So you have a piece called capitalism on chains and in it you basically argue, and I'm going to quote, crypto's ideal state is to make capitalism more effective. Capitalism is like clearly imperfect but it is this beautiful system where resources do flow to the things that people want.
All right, we're live. Paky, thanks for coming on the show, man.
How you doing? Great, good to be here. I'm doing well.
Thanks for having me.
You know, I was reading some of your earlier stuff today, just to prep for this. And in one of your posts, I don't remember exactly which one, you refer to yourself as, or you're kind of unsure on how to refer to yourself. It maybe oscillates between investor, writer, technologist, optimist. How would you introduce yourself to people who may not be familiar?
Yeah, I'm still working on that. But I think, you know, writer and investor, and those two things go together kind of more and more closely over time. So, I write a newsletter called Not Boring. I use that to one just kind of generally explore a lot of things. Like I think one of the things that hopefully comes across in my writing is I'm not that smart but I'll put in a lot of work and so thinking through things on paper is super helpful. And then use it to write about the portfolio companies we end up investing in and some other companies, but to learn and then to kind of help tell the stories of the companies that we back.
Right. And I do want to get into maybe your writing process, investing process and all that. But I want to start from a place that might surprise you and I don't think any of my listeners know this but you in 2021 August actually wrote a piece on Solana and I was at Coinbase at the time and that was interesting. One of my first introductions to Solana.
And yeah, and obviously now I'm let's say quite interested in Solana but at that time I was exploring and that was one of the first pieces I read and reread multiple times and it was quite comprehensive. How did that piece come to be?
Yeah. So this one's actually easy and small world. So, Ben Spango who worked at Solana Foundation, was a neighbor of mine growing up and so we had kind of kept in touch and he mentioned there was some interesting stuff happening. I had been playing around and kind of seeing it. I wrote about kind of some of that in the piece as well. But I think that the reason that I wanted to do it is one I ended up writing about a few L1s. And one of the things that seems to have died down maybe a little bit, but like I really didn't like about crypto at the time was the kind of like this L1 is going to do everything and then this L1 is like a total piece of shit. And I didn't think that was right. And I think any product and certainly any L1 comes with certain trade-offs. And I thought the trade-offs that Solana was making were super interesting.
Got to meet the team, you know, obviously think Anatoly is incredibly smart. And had a pretty clear and different vision for what he wanted to build with Solana. And so, you know, wanted to write it to kind of go deeper into that.
And you also have another piece. Well, you have several pieces on crypto, but the other one that is probably most comparable to the Solana summer piece was, I believe, called Own the Internet, and it was basically a case on Ethereum. And those two pieces, I would say, I mean, they're obviously a few years old. How would you say they've aged? Like, how has your mental model about crypto changed since then?
Yeah, when the bear market happened, I got a bunch of people who were like, can't believe you wrote about Solana, blah blah blah. Look at it now. And so happy to see the price back above where it was when I wrote about it. But I went back and reread it and I think it actually holds up pretty well. I mean, nowhere in the piece was it like you need to put all your money in Solana, this is the only and best blockchain, blah blah. Again, they're making super interesting trade-offs. I think high-speed, you know, financial-focused L1 is a useful thing and different from what Ethereum was doing on Own the Internet.
I was probably a little bullish on ETH compared to where it's performed over the past few years, but I still think kind of center of gravity, a lot of interesting stuff being built on there and thinking through how it captures value. I think it holds up decently well. I think there's probably other ones that haven't held up as well, but I think those two generally hold up decently well in terms of what both of those chains were going for. Maybe like ultrasound money and some of that stuff probably didn't play out as well for Ethereum, but in terms of this is a new platform that people are building interesting things on and you can build kind of different things on the two of them. I think that held up decently well.
