors out there now? Whereas back in 2020, 2021 there were no. There was Solana maybe and that's it. Now we've got, you know, a litany of them. How do you kind of square the circle in your mind?
- [34:25]
D
Yeah. I do think that Ethereum's at a point where, you know, the fundamentals and price narrative have temporarily decoupled and in large part it's about sentiment and some, a lot of that negative sentiment comes from concerns whether Ethereum will continue to maintain its lead. And there's definitely some merit to some of those concerns. There's a lot that we don't know, meaning, you know, fees and activity have migrated to L2s. Like. So in a lot of ways Ethereum L1 looks kind of quiet, right? You have competing L1s with very flashy user numbers and then you have a lot of value accrual questions which is like, oh, how much activity do you need to see on activ. On Ethereum in order for eth. The asset to really capture L2 growth? And there's still quite a bit of debate around that. I do think some of it is cyclical. You know, Bitcoin is also down. It's not like bitcoin has stopped being a great store value asset. But some of it is certainly structural about the long term future of Ethereum. I don't have a crystal ball on this. I think the EF will be making some important announcements soon that I think are very positive for the long term advantage of Ethereum. And it's also hard for me to imagine that Ethereum won't be a major L1 in the next five years during a period where I think blockchain utilization will be growing pretty rapidly. There's still, you know, the major, like it's still where most of the volume of stablecoin lives, most of the RWA lives, a lot of trading activity as well. Will Ethereum be the leader? I don't know, but I think they'll definitely be, you know, one of the leaders.
- [36:18]
B
Yeah, no, I, I agree with that. Yeah, no crystal ball here. Anybody who's telling you they do have a crystal ball, you know, it's not true. But I do have a quick question just in terms of, you know, kind of where you are focused on your investments going forward. Are you guys, you know, going all in on AI stuff, token, rwa, tokenization stuff? Is there like a pocket of the, the universe that you're. You're really focused on right now or you are you guys making new investments? Like where are you guys at in your journey?
- [36:54]
D
Yes, we're still actively investing. We are meeting great teams, I think so. I mentioned before, money movement is crypto's killer use case. And I think the regulatory landscape is really coalescing around it. Hopefully we get clarity passed soon and we're only going to see volumes grow. So we're really focusing our time is payments for users and companies, asset tokenization for institutions. And there are some agentic use cases of crypto that include transactions such as payments, verification, privacy, and also new on chain markets, say, you know, compute exchanges, for example. I think as within those themes, we're also very keen on what, you know, I call the crypto tradfi highway for credit. It's growing really rapidly. I think private credit has, you know, quietly become like the number one cat subcategory within RWAs, overtaking treasuries. Now that the infrastructure is hardened and institutions can use blockchains for settlement. I think this is one area that we're seeing a lot of growth and lots of smart entrepreneurs built within it. We just made an investment in a company called Portola that is bringing sort of traditional consumer loans such as SOFI loans to your favorite crypto wallet such as Metamask or Phantom. And I think it's going to be really cool. Ultimately it's another gateway and I think the crypto user is a very valuable user for many neo banks around the world. And I think people ask me like, well, I can just get a loan on SoFi. Why would I do that? And it's the same reason why, hey, you can go buy SpaceX. Why do people buy SpaceX on Trade XYZ, right? And those volumes are growing a lot. So I do think the medium really matters and people really have shown a preference for crypto mediums in many ways. But yeah, you know, for us as early stage investors, we do have to invest where we think the puck is growing and we have to be early to market. Oftentimes that means we're investing before we have full market validation. So we don't really pivot from sector to sector. We're waiting for a phase shift opportunity where a technical unlock has happened, where there's latent observable market demand, where the dependency has been identified. So I think a lot of founders are the best sources of phase shifts, which is why we always lean towards taking the call from founders. It's actually a really interesting way for us to just learn as to what people are excited about. So why wouldn't we take the call? But yeah, I do think investing in sort of phase shifts is how we sort of see the world. And these are face shifts that we see happening at the moment. And why this is important is, you know, just to give an example, I think one of the reasons that Hyper Liquid became so large and successful was because FTX proved there was market demand. But ftx, you know, went bust and the volume went to other sexes. But I think was really looking for an on chain alternative because people had lost trust in the sexes and you know, hyperliquid emerged as a place where liquidity could aggregate and they saw that opportunity. So it's usually doing these like market dislocations or regulatory changes or where there's like, you know, like the big AI shift. Like it's hard for me to believe, even though it's still very early, that that won't yield opportunities eventually.
