The Delphi Podcast Host and GP of Delphi Ventures Tom Shaughnessy hosts Gmoney to discuss his journey from spending $150K on a cryptopunk to launching Delphi INFINFT, an on-chain NFT fund with us at @Delphi_Digital.
The Delphi Podcast Host and GP of Delphi Ventures Tom Shaughnessy hosts Gmoney to discuss his journey from spending $150K on a cryptopunk to launching Delphi INFINFT, an on-chain NFT fund with us at @Delphi_Digital.
We would like to thank Cosmos for making this podcast possible through their sponsorship! Cosmos is on a mission, link one million blockchains. Name brand projects like Terra, Band, Kava, and Secret use Cosmos and the Cosmos Hub to connect to every other chain in our network. The Cosmos Hub is the port city that delivers Inter-Blockchain Communication today. Learn more at cosmos.network.
Every Delphi Podcast is dropped first as an audio interview for Delphi Digital Subscribers. Our members also have access to full interview transcripts. Join today to get our interviews, first.
(2:11) – First Question: GMoney’s Background and what brought him to Crypto.
(8:00) – Thoughts on Punks with the proliferation of a million different types of NFTs today.
(10:31) – Punk’s utility within the Metaverse / Use Cases.
(14:46) – Thoughts on the traditional world understanding the benefits of NFTs.
(19:12) – Other types of NFTs or tokens more interesting / less interesting.
(22:14) – How to educate people on the merits of NFTs.
(26:18) – How to judge the strength and longevity of a community around an NFT.
(29:42) – Punk’s Risk factors.
(33:29) – Thoughts on launching NFTs and other chains.
(35:25) – What is GMoney looking for in deals/ NFT fund with Delphi Digital / Why on syndicate.
(46:58) – The worst NFT trade.
(48:42) – Pricing issue for NFTs.
(54:35) – How important are L2s to the NFT market.
(01:00:04) – Thoughts on the creator economy / What are people doing right and wrong.
- GMoney: https://twitter.com/gmoneyNFT
- DELPHI INFINFT: https://www.syndicateprotocol.org/syndicate/delphi_infinft
- Our Video interviews Can Be Viewed Here: https://www.youtube.com/channel/UC9Yy99ZlQIX9-PdG_xHj43Q
- Access Delphi’s Research Here: https://www.delphidigital.io/
Disclosures: This podcast is strictly informational and educational and is not investment advice or a solicitation to buy or sell any tokens or securities or to make any financial decisions. Do not trade or invest in any project, tokens, or securities based upon this podcast episode. The host may personally own tokens that are mentioned on the podcast. Lets Talk Bitcoin is a distribution partner for the Chain Reaction Podcast, and our current show features paid sponsorships which may be featured at the start, middle, and/or the end of the episode. These sponsorships are for informational purposes only and are not a solicitation to use any product, service or token. Delphi’s transparency page can be viewed here.
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Hey, everyone. Welcome back to the podcast. I’m your host, Tom Shaughnessy. I help run Delphi Ventures. I also host the pod. And today, I’m really excited to have on GMoney who is at this point you’re kind of famous, man, in the NFT world.
Yeah. I guess so. Yeah. Just a little bit. Yeah. [crosstalk 00:00:22].
It’s a good place to be at.
Yeah. No. It’s definitely fun and interesting. I thought I would be like a “NFT influencer” at some point. But I thought it would take me a year to get there. So, the fact that I am where I am now so soon, it’s just happening. And I guess that just speaks to crypto, just how fast everything moves in the space.
It really does, man. So, I mean I feel like you bought this Punk. You made a crazy name for yourself on Twitter with your views on NFTs in space. When did you actually get started at crypto? When did you actually buy your Punk? And give us a little bit of the backstory.
Yeah. So, I was involved in crypto in 2017. I caught the mid to late ICO boom. And then, in the first quarter of 2018, I was like, “Blockchain tech is really good. Blockchain tech is the future.” But it’s still too early. So, I sold anything that I had liquid. And I was like, “I’ll be back,” thinking it would be five to seven years before something got built because I was using the dot-com bubble as my parallel.
So, it was probably five somewhere between five and 10 years before I say the promises of the dot-com boom finally came to fruition. So, I did that. And I went away from crypto. I come from traditional finance. I’m an equity trader. I’ve been doing that for the last 15, 20 years. And I had some projects that I invested in, in 2017 that finally became started unlocking in early to mid-2020 last year.
And so, as those tokens were unlocking, I got involved in DeFi. And I was like, “Oh, my god. They built some really cool stuff.” And I started going down the rabbit hole in DeFi. And it wasn’t until really August, September when DeFi summer cooled down that I really started looking into NFTs. And it really started was at the first day of quarantine.
On the first day of quarantine, I bought a PlayStation. I hadn’t played a video game in over 10 years. But I knew the only way I was going to survive quarantine was with video games. Netflix alone wasn’t going to cut it. So, at that point, I download Fortnite because I wanted to see what everybody was talking about. I download it. I start playing with my friends. I play with their nephews who are a 10, 11, 12 years old. And the first thing these kids ask me is, “What skins did you buy?” I’m like, “Skins. That’s stupid. I’m not buying any skins. They don’t give me any special powers. Why do I need it?”
And fast forward two or three weeks and I’m buying all the skins that I possibly can. And it was at that point that I realized that digital assets are the future because this kid is 10 years old today, but in 10 years, he’s going to have his own disposable income. And he’s totally okay with digital ownership. So, I was like, “There’s this massive super cycle coming of digital assets that it’s just not totally evident yet.” And this is before I even knew what an NFT was.
And I was like, “I got to find a way to take advantage of this somehow.” And it’s funny, me and my best friend were actually playing a ton of Fortnite at the beginning of quarantine, and we would laugh about how unproductive we were being and maybe we should be doing something more productive. But funny enough is when I did learn about NFTs in the fall, I would have definitely gotten there because I think I had the framework for it. But I think it might have taken me a little longer to understand it.
