Primer: AG is one of the full-time methodologists for the Metaverse Index at Index Coop. Before that, he spent a decade working in the finance industry. In this episode of the Zima Red Podcast, he shares about his background and what made him switch to the crypto industry.
Background
Originally born in Ukraine
Started off playing tennis as a kid and got really good at it
Got a scholarship to study in the States. Completed his undergrad and Master's there
Joined the financial industry after grad school. Spent a decade working in asset management
Moved from the States to Australia. Did the same thing there for 5 years before quitting and pursuing a more independent career
Why Did He Study Finance
Spent most of his time on sports as a teenager. Did not really pay too much attention about school and his academic interest
Eventually realized that he had to pick a major for university. His father selected Business for him
When he went to the States, he got really into finance and that became his focus in his undergrad and Master's
Interested in investing and analyzing companies
Stocks enable him to express the views he have on a company
For a long time, all he wanted to do was to be a research analyst, analyzing stocks
"I really enjoyed watching CNBC as an 18/19 year old and just listening about, like, what's happening with the economy, what's happening with this company, and then just having the ability to like, literally dig in and do your research and understand like, what makes a company tick, and what makes it profitable." - AG
Life In Portfolio Management
Finished school in 2010. Relatively challenging to find a job in finance as it was just after the financial crisis
Ended up in a role called Investment Specialist — Understanding investment products and helping portfolio managers in terms of strategy, pitch, books, sales, education, commentary, etc.
Interacts with portfolio managers and traders on a daily basis
Covered different asset classes
His Move To Sydney
Tired of being in the US due to the immigration policies
Started to look for other opportunities
Had some friends who were also moving to Australia at that point in time. Ended up with Australia as his number one option
Moving From TradFi To Crypto
After 1.5 years into his first job out of college, he did not want to do traditional finance anymore because of the following reasons:
Lack of innovation in the industry
Non-alignment of incentives (e.g. compensation/progression is not tied to performance, but to political skills)
Decided to look for a backup route to take
For him, he doesn't want to go back to Ukraine
Got into crypto in 2017. Was trying to do geographical arbitrage since Australian crypto prices were much higher than in US and Europe
"If you want to move forward in life, if you want to progress you need to be taking risks, but it's really hard to take risks if you have no safety net, right." - AG
When crypto crashed, he did not sell his stuff. He just went back to his regular job
At the beginning of 2020, he started looking into crypto again. Had more time as he was working from home
Started picking up online gigs as a writer covering crypto
Got more involved through DeFi summer
Eventually left his job to continue exploring crypto
Initial Attraction To Crypto
As a finance person, he is able to sort of understand the big picture
Realized that he can make a living working in crypto
Was a gradual process of picking up freelance gigs:
Writing —> getting into Discourse/forums —> figuring out how he can get paid for doing work
How Does His Background Impact His Views On Crypto
Made it easier for him to understand some of the financial products and how they work
Realized how inefficient things are in TradFi, where innovation is stifled
Thinks that anything in TradFi can be replicated in DeFi. There's no moat in TradFi
"In general, I think it's just anything in traditional finance can be replicated in DeFi. There's no moat, like there's nothing that we can see in TradFi and be like, oh, no, like I can't do it in DeFi." - AG
What Does Crypto Do Better Than TradFi And Vice Versa?
Removing the barriers and taking out intermediaries
Leveling the playing field and introducing transparency
Areas for improvement would include:
Improving the user experience and user interfaces
Developing mobile apps to make it more accessible
Working For DAOs
Requires a completely different mindset to work in DAOs than compared to TradFi
There's no hierarchy and anyone can just walk in and start contributing
Contribution will be judged on merit
Need to have initiative. No one will be telling you what work needs to be done
Barrier of entry to DAOs is getting higher. The space is starting to accumulate history and grow older. So new entrants need more and more context for them to understand what's going on
Still thinks that working for DAOs is an amazing opportunity
Usually the founding team consists of developers. However, a DAO needs much more than that — marketing, sales, partnerships, etc. Hence, they open up this whole range of possibilities for people to come in and contribute
Index Coop
One-liner: BlackRock or Vanguard of DeFi
Is a full-timer at Index Coop
Index Coop started bringing in full-time people at end March/early April
Every DAO has a culture and there needs to be a fit of one's skills to the DAO. For him, those 2 things align with Index Coop
Products
Their products are noncustodial
DeFiPulse Index (DPI) — Their flagship product. Provides exposure to the DeFi theme. Contains blue chip DeFi projects
Metaverse Index (MVI) — Provides exposure to the Metaverse theme. The index is constructed from virtual worlds, games, NFTs, etc.