And I believe you called yourself a maximalist minimalist or maybe the other way around. And where you say something like you believe that they will specialize in these functions and then they will interoperate between them. I want to maybe dive deeper on that. Can you explain what that concept would look like? Is it, and maybe the thing I'm interested in specifically is because you also have another piece called blockchains or platforms, right? And a platform obviously benefits from getting network effects or switching costs and things like this. Do you think that's kind of the ideal state for crypto where you have a bunch of specialized chains interoperating or does it look more like, you know, a trio where it's like you have AWS, GCP and Azure that are like the three heads of the market?
Yeah, I don't think it's one and I don't think it's infinity. I think probably something where there's a few chains that kind of make different trade-offs, but nobody's probably getting fine-grained enough to care very deeply. I think having a bunch of users and liquidity and other stuff on a chain is useful. The maximalist minimalist idea is kind of what I've been talking about. I think it's silly that there's such, it's silly but also to be fair useful in kind of bootstrapping belief and getting people on them and all that, but just the fact that people were like this is the only chain and everything else is stupid. That's the maximalism minimalism piece.
But I do think any kind of healthy ecosystem has a few different options that cater to different needs in different ways. And I thought at the time and probably if anything's changed I think there'll be kind of fewer dominant L1s but I don't think that number is one. It's certainly not just Bitcoin. I think actually the thing that holds up the least well in the Ethereum piece is like I have the picture of somebody poking the Bitcoin logo with a stick and saying do something. One thing that's changed, I've really come to appreciate the doing nothing and just doing the thing that it's supposed to do really really well. But certainly Bitcoin is not going to be the only chain. And I think there's a number between there and probably like eight or six or five or three that is probably the right amount. You tell me though. I mean you're in the trenches building this stuff. What do you think?
Yeah, I would agree. I just basically draw comparisons to all other software platform types. So like mobile operating systems, Android, iOS, gaming system, PlayStation, Wii, Xbox. App stores, there's always kind of three or four that end up dominating. When there's a market to be had, people just compete. So I would say, yeah, the idea of doing one thing or one chain and rule them all is certainly somewhat an ancient relic at this point.
And I've had the same realization about Bitcoin where at first, so I'm an engineer, it's like, oh, this is really cool. And then you're like, wait a minute, it doesn't do anything. That's kind of weird. And you're like, oh, wait, it doesn't do anything. That's a great thing.
Yeah. I mean to my detriment I like complex things and one of the things that drew me to ETH I was like oh my god you could just do so much more with this and then kind of Solana after that. I think to me there's almost a, the differences have to be wide enough and so the Solana killers like a little bit faster or something like that I guess hasn't worked out particularly well.
So I think there's some rule in there about how big the differences have to be. Obviously iOS and Android have some major differences and so those it makes sense you'd choose between those two. Maybe the cloud providers, fewer differences and you just need kind of multiple and they have different sales, different go to market motions and teams and it's just healthy to have a few players in that space. But yeah, it's like really what are you going to be best known for? And if Solana was like speed, then trying to be the third company that's going to compete on being a little bit faster is probably not the right approach. And so that's probably the limiting factor there.
So there's not that many dimensions on which you can really differentiate, right?
Yeah, I think most people at this point would probably agree. Hopefully.
But I want to get to some other concepts. In one of your posts you say quote, if I had to describe why I'm excited about web 3 in one idea, it would be that web 3 allows for the most rapid iteration on new economic and governance models of any system humans have built. Can you maybe unpack that a little bit?
Yeah, I mean I think the shared infrastructure and people just building the differentiated piece on top of shared infrastructure is a really interesting and powerful concept. I think something that's been disappointing a little bit recently is just how much of that is just PVP and financialized. I was probably more, DAOs was one of the first concepts that I got introduced to and was like holy shit this is amazing and has not worked out particularly well.
I think any system where human beings are going to be allowed to, just figuring out how to get all of the edge cases right is unbelievably difficult. At the same time though I do think having a place where you can experiment, see what works, the idea of composability of something that is really exciting to me. Take little pieces, add it in, it's almost like this evolutionary system.
