Cobie and Sassal | Crypto Ponzis, Bad VCs, and Spicy Takes - The Daily Gwei Drive Thru #1
Primer: The first guest of The Daily Gwei, hosted by Anthony Sassano, is none other than Cobie. The two giants in the space went on to talk about various topics, including the Venture Capitalist, regulations, DeFi 2.0 and more. Finally, they each gave their spiciest take on the crypto space.
Cobie - First Guest on The Daily Gwei
Sassano mentioned that he won’t be having guests but invited Cobie over to talk because he is worth breaking that rule for
After Sassano tweeted that he wished he had an anon account so that he can say things without reputational risk, Cobie DM him
Decided to have a chat to talk about all the shady stuff that happens in the industry
Reputational risk
Cobie wanted to know what reputational risk means to Sassano. He had seen emails from unknown parties that tell people how they should ‘land on the UST issue in public’
If an account talks about things that go against these powers that be, might have repercussions like not being invited for fundraising rounds
Sassano said that he had earned a certain reputation for himself and he don’t want to hurt that image because he kind of liked it
Wanted to call out on Terra many times publicly but he do not want to make public enemies
Bankless did that and they were ruthlessly attacked by the Luna moonboys. It is mentally draining to do so
VCs and other big names are in there and it lends legitimacy to the whole thing. Talking it down might lose your reputation
Cobie mentioned before that it’s not good to be the main character in Crypto Twitter, otherwise they will kill you off. Better to be a comedic relief and that is how Sassano wants to position himself on Twitter
If you have an extremely high conviction about something, even if it’s unpopular, you should share it
Saying something is going down without a lot of conviction just invites a lot of stress, drama and abuse that it is just not worth the trouble
UST had been talked down since day 1 too but it still hasn’t happened to date
Another point of view is that Sassano is a known Ethereum maximalist, so his public negative views of Terra might be seen as him being defensive about his own bags
Sassano understands this point of view because the Bitcoin maximalist is also spreading FUD about Ethereum
Venture Capitalists (VCs)
There is this mentality that since VCs and other funds have lots of money, they are also smart - not necessary so
With an anon account, Sassano will be a lot more aggressively in calling out specific people because there is no accountability in the things these people say
Will be posting things like how VCs and funds in the Solana ecosystem pump and dump on people but can’t do it on his doxxed account
Cobie think that the Solana VC ecosystem has set back the DeFi ecosystem by a few years because of the way they funded several projects that are worthless
On the other hand, the Luna VC ecosystem seems to have the perception that a perpetual motion machine had been created on the blockchain
Any critics end up getting called names or called poor
“But it feels like critical thinking has been significantly reduced. Perhaps because there's so much stupidity already so it's like it doesn't even matter. And people's short term focus has really, really, really increased.”
- Cobie
There are other VCs who do not have a short term mindset
a16z is not very crypto native but they do hold everything they invest with a 10-year horizon and they don’t sell much
At least they are not dumping on everyone on the same day that others are buying
The flip side is that low-tier VCs will get less allocations and inclusions in seed rounds because people can see their predatory behaviour
Eventually, these type of VCs and behaviours will get washed out
People will want longer-term ecosystem type partners
Sassano mentioned that some of these low-tier VCs are being forced into making these investments as well because of peer pressure
They also keep doing it because it’s a good way to make money
They are not held accountable for their actions so they still get invited to projects
ZachXBT had done a great job exposing these but who remembers after a day?
Regulations
Cobie said that a lot of VCs funding had to do with the SEC
A founder serious about building something for the long term does not want to do an ICO unless he is anonymous. Otherwise, there will be an additional risk for the thing he is building
A legal/regulatory advisor will say the safest way is to get accredited investors to fund
So the founder gets pushed to go down to VCs for funding instead of proper crowdfunding
There are a lot of scams in the system and it is not easy to tell which is which
This is where SEC should be adding value to the crypto ecosystem instead of enforcing against people raising funds
More disclosure enforced by SEC should be done
Cobie suggested making clear where the yield is coming from for projects so retail investors can understand better
Have a uniform and clear emission schedule graph on a per asset basis
E.g. For the Solana ecosystem where a project opens at a $50 billion fully diluted valuation and goes all the way down. With the knowledge of what is the supply over the next few years, people can decide if the demand can absorb the supply
Disclose all private investment terms so that retail investors will know the cost basis of VCs investment
Knowing where else a VC has exposure is good information too because if a VC lost a massive chunk of money, it might have contagion on other protocols
Light touches by regulatory bodies
Cobie is usually anti-regulation in general, but he thinks simple stuff like this will make retail investors feel protected
Light touches by regulators will be net positive for everyone
Hates it when regulators tell people what they are allowed or not allowed to do
But people should be informed sufficiently to make fair, good decisions and there’s where regulators can come in
Sassano said that SEC is just being reactive instead of proactive - they only come in when something blows up instead of working with teams to do disclosures and stuff
Cobie would rather see more self-policing. Adopting these measures without being told to do so is a very good sign
Happy to see that the Luna proposal is sort of paying back small investors first
DeFi 2.0 - all Ponzinomics?
