Paradigm founders Fred Ehrsam and Matt Huang

Up Only 10 ignition sequence.

Hello and welcome to Up Only TV, where I've already rugged something, but we are back and ready to go. Before we get to it, go to up.tv. FTX is a partner for every episode of Up Only TV. You can trade directly from one asset to the other right there on FTX. Thanks to them for being our partners. You can also earn yield on your assets if you're sitting in stables or whatever else you might be doing right there at FTX. That's right, let's get to our show and say hello again to our good friend Kobe. How you doing, buddy?

Oh my God, still rugged. Where are we? You disappeared your own face. I'm all right, mate. I can't hear out of my right ear, but that's all right. I got my left one, and I take loads of antibiotics so I can't drink anything. Maybe it's a good thing, might get my life on track. How are you doing? Missed you.

I missed you too. I thought I had done everything after not doing a show for like a month, and I ended up messing it up immediately because our intro video didn't roll because my Dropbox rugged me, and I only got the one video back. So whatever, that's okay. We're back. I'm happy to see you. You've been in Africa.

I was in Africa. We didn't see each other though. That would have been too much.

Yeah, we got to avoid each other for the rest of time. And we've got the Paradigm founders with us, so while you've been messing around and messing up the stream, you're wasting very important people's time.

Yeah, what else is new? Yeah, Matt, Fred, welcome. How you doing?

Welcome. So, I imagine you've never watched Up Only TV. It would be a waste of your time. For the people who are watching, they know it's a waste of their time, but they're just doing it anyway. So we don't really have a plan or do anything. We just sit here for a while, normally get drunk, but I can't get drunk, and we just see what happens. So hopefully they're up for that. And why don't you send us drinks in advance? We're sitting here with water.

100%. Look, we've got low budget times. Times are hard. You see in the charts, it's down like 7% or something. So, how did you two meet? How do you know each other? What happened?

Yeah, and then maybe got to classic Fred troll. But yeah, meeting him and talking to him about this VR idea kind of had the light bulb click. I don't know if you've ever felt it, but there's something special about this person. I'd love to work with them someday, whether it was like fund his next company or something else.

So what year was this? Because I've only known the word metaverse for about three weeks now.

Yet it's half of the words that you say out loud.

That's right.

So what you're saying is it's not just that weird voxel, sort of Doom graphics style world where you just walk around and look at the three other people that are in there, but it's the idea that you can take the stuff that you have into that world, but also like a hundred other worlds just like it that other people have created. It's like state between all those worlds.

And you don't just think this is trendy because of the new Marvel timeline stuff they're doing?

Yeah, I think that makes sense. I like sometimes I think metaverse is just what people say when they don't know what else to say. Like the word convexity, people just say it in case it sounds smart. They just throw a word, and metaverse has become the new one. But I do think it makes sense that we've seen over this year and the last few years actually, people having this online identity that's around an Ethereum address or a Solana address or some online thing, and they want to port that into different systems and be able to use it here and there. How do you think this is going to play out over the next, I don't know, this is a hard question, but like 15 to 20 years? What do you think it practically looks like in the future?

Oh God, so many things. One observation that we often think about is how, to state the obvious, people are spending more time in these digital worlds. You could think of Twitter, Discord as a version of that. You could think of World of Warcraft or Fortnite. And as people spend more time there, they're also spending money. The in-game item economy is massive, totally outside of the crypto context. But if you really think about that, that's kind of putting all your energy into these systems that are ultimately owned by someone else. And it's not a government that has a clear code of law and property rights. It's sort of the whims of Google or Facebook or someone else. So I think one thing that's really potentially compelling is blockchains enabling these property rights. And I think much like developed countries or developing countries are limited if they don't have strong property rights, if the government can come in and seize your assets or there are local warlords that are going to come after you, I think enabling strong property rights in crypto could make these digital worlds a lot bigger than they are today. So I think that's just a general trend that we're probably going to see over 10, 15 years.

When you talked about web 2 being feudalism, is it because apps took such a dominant space within the web versus just websites themselves in an open HTTP environment? Now so many people, Facebook is their internet or they spend all of their social media time on Instagram. Is that the reason, or could it have been more open in a web-based internet, or do you think it's kind of either way it's still feudalism?

