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On this episode of Okay, Computer. Dan talks with CoinShares Chief Strategy Officer Meltem Demirors about the expanding domino effects from the crypto crash (1:07), why VC capital is still flowing into crypto and web3 startups (10:14), how past financial frenzies & bubbles may help reveal what’s ahead for crypto (15:35), what crypto companies can do to start creating true value with their products (18;12), and Meltem helping spark a new surge in interest for CryptoDickbutts and what they say about the future of cultural capital and memes (28:08).

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Show Transcript:

Dan Nathan: [00:00:36] Current Ad. All right. Okay, Computer, we’re back. I took the week off last week. And let me tell you something, we have a very, very special guest, Meltem Demirors. She’s a co-host of this fine program, but she has not been on it in a very long time. Meltem I just went back and looked. May 18th, last time you were on. Okay. Computer. [00:00:57][20.8]

Meltem Demirors: [00:00:58] Dan, what are we doing? I’ve missed you, fam. [00:01:01][3.2]

Dan Nathan: [00:01:02] How’s your summer been? What’s going on here? [00:01:04][2.1]

Meltem Demirors: [00:01:05] I mean, I’m not going to lie. It’s been weird. [00:01:08][3.1]

Dan Nathan: [00:01:09] Really? Good weird or bad weird? [00:01:09][0.0]

Meltem Demirors: [00:01:11] A bad weird. So May 18th, that is right when Luna and Luna Stablecoin Terra started to unravel. So basically, what have I been up to? While first Terra unraveled, the stablecoin that was collateralized with shitcoins and bitcoin basically lost its peg, saw mass liquidations, then Luna itself, which has close to $30 billion market cap became worth zero within the span of a week or two, tried to launch a v2, also worth zero. Then a bunch of firms became insolvent and announced their insolvency. Notably, it started with Celsius that it was three, Celsius, operates more like a bank, took in customer deposits, didn’t hold those deposits, gambled them effectively, then three arrows which was operated kind of like a family office principal capital plus some external capital, a large market maker, they became insolvent and left about 4 to $5 billion hole in the crypto market. From there, a ton of other platforms in the space became insolvent and I spent most of my summer trying to plug holes, fix things. [00:02:27][75.7]

Dan Nathan: [00:02:27] Let’s put all of that in some context because that was kind of a succinct domino effect, if you will. It was all the FUD that existed about some of these, starting with the stabelcoins you’ve been on, on the tape, an okay computer with me, it feels like now a dozen times over the last year. And you know, my co-host, Danny Moses on on the tape, he’s brought this up with many of the crypto folks who’ve come on talking about Stablecoins and what they’re backed by and what the knock on effects if there was a run on that. And so I think the way you just laid out what happened starting in May into is still going on. There was Voyager. There’s a bunch of other failures of some of these other counterparties, if you will. Is it fairly well contained? And that that is a term that goes back to the financial crisis. Remember when the Fed famously said that the subprime situation was contained? Do you feel that like some of the mechanisms that were in place to guard against, I guess you would call it, a domino effect of something kind of bubbling up. Did they work properly? [00:03:25][57.9]

Meltem Demirors: [00:03:26] That is a great question, Dan. And okay, containment I think is a bit challenging here. One of the important issues to untangle, and I’m going to do my best to sort of untangle it for the listeners, there is a fundamental difference between on chain finance, which requires, by its very nature, instant settlement. It requires in many cases atomic swap and in many cases a lot of on chain crypto finance today requires full collateralization or over collateralization. There is a fundamental difference between what’s happening there and what’s happening off chain, which all of the institutions, firms, entities we are talking about in this instance operated off chain in the sense that yes, they had cryptocurrencies, but their books, the way they operated, everything they did was done off chain. And in fact it was the entry of traditional capital markets practices into the crypto space, quite ironically, that resulted in this series of implosions. And then in our Archagos like situation, what we had was an institution that had an enormous amount of leverage. There was no visibility into this leverage. On the flip side, I think crypto lenders became very loose with their capital. They were chasing yields, everyone was making a lot of money. And so risk management practices sort of went by the wayside. Aside little bit. This is like 2008, why did Archegos happen? We all got low happy. And so from a technical perspective, there is still fundamental the same premise of on chain finance, providing more transparency and making it impossible to have these types of systemic unwinding holds true. The issue is that in order to make crypto capital markets efficient, we started to centralize and introduce some of these organizations and entities that applied leverage without requiring collateral, which ironically resulted in these cascading liquidations that then sort of caused the whole space to become a bit unstable. And so, again, it’s not that the premise of crypto and on chain finance or, as we call it, decentralized finance is in any way, I think, diminished by this. The issue is in order to make crypto more efficient, we need to have more traditional financial practices and those are not managed well like Coinshares is publicly listed in my firm is a lot of work with to provide a lot of transparency. Coinbase has publicly listed Galaxy’s publicly listed. Voyager was although you know that didn’t stop them from doing not so wise things that their balance sheet was not a criticism but it could have happened to anyone. And so I think the issue is the level of opacity and the lack of understanding of these business models has resulted in people making certain assumptions, never taking the steps to prove out those assumptions. And as a result, when people got margin call, they didn’t have it. [00:06:45][199.2]

