YouSaid · the spoken record

Vance Spencer

lines on the record: 92
first: 2023-01-06
most recent: 2023-01-06
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Was my theory in terms of why three hours initially got in trouble? They were circularly levering up this GBTC trade. They had to wait six months for shares. And by the time they actually got their shares, the discount was so material that they kind of got blown out on their original loan. And that probably is what created a lot of the holes in a lot of these lender's balance sheets. And I think that three arrows still owes DCG in Genesis like $600 million or something like that. So they blew up pretty good.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“So it wasn't like it was two distinct trades. The wrinkle in trading or creating GPT shares generally is that I will give you Bitcoin and then six months later you'll give me GBTC. And so, if I give you Bitcoin at a 60% premium, and then by the time that I go to actually get my GBTC shares, it's now a discount, I just got completely hosed. And so you kind of needed to lock out on that six months timing window. And it's funny, like you can see the premium persists for like six to seven months and then just like drop off the face of the planet because, you know, you could just tell that someone had really just taken their shares and then hit the bid and collapsed it. But like that”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“And so at that point, I was like, they had gotten access to some new source of capital. And the fact that it was GPTC and Genesis had been known to lend to them kind of made it seem like it might be more of like they were doing something together. And I think the non-charitable version or interpretation of events that followed were Sue, three arrows gave Genesis BTC. GPTC. Genesis would give them back US dollars, which they would then use to buy GPTC, which they would then post to Genesis, and they would get more USD, which they would buy GPTC again. And so Genesis would allow them to circulate lever up.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“They're the co founders of Three Arrows Capital, a very large Singapore based hedge fund or was a big Singapore-based bet hedge fund. I think at their peak they had like 10 or 12 billion or something of assets. I don't know if that balance sheet was correct or not. There was allegations of like balance sheet fraud and things like that. But we can get to that in a second. First time that I really saw them operate at scale was they announced that they had 7% of the GPTC trust and it was something like 270,000 Bitcoin and kind of how I knew how I had known Sue and Kyle was Medium sized traders punch like a million dollar ticket on a trade, something like that. The idea that they would have 272,000 Bitcoin lying around was crazy to me”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“So, to take it back to where it started, it all starts with this asset called GPTC, which is a trust, and the trust works as follows. You can put Bitcoin into the trust and you create GBTC. You get charged 2% per year for putting your Bitcoin in. That's how Grayscale makes money, but you cannot redeem. There is no redemption mechanism because it is not an actual ETF. And so the only way to get out of this is to sell your GPDC. And this wouldn't sound like such a bad idea at the start, but if you consider it in a different light, it's like there's this money in a box and you can't take it out and it's only worth whatever people will pay for the box. And so like, how do you actually value the box? And there's maybe, you know, in the distant future, in four or five years, like a vague promise that the box might be open and you can take the money out. But like that's the basic value proposition. But instead of it just being like a box with money in it, it's a box with Bitcoin in it, but you can't actually get it out. And so”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“It's not like these things are not being used. My nephews, my cousins still use Snapchat. It's a huge cultural thing. It's just that they're getting squeezed by Apple and they don't really have that much pricing power to start with. And that is symptomatic of a lot of the kind of mid-2010 style businesses. But I think Elon's going to run the A-B test with Twitter in real time and see if you can actually buy one of these things as kind of like a private equity style play and strip the cost out and keep it running. I think he's going to be successful. I don't think you can do it with places like Snapchat because Evan Spiegel has all the votes. Netflix is probably too big to even consider doing anything like that with. And so it's going to be interesting to see how it plays out because a lot of these things can never be profitable. A lot of these things have governance problems. A lot of these things just all the best employees have left to go do something else. It's going to be a weird time for tech. It's like a midlife crisis.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“It's not just brick and mortar places either. Snapchat has never turned to profit. How do these things continue to go on as a going concern? I think in the 2010s, it was a lot of debt and a lot of low interest rates doing stock buybacks and recapitalizing the company. But I think at the end of the day, a lot of these things are just not going to stand the test of time in terms of being able to scale out of their operating costs.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“They cost very, very little to run. Like, look at Lido. $60 million in earnings this year. The Dow spends about 10 million per year in software maintenance costs. But if ETH goes up, if yields go up, if usage goes up, Lido's going to have a 10, 20x increase in cash flows. And that is going to be the thing that scales while their operating costs stay the exact same. And those are the very powerful business models that are only facilitated by open source software built on blockchains that I think is the really interesting thing in the shadow of this growth collapse in tech. Why did the growth stocks collapse? Because none of them are actually profitable. They couldn't actually scale their unit economics beyond their costs. But you look at these things on crypto and there's no lot of them. They're kind of strange, but they actually have the operating leverage which makes them able to justify these big valuations and big multiples. And if you think the crypto is riding tailwinds, these revenues are just going to increase to the degrees of those tailwinds play out. And that's what's exciting.