AI feels like actually frankly very different than that to me where it's kind of waiting for these foundation models and then you can try a bunch of, we have agents for selling now and we have agents for this other thing and it's actually like a lot less evolutionary. You're bottlenecked by this one thing that you're waiting for and then you can see what you can build on top of that. But there hasn't been as much divergence. So I don't know, I'd love to see more of the idealistic, get back to playing with totally crazy things. I understand why that's difficult. But that's one of the things that attracted me, is that you have this shared infrastructure, people are building different things on top. Ideally it's composable and that allows for this evolutionary process to happen.
And I do think there's also something invaluable. I read a piece called the laboratory for complex problems where there's some stuff that seems really really silly and you get to experiment on something like a monkey picture and people are like, oh, this is all about monkey pictures, but you get to try a bunch of stuff that is high enough stakes because there's money involved, but low enough stakes because it's monkey pictures that you can actually try new things that have some consequences and feels like something that's better than you could get in an academic study where it's like here's $5. Do you want to punish the person across from you? I think there's some interesting stuff that you can experiment with when there's that right level of stakes that crypto has.
Yeah. I agree. One thing that you might find interesting, this is kind of an aside, as far as DAOs go, Kyle Samani, I'm guessing you're familiar with, he generally says the most successful DAOs in crypto are actually deep in projects. Which I know probably goes somewhat well with your technoindustrialist piece as well because they blend the physical world with crypto.
But then they're governed by the token holders basically and people who actually participate. What do you think about DePIN, if you have you looked into it?
Yeah. So we're investors in Demo and Daylight and I really like the concept generally a lot. I think the challenge or the question for me when I'm looking at them is can you ultimately get to a spot where you can do something that is, this is my kind of lens on everything, like stablecoins I think the answer is yes versus what they do in DePIN. I think some of the, the question that I always ask for anything whether it's crypto or not is will it let you do something better, faster, cheaper. So I think to the extent that that is possible and that could be like go to market is actually more efficient and you can pass those savings back on and so yes. Or in the case of Demo, most of this information is locked down and you just physically can't build things on top of it. So it is useful to have that data open and let people build but does it let you do something that otherwise couldn't be done versus will you attract some early users because there's a token.
I know you started Helium, the IoT network, and so no, but that's like the question kind of generally with any project for me, is does it allow you to do things better, faster, cheaper. I think in some cases the answer is yes, in some cases the answer is no. But I'm very, very excited about DePIN like generally as a category and have been for a while.
Well, you just mentioned monkeys, which brings me to this other point where there used to be a time, I mean it's still kind of relevant today but especially two years ago where everybody would say okay so what are the use cases, right? What do you use crypto for anything other than just circulating money around? And you had a piece around web 3 use cases today and I believe it mentions NFTs, DeFi, stablecoins, and those mostly have aged quite well, especially stablecoins.
And then DeFi it seems it's getting even more traction with better regulation. NFTs maybe not so much or at least in the form that we envisioned, but what would you say are like when people ask you from the outside that are not in crypto, they're like, okay, so what are the use cases today? What would you tell them?
Yeah, stablecoins are like the clear, clear winner here. We're investors in Bridge and it's cool to see that just spreading into the normal economy. I think even the tokenization of kind of everything is super interesting. Like Robin Hood is now making this big beautiful presentation. I just loved that whole presentation whether or not they actually had access to the open iShares and SpaceX shares, the fact that you can trade equities and ownership in private companies on chain is super, super interesting. RWAs in general, I think everything that can be tokenized will be tokenized eventually over time and so I think that is still happening.
NFTs never excited me as like you're buying the picture of this thing and the community is going to make it worth a trillion dollars. I do think the ability to create scarcity on the internet is a really cool primitive to play with that I want to see a little bit more happen there. I don't know if you've seen anything interesting in the space but that's a very cool thing. You have this abundance machine where you can make infinite copies of stuff and the fact you could have something scarce and digital is really interesting and that's one that's probably, you're right, the least come to the least fruition but would like to see develop more.