Sassano is an Ethereum maxi because he truly finds Ethereum very innovative and it is truly all about the technology and less of the financial stuff
Hated that celebrities like Elon Musk gave legitimacy to things like Dogecoin, which attracted a lot of people to buy at the top and got completely rekt
This is in contrast to Vitalik who always talks about Ethereum and also lends legitimacy to it, but he didn’t talk about the price. He is just intellectually interested in it
“I actually think that the projects known as DeFi 1.0 are where the innovation is happening. Like there's a lot of work going on there but people don't pay attention to it because these projects are actually legitimate, They don't use Ponzi-esque mechanisms to grow themselves, and attract all that attention and capital and they don't have shill armies.”
- Sassano
The biggest DeFi 2.0 projects are all dead now, like the frog nation behind Daniele Sestagalli. He hated the term “DeFi 2.0”
Nobody is paying attention to legitimate projects because they are boring and they are only cool to people who care about the technology side of things. Everyone else just focuses on the money side of things
Only after the collapse of Terra that people about realizing the importance of boring things like security and decentralization
The whole structure of the ecosystem is screwed up
Onboarding people and sending them straight to the slaughterhouse instead of the legitimate side of things
People ended up getting rekt and leaving, thinking that crypto is a scam
Cobie thinks DeFi 2.0 is an investment game of chicken as well - it’s late-cycle and everyone’s capital floods into the same thing that is moving
Crypto is like a really early-stage startup where success is not guaranteed and a protocol can work like magic for a while before another protocol takes over it
The difference is that in the real world, startup investments are held by VCs (not retail investors) and they are illiquid
Crypto is liquid and there are retail investors speculating on them
Projects failing or being replaced by something better is a good and healthy thing
Launching tokens
Sassano mentioned that there are lots of projects that had launched tokens but there are no products yet
There are some good projects that tried to grow organically and held off doing a token launch, but these are exceptions rather than the rule
Having a token was a detriment to their project because it was too early to have one
Cobie said that people could be launching tokens defensively, like how UniSwap had a token launch because SushiSwap was vampire-attacking them
If UniSwap do not launch a token, someone else will clone their work and have one instead
Selling Vested Tokens
Sassano thinks that the team members should be able to sell their vested tokens once they are unlocked because their salary package is lower but with a promised equity as part of the package
If someone bought the token on the public market, nobody will question the selling, so why should the team members who have added more value not be allowed to sell?
If the vesting schedule is such that the team can get their tokens and sell on the day of the launch, then it’s bad
To say that it is bearish because the team is selling seems like a weak reason, especially if the team had been there for years building on the project
Cobie mentioned that Curve, which is a very important part of the ecosystem
Sucks not to be able to sell at the peak valuation after having worked on a project that was very important
Team members should be able to realise some of their networth and de-risk
With the money in the bank, they can have the motivation to build more aggressively because they’ve got their financial side settled
This allows the team to take really risky, ambitious steps to go 10x upwards instead of trying to maintain the price and market share at current levels so that their networth wouldn’t fluctuate too much
Spicy Takes
Sassano wants more accountability in the sense of legal repercussions
Wants scammers to end up in prison and examples to be set
If not, the same thing is going to be repeated again and again
The threat of law enforcement will prevent scammers from entering the space. People do bad things because they know they can get away with it
Cobie thinks a lot of VCs are not scammers, but they are just stupid
“But I do think a lot of the VCs are extremely dumb. I think they're not smart. I don't think they can think critically, I don't think they can evaluate one project from the other. I think they rely on social signallings, like who's in this round?”
- Cobie
Some of them invested without even having used the protocol and they follow each other
There is a concept in Germany (called rat king) where several rats get their tails tied together and they die.
One needs to be smart enough to be malicious and he doesn’t think the VCs are smart enough
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