Dan Nathan: [00:06:46] When you were on on May 18th, you said something I thought was really interesting. You said greed is a flywheel that drives much of crypto innovation when you think about it. Like, if we want to put all of that in some sort of context that just happened, it’s going to be a bit of a blip, like a footnote in the journey or the development of these protocols and how they kind of compete with traditional finance and how they evolve and become mass use sort of things. And at the time it’s kind of interesting because Bitcoin had just come in from like 50,000 to like 30,000. And at the time you said you’re always a net buyer of Bitcoin, but I think not yet. You thought it was going a bit lower. Was that because you thought this was going to take a bit more time to kind of work itself out? When you think of the collateral that’s being used for a lot of these defi protocols, that sort of thing, it’s a lot of bitcoin. And so you thought that if there’s more unwind to come, that there’s going to be downward pressure on Bitcoin. [00:07:39][53.3]

Meltem Demirors: [00:07:40] And I think, by the way, Dan, when we talk about these cascading liquidations and this forced selling working its way through crypto markets, I don’t think that’s necessarily over. So the insolvencies have started. Several companies have filed for bankruptcy protection to give them time to work things out. As you and I and many other people who listen to the show know, going into bankruptcy and hiring a restructuring firm basically means that, you know, .40 to $0.50 of every dollar are going to end up going to the lawyers and the firms for doing doing the restructuring. I mean, look at Mt. Gox, right? When Mt. Gox exploded, that had a very, very dramatic impact on the level of confidence in Bitcoin, in particular capital markets around Bitcoin. And we still haven’t settled Mt. Gox. Creditors of Mt. Gox are supposed to get paid out in the next few weeks I believe. That’s a lot of Bitcoin, by the way, that’s going to get given to people. It’s a lot of cash in Bitcoin. It’s going to get handed out, but that’s seven years almost. So it’s going to take time for this to work its way through the system. And the bigger question is, and one thing we’re still untangling, because it’s so unclear because this was done all off chain. Right. We can try to do some blockchain forensics to see where assets moved, how many companies, how many projects had Treasury, capital or parts of their balance sheet at these firms? How many of them chose to bank with Voyager or with Celsius or with other institutions that were acting like interest paying banks, but not managing deposit capital or risk capital in the way FDIC insured bank would or, you know, a bank with a charter would. It’s going to take time to unwind. The other thing we have to remember is a lot of people who may have deposited assets in these different places don’t need cash right now, or maybe they’re not looking at their portfolios. Typically in crypto bear markets, what we see is people kind of pretend their crypto portfolio doesn’t exist because it’s painful to look at. I myself have been guilty of it. And then when the next sort of market run up comes around, they’re like, Oh, wait a minute, yeah, I had an account here, I had an account here. They got to log back in. They want to withdraw their assets, they want to cash out. And so all of a sudden you find you may not have any assets to withdraw. So unclear. The story is far from over, but I think the bulk of the damage has sort of been contained. The question ultimately is who’s going to be left holding the bag? In the case of Blockfi, FTX stepped in, bought the company for pennies on the dollar. Investors got screwed. So the billions of dollars that went into the company wiped out. But at least customers will be made whole. In other cases, no buyers. [00:10:20][159.9]