So, when I saw NFTs, I was like, “Oh, I get this.” And it happened really quickly because of that. And when I started going down the rabbit hole and on NFTs, people started pitching me Punks. And I was like, “No. No. I want the next crypto Punks. I don’t want Punk. Punks are too expensive.” At the time, I think the floors was around 1500 bucks. Yeah. As I spent more time on crypto Twitter, on Discord, on Telegram I realized that some of the most OG people that knew what they were talking about that were the most successful people in the NFT space were they had Punks as their avatars.
And I was like, “Yeah. this is your skin.” And if you wear, it’s almost like a designer brand. You wear certain brands. Certain brands say different things about the users, about the people that wear them. And that’s the kind of the way I saw it, is like, “Oh, if I have a crypto Punk as my avatar, what does that say about me?” It says that, one, I’m pretty successful considering the fact that I have to spend a significant amount of money on a Punk on this picture. But then, two, is I understand crypto. Three, is I’ve been around for a long time. So, I think it was just a convergence of a lot of different things.
So, once I got it, I started. I bought my first Punk in December which I actually just sold this morning was the zombie. And then, I was just looking. I was waiting for an ape and about a month later, there was an ape that came for sale. He kept coming low offer. And I contacted the seller. We got a deal done within five or 10 minutes. And I bought it. And I wrote my thread on Twitter. And I guess the rest is history at this point. But, yeah. It went viral on crypto Twitter, and that’s kind of how I started building my brand.
That’s incredible, man. I mean the timing doesn’t link up perfectly. But I remember everyone selling their Uniswap airdrop to buy a PS5. Meanwhile, you bought a PS4 and bought something that was worth well, well beyond that.
Yeah. Yeah. No. I think what happened with Punks was inevitable. It was definitely going to happen. But I do think that I threw a lot of gasoline on that fire at the beginning of this year and kind of explained it in a way that maybe some people hadn’t been able to understand up until that point.
How do you think through? I mean you open this with, “Hey, I want the next Punk. I want the next best thing.” And I think we’ve seen that play out a lot in crypto where people get involved with Bitcoin. They want the next big thing. They go to Ethereum. And now, people are looking other chains like Cosmos. And a lot of people are just doubling down and staying on Ethereum and getting it to DeFi. But it seems to reverse NFTs where the originals are the scarcest, that people don’t want the next thing. They want the original. And having more NFTs just makes those originals even more valuable. I guess how do you think about Punks with just the proliferation of a million different types of NFTs today?
Yeah. So, that’s a really good question. And the way I look at it and this is why I think I’ve been such a huge advocate for Punks is if I can convince you as to why Punks are valuable being the first NFT project on Ethereum of significance being on chain generative art and how important they are for the history of NFTs, then at that point, whether or not you decide that it’s worth the price is besides the point.
I just want you to understand that people could find value in it. And then, you can decide how far down the rabbit hole you want to go. If I want to show you on some new project, there has to be a good use case for it and a good reasoning behind it. But the way I thought about it was that Punks are historically significant so that besides using it as your avatar, if there is a world where crypto art is part of the mainstream in the future, there’s probably a wing in some museum, in some major museum, like the MoMa or the Guggenheim or big museums around the world where there’s a crypto art wing.
And if there’s going to be a crypto art wing, there’s probably going to be a crypto Punk in there. There’s going to be these really early genesis projects that people want to be involved with because that was the start of it all. So, to me, even when you had all the copies come out over the last few months of people doing their own version of Punks, to me, that just validates the thesis that much more. People don’t buy fake handbags of bad brands. They buy fake handbags of the highest brands possible because, to me, imitation is the highest compliment.
I really like that. Yeah. I’m excited for museums to have it. I guess just thinking about the Punk though, when you bought it, are you expecting the Punk itself to have utility within the Metaverse? Are you expecting to show the soft in VR museums and potentially lend it out and add capabilities to it over time or to you, is this a scarce kind of digital asset, and you don’t really care if there’s additional functionality down the line?
So, I do think that there’s going to be a ton of use cases around it down the road. I mean I think we started to see the beginning of it where Punk owners got a Meebit airdrop to them. The artifact guys did the Punk sneakers where you had to be a Punk owner in order to redeem them.
And I think you’re probably going to see more and more of that, like what you saw on DeFi over the summer where if certain wallets had interacted in governance on certain contracts or yield farm or done things that maybe protocol finds valuable, I think you’re going to see the same thing with Punks in the sense that it’s probably one of the strongest group of collector bases in NFTs where I don’t want to say it’s tribal because people, I think, in the NFT space are super welcoming and willing to help others out. But you have this core group of collectors that if they like your project and get in there, it could help the project rise to prominence faster than if they didn’t go grassroots.
So, to me, I think you’re going to see more of that going forward. But I don’t think my initial case for Punks was never that. Even though we’re sitting in front of the computer screen now more because of COVID and obviously as the digital future approaches, people are still going to be human. Humans are still going to be humans in the sense that we still want a social status signal. We still want to show our individuality. We still want to do all these things that make us unique, and we’re going to find different ways to display that. And changing your profile picture is just one of those ways that people were doing.
That’s awesome, [inaudible 00:11:26], man. Yeah. And I guess for those that might be new to NFTs, I want to stay in the weeds with you on this. But I have to ask what’s the best pushback you’ve given to people that say, “Hey, I’ll just screenshot that NFT and use as my profile picture?”
The only times I really had the pushback was really when I first bought it when people like, “I can screenshot it.” And my response was like, “Please, do. Screenshot it and make your profile picture,” because that’s literally free advertising for me because nobody’s going to pay you for your screenshot. But you can prove that I own the original. That’s saying like, “Andy Warhol screen printed the Campbell’s soup can.”
I think one of the first ones that he ever made the last time it went for sale was at auction, I think, almost 10 years ago. It went for $70 million. This is a screen printed poster. You can buy the same exact screen printed poster in better condition on online today for 20 bucks. So, why is it that one’s not worth as much as the original? Because there’s provenance that Andy Warhol made that one.
And so, to me, it’s like, “You have the provenance on chain that I own the original.” Sure, you can take a screenshot of it. Sure, you can make it your profile picture. But nobody’s going to pay you for it whereas people, humans in general, like the original edition. They don’t like the duplicates. And we see that in pretty much every aspect of collectibles. You’ve seen that in magic cards. You’ve seen that in Pokémon cards. You’ve seen that in baseball cards where the more rare something is and the closer it is to being the original run, the more its value.