I think it was missing a key technical ingredient, which was the ability to store state in a decentralized way. And that's ultimately what blockchains allow you to do. Because even though you take email as a great decentralized protocol, everyone on this podcast probably uses Gmail or Outlook, and so there still are these sorts of centralized systems that end up with all the data. So I think for the first time with blockchains and web 3, we have the chance to change that.

It feels a little bit like the web 2 gatekeepers have started to realize this trend and that ownership will mean that web 3 is able to threaten web 2. Because you got Jack from Twitter who's started funding decentralized Twitter and trying to build a decentralized version of his own company. You've got Facebook, and obviously they've just changed the name to Meta in the last couple months. I thought that story was a joke. I was like, no way this actually happens. It's like them changing their name to Loom D or something. I was like, no way that this actually happens. But I guess it did. What do you think the strategies for companies like that are? Do you think they just try and, do you think there will be a war for the metaverse?

I think the challenge in any big technological paradigm shift is whether or not the companies fully embrace from the ground up the new technology. It's sort of like media companies going into the internet. How many of them just put their existing media property on the internet relative to trying some totally new approach? Of course, the thing that got really big was fundamentally totally different. It was social media, not traditional media. So I think that's the big question for a lot of these incumbents: how crypto native can they really get? And are they willing to adopt totally new approaches that might be very different or even orthogonal, or cannibalizing short term to some of their existing businesses? So we'll see. I think if you were to poll us today, I'm curious what you think. I think we're maybe more bullish on some categories than others. Like gaming companies, it feels like they might be more likely to be able to make the jump because just installing an open economy into games might be the right approach to games. If you're current gen social media, that feels like it might be harder in the full ground-up sense, just because the social media networks of the future, whatever that term means, will probably look wrong in retrospect or just going to look a lot different. So there's always the innovator's dilemma, and there's probably an 'it depends' element.

One other thing you guys brought up before is it may be that we look back on this and realize that as a network effects based business, which all the largest internet platforms, which are also the largest companies by market cap in the world, we look back and it's sort of like the only approach is one in which you give users some ownership. It doesn't mean it's a lot, but that might sort of just become the norm over the next 20 years. And if so, that's a pretty radical sea change.

Do you think that requires users essentially seeing some of what's in it for them? So if you look at play-to-earn type stuff with Axie, maybe that's the lynchpin that tells them, 'Oh yeah, we can earn stuff because we're using these companies' products. We can share in the network effects growth of this ecosystem.'

I think that's right. The hardest part about getting a network effects based business going is the chicken and the egg problem. At the beginning, you're starting new Twitter. You're the first user there. You shout into an empty room. There's no utility. You leave. And that problem goes on ad infinitum, which is why some of these web 2 giants, they just haven't changed. Network effects are so big at this point that overcoming that is really hard. And I think our view is that crypto presents the first real potential orthogonal solve to overcoming that cold start problem. Which is, at the beginning when the network has low utility, you're the first user who shows up on Twitter 2.0, whatever it is, you get ownership in the network. And the potential economic upside in being an early owner of the network offsets the fact that the utility is low at the start.

I think play-to-earn is just yield farming with a waste of time component added on top.

People love it. On some level, I think work equals purpose for humans. So there's a lot of good theory on this. A lot of the most popular games like World of Warcraft actually have a strong work component to them. People actually find a lot of meaning in building towards these experiences in these games. So I think you're right. I think that actually might be a feature in some ways as much as it could be viewed as a bug.