- [40:27]
A
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D
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- [44:13]
C
Do you think that any of those sectors are maybe overhyped or overextended at the moment? Because you do hear a lot of like hype and attention, especially towards some of these. Like AI is probably like the best example, right? AI is everywhere right now. Companies are sticking it in front of their name, they're stipping it, they're sticking it in their descriptions. They're talking about how they're using AI here and there. You also kind of see that a little bit in the crypto space with AI doing very well and those projects that relate to it do do very well. But you know, you also mentioned that there's tokenization and payment rails and stable coins. Do you think that any of those sectors, or maybe one that I didn't even mention are overextended or are overhyped or is the best yet to come for some of those?
- [45:04]
D
Yeah. So you know, maybe before I like immediately address those specific categories like I think we can talk about like things being sort of overhyped. And as investor I think sometimes there's too much emphasis on being contrarian. You know, you focus on trying to get contrarian ideas, you end up drinking your own Kool aid and ignoring what the market is telling you. So. Good point. As a firm we, we do our own research, we come up with our own hypotheses, we're generally agnostic. Our peers and market narratives are saying, but you know, for example we, we mostly missed the NFT hype, we missed the play to earn hype, we missed the gaming hype because we looked into it. We just couldn't really build conviction around the long term sustainability of it and we're in it for the long run. But that said, I have immense respect for our peers and I think narratives exist for a reason. So ignoring them completely seems quite foolish. And if something seems hype like there's often a reason and there's an opportunity and it's worth making sense of it. So I do. But at the same time, especially in something emerging like our space, the narrative is always ahead of the infrastructure. So that gap is where you either lose money or make money. So timing is everything. And I think you mentioned stablecoins, tokenization and AI. Right. So I believe stablecoins are underhyped. They're the clearest product market fit in all of crypto. The rails are still very early. If you look at say merchant payments, we're still at the tip of the iceberg right now. It's mostly B2B cross border treasury use cases. And while those are very, very large, they're equally large adjacent subcategories that stablecoins can push into that. I don't think we've seen much traction yet. Tokenization, I think the idea is 100% on point but oftentimes it's quite premature. Like there we see a lot of tokenized this, tokenize that. Like you know, I think we've seen all of tokenized real estate for example, but it maybe lacks real buyers or liquidity. There's a lot of like reliance on institutional participation. And you know, Franklin Templeton and Blackwell are not going to work with every single pre seed startup. But I do think the winners will be very Large in this category, picking is the right bets in this category is everything AI and crypto. I think, yeah, this has certainly, you know, as you mentioned, the most hype and it's the least settled or validated. There's been a lot of like, you know, AI crypto chains and applications that haven't really seen a lot of traction. And a lot of the early ones were also sort of wrappers around the technology as opposed to really delivering anything meaningful in terms of verification or privacy. I think the long term thesis that agents need permissionless money and identity, I think for example, with the recent ban of anthropic, that really shows us how we do need open systems. We do need autonomous ownership of a lot of these models because a lot of censorship is only going to continue. This is not flash in the pan. So I think the long term thesis really makes sense. But a lot of today's projects, you know, will not survive until the, you know, there's sort of demand from the AI side. So we're proceeding very carefully with this category even though we have a lot of excitement for it. In the long run. I think the founders need to make sense. I think the sort of closeness to the AI industry and identifying real opportunity is, is really important and I think the ability to sort of raise money to weather a sort of long term uptake is also very important here.