So, to me, that was always the pushback that I would say. And I do say I have that conversation less and less now because I think people are totally beginning to understand it more and becoming more accepting of it.
Now, I’m with you there. I like your strategy. I’m definitely hearing it less. And I guess just as a corollary to that, just dealing with people in the real world, I mean what’s the reception been from the traditional world? I mean we’ve seen a lot of pushback from traditional art collectors. I get it’s a different generation. But whenever you see something that’s collectible in the real world, you just run into all the issues, like baseball cards you saw over printing, the famous wine [inaudible 00:13:59] movie on Netflix, the guy was putting labels on fake wine bottles. You have just the provenance which people buying art they think is real, and you’re duping all these “experts” when in reality, I could just go on Etherscan and check that your Punk’s real. Why do you think it’s so hard for people in traditional world to just understand the benefits of NFTs?
I think a lot of it has to do with age and being okay with a more digital life. When I explain the concept of an NFT to anybody over the age of 30, sometimes, they have, for the most part, a hard time understanding it. But when I explain an NFT to anybody in the age of 18, their first response is like, “This is awesome. How do I do it,” because if you’re 18 years old, you’ve grown up with an iPhone in your hand. You’ve grown up with Netflix, with all these digital services at your fingertips whereas I think as you get older, it’s harder one to change consumer behavior because it’s more ingrained.
But two, is if you grew up analog and email came into you while you were an adult, you use email obviously now because it’s very convenient. But it’s probably not the thing you most feel comfortable with. But if you’ve been in front of a computer since you were the age of… I have friends with kids that are two years old, and they have to take away the iPad because all the kids want to do is watch YouTube and for better or worse. But that’s just kind of the way it is. So, I think the younger somebody is, the more digitally native they are. And to me, it’s just the fact that the older generation isn’t as digitally native as the younger generations.
Yeah. That’s a really good point. I mean we grew up playing Pokémon on Game Boys when I tell people you could only Charizard. It just clicks so easily with people. I guess do you care if they get involved? Do you care if your Punk is displayed in, let’s say, the MoMa or something super legit museums around the world because I’m starting to think it doesn’t really matter as much?
Yeah. So, the validation is great. But at the end of the day is the thing that I think is amazing about crypto in general is that it’s disrupting the old world, the old gatekeepers. And it’s allowing people to kind of express themselves freely. And to me, I would much rather have adoption by the younger generation that sees the value of it and is willing to be a participant rather than trying to convince somebody that there’s value here because the future is the younger generation. So, the validation would be great.
And we it. Punks were in Miami. Punks were in New York City. They’re going to London next. And it’s the Punk community that’s doing it on themselves. They’re the ones that bootstrapped this and made it happen. So, to me, that’s way more exciting than being displayed in a high-end gallery or a museum.
Yeah. It’s funny. I was riding bike with my girlfriend the other day, and we saw a couple of Punks. It was along the water in New York. And I was like, “Damn, we’re doing a fun with that guy.” But no, you’re right. I mean to point to your example, I saw your tweet that on Christie’s and then auctioning off a couple Punks. I mean they really botched that wholesale.
Yeah. I mean I think that Noah, I thought, wrote a good response personally. I would have curated it a little differently. But I don’t come from the traditional art world. But I mean I thought his response was pretty solid. And, hopefully, we can all learn from this going forward and, I think, give NFTs the spot that they deserve alongside other classic works of art.
I like that. And let’s switch gears a little bit. I mean building on, so you have a Punk. I mean you have a bunch of different NFTs at this point. But what are the other types of NFTs that get you excited? We’re obviously full disclosure investors in Axie, in Illuvium and a couple others and those gaming projects have native tokens that are for fees. But there’s also a plethora of specific NFTs you can use within those worlds. We have things like access tokens, like friends with benefits and others.
What are the other types of NFTs or tokens that kind of get you excited? And also, which ones do you think are less interesting?
Yeah. So, I mean to be honest, everything gets me excited because the way I view it is everything in the real world is an NFT. So, there is so much industry and commerce that goes on in the real world that will eventually come on chain the more digital our lives go. So, to me, it’s like there’s not one specific vertical that I think will succeed over the others because there’s so many different verticals.
A mortgage is an NFT. A car loan is an NFT. A house is an NFT. And all these things are very different. But they’re all amazing, and they’re all these amazing industries. So, when I realized that and I realized that I feel early on in my discovery of NFTs and I was like, “Wow. Art is just literally the first industry that’s getting disrupted.” And obviously, it’s been definitely for the best.
Creators are making more money. They’re interacting more with their community which is amazing. But this is definitely not going to be the last industry that gets disrupted. And so, that was kind of the genesis of our fund because as I was talking to you and some of the other guys at Delphi, where it was like, “Dude, the future is so bright, and there’s so many cool things that are coming,” and people don’t even know yet.
And so, to me, to say I think one vertical is better than others or one is worse than others, I always tell people that hit me up I talked to is like, “You can be as creative as you want within NFT, and that is the beauty of it,” because you can be as creative as you want in the real world. So, if you think of something cool or some new mechanism, and you want to integrate it, that’s great. You can change how NFTs are used, and we’re kind of seeing that already and you’ve seen it with drops where initially, it was just like, “We’re going to drop art. And then, we’re going to drop art and music,” or just now, it’s starting to include the latest Gary Vee’s drop a couple weeks ago where it’s like some sort of interactive experience with Gary.
And it’s like these things are going to evolve, and there’s going to be a different market and a different set of customers for each one of them. But that’s the beauty of it. It doesn’t need to be purely defined one way or the other.
Hey, G, I guess one other question for you though is just we see a lot of high profile artists and famous people drop NFTs just as a cash grab don’t really expect them to stick around and add a lot of value for their communities. How do you feel about that? And I guess how do you educate people on the merits of NFTs when you have these people with such mega platforms kind of diluting the value.
Yeah. I mean I think it’s really interesting because it’s like if you take the crypto equivalent of it, that’s like somebody pumping a token and dumping it on their followers. But it’s probably even worse because the person that’s most likely to buy a celebrity’s cash grab NFT is their most ardent followers.