One thing that made it click for me, the metaverse stuff, because I'm always incredibly skeptical. I've been in crypto from 2012-ish, and I just saw everything was just like, everything went to zero. No one ever did what they said they were going to do. I used Crypto Rush, I used CEXY, all these things, they all just disappeared. So I became very, very, and it was always a case of get in, get your 5x multiple, and just bail because it's not going to be a real thing anyway. Do you remember when they did the Iceland coin airdrop? They were going to airdrop it to everyone in Iceland. That never happened, did it? That was a lie. I became really skeptical. Thinking too small, world coins got to write, you know, not just the whole thing. Yeah, you just trade an eyeball for it. But the metaverse, it's a thing to be skeptical of. And I think I'm extra skeptical when stuff translates onto Saturday Night Live and they start talking about the metaverse and they make it sound even more stupid. But the thing that made it click for me was I remembered when I was younger and I played the early Halo games and the early Call of Duty games, and I did those weird things in the game where you jump through all these hoops and you go around and you do this extremely long mission, you get a special helmet. I did it, spent ages getting this special helmet. And I stopped playing the game, and then a different game came out later, and you could maybe get the helmet again if you connected your account and you could do some stuff. But I've done that with loads of games through my life where I've spent a lot of time on some meaningless objective, and there's no record of all the things I've done. I probably have some quite good clout now from all these weird secret objectives I found in games. I also have some embarrassing clout for the eight years I've spent playing League of Legends 12 hours a day. But connecting all that together and then allowing it to influence the next game I play, bringing like when you create your character in Skyrim or something, I've been creating it for the last 15 years of my life. I don't want to just change the guy's hair. I want to import my history and all the mistakes and stuff I made back then. And then it kind of clicked. I play a video game and it just knows who I am and it's got my stuff from my real world and my game history. And then I was like, all right, the metaverse is maybe a thing. Maybe a thing I can stand them talking about for a bit.

Yeah, well I mean you were saying before we started, right? You've had to handle Crypto Kobe for what, how long? Started as just this random idea you had as a kid, and now it's built all this brand value. So in some sense, you're kind of living this in a way.

Yeah, yeah, it's weird. I also met Francis Kurkdjian's daughter at a festival. Someone brought up the account and it was one of the worst experiences of my entire life. Like, you pretend to be my dead father on the internet all right. But yeah, I made it ages ago and it was just a way to not talk about crypto all the time, but not as myself because I had a bunch of followers from other things. I didn't want to bother them all the time with this weird drug money because Silk Road was popping back in those days. And then yeah, it became a thing and now I got this split personality disorder that I inflicted on myself.

I have a question for y'all. Why is it important what we wear and who we are in the metaverse? Why is it just this de facto standard that we're going to have a profile picture or a 3D character or something in the metaverse that represents us, and it's not just ourselves? Why can't it be video or some actual representation of ourselves? Why is that such a big part of this and seems to be the only thing anyone focuses on right now, at least in terms of what the metaverse will look like?

Well, I mean, part of the beauty of the internet or anything virtual is that you can create the world that you want to create. So I think that's where people's creativity will be unleashed. I'm guessing if you ask most people what is really important to you or what is your mental image of yourself, would they literally describe their exact physical appearance? And even that is kind of a limiting frame. So yeah, and then I think to answer another part of the question which you're getting at, which is why do people place value in this stuff? I think we're already living in a world where people's digital identities are as valuable, if not more valuable, to a lot of people than their physical or meatspace ones. I think we were all early on this in some sense. I know Matt and I both played a bunch of games. I spent 4,000 hours in World of Warcraft when I was 16 years old. I cared way more about my WoW character and my armor than anything else. You could not pay me any dollar amount to sell that.

You just ruined a lot of college parents where they're like, 'You're never going to make it, kid. You're never going to make it playing these games all day.' And they're like, 'Here's the co-founder of Paradigm, and he just did nothing but World of Warcraft.'

Math is probably why you can do more in it.

I've not really walked down the street. I've just been outside. But for the previous year, I haven't spent much time on streets. I don't go outside very much, mate. Somebody in the chat was like, 'Kobe's white balance is kind of a lesson too, right?' It's sort of like the digital world is sort of like, what I like is that I can separate the two things out. I can go outside and wander around and no one's going to be like, 'That tweet you posted was offensive.' So it just feels like they're two separate things, and I can sort of turn it off and just put my phone away and then I don't have to pretend to be Cobie on the internet for a bit. And I think I have several personalities. I got that Twitter account, I got some other Twitter accounts, I play video games with a group of people and they know me as something different as well. So I think there's several characters or heteronyms that I sort of care about uniquely.

Just to rip on that for one second, that's kind of one question we ask ourselves a lot. For any new crypto idea, is it uniquely enabled by crypto or not? One interesting thing that is uniquely enabled by digital worlds that is not able to happen in the physical world is you could have multiple identities. So that'll probably be a big part of the metaverse or just of our digital future. Take one off, put another one on, and maybe your real life personality can just be one of those.