Dan Nathan: [00:10:21] Some of the stuff that we’ve seen lately reports about capital going into VC, blockchain, web3, whatever, wherever you go, it’s looking pretty decent this year. And aren’t there a number of examples where VC backed sort of projects over the last few years have just. Absolutely imploded. Are you surprised, looking at some of the headlines that we’ve seen of late about the capital that continues? I saw there was a story in Axios. It’s a pension funds are beginning to dabble in crypto investing opening the door for a broader discussion about whether investment managers should embrace the risk profile of digital assets. And that’s primarily, I think rather than like coins, they’re talking about VC investing here for the most part. And is it that you’re just going to have new cycles of capital that are coming into it and then maybe they’re better informed because they’re literally seeing some of the kind of earlier projects of the last few years that have imploded and how to do things right going forward. Is that part of it? [00:11:12][50.6]

Meltem Demirors: [00:11:12] Absolutely not. Sad to say. Okay. [00:11:15][2.8]

Dan Nathan: [00:11:15] We’ll continue to make the same mistakes over and over, right? [00:11:17][2.0]

Meltem Demirors: [00:11:18] 100%. Okay. So here is the current state of crypto venture capital. It has been an asset gathering game. There’s a barbell happening. There are smaller funds in the space that are sub hundred million, that have smaller vehicles, very focused. And then there are these mega funds that basically should have raised probably 100, 150, but could raise more. And they gather that AUM. I do think that the 2021 vintage of crypto funds is going to be one of the worst performing of all time. The issue is, and I thought the episode you and Rick did with Josh from Lux Capital was great. [00:11:54][36.2]

Dan Nathan: [00:11:55] Yeah Josh Wolfe. [00:11:55][-0.2]

Meltem Demirors: [00:11:55] Yeah, yeah. Josh Wolfe, I thought it was great and spot on. There is way too much capital right now, chasing way too few opportunities and as a result the ROI of investing in new protocols and new tokens is going down. And so the question is, when you have a ton of capital chasing an opportunity that has been widely publicized that everyone knows about, of course, inevitably valuations are going to go up. Competition to get in is going to go up. It becomes a social network driven game, it becomes a marketing and narrative driven game. And it’s no longer about the returns. The returns start to diminish. And so where I think the value is and as an investor or I’m going me with my very small funds or where I am going is to places where other people are not. Because I think the pendulum of where money is going to be made is very quickly shifting. By the way, all of those investors in Q3 and Q4 that were fundraising their mega funds had marked up positions in Luna, Zero, Avalanche also down massively and a ton of other projects that six months ago, nine months ago were printing returns. Right. So they’re printing these marks. They’re not realized. And I think investing in equity venture in the crypto space has also not been without issues. I think, you know, Blockfi is an unfortunate example. The Voyager, an unfortunate example. Even growth equity investors who invested in Coinbase pre IPO say they invested at 10 billion, 12 billion, 15 billion. Coinbase, where it’s trading right now. Right. Like so many tech IPOs, you could potentially be underwater. And I think if we look at the performance of just generally tech IPOs funded by mega venture firms over the last four or five years, the returns, the performance over a longer period of time hasn’t been phenomenal. And again, I’m curious to see what returns to our peers will look like. Even on the allocators side. I think a lot of allocators by brand and marketing rather than returns, there is less risk in buying A16z crypto or buying Sequoia crypto or Bain Capital crypto than there is buying an unproven manager, even if the returns are subpar. That’s not to throw shade at any firms, but I do think valuations are still insane, so I’m not really sure how people plan on making money. There needs to be, especially with tokens, you’re relying on kind of a greater fool theory right now because there isn’t organic demand for many of these tokens outside Bitcoin has organic demand, Ethereum has organic demand, maybe a handful of other tokens do, and that takes time to develop. So again, not a criticism, but for a lot of these investors, I’m not really sure how investing in yet another layer one protocol at a multibillion dollar valuation is going to result in delivering significant returns to LPC. [00:14:49][173.4]