So, I don’t know. It’s really interesting. I think you started to see a big slowdown on it in the space just because I think people are realizing that’s not what you want to do. The coolest thing I think about NFTs for creators is the sense of community that you can build and cutting out a lot of the middlemen that get between you and your fans.
So, whenever I talk to people that are thinking about NFTs or want to enter into space, that’s one of the first things I tell them. It’s like, “Listen, if you want to do an NFT drop and then leave, that’s fine. It’s your prerogative. But it’s not going to go over well. There’s going to be no residual value there on the NFTs other than the fact that it’s on chain. But there really is no value there. If you’re going to build the community around it and you’re going to engage and interact with your fans, then, that’s how your work is going to hold value.
And I think it’s just trying to approach it from a different angle in a different way. And I think they just need to be educated because I think when people first heard of NFTs and they see this, they’re like, “The numbers are really eye-popping.” And at this point now, it’s like as it gets more and more saturated, you have to create a better product for your fans. And I think that that’s where we’re going to see a lot of that, just probably better content and a more thought-out process coming along.
I’m with you there. I mean one of the things I struggle with is just the NFTs that unlock real world experiences like, “Hey, come to a baseball game or, hey, get access to a concert.” I kind of feel it’s a bit forced permission blockchains or permission instances of Ethereum back in 2017 and 2018 where we’re trying to grapple with the old world and the new world. It just seems like NFTs fit in so well within the metaverse and crypto sphere and less so in the real world. Are you bullish on the connection of NFTs in the real world or are you somewhat bearish?
I’m bullish on it because it’s not going to be an off-on switch. There’s going to be waves of adoption because it’s not going to be where, “Hey, I’m going to live a fully digital life overnight.” There’s going to be a gradual increase of people spending their lives in a digital realm increasing over time.” So, I think you’re going to have a lot of this AR-ish type adoption where some of it’s in the metaverse. Some of it’s in the physical world.
But as people become more and more comfortable with it, I think you’ll see more and more of this stuff happening in the digital realm. Who wants to do a Zoom call with their favorite celebrity? I’d rather go out to eat with them. But I think at some point in the future, I don’t know when but would it be cooler to just hang out and saw me in space and go to a party together? When that’s more socially acceptable or it happens more often, then that will be the experience. But I think for now, as people get more comfortable with it, you’re going to have the interaction of the physical and the digital.
That’s pretty cool. And I mean one of the other things I’m struggling with is there’s so much hype to, I guess, some of our discussion already. It’s really hard. I mean you and I talk to private deals, private teams. We also see a lot of the public deals, a lot of the new NFTs out there. I mean one of the really hard things is just judging how viable an NFT is. And a lot of that comes back to the community around it, and the story and the narrative. How do you quickly judge the strength and longevity of a community in an NFT with so much going on in the space?
I think one of them is how active is the Discord or also who’s in the Discord. I’ve been around long enough that I know who are good community members, who are good collectors, who are people that aren’t pump and dumpers, let’s say. Yeah. There are a ton of projects coming out. But it’s really just each one is going to talk to a different sector of the population for the same reason that you have a lot of different clothing brands. Different brands say different things about who you are as a person.
And people want to express themselves in the real world. It’s off very much often with clothes. But I think we’re going to see more and more in the digital realm that people are going to be expressing themselves with their NFTs like, “Hey, I met this person. They seem pretty cool.” And then, you look at their wallet and their NFTs, and you’re, “All right. Well, this person likes this, and this person likes that.”
It’s almost when you meet somebody, and you go on their Instagram and kind of just see a peek into their life, I think that somebody’s NFT wallet or NFT gallery will become that peak into their lives.
That’s a really good point. And apologize if I miss it, but when you see a new project though with a new founder, it’s just so hard. We saw me that sell out overnight. I see there’s so many different communities out there. I’m trying to figure out what’s important and what isn’t. I guess to our earlier point, it just makes Punks more valuable. But I guess what would make you feel comfortable in buying an NFT and not being able to sell it for five years or, let’s say, a year because it’s crypto time. What would you want to see in the community?
Well, I think MeeBit’s a little different because it wasn’t a new team or a new founder. These guys have made two of the most important projects on chain already in CryptoPunks, and in Autoglyphs. So, I’m willing to take that bet. I’ll take that bet 10 times out of 10.
I’ll ape into that project. When I see new projects come out, I generally don’t ape that much because, to me, it’s like I want it to stand the test of time. I’d rather pay a little higher when I see that the community has been built around it rather than me aping in not really knowing enough about it. Unless the founder or the team has done something really cool, if Avastars were to do something a new project, I would probably ape because the founders of Avastars have proven themselves out to be pushing the limits of what NFTs can do and what they can be.
That’s a really good point. And I guess just playing devil’s advocate, the space moves and innovates so fast especially in the NFT side. I mean you and I see this every day. But is there anything that could come out that you think will just technologically hurt the value of your Punks? I mean the scarcity, I get that. But what would keep you up at night on Punk’s losing value? What are the risk factors for you?
I mean I guess the biggest risk factor is the contract getting hacked, just like pretty much anything in crypto where if it could get hacked or maybe something happens where you can no longer prove the provenance, to me, those are probably the biggest risk factors. But outside of that, if a new NFT project comes out, I’m not really concerned about that or moving more to the metaverse, I think to me, this is still a really big piece of crypto history that will exist there no matter what.
Yeah. I’m with you there. And I guess are you at all concerned about the hype cycle? I feel interest in NFTs grew exponentially. And now, I feel like we’re seeing a little bit of a cooling off now. But obviously, you’re closer to the space. I guess my question is do you think NFTs are cooling off? And then, two, are you one to go shopping if there would be a bear market or do you think it’s kind of let’s see how everything fares if that were to happen?
Yeah. So, I do think we’re probably in a cool off period on the hype cycle. But to me, that’s super bullish, and you always hear this argument in crypto where it’s like people are bullish, and prices go up for a reason because the narrative is really good, and people see into the future of what’s coming, and it’s reflected in price.
