1/ let's talk about today's @MakerDAO / @a16z announcement. for those who missed it, A16Z's crypto fund bought 6% of Maker tokens for $15M, at a 25% implied discount to the current price of $MKR.

https://twitter.com/MakerDAO/status/1044210095159169024

2/ according to a blog post, the $15M will be used to fund the next 3 years of operating costs. i'm sure people think this is a great sign for the project - being able to recruit high quality capital. but, i think this is a massive failure in governance and project management.

1/ in markets, investor psychology is everything. i shared my thoughts on greed, investor psychology, shitcoin, and market cannibalization at @dezentral_io in berlin and wanted to share some of these ideas here...

option b: skip directly to slides here: slideshare.net/DCGCo/how-to-n… 2/ investors in the crypto ecosystem saw everything go up and to the right. everyone in the market is feeling good, and worth a lot on paper. everyone outside the market is feeling FOMO, and wants in on some juicy returns. the narrative is "blockchain, make me money!"

1/ a quick thread on protocols focused on location. location data is leveraged by many consumer services (Google Maps, Uber), but also by military and industrial applications. now teams are #blockchain-ing this data to make it tamper-proof (secure), verifiable, and trustless. 2/ furthermore, new applications like self driving vehicles, AI, and increasingly digitized consumer, industrial, and military services will rely on secure location information services to deliver service. example - in 2012, a military drone was hacked and "stolen" by students...

1/ decentralization is a myth. we use "decentralized" without any specificity as to what that *actually* means. let's untangle the idea of decentralization. i developed a basic grid that breaks it down at the protocol, network, and app layer (dated april 2018) 2/ a good chunk of the data comes from arewedecentralizedyet.com - the brainchild of @ummjackson - who was continuously harassed by some of the projects on his site that are... ummm... clearly not "decentralized" in any manner while marketing that narrative ad nauseum

1/ security tokens may be interesting, but i think we are far from a world where there is demand for millions of tokenized assets. let’s dive into “why” - promise this will be fun 😈 2/ i’ve been spending the last six months deeply immersed in the institutional investor community. for simplicity, let’s say the US cohort of “institutional” investors - or the TAM - for tokens is $28 trillion in AUM. (ignore new demand creation)

1/ re-visiting Howard Marks' @Oaktree comments on liquidity, very relevant to crypto, and especially thinly traded or centrally owned, alts:

the key criterion [for liquidity] isn't "can you sell it?" it's "can you sell it a price equal or close to the last price?" 2/ liquidity is ephemeral. it can come and go. the liquidity of an asset often depends on which way you want to go... and which way everyone else wants to go. if you want to sell when everyone wants to buy, you're likely to find your position is highly liquid.

1/ as you may already know, i love developing new frameworks around various matters in #crypto and drawing analogs to existing concepts in traditional finance (recovering consultant, I know 🙄)

my latest target: the @tezos experiment and token holder activism 2/ full disclosure: I'm a #tezos token holder and will be delegating my stake to the baking crew at @tezzigator (what up josh and bo)

Here's why: reddit.com/r/tezos/commen…

now what is "baking" you may ask? a great place to start it turns out.

1/ thinking about VCs and their role in the emerging token economy. in order to understand how VCs are playing the crypto game, you have to understand the business of venture capital. VCs aren’t philanthropists. they invest money in companies for a financial return.

https://twitter.com/twobitidiot/status/1021021229254397953

2/ part of being a VC is finding great companies that are likely to create a lot of value. a lot of being a VC is about controlling your entry price (as low as possible) and maximizing your exit price (as high as possible) to juice your return multiple.

1/ just a quick fact check on $EOS
- block.one raised four billion dollars for $EOS
- they’ve been spending millions on “venture investing” - giving $300M to Galaxy, $200M to AccelerateVC - presumably all at 2% AUM management fee + 20% profit share aka 2+20 2/ so those of you who “invested” in EOS, but didn’t actually invest because you have no legal rights to anything, here’s your money went:
- $1 billion, or 25 cents per 1$, to venture funds for the “ecosystem” where block.one is the ultimate LP or the GP

1/ reflecting on recent comments on the forced sale / liquidation that might be coming for crypto funds, and thinking through the impact on crypto markets. making some assumptions here, but say there are 250 crypto funds that have $2.5B in AUM collectively. 2/ that $2.5B is from $500M - $1B in cash and crypto subscriptions, and the rest is AUM growth from funds who started in late 2017. if we apply power laws, there are only a handful of funds with >$100M in AUM. in fact, most funds have far less in AUM.

in the last six months, @binance has:
* set up shop in 🇧🇲 (bermuda), 🇯🇪(jersey), 🇲🇹 (malta)
* quadrupled (4x) users on platform
* announced a billion dollar ($1B) ecosystem fund
* fought a big name VC (@sequoia) and won

revolution (@binance) v evolution (@coinbase) in the coming months and years, i expect we’ll continue to see a bifurcation between companies who choose to operate under restrictive regulatory and licensing schemes to build a competitive moat by spending dollars on legal and lobbying

1/ one of the most common arguments against bitcoin's PoW is energy expenditure and "waste" - both in terms of computational capacity and electricity. this is a flawed analysis, because it is absolute instead of comparative. 2/ how much energy is expended on mining, trading, and storing physical gold? how much energy is expended on printing and securing physical cash? how much energy is expended on building, maintaining, and securing telecommunications infrastructure?

1/ i am seeing so many ICO projects where 20+% of the tokens go to founders and advisors. the whole point of tokens is to create *broad* distribution of an economic incentive to support network effects, not enrich a small group of insiders. 2/ to put it another way, for every dollar you contribute, 25 cents goes to the creators of the project. if i invest $100k, i am giving $25k to the team before they've even shipped a single line of code, in many cases.