Zima Red ep 128: Jiran - Playing The Great Crypto Game: Investing, Building & Exploring Web3
Primer: In this episode of the Zima Red podcast, we learned that having a firm grasp of human psychology and on-chain sleuthing is one huge source of crypto alpha. Find out more in this alpha-packed episode from Jiran.
Background
Been in tech for 12 years
Built a couple of SaaS startups
One of his startups was a Cybersecurity startup, which introduced him to crypto
Bought Bitcoin and forgotten about it
Recently re-entered the crypto space
What Compelled Him To Dive In?
Entered college in 2008
Was frustrated as he grew up in poverty
His mom moved to the States as a refugee
“It felt kind of like the haves and have-nots in a way of like, no matter what you tried to do, it was near impossible to get to have control of your own money and control of your own destiny.”
- Jiran
Bought a few Bitcoin because he believed in its philosophy
When Did He Get Interested Again?
Bought more in 2020
Have seen SaaS startups growing into large corporations
His thesis was that people are going to want decentralization because they are sick of centralized entities
Saw Gmoney’s Twitter thread about buying an Ape and he got interested
Have collected art for a long time so he understood NFTs
How Did He Decide To Dive Into NFTs?
Was driven monetarily
Have always been good at flipping physical things
Was burnout and did not want to build another SaaS product
Crypto was an interesting wild west for him
Started out by buying art from artists he knew from the real world. Got rekt from doing so
Started to learn the rules and watch on-chain transactions
Defining What He Does Today
Describes himself as a trader-investor
Uses on-chain analysis, coding, and arbitrage
What Is The Game And Is It Played?
Humans are tribal
“One of the coolest things about watching the blockchain is you kind of see this activity. To me, it's like history is being recorded. I call it blockchain archaeology.”
- Jiran
In the past, he used to be into historical stuff like Roman empire, Greek empire, etc.
Realized historians put their own subjective biases on top
In contrast, the blockchain is completely objective
It’s up to people to dig up these transactions and understand the flow of human culture and tribes
Understood Nansen’s Smart Money and which wallets are good at this stuff
How Does Tribalism Drive Value?
During COVID, people experienced a sense of isolation
We belong to communities but don’t feel a sense of belonging
People end up illogically holding NFTs all the way up and not selling them because they identify with the community
He trades DAO NFTs based on certain considerations:
Is the roadmap built around hype?
Do they have certain influencers as part of the community?
Do they have something like a TV show that could push the project?
Do they have a feverish community of collectors, holders, and traders?
A good example is Azuki
Decision Making Process When Investing Into NFTs Post-Launch
Sometimes it’s just intuition
For one project, he found the 5-6 top holders who had, a few months ahead of time, purchased another NFT which ended up being the whitelist for this newer project
This shows that they have some sort of edge or insider information
Watches holder lists on etherscan and track what they are up to based on the flow of how some of these wallets interact
He creates labels for the wallets he is tracking
Is He Only Focused On Ethereum?
Mostly on Ethereum
Likes Parsec because they have cool data analysis tools
If it’s chain analysis, he uses purely Etherscan
Have some tools of his own to track wallets and dive deeper on things
Labelling Wallets
Etherscan has their own labels and private notes
You can create a free account
Think that they will eventually release a paid account
Has a giant notebook of wallets that are associated to certain addresses (e.g. 3AC, other funds, good flippers, etc.)
There are 3 exchanges that are purely institutional exchanges
Whenever he sees that, he knows it is some fund contacting Genesis OTC
Have tagged 3AC and Alameda a long time ago
Have to find a central hub (e.g. 3AC has a specific hub that funds all of their other wallets)
A lot of people get really obsessed about who the wallet is, but he does not care. What matters more is what they are doing
How Does He Determine Whether Something Is Random Or There’s Something Coming Up Soon?
You can’t always tell as there are false positives
Need a longer history to have a decent thesis
To him, it’s more about understanding the flow
Insights Gleaned From Watching The Flows
Velocity is a big one — how fast are people scooping it up
Example of ENS picking up like crazy right now
If there’s a purchase every 10 seconds, the momentum is there. He would not sell into it
Once the gap has slowed down, you can sell into it
Another great data point is post-first parabola of a project:
Azuki went from 1 ETH —> 8 ETH —> 20 ETH —> 12 ETH —> 8 ETH —> 16 ETH
Seen this multiple times now for Azuki
Means that floors are so popular that they get gobbled up every time they are listed
People were bearish in Dec 2021, but he was bullish as he saw many 60 ETH Bored Apes sales
There was extra liquidity, which eventually went into Azuki
Identifying Profitable Traders/Investors
Find them on Etherscan and work backwards to find them on Twitter
The best traders have 2000-3000 followers. They are very quiet and don’t tweet much
They are very good at finding new projects and flipping them
Thoughts On Influencers In The NFT Space
Projects naturally need hype people
There are certain influencers that people don’t like, but are really good at hyping projects
There are some grifters who are here just for the money and they just dump on everyone
Why Is It Important To Understand The Human Behaviour Aspect?
Spoke to lots of quant funds that are trying to enter the NFT market
They will get rekt hard as the markets are not as efficient as they want them to be
“The data can show you things, but that's not gonna help you understand the irrationality of people, right?”
- Jiran
GCR realized that narratives plays the biggest part in trading, be it DeFi or NFTs
Is It Extremely Common For People To Look At On-Chain Analytics?
Don’t think most people/funds do so
People have a hard time deciphering this data. Once data gets past 3 wallets, it becomes very hard for them to keep track
His personal opinion is that people are complacent right now because of the easy money in crypto for the past 2 years
These people are getting rekt because they can no longer buddy up with influencers who pump their bags for a quick profit
To have an edge now, one needs to understand code, human behaviour, etc.
Will The Future Of NFT Investing Bifurcate Between Fundamentals Investing And Data-Focused Investing?
Thinks that the best traders in the next 5 years will be those that understand psychology/narrative and on-chain analytics
Expecting to see plenty of TradFi and DeFi investors entering the NFT markets and getting rekt
Recent example is Miladys
They are weird and creepy, but are tribal
They took off but no funds were buying them
Will The NFT Market Become More Efficient?
Top 10% will become more advanced but the rest won’t
People will start to build technology that abstracts the complexity away
“I think five years from now, most people won't even know how to set gas or understand why to set certain gas the way they do and why that matters.”
- Jiran
Most people will end up listening to influencers on Twitter Spaces and getting excited about drops and do not much else
Some Interesting Insights He Has Gleaned From On-Chain Data
Last year, he noticed that Coinbase has been using 0x as part of their tech based on on-chain transactions
People could have bought ZRX and then waited for Coinbase’s announcements
Which NFT Subsector Excites Him The Most?
None of it is exciting right now
Thoughts On Web3 Gaming
Bearish on Web3 gaming because most games suck
Devs can only build basic games because of the tech constraints/paying for transactions
Only interesting thing is the assets being NFTs
Thoughts On PFP Projects Getting Acquired
Will see more mergers and acquisitions
Some of the teams are overwhelmed as it’s their first time running a business
Foresees Cool Cats getting acquired
The acquirer gains the community through the acquisition
Thoughts On The Current NFT Market
Summer will be slow
Single Favourite NFT
His Cat Ear Azuki
Most Controversial Thought
Everything ZK-related sucks, is not going to work, and is too complicated
If He Can Improve One Thing In The Space
More people to understand on-chain stuff and to think for themselves
NFT Ecosystem In 3 Years
Feels that in 3-5 years time, it’s like 1999 in the Dotcom era
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