I think that if we go into a bear market, I have a list of assets that I definitely want to buy. Punks is definitely at the top of that list that I would definitely accumulate into a bear cycle, and there’s a couple of other projects that I don’t want to leak too much alpha because I want to be able to buy them. Yeah. To me, it’s just super bullish. It’s like I see NFTs as being the way that the world adopts crypto because you take a look at a project like NBA Top Shot, and the user doesn’t even need to necessarily know that they’re buying something an NFT on a crypto platform.
It’s not as decentralized as maybe I’d want it to be at this moment. But I know they’re working towards it. And I’m willing to give the team that time. But the number one thing for me is how awesome is the user experience for the consumer because it’s like if it’s going to be really cumbersome, then adoption is going to lag, and you kind of see that with DeFi a little bit where it’s like I love DeFi, I’m a big user of it.
But there is a learning curve in learning how to work MetaMask and how to send a transaction and people being scared of like, “Oh, did I lose this forever and what’s going on?” But the closer we can get to that web 2 seamless experience on a web 3 platform, the more adoption is going to come. And NFTs and collectibles and art, that’s something that humans inherently understand because we’ve been doing it since the beginning of time. So, to me, it’s like that’s what’s coming. And this NFT hype cycle is just more and more people realizing that it’s going to come.
I like that. No. I would definitely go Punk shopping in a bear market. I’m not saying we’re anywhere close to that. But I definitely agree. And you mentioned NBA Top Shot. What’s your take on NFTs and other chains? I always felt that DeFi would be very hard to do in other chains unless you add a new design space. But we’re seeing that play out. You could build faster and cheaper apps on Solana. But you kind of lose that Eth community. What do you think about launching NFTs and other chains? I’m not totally sure what you would differentiate on other than I guess cheaper transaction speeds and maybe some customizable security.
Yeah. So, I’m kind of with you on that. And there’s definitely a range a gamut because the same way in the real world, you’ll have a high-end store, a mid-tier store, and a low-end store. And they target different users. If I’m selling a piece of art, and it’s a million dollars, do I necessarily care about what the transaction costs on Eth? Most likely not. But if I’m selling a baseball card pack for five bucks, I can’t have the transaction cost be five times the amount of the pack.
So, I do think that each one has their time in their place. We’re seeing a ton of L2s come out and a ton of other chains come out. And I think it’s almost like you have to kind of wait on the sidelines for a little bit and let the ecosystem develop. You don’t necessarily have to be betting on them at this moment. And you can kind of just wait to see how transaction volumes go over time and where the adoption comes. Who makes the best UI for new users and stuff like that? So, I do think that Eth kind of the same way I feel in DeFi where it’s like Eth will retain its number one spot. But there will be a time and a place for other chains.
I really like that. And I agree. It’s just such layered risk to NFTs are just getting started to make a bold case for them on another chain is kind of tough. And G, switching gears a bit, I’ve been waiting to talk about this because I wanted to get your other views first. But we launched an NFT fund with you. I mean I know all about it. But I want you to give the story about it. I want you to share the focus, what you’re looking for in deals, what types of projects should reach out to you? Love to talk more about the fund.
Yeah. Sure. So, I mean basically, hen when I started talking with you guys, and we were all bullish on the NFT space in general, hype cycle or not, a lot of it is, and I alluded to it earlier in the interview, is everything is an NFT. So, there’s going to be so much stuff that is going to be built to facilitate trading NFTs, building an ecosystem around NFTs. There’s so much infrastructure that needs to get built that I was like… And me coming from a financial background, I saw it, and it’s like art and collectibles is just one small use case. And this is going to be a multi-trillion dollar market cap industry.
So, I want to look for protocols that are going to help bring the future to today whether it be in the metaverse, whether it be through a game, whether it be through lending protocols, whether it be through fractionalization protocols. Literally, the sky is the limit.
The coolest stuff that I see is stuff that I didn’t even think of until I saw the pitch. And I was like, “Wow. That’s a really novel idea that I didn’t think about.” And I could see it why that’s going to be useful in the future. I take a real world example where I always used to joke this with my friends growing up is everybody has that rich friend that is in their group, and you find out what their dad did. And a lot of times, it was like something really obscure that you have no idea that even existed as a business, let alone it would be a very lucrative business. So, I see that in the NFT space and in all spaces in general where it’s like there’s going to be a lot of money to be made solving problems that not everybody thinks is super on everybody’s radar.
How do you compete for deals, I guess, on the NFT side? And I mean I know we work closely with you. So, I’m playing the role of somebody new to this. But on the DeFi side, you want to compete on the value you could bring beyond money. Money’s cheap. You want to compete on how you can help the founders with strategy and token econ and exposure and a plethora of things. How exactly do you get into an NFT deal per se and compete because there’s just so much competition out there?
So, yeah. So, I mean I think that’s one of the reasons we decided to stay small, is I think because we can be more of a partner to help a protocol grow. One of the things that I know people will reach out to me on is, one, is I was able to see the space a little clearer and a little faster than most.
And I use that same analysis when I invest in projects. It’s like I want to be investing in the guys that were building and working on NFTs over six months ago, a year ago, two years ago or longer. And so, I think that that’s one of the things that I help bring is I see the space. I see where it’s going. I have proven that I can see where it’s going, and I can help a project kind of get to the critical mass of integrate with the NFT community, be able to introduce them to partners that I think will help them.
I have really good relationships with a lot of different funds there. I’m like, “Hey, look. I think this is something you might be interested in,” and put them in front of the right people that will help them succeed. I’m not just kind of going in there just to collect the check and wait for the tokens or the equity or whatever. It’s like I want to build and help a protocol succeed.
I think coming from traditional finance, one of the things that I love about crypto is how much of an impact you can have and not have to have an insane amount of money. If I owned $100 million worth of Tesla stock, there’s 0% chance that I get Elon musk on the phone if I had the solution for everlasting battery power. But the amazing thing about crypto is if I have a cool idea about a protocol and what I think they should do, I don’t need to own the token. I can just sign into Discord, and I could have a chat with the founders. And who knows?
Maybe, what I say makes sense. Maybe, it doesn’t. But it can have a lasting impact one way or the other. So, to me, that’s kind of what I want to do. I want to help these founders get to help them achieve their vision and get to where they want to go.