What are your favorite use cases right now?
Oh. Well, I would say, people tend to, I used to be one of the types where I'm like, okay, we can do anything on blockchain, therefore we should try everything. And I was especially interested in non-financial use cases. And then I'm not sure what happened but basically I realized that actually it being extremely good at conducting global finance, as Solana's vision is the decentralized NASDAQ for example, that's actually, it's one of those layered problems as you keep solving small pieces of it you end up opening up new questions which ends up being super interesting. And so I'm actually quite okay with just trading exchanges and then that being used to be composed with payments.
So, for example, you might have seen X stocks which is like tokenized stocks on chain now. And you can do some crazy stuff like just buy Tesla shares on chain and then collateralize them against Fartcoin and it's just bizarre stuff that it's play at first but I think it could be interesting going forward. I believe the US housing people also now might allow for you to take out a mortgage against your Bitcoin and things like this. So I think I'm just really, and prediction markets I think was another one that I didn't really see coming but that's been quite interesting.
Totally. Yeah. Prediction markets I didn't see coming either.
I was excited with about them. We invested in the company that was doing a new type of prediction market that ended up pivoting away from it a few months before Polymarket broke out because a lot of smart people that I talked to about it were like we love prediction markets, the idea is amazing, it's like almost an impossible challenge to solve for X Y and Z reason.
And so to see them kind of take off has been very cool. And we actually started a podcast for a few weeks that was just taking prediction markets and auto-generating my voice talking about the stories of the day based on the prediction market. So I think there's a lot of interesting stuff there particularly when it comes to the fire hose of information on X and everywhere else. If you can somehow marry, we have all this noise but then you have to bet on it. I think that's actually a really interesting thing to have. And still Polymarket is one of the first places that I check when I hear that something happened in the world. I'm like, all right, is this or not? I'm going to go to Polymarket and see kind of where it's trading. So I think that's very useful.
I wrote a piece not that long ago, capitalism unchained. And I think you're right like idealistically I wish that every platform was going to come, be user owned and governed. And I do see those challenges with that. But I think if you can make money movement and the exchange of capital a little bit more efficient, the impact on the global economy is massive just from that alone.
I've written about this a little bit as well. Like the financial use cases are the ones that are most clear. This was in the developer piece that you mentioned or the platform piece that you mentioned earlier. If the financial uses are the ones that are most clear and obvious and where there is the biggest difference and where they're the most better, you're willing to make other trade-offs to be able to get that thing that is very, very good. And so as the underlying infrastructure improves, and it's improved a ton, but as the underlying infrastructure improves and there's fewer and fewer and fewer trade-offs to make maybe more things come on chain but it makes a ton of sense that finance would be the first and maybe only big use case for a while because those trade-offs are worth making.
That capitalism on chain piece is actually probably my favorite piece, actually probably my favorite piece on crypto in general, one that I use to reference, I have like some internal memos that I send the team and I do want to touch on that maybe after this question but following up on the current use cases you also had some predictions or maybe let's say desires on what you would like the next use cases to be and I think if I see my notes here they include regenerative finance, hyperstructures which that's from the piece from Jacob from Zora, and decentralized science. How do you think those, do you still have hope for those? And second part of that question would be like what do you think the next future use cases will actually be from today?
That's a good question. Regenerative finance, maybe actually a little bit less. And frankly I think the biggest change I've had in my kind of thinking on this stuff is I've always been an energy fan but just I think that energy, energy generation and transmission getting that right solves like 99.9% of climate problems. And so the more that we can put towards just getting clean energy online and cheap and accessible and to where it needs to go, that solves most of it.
DeSci it still interests me and I think that would be one of the ones that I'd want to see kind of in the future. I think like molecule does some interesting stuff and I think anytime that there's one of the most broken things in the system is the way that we fund research now and the way that the journal system works and all of that. And so any kind of new mechanisms to make that work and to get the science that deserves to be funded funded even if it doesn't fit in the current system, I think that is a super compelling use case. But I don't know, I do think I've come around to your view where the next few years are really going to be about how can you bring a bigger piece of the financial markets on chain now that the regulations are in place to enable you to do that in a way that just works smoothly. I think once that's happening everything gets a lot easier.