That makes sense. What I like about it is you can be very creative if you allow yourself to abandon your own opinions and say, 'This character I have in my head, they like these certain things, they think about stuff in a different way to me.' And I get into that person's mind. What would they think about this situation? He gets to be very creative like that. I would never say that, but that person would say that. And that's quite interesting. Anyway, we're not really talking about crypto anymore. We're talking about my mental illnesses.

So the chat's even further off on a tangent, so it's fine.

I stopped looking at chat because they were making me laugh. They were mocking my white balance.

Yeah, somebody asked if your white balance was off on your camera. You've just been outside for the first time in two years.

Yeah, they were mocking my ear as well. Not very nice. They're bullying me. All right, so we've been baited by the late 2021 straight to the metaverse stuff. Let's cycle back a bit. We know how you both met now. You decide to start Paradigm together. How did it go from there? You now have a research team and other VCs trying to do the Paradigm method of having co-building or research first, contribute to the space for brand purposes, but otherwise don't call it the Paradigm method. But lots has happened since you founded this. Can you take us on a quick version of what that was like and why some of those decisions were made?

Yeah, I mean, after we met in 2017, we started spending more time together. I think the biggest question we had was, we became convinced that this crypto thing, I mean Fred much earlier than me to his credit, Coinbase started in 2012. But in 2017, we started to see that crypto was definitely going to be part of the future, probably the most interesting thing we could work on for 10, 20 years. We grew up on the internet, but in a lot of ways we missed it. A lot of the biggest internet companies were already built. Crypto felt like this place that we could actually contribute and make a difference. But when we looked out there, we didn't see another crypto investment firm that, if we were starting something, we'd want to take money from. So that was the core of where it came from. We started to go on walks, we did an offsite in the woods, we started to put ideas on paper of what that would look like. And I think one of the early seeds was this idea that the type of talent in crypto that's going to make a difference is very different than the staff engineer at Google or the famous XYZ person in web 2. It was just a unique skill set. Some of them are anonymous or pseudonymous. So a core premise for the firm was always to be a place that really special, brilliant people would want to spend time. And if we could get that part right, regardless of what they were doing, everything else would probably fall into place. We never had a job spec for the research role. We just knew Dan Robinson and we were like, 'How do we get him on the team? Let's make something up. You can spend time however you want.' At the time he was working on Stellar open source stuff, and we just took it from there. Or Samson, we never thought we needed a security person, but we started seeing Sam, the legend, just finding all the bugs. So we were like, 'Maybe we should talk to him.' And everything's evolved from there. Obviously a lot of structure has come into place, and we've developed more of an intentional strategy, but really coming back to first principles, it's really that talent first approach that I think continues to guide us today.

I think it's a general phenomenon actually that, obviously it's sort of obvious when you state it, but the talented young people are the people that actually create the future. So if you think about where the talented young people want to go, 20 years ago maybe it was Goldman Sachs or McKinsey. Fred worked at Goldman. 10 years ago it was Google, Facebook. I think today most of the young people we meet or talk to are already messing around with crypto. Anish who's on our team or Charlie, they were in crypto and they were 12. And if you capture the inspiration and the minds of people who are up and coming and brilliant, I think that's really powerful for crypto as a whole. And obviously we think about that at Paradigm too.

You mentioned you wanted to build this because you couldn't find a place you'd want to raise money from if you were building a thing. Do you think that's got better or worse since 2017? Might be an unfair question. You can just stare blankly at the screen if it's politically bad to answer.

We're biased. We think we're doing an okay job. I think one thing we think about is, it's actually great, exclude ourselves. I think it's great that more and more investors are focused on crypto. And I think generally the quality of investors, the quality of help that investors bring to the table has gone up. I think that's awesome because for us, there's nothing more we'd love to see than crypto become this powerful movement that takes over the world. And I think we're already well on our way there.