That’s awesome, man. And when you’re thinking through projects that you want to invest in, I mean I think there’s kind of two camps where I’ve seen a ridiculous amount of money being made, very specific early NFTs on one side, and then, two, kind of the well-known centralized picks and shovels players like Open Sea and the valuations that they’re probably sporting on their rounds. How do you kind of meet in the middle there? You want to invest in the infrastructure to facilitate NFTs. But you also probably don’t want to go too centralized and play into the major valuations. So, I mean what are you looking for in a deal because I mean there’s appraisal deals, fractionalization deals, picks and shovels, new projects. How do you kind of size up and curate what you’re looking at?
Yeah. So, it’s like I try to talk to everybody to try to get an idea of what they’re thinking and how they see the market. And the stuff that I find the most interesting is the people that are thinking five, 10 years into the future where the NFT project isn’t just about art and collectibles. That’s where we are today. But I envision a world where five, 10 years from now, 20 years from now, we have mortgages on chain. We have regionalized CMBS fully on chain indexes and cool stuff like that. Those are all NFTs, and that infrastructure, it’s going to be needed to be built well in advance of those assets coming on chain.
So, to me, I always look at what does the founders see? What do they see is the blue sky opportunity? How do they want to get there obviously within the framework of where we are now with a path to how to get there in the future?
I love that. I mean one of my questions was going to be when you’re looking at one of these projects for the fund, what’s the first question you ask founders? And I mean maybe beyond just the questions, but what do you get out of the founders that makes you extremely bullish? You mentioned earlier you want founders that have been building for a while, but is it something they say, “Hey, man? I also have a Punk or hey, man, I also have X, Y, Z.” What gets you amped up when you talk to a founder?
Wait. So, basically you’re saying if I tell them that they need to have a Punk, they’re going to go out and buy Punks? All right. Cool. No. It’s just how they see the space. There’s no one question I ask every founder. But I think it comes out through the conversations that we have and explaining the roadmap and what they see and how they see the space.
And, obviously, everybody has a history. Everybody has a resume and just me being like, “Okay. What have you done in the past and how competent are you to kind of get to…” Because it’s one thing to have the vision. But then, it’s the other to execute. So, it’s two very different things, and we’re all just making calculated bets at this point and betting on what we think is what maybe the best horse or the people that have the best economics in the tokens or the best structure in how the mechanisms of everything work.
So, it’s different for every project. I wouldn’t say there’s one thing that’s like I’ll be, “Oh, I really love what this person’s…” This is the one question I ask that if they answer it this way, I’ll definitely invest. It’s like a lot of it is vision, technical knowledge because there’s some aspects that I don’t know enough of, and I think that’s the huge advantage of being part of Delphi is there’s a lot of really smart people on the team that if I don’t understand something, I can bring somebody on, and they’ll be like, “All right. Cool. You can’t BS everybody.” If there’s something that I can be BS on, I’ll try to get an expert in there to make sure that I understand it, and I feel comfortable with it. But ultimately-
I love that.
.. it’s really just what’s the vision and what do I how what do I think are the odds of the founder completing that vision and getting there?
Yeah. No. You’re totally right. I love that we kind of have an army to ask questions too. Kind of tap to O’Neal for making that happen. And I guess just looking at the founders though, I mean you talk about a resume. But at the NFT surge is so new It’s not like I can go back five years and be like, “Oh, you built leading NFT exchange oversight.” It happened so fast. So, you have to spot check people based on what they’ve done in the past six months, not the past six years. Does that get you comfortable?
But even then, I wouldn’t say I just necessarily look at somebody’s last six months because everyone’s done work before then. People could have come from traditional tech companies and lead big teams there. It’s not necessarily just what have you done in the NFT space because if that’s the case, then, I’d say most projects are out the door by that standard. But it’s more like what’s your history of completing projects that you work on? What’s your standard of execution? If you’re working at a big company and you led some really big teams, that is a good resume, whether it’s in crypto or not.
Yeah. No. You’re right. A lot of that EQ and management style approach plays into this. So, password is really, really important. I guess the other thing to ask you is so you launched the fund with us on syndicate. Full disclosure syndicate’s a portfolio company. Why did you decide to do it on syndicate?
One of those things is, again, I want to push the space forward as much as possible. And I know syndicate obviously isn’t NFT focus. It’s DeFi. But that’s one of the ways. We push the space forward. We use the systems that we’re building. I come from traditional finance. Everybody has used the bank. We all know how frustrating that can be at times. So, it’s like the faster we can get these protocols up to par with the experience of running something in the legacy system and making it better, the faster. We’re going to iterate better versions of it faster. So, to me, it’s really about pushing the space forward and like, “Let’s bring on the brave new world that’s coming that some legacy institutions are so afraid of.”
I love that. That’s really awesome. And I guess just switching gears a bit, what was the worst NFT trade, I guess, you’ve made? I mean I feel like at some point you probably start aping so many things that a lot of the graveyard’s probably filled with a lot of things that aren’t too important. But are there any projects you invested in on the NFT side or NFTs in particular that you thought were going to be a big deal but frankly you got wrong?
I’m trying to think. I guess the trader in me. I’m just used to like if I have a bad trade, I reflect on it. I learn from it. And I move on. So, I just don’t know if I dwell on past trades. But I’d say for a little while, I think in, let’s say, mid-February to beginning of March I was aping into a lot of stuff. And I’m like, “What am I doing?” I’m like, “This is just me trying to make a quick flip or something trying to play hype.” And then, I was like, “You know what? I reevaluated.” And I’m like, “I’d rather be spending more and buying something of significance rather than aping into a random celebrity drop that probably doesn’t have any residual value.”
Yeah. No. I was thinking about the other day all the random, “Hey, I’ll just grab a bag of this or a bag of that.” That really adds up.
Oh yeah. And the worst part is it’s not liquid. So, if all of a sudden, you’re like, “It’s one thing to be in an altcoin,” and you’re like, “All right. Well, this isn’t working out the way I expected.” You have some liquidity to get out, maybe not at the prices you want. But with NFTs, you might look, and there’s no bids. So, it’s a very binary event.”