Dan Nathan: [00:14:49] You make a great point though. I mean, if you think of like growth stage venture investing over the last few years in the exits, they haven’t been great and there’s been some fabulous blowups. If you think about Uber and we work and then some of the IPO exits like you’re talking about Coinbase or Robinhood, I mean, the list goes on and on. In the fintech space, they’ve actually been disasters. And then if you want to go back and look at some of the more consumer facing like SNAP that went public in 2017 at 17 bucks is trading at ten today. I guess my point is there aren’t too many situations over the last, let’s call it five years where those public exits have been home runs unless you were able to sell a high in the public market. Let’s just talk a little bit about it seems like FTX has been this kind of buyer. Of last resort of all these blow ups. If things break, I mean, who else is out there? I think it was like a few weeks ago, Brian Armstrong, CEO, founder of Coinbase, they were talking about layoffs there. They were talking about bracing for a crypto winter. Define that. What does that mean in a way? Because for all intents and purposes, crypto is in a bear market. We just talked about VC capital and there is plenty of it that’s designated for this. We just talked about how the 2021 vintage VC funds is going to be not particularly pretty, but we’ve seen hundreds of millions of dollars raised by some very high profile investors Chris Dixon, Katie Hon, Ali Ginn. I mean, these are all big funds, right? And so focused on a thing called Web3 that it seems to be something that is not pretty well defined at the moment. And so I’m just curious, are those sorts of funds that have been dedicated, do they help put a bottom, at least from a sentiment standpoint or some of the projects that are going on? I’m just curious, your thought process and and really, what does a crypto winter mean? What does it mean to you over there at Coinshares? [00:16:38][108.9]

Meltem Demirors: [00:16:39] I want to go back to a mental framework here. I think frameworks are really helpful. So MIT researcher Carlotta Perez wrote this great book about a decade ago called Technological Revolutions and Financial Bubbles, and it uses a lot of historical anecdotes from the railroad stock in the 1920s, the 1930s tech stock boom and subsequent burst. But basically the idea is any time there’s a new technology, there tends to be this frenzy of financial speculation around it, people throwing money at it. The paper value of that technology decouples from the actual production value, and that goes on for a period of time. Then people kind of take a step back and they’re like, Wait a minute, these things are so out of alignment. The paper value bubble pops, paper value drops and production value starts to catch up because all of the stuff that’s been invested in starts to get built out and the to get re coupled together. And then that cycle repeats and repeats. And the idea is, is that as these technologies mature, the magnitude of those bubbles and the size of those discrepancies gets smaller and smaller until the technology is sort of quite mature. It’s fully integrated into the economy and the paper value and the production value of that new technology innovation are aligned. So I think if we look at crypto through that lens, it’s helpful. And Fred Wilson at Union Square Ventures has written about this as well, using the Carlotta Perez framework others. But if you haven’t read it, go read the blog post about it. Carlotta Perez It’s like a great ten minute read. [00:18:18][98.9]

Dan Nathan: [00:18:19] Ben Thompson from Stratechery has a great one from 2021 also on the call letter. [00:18:24][4.8]

Meltem Demirors: [00:18:24] He’s a great writer as well. Yeah, a lot of people use her framework if we view the last 18 months through that lens. And as I’ve said many times on this show, crypto, it has cycles, right? It is cyclical nature, but there is a broader secular trend. So if you zoom out right, if we look at Crypto’s trajectory, it is up and to the right. If you zoom in on specific two year cycles, we see literally you can see this trend. We see these massive spikes in valuation, in investor dollars. All of these metrics you can look at and then we see that bubble pop. So what I think we’re seeing now is like last year was exuberant, it was ebullience, whatever you want to call it, it was frothy, frothy, frothy, frothy. I think throughout the course of this year, we’ve started to realize a lot of these things that we’re being sold on. A lot of it was driving this crazy frenzy of speculative capital is not yet there. That value is not going to be realized and a lot of these things probably will never exist. There’s also a lot of like scammy behavior. There’s always snake oil salesman and saleswomen that emerge. I try not to be one. [00:19:33][68.5]

Dan Nathan: [00:19:33] We’re going to get to one thing you’re selling that I’m buying that I’ve been a buyer of. But we’re going to do it. I think the equation is one D equals one B, but we’re going to get we’re going to we’re going to we’re going to get there. We’re definitely a good brand. [00:19:44][11.4]

Meltem Demirors: [00:19:45] Oh man that’s going to be my legacy. [00:19:46][0.6]