I was still thinking about the people that you bring on. You just announced today an entrepreneur in residence, Jackson, the guy from 100 Thieves. But I was also thinking, between Dan or Huy or a bunch of these really smart people, Sam, which Sam's Sam? Son CZ, it's like his name is a combination of three giga billionaires in crypto. But a lot of these people are so talented they could probably go do a billion dollar protocol, get infinite funding on their own. So how do you incentivize people from a culture perspective, not talking about money necessarily, but make them say, 'I'm at Paradigm because this is the best freaking place to be' versus go chasing their own project?

Well, maybe we can both rip on this. I'd say our goal is just to help the people building the most ambitious things out there. And one cool thing if you're on the team is you probably want to work on those things too. And it might be that you get to help multiple of them at once. So it's sort of like for the right brains, that can be a pretty epic setup. They don't have to marry the bag.

Yes, that might even be beyond me. But yeah, you've only been in profit. You have to be desperate in your position and down horrendous, like somebody like me, to know what it means to marry the bag.

2017 after that, like 2018, 19, that was nothing compared to the 2014 one because it was like Gox and everything. It was horrible.

But Mark Cuban in the chat wants to know how many anons are on the Paradigm team. It might be the real Mark Cuban. We're never sure.

So if you look at the website, we have at least Sam and Huy, and we've got another joining soon. And we're experimenting with it. I think what's great about crypto is people can come out of nowhere and do amazing stuff on the internet. And you don't have to go look at where they went to school or what they did in the past. The work is just out there and speaks for itself. And I think that's super powerful. So for us, we love that talent and it comes from everywhere around the world.

Another question I have about the research side of things that you do is you'll put out a blog post and you just throw it out there for everybody. And I look at it and I'm like, somebody definitely could have taken this idea and raised a ton of money, and you're just like, 'Well, here's how you financialize NFTs,' and you just give it to everybody. What's the strategy with that? And how do you encourage that type of culture where you're not like, 'Okay, well here's exactly how we're strategizing what we're going to build around this primitive concept in crypto that nobody else has thought about'? It's just an interesting model for me. I love reading the posts and then I instantly start thinking, 'Who's going to do this?' You know, this is a huge product.

One thing both learned is, having started companies and worked on them and invested in a bunch, it takes a lot of energy and dedication and time to build anything that succeeds. So even if you have the idea, to actually put together a team and a company or a DAO and actually execute on it is a lot of work. So part of what we hope when the research team publishes some of these ideas is that that actually brings people to reach out to us, and maybe that's the start of the collaboration.

Also, one belief we had going in is a lot of the best ideas, whether it's research related, investment related, or otherwise, come from people just following their natural curiosity. That's how you get to the good stuff. It's not necessarily the hot thing at the time. That's how you get to first principles, how you get to the good stuff. And we wanted to try to create an environment where people were not only could do that, but they were explicitly encouraged to do it.

I like it. That makes a lot of sense. There's another question from the chat about anons. I've got my own theory, but they want to know which one of you is 0xTuber.

He's in the background over there. Can't you see it?

That's like on the, is it Guess Who? Where you got to flip all the faces down. Yeah, we can erase like 50% of the board now. All right, we've narrowed it down. Has a mustache. So over the last sort of, I don't know, time all blows into one. I don't know what month this is. End of November. It's my birthday in three days. Messed up. So over the last few months, people have been starting talking about DeFi 2.0, which to me seems like forks of DeFi 1.0 with new logos and stuff, or on-chain. And a lot of the traditional DeFi stuff has been in a bit of a bear market, especially against ETH. And there's often people saying on the internet that it's feeling a bit stale and they haven't seen anything interesting in DeFi in a while. And then a new primitive or something pops up and everyone's skeptical about it, and then it goes to a multi-billion dollar valuation, and then someone just says they haven't seen anything in a while again, and it sort of repeats. So where do you think we're at in the life story of DeFi? Where do you think we are and what do you think happens next?

I think we're super early. I mean, if what's happening is we're building a financial system from the ground up on blockchains, I think there's still a lot left to build. And we often think about this idea of the periodic table of DeFi. There are these elemental primitives that we're discovering. Basic decentralized exchange is one of those, lending, leverage, synthetic assets. And maybe there's some squares where there could be something like algorithmic stablecoins, but maybe we haven't figured out what exactly the right way to do that, or even if it's possible. So I think innovation will come in waves. The new hot thing every month, this month it might be some NFT thing or some web 3 thing. But in the background, we meet a lot of people who are still working on DeFi. And so I think if DeFi is interesting at all, it's probably interesting for the next 10 years.