You're talking about being able to back your Tesla shares, to bargain your Tesla shares to buy Fartcoin and all of that. Like I do think that once there's more capital on chain, it makes sense for more things to come on and plug into that. But I do think actually it's probably going to be a few years of just kind of bring all of that together. I don't know. What are you most excited about?
Yeah, I think there's some interesting maybe tidbits of a beginning on this intersection of attention, social, and finance. I believe Farcaster did an okay first pass and then Farcaster, Zora and even Pump to an extent have somewhat extended that idea. But I do think there's still something interesting there that hasn't been quite articulated in a product. But I think this combination of attention, social, and finance, there's something there. I'm not quite sure what it is, though.
Yeah. I wonder if it's an attention measurement or capture problem or there's certainly the, it's fun for a little while to trade things, but then attention has to wane and move on to the next thing. So I think there's a lot of tricky mechanisms.
I think Jacob is one of the most creative people in the space and I think hopefully one of the people I like to read the most as well. And so if anybody can figure out these little things, it's probably him and that team. But yeah, there's just, it's just a very hard problem that I think will be really interesting to solve if people figure it out, right?
So I want to get to now my favorite piece. The capitalism piece. And I'm going to give the audience some context. So you have a piece called capitalism on chains and in it you basically argue, and I'm going to quote, crypto's ideal state is to make capitalism more effective. And this is in two parts. Part one: capitalism is good and capitalism evolves. And two: how crypto can make capitalism more effective. So I want to actually start somewhat surprisingly with number one just given how capitalism maybe is not seen so popular in some circles at least. Can you just quickly make the case for why capitalism is good and how it evolves?
Yeah. I mean there's the Churchill quote on democracy being the best system that we come up with, the worst system other than all the other ones. And I think there's probably something to be said for capitalism that is very similar. There's a lot of things that you can identify as challenges with capitalism. There's inequality. There's, I think there's actually, I'm kind of writing a piece that actually talks about some of these downsides particularly when it comes to attention and different platforms really trying to suck our minds into the computer or into an advertisement. We don't have a particularly contemplative life anymore. There's a lot of downsides and then as soon as you start to say we should do X thing instead and this group of people is going to decide what that thing is, it almost invariably goes worse.
Communism kills a ton of people and creates miserable conditions. You hear people in the West talking about how awesome communism is. And then anybody who's lived through it or whose parents have lived through it are like no, no, no, do not do that. It is the worst thing in the history of the world. And so capitalism is clearly imperfect, but it is this beautiful system where resources do flow to the things that people want. And I think one of the areas where capitalism falls short is just the human brain. It's kind of crypto as well, where the human brain takes advantage of this big beautiful system and has gotten really good at figuring out how to hijack it in certain cases.
There's almost, I don't know, I took X off my phone as one example and put up the one cent thing on Twitter. I think this is actually kind of also like climate change where I don't know what the nuclear and solar of attention is but we need that nuclear and solar because asking a billion people or eight billion people to individually always make the hard choice is never ever going to work. But I do think often when there are challenges with capitalism, the best way to fight back is with more capitalism. So the capitalism evolves, like child labor was bad and people died in factories all of the time and then Ford for selfish reasons frankly implements better working conditions and 40-hour work weeks and all of those things.
And so just because you like capitalism and think it's good doesn't mean it's perfect. You certainly wouldn't say it was perfect back then when people were dying in factories. But it keeps getting better and better and better. And back to our conversation on crypto being this thing that evolves, any system that you give that kind of freedom will be higher variance but evolved hopefully towards something better over time. And so that's kind of my capitalism is good argument. Like every measure of quality of life other than maybe family connection or something, most measures of quality of life since the start of the industrial revolution have gone like this.