Meltem Demirors: [00:19:47] But but when these bubbles pop, so I just want to finish. Okay. So when these bubble does pop, basically what’s happening is like the market is realizing, okay, the bubble has popped. Now we have to actually build shit to catch up with this value that we have prematurely created. And so I think when you look at these companies, basically what we’ve realized at Coinshares, what Coinbase is realizing, companies in both the public and the private sector is like, okay, we can’t rely on this inflow of speculative capital, continuing to pump up prices and continuing to provide us with cheap capital. Right. So it also goes back to the capital asset pricing model. Weighted average cost of capital is really important. Inflation is rampant. So rates going up. Right. Makes capital more expensive. So if we look at work or the weighted average cost of capital. The cost at which companies can acquire either equity or debt. And in the instance of crypto, companies sell tokens. Capital is getting more expensive, so you need to conserve the cash you have on hand because you don’t want to pay a really high cost of capital because it’s going to make your venture unprofitable for you. Why put in sweat equity if you’re not going to make money? That’s not logical. And so I think what we’re seeing is people recognizing, okay, bubble has popped. We need to actually produce value. Whack rising costs, capital rising. So you take those together. And I think a lot of people are taking a step back and saying, okay, cut the fluff, cut the bullshit, cut the marketing, cut the whatever projects, cut the sponsorships. All of that crap that literally was just about marketing and inflating prices. And let’s actually deliver things that create value so that production value can be realigned with paper value that’s been created. That’s it. That’s my view. It’s very simple. [00:21:30][102.4]

Dan Nathan: [00:21:31] No, no. And that makes a lot of sense. And couple of things have happened. You just again, we started the podcast with you kind of putting a nice little summary around all the disasters that happened in May and June and what kind of what could happen on the back of that? I think there were a couple other things that are really important footnotes. I think Tesla, who had put Bitcoin on their balance sheet, sold some in, I think early 20, 21, shortly after they bought it, saying Elon Musk saying they’re not going to sell, selling most of it in the last quarter. And then also, I think it’s interesting that Michael Saylor of MicroStrategy that’s leveraged his software company, his entire balance sheet, a company that he had been the CEO of a long time. And he sold equity, he sold debt. He leveraged the Bitcoin that he bought to buy Bitcoin. He stepped down as CEO of that company. I think these are going to be important footnotes. Now, they say they’re not selling it, but they might look to hedge a bit of that on their balance sheet. And then also, when you think about retail, I mean, retail, you talk about bag holders. I mean, it’s retail. I mean, retail are the ones when you talk about during these crypto winters where people who don’t look at their holdings, right, they don’t open up that account or whatever that means you’re diversified, that you have the ability to do that right as a percentage of your investable assets. That’s not going to change your life if it goes down 70%. And when you think about where some of these coins are, I mean, they’re down 80, 90%. There are Nasdaq stocks, household names that are down 80% or whatever. Now, if you have a stock portfolio, it’s probably most of your investable assets and you got to look at it every day. But if you have a crypto portfolio and it’s 5 to 10%, which I think that is probably on the high end of what someone like you have been advocating for people to participate in this over the last few years, single digit percentage of your investment, then you can do that during a crypto winter. Then you can not open your Coinbase account or Coinshares account or coin, whatever account. And you can you can wait it out, right? And you can kind of find some of these things. So to me, I think it’s unfortunate that retail is probably kind of wiped out. [00:23:26][115.4]

Meltem Demirors: [00:23:27] But I think again, what you’re highlighting and I think what’s so interesting in listening to your podcast and guests from other industries, this is not unique to crypto. Is this in every industry who are the bag holders on Tesla? Who are the bag holders on Nikola? Primarily retail. And look, at the end of the day, right, if you read about Market Microstructure, there are different types of traders, like the futile traders are typically driven by unrealistic expectations. All it takes is a few stories of people making life changing amounts of money on Shiba Inu or Dogecoin or like insert shitcoin here. Everyone probably has someone in their social circle that made a life changing amount of money on a questionable scam. Cryptocurrency or a real cryptocurrency. You probably all know someone in your life who has made a life changing amount of money on Bitcoin or ethereum or something else. And so I think that sort of behavior gets replicated and replicated until it spirals out of control. It happens in every asset class we see in every cycle. I don’t think it’s unique to crypto. What makes us so interesting in crypto is the velocity, the speed at which it happens is just greater and the channels through which it happens, right? Like we had investment banks writing buy recommendations for Tesla and insane valuations. There was one portfolio manager who I will not name who’s been very bullish on things that have performed very poorly and has publicly articulated this and encouraged people to buy these things. I think same thing with crypto. It’s just that it happens on social media and in a way that is driven by means and this is where you can get into one D equals one B and like the memes and the channels of propagation in crypto are very different than Tradfi. It’s the same thing. It’s just different people hawking it, it’s the same behavior. But instead of like your boiler room folks, instead of your teams, instead of your tradfi pundits who go on TV to show their portfolio, you have people doing it via memes and funny videos. And these new sort of mediums that I think from the outside looking in look absurd. It’s the same thing, just a different medium. [00:25:34][127.1]