Is it half that yours?

What do you think are the missing pieces to take us from that $100 billion to those multi-trillions? What are the stepping stones along the way?

Money. You have a well, I think your point around just embedded trust in systems is a good one. Yeah, I mean I think one thing that's missing is some of these things just take time. You can analogize to software as a service, which today is the hottest tech category, and there's a new SaaS IPO every week. But actually, people don't remember back 15 years ago, the idea that you would outsource some really important

Yeah, that was a brutal one.

Around the trust you talked about, time and people's willingness to realize that these things are possible. It makes me think of when elevators came out, they had an attendant, a lot of it was because people felt safer if there was a person operating it versus just pushing the button and it does its own thing. One of the things I hear a lot is this fear of it's gone forever. The finality of the blockchain is a feature, but it can also establish fear for people. Do you think in addition to time and best practices, some other feel-good things like insurance on-chain for your assets or product-driven stuff could assist in establishing more trust for people?

I think you going into Lloyd's of London would be a bit more successful than me because I look like I'm homeless, so they'd show me out the door.

Yeah, I don't think it even works there anymore. It worked maybe 30 years ago.

For sure, like social recovery and user-controlled wallets is probably a great example of that. People put their money in this user-controlled wallet and they're like, shoot, if I lose my private key, all my money is gone. So just the mechanisms around that... The chat has asked me to stop talking about insurance, so I will.

I want to talk about going from 100 billion to the multi-trillions, and crypto getting much bigger than it is. It's early. At the same time, this year particularly, we've dominated a lot of popular culture. The richest man in the world went on television to talk about Dogecoin and it was super weird. He dressed up like Waluigi. There's been a massive rise in retail traders, option traders, and you've begun to see this divide between people who are very okay with crypto, they think it's super cool, it's going to be the future, and then this visceral outcry of anger from people. Discord was doing this Web3 integration and they got hundreds, maybe thousands of reports saying if you do this, I'm going to cancel my Discord subscription or whatever. And that guy who does that late night show in America, Jimmy Fallon, he put his profile picture to a Bored Ape, and in the replies there were loads of other Bored Apes giving thumbs up, and then loads of people being like, Jimmy, I can't believe you've done this, you could not sink lower. It does seem very split now where there's people like, yeah it's cool, I own an NFT, and then there's people like, you own an NFT, I'm going to find out where you live and kill you. Why do you think this has happened, and how do you think that public perception changes as it goes to multi-trillions in DeFi?

Can you clarify whether or not you hate the rainforests?

Yeah, that's also the route Sailor went down, didn't he? Posted all those anti-Bitcoin tweets when you were building Coinbase, and then decided to buy loads of Bitcoin from you a bit later. He went down a similar route. I think it is relatively common. People don't like to admit that they were wrong often in public. Play pretty good too, by the way. If anybody needs the short, this is a long podcast, that's a short podcast, so we can say it's good.

Yeah, I want to ask, who's the smartest person that either of you know that is bearish crypto, and do they have a good point?

The chat brought up Charlie Munger, some of the old guard, really smart people. But I wonder if that's just a generation difference, they're just not going to get it no matter what.

Yeah, I think that makes sense. I think a lot of the smart people that I know that are bearish just see the stuff that seems silly. They see the dog money and they see rugs or whatever, and they're just like, what is going on? And you're like, yeah, but look a bit closer. They're like, no, I'm not looking any closer, it looks ridiculous. You can't blame them sometimes. Sometimes you're like, okay, we have to train ourselves actively to ignore that impulse. Even being people in crypto, sometimes you see stuff and you're like, that couldn't be more stupid. But let me turn off that part of my brain and lean in a little bit to try and understand what's happening. Usually when you do that, at least you learn something, even if you don't end up investing. I feel that way about Worldcoin. I really do. It seems a bit dystopian, but I understand at the same time they're trying to be like whatever UBI or something, so I understand there's some ideas there. I don't think you all backed it, but I looked on the investor list to make sure I'm not shaming your investments. The first due diligence ever done on the show. To be fair, it wasn't until the show started, it's like on my phone. Am I making fun of them? But there's smart people behind it, both on the investor side and the team side, and I kind of get what they're talking about. I just can't imagine a world where you're staring into basketballs and scanning your eyes and calling it UBI and giving like 30% of it to the team and investors. It just doesn't make sense to me. It would be sick to have one of those orbs though, wouldn't it? Put that next to your tungsten cube.