Yeah. No. You’re totally right there. I mean the other thing that comes into this is just the pricing issue. We invested in Upshot which basically kind of makes it so anybody is incentivized to share what they think an NFT is worth so that we don’t just base the NFTs on their last sale price.
And I also think really cool projects like fractional will also kind of help drive accurate price for entities because more people have access to buying pieces of it. You can more accurately price it. Do you think pricing now is an issue for NFTs?
Pricing in the sense of what? Because-
I guess just appraisal that when I pull up zapper, I know exactly what my tokens are worth. When I pull up with my NFTs like so my Gods Unchained cards, I’m only seeing basically the price I paid for them which is tough.
So, I think the thing is the pricing becomes an issue, and this is kind of where is the ball going. Pricing is becoming an issue and people want to get real-time appraisals and quotes on it because people want to start using them as collateral because then, it becomes more useful. You can get a yield out of it if you can borrow money against it and let’s say yield farm with it. So, to me, it’s definitely an issue.
And I think there are a lot of smart teams working. I think the team, Nick and the team and Upshot are doing a cool thing, and we’re going to see how that plays out and fractionalization. I think one of the things with fractionalization that we’ve seen is that there isn’t enough liquidity on these fractionalized NFTs where you can’t get a big position if you wanted to without moving the market too much.
So, I think that these are all issues that people will definitely solve. And I think as they solve them, the capital efficiency increases. So, I think that we’re moving towards a world where this happens because you think about the traditional art market. And if I wanted to get a loan against, let’s say, a Nonet that I had in my apartment, I could definitely get. It would be expensive. I’d have to get an appraised. I’d have to get it insured. But the transaction cost, even though it’s high, it’s still low to the relative value of the painting whereas if I had a $10,000 painting in my house, I wouldn’t be able to get a loan against it because the cost of getting it appraised and insured would probably be worth more than the painting is worth.
So, I think we’re just going to start seeing that scale down to the lowest end where it becomes affordable for everyone which is kind of what we’re doing. It’s kind of evening the playing field and giving these tools that were once available only to the richest most powerful people in the world available to everyone. And I think that’s why you’re seeing this move towards all these different protocols which at some point we’re going to get it. Which iteration of it will it be? I don’t know. But I’m trying to find the teams that I think are most likely to get it right.
Yeah. I love that. And I mean we’re going to have Andy on a Fractional who’s also a part of the NFT fund. But I wanted to get your take on it. And I mean I love his approach because I love how they put the pieces back together. But I don’t want to share too much on that. I’ll let him share what he wants to next week on the pod. But I guess would you ever consider fractionalizing your own Punk? I mean you get potentially a better price. You can get some exit liquidity because right now, there’s only probably a couple of people, just a handful of people around the world that would want your Punk at a price that you’re willing to sell it. But I’m sure there’s a lot of people that would want to “ape in” at for pieces of it.
Yeah. So, it’s really interesting. It’s something that I think about a decent amount of time. I spent a decent amount of time thinking about would I fractionalize my Punk? Most likely not. What I would probably be more interested in doing is maybe creating some sort of social token around my Punk? I haven’t really thought about it extensively. But I do know that we’re in a new paradigm where I think NFT personalities are probably going to be way bigger than people think. And I think the upside that’s going to happen is going to be way higher than most people think.
Do you mean that in the sense of your NFT having its own personality, being able to go to events, things that we kind of envision in that crazy Black Mirror VR world of the future?
Something along those lines. I don’t think that there’s any reason why we can’t have an NFT influencer the same way we have a social media influencer on Instagram or TikTok or something where this NFT has its own personality, its own brand. It represents whatever the creator wants it to represent and people follow it. If it resonates with enough people, those people will be interacting with it because it has an experience that they want to be entertained by.
I love that. Yeah. I’m still trying to figure out how manual that is. Do people go on a site, and they say, “Hey, GMoney, I want to borrow your Punk for a day. I’ll give you yield,” or if it’s AI infused where your Punk is out there doing its own thing of concerts and meet and greets, et cetera, and getting a yield or a mix of both. I don’t know where we are in that level of technology right now.
Yeah. I mean I think it’s going to become more and more interactive over time especially from the stuff that I’ve seen of people approach me with and talks that I’ve been having. And I think there’s a monster space. And I think it’s closer than many think.
Yeah. No. I’m with you there. And I guess one of my last kind of questions for you is just on L2s. I mean there’s a laundry list like Optimism, Polygon, Arbitrum, zkSync. There’s a bunch, and your point earlier is really important. I was trying to buy Gods Unchained cards over Christmas. And I wanted to buy $5 cards. It’s like $6 in gas fees. So, I would never buy them to play with them. How important are L2s to the NFT market?
Again, I think it depends what end of the spectrum because for high value NFTs Punks, I wouldn’t want an L2 Punk. I want my Punk on Ethereum. That’s where it was born. That’s where it was made. That’s where I want to transact on it. But there will be use cases your WAX, Your MADEX, your flows that literally the transaction costs are lower, the throughput’s higher so that it allows for your everyday person to do millions of transactions a day or billions of transactions a day at scale.
So, again, I think it’s super early to pick one horse in the race. You could have maybe flow becomes the sports moments chain and WAX becomes the video game chain. I think the space is big enough. And I think down the road, ultimately, people won’t know. 20 years from now, I don’t think people will be like, “Oh, I’m playing this game or I’m trading this asset,” and it’s on this chain. We’re not going to know what chain everything is on.
Right now, we know because we’re in the process of building it, and we need to know how everything integrates. But I think once you have a more finalized version of all the products, people won’t even know that they’re dealing in crypto. It’s going to be a very seamless experience.
I love that. And I guess we’re really early in the NFT space. When I look in the NFT on OpenSea, I could see the trades. And I could see X% of the group have this trade, X% of that group. When do you think we get to a point when NFTs themselves start to trade on their inherent value, I guess? Based on their trades, based on their functionality, stuff like that. I mean. Axie is a pretty clear example. Illuvium is another clear example. You’re going to buy an Axie, and you’re going to be able to yield on that depending on how strong it is, how rare it is, stuff like that.