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“MakerDAO will probably have probably 100, 110 million. And Lido is a liquid staking protocol where they actually facilitate the asset Steeth and you stake ETH and you receive Steath. And the Steath allows you to have a receipt token so you can actually generate use liquidity, use it productively, but you also still accrue rewards that token. And the thing that Lido provides is a validator set to Ethereum to run the actual protocol. So they're downstream of Ethereum making money there. MakerDAO is a stable coin. You can look at it as kind of like a bank, but they have their own currency. And they earn a spread between the lending rate and what they charge people. They also earn money for printing die and giving it to people like Coinbase who then go by treasuries and give MakerDAO some of the proceeds back. And so are these business models a little strange? 100% they are. But I think that's the point. And the really cool thing about them is.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“There's not a ton. There's like 10 or 15 or 20. And I think that. That's totally fine. Like, some people choose to see the hundreds of projects that didn't make it and the copy paste projects that were very low effort. But there are actually a few projects that are generating mid eight figures, low nine figures of revenue and that are passing it to token holders in some way, shape or form. And that ranges from Ethereum, which is probably going to have $2 billion earnings this year to things that are smaller like MakerDAO and Lido, which Lido will probably have $60 million.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Okay, okay, okay, so activity is down, but also the dollar value is down. So that makes sense. Yeah, in terms of you said the valuation metrics for DeFi projects are relatively simple, walk us through that for Ethereum and other things you track because I think a lot of people think of crypto as something that has no valuation metric. And I think for something like Bitcoin or most L1s or a lot of, you know, if there are 20,000 crypto projects listed on CoinMarketCap, a lot of those would be impossible to value on something that a traditional value investor would consider a valuation metric. But it sounds like you're saying that some of them are, and I'm really interested in that. So tell us more.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“So there's a few different forms of staked Ethereum. There's Steath, there's like staking it through figment or Coinbase or things like that where you don't actually get a receipt token, but like it's kind of all the same thing with regards to staking Ethereum and getting rewards back.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“So Ethereum launched what was called the beacon chain, and the beacon chain was effectively the placeholder chain, which we're now operating on. But you could stake your Ethereum there and it worked in parallel with proof of work. And so the proof of stake people would be earning rewards from the beacon chain. And the proof of work miners were actually earning rewards as well.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Right. Okay. And so under the current proof of stake model, validators are paid, but that only happened recently because of the merge. So how was it that the fees were being generated under the mining system? And then you also mentioned something about a bridge.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Our hope is that this stabilizes eventually and we don't actually have to go through this and that we provide these useful use cases which persist versus bull and barren and don't rely on the token price itself.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“It's super reflexive, which is good and bad. George Torres would say, this is an industry that can generate its own valuation at any price because it's circular, right? But on the downside, it can collapse 90%.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Right, okay. So a lot of that 90% fall in activity is just due to the token prices collapsing. And this is something that I first got into crypto like many people in near the top of 2017. And I started looking to the valuation metrics. A lot of them were just purely based on how many the total dollar amount of dollar of transactions per day. And it drove me crazy because if the coin goes from a dollar to $100 and the volume stays the same, the daily traded volume is going to go up 100 times. So it's ridiculously self justification evaluation metrics.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“And so that's about six to seven million. And so the revenue of Ethereum, the use cases have dropped 90%. And so it's not just like this speculative bubble that had deflated. People are actually using crypto less as a result. And that has been the impact of the interest rates, in my opinion, because a lot of this activity is currently financialized, but that is okay. That is how we actually build useful applications. We actually need this.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“So, in a proof of stake world and the proof of stake, the bridge contract had launched last January, when you're an Ethereum staker, you stake your Ethereum, which you bought, and you earn transaction fees from it. You get about 20% of the transaction fees, the other 80% are burnt. So you have the deflation impacts and you have the revenue impact that goes straight to you. But the point I was trying to say is last year $75 million per day at the peak at bull run. Right now you look, there's about 30 or 4,000 ETH being spent per day, and it's being spent at around $1,200 cost basis right now.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Being used for transactions. So like using DeFi, using NFTs, playing a game, transferring assets. So Ethereum was doing $75 million of revenue. It was pure profit per day being past the stakeholders at the top of the last bull market.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Definitely had a lot to do with it. And I think the other thing is that right now, and a lot of crypto's use cases are financialized, when you look at the transactions on chain, you can see it in the usage. At the very peak of the bull run of last year, there was about 10 to 15,000 Ethereum per day being spent at about $5,000 per ETH basis.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“The cycles. I mean, interest rates definitely had an impact. It had an impact on everything. And I think the most damaging, you know, of the interest rates is not anything specific. It's the cumulative impact of all these animal spirits being removed by stocks are going down, crypto's weak, it just kind of took a lot of the excitement out of the room. I do think it was going to happen, this crash, whether now or later something like Aluna just a perpetual motion machine. It's not going to continue forever. Same with FTX. At some point, that fraud would have been found out. And if it would have had been at an even bigger scale, imagine if the DCPA, the legislation that SBF was pushing, had passed, he'd gotten into the US and then you'd blown up even bigger. Imagine if Luna had been, you know, a 500 billion application. I'm just glad that the damage was relatively limited, even though it was deeply embarrassing.