Leverage Indices — A single token but with 2x exposure to ETH or BTC, depending on the token you buy. Holders do not need to manage their collateral
BED Index — Consists of 1/3 BTC, 1/3 ETH, and 1/3 DPI. Recently launched this index in partnership with Bankless
Cons Of Their Products
In crypto, there's a lot of information asymmetry. There's opportunities to make outsized returns if one actually does the research
Selecting an index instead of picking individual tokens would mean that the individual is forfeiting the opportunity to make outsized returns
This can be mitigated by a Core-Satellite strategy where an investor can get their core exposure through passive indices and handpick individual tokens in an active manner
Future Products
DATA Index is in the pipeline to capture trends in the data economy
Working on launching more indexes and trading products
INDEX Token
Index Coop is funded by fees on their product
These fees accrue to the Index Coop treasury
Community chooses how to spend those resources through Snapshot votes
Community has been discussing about distributing a portion of fees to INDEX token holders. However, they are just a 10 month old startup. It would make more sense to reinvest in their business than to distribute dividends
Currently, the token is used for voting only
Have something that's called meta-governance. INDEX token holders can vote on the governance proposals of the underlying tokens in their products (e.g. INDEX token voting on a Uniswap governance proposal)
If You Could Design Your Own Crypto Product
Haven't had time to think of such a product
Thinks that it would be an education service onboarding people into crypto instead
"It's fascinating to me, that in crypto, the educational requirements are non-existent, right? It doesn't matter if you have a high school diploma, no diploma, university degree, PhD, whatever. I've seen people across all those levels in crypto. It's massive, like, leveling the playing field." - AG
MetaPortal
A newsletter and podcast looking at crypto and the metaverse
Launched by Dark Forest Capital and himself. Both of them came up with the idea of the Metaverse Index (MVI) at Index Coop. Became full-time methodologists managing the MVI
Realized that there isn't much content covering:
The macro view of the Metaverse
Deep dives into individual metaverse projects
MetaPortal was launched to help them with managing the MVI and educating people on the metaverse
Thoughts On The Metaverse
Definition Of The Metaverse
Two ways to think about it:
Global Economy 2.0, where it's going to get bigger than the US and Chinese economy
The digital layer on top of the real world. It will be a seamless experience for people to move from the real life layer to the digital layer anytime they want
Is The Metaverse Only Possible With Distributed Ledger Technology?
A lot of people talk about the metaverse without mentions of blockchain
Facebook trying to position itself as a metaverse company now
Found it sick when Microsoft talked about a corporate metaverse
In his mind, it has to be built on the blockchain and people have full sovereignty over their identity and assets
Which Sector Is He Most Excited About?
Most excited about Axie Infinity, the emergency of play-to-earn and its economic consequences, and the future of work
Excited to see the next wave of innovation in the play-to-earn space
Thoughts On Play-To-Earn
Fascinated by play-to-earn
Play-to-earn is a subset of the ownership economy narrative
Thinks that the play-to-earn movement is sustainable. However, the sustainability of individual play-to-earn projects are dependent on the token economic design
For Axie Infinity, the ecosystem has many different levers that the team can pull to ensure that the economy functions
Grand 5-10 Year Vision
Doesn't think in such long time frames
Thinks that the product lineup of Index Coop will continue to expand until they become one of the largest global asset managers
Takes things day-by-day with regards to the Metaverse Index. Will continue iterating the methodology to make sure it best represents this movement into the metaverse for investors
Favourite Video Game
Played a lot of video games as a kid
Favourite game is Diablo
Last video game that he spent a lot of time playing was World of Warcraft
Single Favourite NFT
Owns only 2 NFTs
Would have to say the Axies that he use to battle with
Most Controversial Thought On Cryptos/NFTs
From an investor's perspective, the token economics in the metaverse space are generally shit
There is only a handful of projects that have given any meaningful thought to the token economics of their token
How Can Projects Improve Their Tokenomics?
A lot of teams are still working on their product right now. Tokens are still secondary to them in terms of their priorities
Once they are happy with their product, they will then focus on their token
This may not be the best way to go about it. If the team does not spend time on their token and how it will fit into their ecosystem, it may be best if they don't launch a token
If He Could Change One Thing In The Space
Improve liquidity for different metaverse tokens and NFTs in general
Crypto Ecosystem In 3 Years
Challenging to think about this. Innovation with technology is exponential and our brains are not wired to think in exponential terms
Everyone is going to continue building and innovating
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