When do you think we actually get to a point when all that stuff is fundamentally priced and be interesting given your take, given you come from traditional finance.
Yeah. So, I mean I think you have different types of assets because what’s the fundamental price of a CryptoPunk? You can’t really base it on fundamentals. You can’t DCF it with a spreadsheet. But you can DCF the yield that you get from Axie or an Illuvium asset because what your yield is, what you’re going to pay. And then, you could DCF that to the fair market value.
And also, for art. Art is very subjective. In the traditional art world, people tell art is worth whatever people are willing to pay for it. There’s no fundamental analysis on it. You can compare it to similar pieces, and you can do the same thing with NFTs and collectibles. But ultimately, it’s how scarce is something and how much do people value it.
So, maybe you start seeing a leg up in Punks if you can use them as collateral or you can use them for yield. And it’s, all sudden, a collectible that otherwise didn’t throw off any free cash flow, all of a sudden has some sort of yield that would add to the value of what’s already there. So, I think as you get more and more functionality and you’re just going to have different mechanisms for pricing stuff. And you see that in traditional equity as well where, let’s say, a SaaS company that is in a high growth period.
The PE doesn’t matter. It’s more about the price to sales. It’s more about what’s the year-over-year growth whereas if you’re looking at a Coca-Cola, you want to know how much earnings does it make per year because you want that dividend. So, I think different asset classes of NFTs will be valued differently. And yeah [crosstalk 00:58:26].
My bad. No. I totally agree. It’s kind of funny you bring up the growth. I feel like whenever you can accurately value something on a fundamental basis, it’s probably a mature industry that you’re not going to get that much gains. AWS has been valued based on it’s year-over-year growth on AWS forever. We’re not exactly expecting dividends from that. And frankly, it’s been out-performing [inaudible 00:58:47] world forever.
Yeah, for sure.
And G, sorry for keep going, man. But I have you. The last set of questions for you, just sound like the creator coin world. I’m so bullish on the creator economy. You bring the barriers down to nothing. You could have anyone start up their brand and get cash flows for their specific work, and they have the whole internet to kind of feed them and grow with them.
But I feel like to date, it’s been pretty botched on its delivery. I don’t exactly say the crypto community using BitClout in a big way. I don’t really see a ton of value flows the right way. But that also might not matter right now. What’s your take on, I guess, just the creator economy? And what are people doing right and wrong?
I think it’s still really early. I think that there’s definitely demand for it. You saw what happened with BigClout and how people were going nuts for the creator coins. And whether or not they did it right or wrong remains to be seen. But there’s a ton of demand for it. So, there’s definitely going to be right ways to do it and wrong ways to do it.
I do think there’s a huge value add to having your fans own not necessarily all of it, but maybe a piece of “the value accrual of the brand” because then you kind of have this army of people that are helping you and helping you grow your brand. And I can’t say I’ve seen anybody really crush it.
But I don’t think I’ve been paying close enough attention yet. But I’ve been circling around it because I think it’s something that not only am I looking it out for myself but just I want to see as bigger and bigger brands come into the space, and they have, let’s say, a user base that they can monetize and how they do it without alienating the user base because it’s kind of what we were just talking about is if I’m going to do a drop and I’m going to just dump it on my fans and just walk away, you’re alienating your user base.
And there is a blog post that’s all you need is 10,000 die-hard fans where it’s like you can start a sustainable career with just a fans. It’s either 10,000 or 1000. But it’s much smaller than we think because we’ve been taught for the last 10, 20 years that like, “Oh, you need to get scale. You need to get scale. You need millions and millions of followers.” But that’s not necessarily the case. You just need a small group of followers that are avid supporters and love your work, and they are die hard.
And then, from there, the fan base can grow. Whether it grows or not is irrelevant. But I just think that we’re going to see more and more experiments in the space of how people are using these communities to kind of help grow the communities faster themselves.
Yeah. No. You bring up a really good point for established brands, and those moving to the space. I guess a different question for you though is the people just starting out, the 18 year olds, the 19 year olds, the artists, the writers, the musicians that aren’t big. Do you think that they emotionally or culturally understand that their boss is the world. If they screw up, it’s the whole world that’s going to hate them and not them. It’s not just a boss that you could put your two weeks in and hop to the next job.
But now, you’re accountable as a creator to the world. On the flip side, you can get a ton of attraction, give them all upside ton of liquidity. But on the other side of this, if you screw up, the world is going to really hit you.
Right. Yeah. I mean it’s interesting that you bring that up that I haven’t thought about it before. But just thinking about that reminded me of that one Black Mirror episode where we basically had a social score where they-
Oh, man. Yeah.
[crosstalk 01:02:53] you can upload and download people, and it’s in a Dystopian society. All we care about is what our social score is, and that’s kind of what a social token is per se. I mean I guess maybe the optimist in me is thinking the good that it could do, and people might be less likely to do bad shit to people. You’re not going to screw people over as much or as willingly if you know it’s going to affect your social token or whatever. You might want to make better decisions.
And they would also just lose a lot of money.
Yeah. And that’s besides the monetary factor. But I think with that comes the realization that not only would you lose money in the short term. But you probably lose on opportunities in the long term. And you see it with a lot of celebrities already and people. We all have an Instagram influencer friend that’s like, “Oh, is that on brand?” It’s like people think about these things and maybe they’ll be thinking about it more as there’s more of a monetary effect on it.
Yeah. No. I’m totally with you. I just watched Love, Death & Robots season two. So, I’m still getting through that, let alone Black Mirror. It’s all good points. G, this is awesome, man. We’ve covered a lot. Is there anything I missed or forgot to ask? We went all over the place.
Yeah. No. I mean I thought this was really comprehensive. I thought your questions were great. I’m looking forward to knocking the ball out of the park with you, guys, and interviewing and talking to as many teams as we possibly can and helping push the space forward.
Yeah. No, man. We’re super excited to have you and work with you and amp to do this again soon. And just full disclosure for everyone on the pod, Delphi Ventures invest in syndicate running and invested in Delphi Infinity with GMoney. And I think that’s all on disclosures. We can see the show notes. G, thanks so much for coming on, man.
Awesome. Thanks for your time.