- [48:56]
C
Yeah, what it sounds like is that you think that, you know, hey, this stuff has a really valid argument for the long term and it sounds like you believe that the, the tam, right, the total addressable market is there and you know, maybe there's pullbacks and stuff, but the bet really is on the long term when it comes to this. And again, I think that really goes back to kind of the core of Ethereal Ventures is you saying, listen, there's going to be speed bumps, there's going to be volatility, but for the listeners out there, I think the total addressable market here is real. And when you look at a lot of these different sectors, you know, you're, you're looking in the trillions. I think personally here, I think you're looking in the trillions for tokenization. I think you're looking in the trillions for, for stablecoins and kind of that kind of infrastructure. I think obviously AI has proven itself that it's, you know, trillions, maybe more in terms of how much it can kind of disrupt and affect. But there's a lot of potential here and I think that what we're doing is we are just scratching the surface of it and the way that I like to look at this. And again, you're the expert when it comes to early investments and viewing all this. But the way that I always like to phrase it is that to me personally, the risk of missing this train is so much greater than the risk of maybe losing. And throughout this process, right, I can live with myself saying, hey, I tried it, I failed some, I won some. But you know, I, I took a part in this, this, this risk train as opposed to, if I look back in 20 years, 30 years, and I go, man, I was too scared and I didn't put anything in it. It, it succeeded, it blew up. I think that, you know, this is what we like to call somewhat of asymmetric upside, which is that there is this huge potential impact. There's this huge potential, you know, market that's sitting out there. And if this succeeds, well, that's where the asymmetric upside kind of comes from. And again, you know, risk management's important here, but I think that the space there is certainly open for. The space is open and it's, it's ready to be filled. And I guess that's what we're betting on is who's going to fill it 100%.
- [51:01]
D
I think if you, and I think from the retail side you really see a lot of demand that people want to see more AI related crypto. I think ultimately real products need to exist and there are many teams building real products. Like Worldcoin has done really well recently. Venice AI has done super well. Icon, which is one of our investments. They have a super crack team, long Runway. And they're building products that actually rival products coming from the big AI labs themselves. So I do think we're going to see a lot of activity over the next two years and it's going to become more and more real. There are certainly like, you know, categories that people are excited about, like Agentic payments. We are looking at it like very carefully. I have no idea what the requirements for agent agent payments are. I feel like, you know, maybe like the agents will build their own payment system. What's stopping them from doing that? So there are parts of that where I think we do want to wait for more market data, but ultimately find a really great team where, you know, we think like, hey, the, the vision of future that you're presenting is really compelling and you're way smarter than us. You know, why not take the lead?
- [52:17]
B
I love it, man. This has been an awesome conversation, Min and I hope that we get you back at some point in the future, whether for a podcast or one of our live virtual summits. But just as you leave our listeners with, with kind of one last word of wisdom or word of. Not financial advice or anything like that, but we're just curious, like, you know, for somebody who is, you know, maybe just starting their crypto investing journey or maybe well on their way, you know, from an expert who's, you know, way down the line, what are some words of wisdom you could leave us with?
- [52:53]
D
I, you know, so from a context of someone who is, you know, just starting to trade crypto, for example, my sort of $0.02 is developer system and focus on quality. Right now. I think we've learned a lot as an industry. Blockworks has released a token transparency framework, which I think is fantastic for understanding a lot of fundamentals of these token networks if you want to hold category leaders at the end of the day. And so people are looking not just for revenues, also for cash flows. And with regards to developing a system, I think if you're new to it, like Claude can really help you out here. Learn from the best. It's so easy now to ask Claude to just ingest systems of the best traders out there and implement it on your own. And you can like technical analysis, you can buy and hold, you can DCA whatever it is, but have a system and always know when to sell and take profit.
- [53:54]
B
I love it. Awesome. Yeah, use the, the bots to kind of obfuscate away the emotion that gets in the way of making good decisions. I think that's a great tip. Everybody should check it out, whether it's Claude. I think Grok now has Grok build, you've got chat GPT with their codec. So there's a lot of different tools out there and I think it's great right now because they're all subsidized essentially by venture capitalists and by the companies and all these other investments. So it's as cheap as it's going to be. That's kind of my, my prognostication is that right now these AI tools are just only going to get more expensive as we kind of adjust price to the supply and demand of everything. But good note. I love that one min. Thank you so much. Where can people follow you personally or follow Ethereal Ventures? Whether there's like a, a blog or a LinkedIn or an X profile you'd like to shout out and whatever it is, we'll post all that in the show notes.
- [54:52]
D
Absolutely. So our website is etheroventures.com you have all our socials, you have a blog link there on the background of the team and you know, please check them out like the team is absolutely awesome. I'm just one humble member of the team and you know my twitter is Mintio. I mostly post about, you know, portfolio company stuff, but I also respond to DMs so I'm reachable there.
- [55:19]
C
Awesome.
- [55:20]
B
Well, thank you so much for all of your time this afternoon. We hope to chat with you again. And for everybody who took the time out of their busy day to listen to us, we greatly appreciate all of your support. Come back same time, same place next week. We'll have some more great guests for you. Take care.
- [55:45]
E
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