Dan Nathan: [00:25:35] I’m part of the financial media, if you will, the traditional financial media. And I get it like shilling your bags or this and or whatever. I mean, listen, you know, one of the reasons people tune in to any of that stuff is they’re looking for like people that they trust, that they find interesting, that they maybe find funny or whatever the hell it is they think are good at doing the thing that they want to do. Right. And so to me, I agree with the different channels. For whatever reason, it just seems a bit scammier on some of these new channels, maybe because they are so new to us. And so you guys, what do you call the D jens, the d jens, the this or that or whatever. [00:26:07][32.8]

Meltem Demirors: [00:26:08] D jens, we’re trash pandas [00:26:08][0.0]

Dan Nathan: [00:26:11] Your trash pandas, your d jens. So the other day I was on vacation and I didn’t see it until a day or two later here. But you posted, I don’t know, was it an emergency? Twitter spaces here. I’m looking at the tweet right here. You took a picture of it. Just something you kind of handwrote Sunday worship in emergency spaces. Discuss the prophecy and the epic bang one D equals one B, get in here. Tell me what was going on. Why did you decide to do this? It was a Sunday here and then there was decrypt wrote an article because I guess, as you kids would say, the crypto dipped but started pumping a little bit after this. So what happened here? [00:29:19][187.9]

Meltem Demirors: [00:29:19] I am so happy this is my calling card. First I was the lady who said Shitcoin in congress. Now I’m the dick Butt lady so my track record really is just perfect Dan. Okay, so here’s what’s happening memes are culture. Memes are the transmission of new ideas and memes are also becoming money, right? One of the coolest things that is happening with NFT is, is we are turning cultural capital into financial capital and we can now trade culture and memes in the form of an asset. And actually I will put the link in the show notes. I’ll send it to you. I just wrote a great finance driven blog post about Market Microstructure for NFTs using Crpto dick butts as an example. But what I liked about these cute little pixelated cartoons that use one of the old lists, internet memes. By the way, Casey Green cartoonist created Dick butts. They became an Internet meme through this cartoon. Reddit really helped propagate the meme, but this is a very, very old Internet meme, just like dancing, baby and cat and some others. And so these little pixelated characters were created, 5200 of them. I don’t know where the number came from. The 5200 of them, they were minted in August of last year, started minting or I think point to ETH at the time it took the collection six months to mint out like people are not excited about it just random people bought them, thought they were funny, thought they were cute and I discovered them in November. Didn’t mint any cause I was doing other things. I didn’t really get into the NFT as I was busy with ether rocks. But then in February I was like, These are weird. I’m into it. Let’s see what’s going on. My premise is that the strongest memes will create the most value. So the cultural capital that is getting created around NFT is a lot of nfts are trying to have like road maps or utility or do all these things, but all the financial value has already been extracted. Crypto dick butts there is no roadmap, there’s no utility, there’s no token, there’s you don’t get a tote bag or T-shirt. We ain’t got shit. It’s just a funny meme. So it’s really interesting what started happening as people started getting really interested in them and a group of us started getting excited about them. We talked about this. It’s like, How do you make the meme as absurd as possible? We started hanging out and having little events. We threw an event in New York in May that was mostly funded by individuals who donated to this cause. I hired ballet dancers and we did this whole, like, eyes wide shot a cult ceremony thing to just try to amp up the memetic value here. And people responded to it. So this Sunday, for some reason, like we hit this interesting cultural inflection point where there was just this mass of people who all collectively decided, I want in on this meme. I want to be a part of this this joke of this moment in time. And so for me, what’s interesting about participating in these things and sometimes helping propagate them is it’s so interesting to observe how cultural capital memes and financial capital can converge in these really interesting moments in time that lead to this convergence or cultural consensus around a specific meme and then cause that thing to go crazy. We saw with Dogecoin we saw it with Shiba inu, we’re now seeing it with crypto dick butts. It will happen time and time again. But delving into that and really understanding it is very fun. Also, I don’t want to talk about more tokens. I don’t want to talk about all of these companies that are financially insolvent. Like I want to laugh with my friends on the Internet. So we’re trying to spread some levity. [00:33:11][232.4]