So given your bullishness on a multi-decade horizon, and at the same time you all have multiple cycles under your belts, Kobe going back a pretty long ways, seeing the cyclical ups and downs and the volatility that can occur in the market where valuations of even Ethereum can go down 85-90% even though it's got some product-market fit even in 2017, and stuff like that will happen again. How do you approach investing or the market in general, maybe choosing what you're investing in and balancing that against deploying what you raised, $2 billion, $2.5 billion? I don't know. But you go deploy those funds and you're also considering where we are in the cycle. How do you balance all this as a fund?

So this might be an unfair question because it's quite hard, but if you're thinking 10 years out, or decades, how do you think about layer one blockchains? Do you believe in a world where Ethereum scales and everyone's got Vitalik on the newly printed Ethereum dollars? Or do you see a multi-chain world where it's abstracted away from users from a user experience point of view, but they're jumping between these bridges between a bunch of different blockchains, and maybe the primary blockchain is not yet even invented and you are doing the seed round for it at the moment?

You might disagree?

Do you think when that happens, a lot of the opportunity in crypto disappears quickly for investors? Because when you have those mainstream apps, it clicks into place for so many people at once. At the moment it's this weird magic internet money thing and they're like, does it solve any real problems? Then when you have these consumer apps and they see it and they go, ah, right, no, I get it now. But it happens for so many people at the same time that there's a dilution in opportunity. So right now is the time to be deploying $2.5 billion into stuff?

Yeah, I think it's reasonable for the richest people in the world 10 years from now to be made up mostly of people that were early to a trend as big as crypto. If crypto follows this growth path of the internet, right now the richest people in the world are from the internet age, and before that it was oil companies. I don't think we're there yet, except for maybe Sam. I think CZ is secretly the richest person in the world. People are saying that in the chat. I think that's a really interesting feature of crypto. These aren't people showing up on fancy lists and flying to Davos and networking with the existing establishment. They're people coming out of nowhere, it's global. I think we're probably really underestimating the effects of that, and hopefully it's for the good. I think generally the people benefiting off crypto probably self-select for more open-minded people, people who are interested in weird things and excited to take them seriously. I think having more resources in society go to that type of person is actually tremendously optimistic for the future. We're going to get so much good anime funded.

I mean, Justin Sun almost got liquidated for like $4 billion just because his collateral wasn't quite there. Do you reckon Justin's just going to rug the Constitution DAO and outbid him, go flying at the last minute and just be like, sorry, I doubled your bid? It seems like the Constitution DAO thing is way too public to work. Somebody's just going to be like, I know exactly what you've done, I can bid $1 more. I know how much you've raised. It's going to be Justin, I guarantee it. You just gave me the idea. Somebody's going to send him this. I'm going to text him, Justin, please buy the Constitution. Nice flex. So I want to pull back to some of the identity-driven stuff. You talked about the metaverse earlier, and I know you all are really interested in the role Web3 plays in this next iteration of social, metaverse, whatever it ends up being. The wallet being a part of that. Is the wallet the identity? Is it a multi-wallet future? What is a login look like into the metaverse? How do you blend all that? Where is our being established?

Can we do that and maintain any degree of personal financial privacy? Zero knowledge proofs? Maybe to be less cryptic about that, it's a really good question. Right now everything you do on a blockchain is tracked. It's kind of an interesting thought. In some sense, there are the early beginnings of next-gen social networks just from on-chain data. You have fred.eth, you have your ETH identifier, you're doing all sorts of actions on chain like buying NFTs. That's basically a social graph and an activity feed in some abstract sense. To hit the privacy point, we're definitely going to need to evolve better privacy tools, otherwise we're going to live in a pretty bizarre transparent world. Maybe that would be good in some ways, I'm not sure. One thing that a lot of our team is very into are zero knowledge proofs, where you can still cryptographically prove certain things or take certain actions without your bank statement being public on the internet. That'll probably bleed into people building applications and all that good stuff too.