Dan Nathan: [00:33:12] But why do you have to pay 2 eth to do it? So when I bought my number three two, two seven, which is a beautiful, clean dick butt that you helped find for me, isn’t there a way to participate in the meme and not actually have to commit so much capital to it? And here’s the other thing I’m looking at on Open sea. I’m looking at the properties of number three, two, two seven. Again, a very clean crypto dick butt and it says that 86% of crypto dick butt they have a butt only. 49% have a dick. And so, like to me, there’s something off there. And I’m just curious because mine both has a dick and a butt. Doesn’t that make it more valuable? [00:33:53][40.7]

Meltem Demirors: [00:33:54] No. So thesis on NFT is that it’s not a grill, it’s a floor. I write about this in my piece on NFT Market Microstructure and what trading and nfts as a strategy driven trader as opposed to like an emotional trader slash collector, it looks like. So a lot of different traits. There’s a dick butt out there for everyone. We always like to say in the crypto dick butt community, you don’t find your crypto dick butt, it finds you. The second thing I will say is like crypto dick butts are not for everyone. Some people think they’re stupid. A lot of people are like, This is dumb. And I’m like, Great, then you don’t have to participate. Nobody is forcing you to engage in this dialog at all. You also don’t have to buy one. The main place we hang out is our discord. If people want to come hang out, it’s open to everyone. Everyone can participate in the meme. Have a good laugh. Nothing we do is gated by your token, so it’s open to all. The fun thing about memes is they spread. And then the cool thing is people are now creating derivatives, right? So again, one of the cool things is it’s like, okay, everything is working. And just cultural significance, which I think crypto dick butts are like within our own little microcosm of the universe having their own moment of cultural significance. A lot of people can then come in and create derivatives or compliments around it and bring more people into that meme or that moment of cultural consensus. So again, I think it’s been interesting for me. A lot of people are like, Oh, this is so unprofessional. I’m like, This is literally my profession. This is what happens at scale in my industry on a daily basis. So me understanding it and how it works is actually paramount to me understanding how my industry functions. And again, I think it’s understanding in this new world where we have this new technology and this new culture, how does memetic transmission work and how does memetic transmission impact the way we invest, the way we communicate, the way we create narratives? Right, because these cycles are very much narrative driven. And as the industry evolves and matures, the way we propagate and transmit memes is also evolving. So part of my job is understanding that by participating in the culture, people don’t get that. They may laugh at it, but I do not think you can effectively invest in this industry if you do not understand its culture because it is unique. [00:36:13][139.4]

Dan Nathan: [00:36:14] Yeah, I will tell you this, since we’ve been podcasting since the start of 2021, you’ve been so consistent on that. However anyone’s opinion about any of these memes or any of these projects or whatever, you’ve always been right out there just saying, Listen, if you’re not enjoying it, then you should not be participating in any financial sort of manner because most of these things are not worth anything right other than the experience and culture. I guess I find that very interesting. I also find it interesting, though, just to kind of reset the thing here. I mean, in general, again, I have to make predictions about just sentiment and where I think things are going in broad markets here. It seems like overall right now you’re probably less bullish. I’ve heard you over the last couple of years or so about the environment, and that’s consistent with, I guess, how you’ve been really since late winter or early spring or so. [00:37:03][49.0]

Meltem Demirors: [00:37:04] Again, I am a participant in crypto culture. Again, I see it as an investor reflected in valuations and the types of investors who are at the table, like when large growth equity funds start telling me, yes, if you send me projects, we are happy to invest in them at a 4 to 5 x mark up right after you do. That to me is an indicator that things are a little bit out of hand. So we go through cycles, emotions go through cycles. At the end of the day, I still think this is the most exciting, most important thing I could be working on. There are many wrinkles to it. My perspective will continue to evolve, but my love for memes, my love for the culture will always be intact. That will continue to be expressed in different ways. Dick Butts are not an investment, they are a lifestyle, NFADYOR and again, we like to have fun on the Internet. It’s not a bad thing. [00:37:59][55.0]

Dan Nathan: [00:37:59] Well, you know what? You are tremendous fun to chat with, to follow on the Internet. And you know, I followed you into the crypto dick bu [00:38:06][6.4]



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