Yeah, or like your medical records or your vote, things that are very real world.

So how come Zcash just keeps going down? Zuck's $2 billion buy is going straight to Zuck. He's just rugging on purpose.

It did seem to work for BitClout at first, didn't it? Until all the weird stuff came out. But I think it does make sense. It's sort of like what crypto people do now. They use these protocols and then they get an airdrop, and then they decide whether they keep the airdrop, sell the airdrop, buy more of the airdrop, but they have some ownership over a product that they use. You extrapolate out to anything you could potentially use—games, social networks, whatever app you use. But imagine the anxiety and stress of having all these little fractions of tokens of all these apps I've ever used. Which ones do I... It's going to be a right mess. Blockfolio is going to be way too long. We need a dust collector. I'm just going to leave them all. I really like your point about the way Web2 companies don't put out there, here's your exact net worth and what your bank statement is. It's more you see it in the sense of, here's some recommended products that we think you should buy because you talked about these last night around the living room. They're really good with ad awareness and targeting, and we kind of forgive that because it doesn't feel as directly intrusive. I think that's a really good point. But they know all that stuff. They know when you're pregnant, they know when you're whatever. They know all these things about you, they know your spending habits. So yeah, maybe it's just figuring that out.

Yeah, that makes sense. I know we're running a little bit long on time, but I think we have a couple of questions maybe from the chat. Kobe, go first. I need to know based on all those things you said, it sounds like maybe you're still pretty bullish on something like Punks. The OG avatar. CryptoPunks overpriced or underpriced right now? That's what I want to know. I'm just selfish, it's for the people. You're going to buy or sell after this? I didn't ask about my bags. I asked about CryptoPunks. Obviously we can't get a price, that's fine.

When you both say paradigm, which you use normally in a sentence, it's like in a movie when they say the title of the movie in the movie. Do you use it more or less? Do you try and avoid the word or do you... Kobe, did you use my bad question to prepare your show-ending questions?

Yeah, I got a couple of quick fire ones because we have like four minutes over. We'll do a couple of quick fire ones and then peace out. I want to know what have you been wrong on? Your biggest, I'm firm on this thesis and you just totally messed it up. You were so off the mark. Very impressive people, but tell us when you were wrong, catastrophically wrong with huge consequences if possible.

Yeah, any favorites?

Yeah, that makes sense. The scar tissue thing hits home for me quite a lot. Next rapid fire question. How do you get to work with Paradigm? If you're listening to this, there's a bunch of people listening, they might go, I want a job at Paradigm. How do they make that happen?

We should do go. Yeah, final question. We ask it to every single guest at the end of this podcast or whatever we're doing right now. We want to know a piece of a mantra or something that you often find yourself reflecting on that guides your actions in life. Maybe you got it from a book or an old teacher when you were young or a parent or something. Some sort of life advice that our listeners or viewers can use to make themselves happier, smarter, more fulfilled, richer. Just make their lives a bit better. Something that you find yourself applying to life quite often. I ramble a lot, so it gives you time to think. People that watch just like, goes on about this for ages. It's not that complicated of a question.

I mean, the biggest one for me is that it's easy in life to sweat the small stuff and all kinds of shit happens to the best of us. I think for me, it's always been about zooming out and asking what is the one thing that really matters, the one or two things that really matter in a job, an investment, a situation. Usually if you get those right, everything else kind of takes care of itself. So figuring out what those things are is super important.

I like it. Amazing. Thank you both for your time. Sorry, ran over a little bit. Thank you so much for coming on. If you've tuned in, thanks for watching. Thank you all so much. You can catch them at paradigm.xyz. Got the social handles there, all that good stuff. Appreciate you all being here. Fred, Matt, thank you so much for being here with us. As a reminder, go to up.ftx.com. You can trade crypto right there on the FTX app, just like we do. We bought the dip today. I did, I don't know about you, Kobe. You can do it on FTX. Up only. I haven't looked at the price since I got back. FTX as well. It's not bad. It's okay. You still have time. God, yeah. I'm not looking. Thanks for joining. Not off holiday. We're back. We're happy to be here. See you later. Bye.