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I'd say that sort of. Crypto in TradFi Circles, crypto can be seen as like the hallmark of the Everything Bubble in 2020 and 2021. But I think in some regards that's unfair because I think that in terms of total amount of dollars lost, I mean, I think the excess was definitely much more in SPACs, in SaaS companies that basically would have to be entirely new companies for them to ever be profitable. I think crypto is like kind of a convenient scapegoat. I want to ask how much do you think macro impacts crypto? Like, do you think crypto still would have had a bad year if the macro is more favorable and the stocks markets would up and bond yields remained low? And also how responsible for crypto's meteoric rise in 2021 and 2020 was the favorable backdrop of negative real interest rates and tons of money printing and tons of speculation fervor.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Those are the things when we talk to LPs. That's why they're still excited about crypto. It's yes, it's bad right now, but there's a lot of tailwinds that we're riding.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Terrible year. I was looking at the Carvana chart the other day, just like 99.5% down. Last bear market, it was just crypto. And everyone hated us, and it was like basically the same thing. But this time, it's all of these assets around us have really taken it right in the face. And I think you kind of wonder, okay, will Robin Hood ever hit its all-time high again? Will Carvana ever hit its all-time high again? What tailwinds are they riding? What's going to change about the business to make it successful? I have a hard time coming up with a bullcase for a lot of those types of stocks, growth stocks, things like that. When you look at crypto, there's so much developer innovation. There's so much people that care about this industry. Regulation is now on the table and that's a really positive thing. A lot of the application categories are starting to be proven out. It feels like there's a lot more meat on the bone left in Web3 than there is in Web 2. How many more SAS?”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Crypto Health Check, we're down by like four touchdowns at the half. And we got them right where we want them. I think that's kind of the perspective. It's so bad that it's good. We've washed out basically all of the really scammy and fraudulent products that were at really big scale. Carrying those carcasses forward just is not a good plan for the industry. And I'm glad that we got it done now. And so like, you know, we've kind of washed the bad folks out. We've washed a lot of the credit and the leverage out. Like we've reset in the way that many industries do. But the ground truth is that DeFi has product market fit. Games are starting to scale. It's not huge yet, but like crypto games are going to be coming next year. And right now they have 100, 200K daily active users. If you have a few million a month, that's pretty good. We can scale that 10x and it'll be the biggest applications that are on crypto. ETH transition to proof of stake, the merge went successfully. There's a lot to be excited about. I also think it's just been a”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“And so that valuation model is broken. And that's the other reason that even retrospect we don't really like these L1 investments. It comes down to the basic fact pattern of we need to build things that people want to use. We need to build things that generate fees. And that's kind of the whole point of the industry. And if you're not doing that and you're not Ethereum or Bitcoin, you don't have a chance to be money. I don't really know what the value prop is.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Some reports say that SPF owned like 10 to 12% of sole tokens. I think that's right, just based on kind of the flows that we've seen on chain and things that we've heard. So number one, that's crazy. A token distribution for something that has the chance to be money, one guy should have owned 12%. Imagine one guy owning 12% of all the US dollars or gold in the world, just like doesn't make any sense. The second one was, you know, what was happening to the client funds on the back end? If you look at this whole L1 wave, Layer 1 wave of last year, it was all based on Solana going really high in terms of price and everybody else saying, okay, cool. If Solana can get that high, maybe we can too. The problem with that idea in retrospect is that it is highly likely that SBF, in my opinion, sold his clients ETH and Bitcoin and bought Solana and the other Samcoins that were part of this net worth calculation.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“An L1 is basically a euphemism for saying, well, this could be valued like Ethereum potentially at some point. And Ethereum is valued like it's valued, A because it has a lot of fees, but B, you know, it has this chance to become this form of internet money, this internet bond that pays you yield if you buy it and you stake it and you earn fees from the digital transactions that happen on chain. And so like all of these L1s are basically Martingale pumps towards where Ethereum is valued. And then you hope that the VCs can get out by the time the full diluted valuation converges with the circulated market cap. And these things have just torched investors and that's why we don't like them. We've really never invested in any other L1s and ETH. And again, we're ETH people. That's kind of what we're spiritually aligned with. And so what's the connection between SBF and Solana?”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“So, I mean, we're a skeptic of a lot of L1s. And if you look at the valuation of these things, just to give you a context of the whole landscape, Crypto applications are actually fairly easy to value. You value them on a free cash flow basis, plus a multiple, you know, assuming that they return the cash flows to the shareholders. Some tokens do, some are going to in the future, but that's generally how you value them. If you look at the DeFi applications, they traded high multiples for sure, probably 50 times earnings. These things are growing really quickly. Like you don't really have access to this fast of growth in public markets. But that's a premium for DeFi apps and they all trade within that range. If you look at L1s, The L1s have very, very little fees, but they have these huge multiples to justify their valuation. And, you know, why is that?”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and what is about Solana? Because Solana is what's known as an L1 or a layer one, which I don't really understand, but basically it's like a base layer upon which other things are built. So Bitcoin's an L1, Ethereum's an L1. Solana was sort of, there meant many, many others, but Solana was hyped as, oh, this can actually take over Ethereum. Ethereum is the dominant L1 in terms of applications right now, and it was a year ago. Many other layer ones, but Solana was, okay, this can, it's faster. It has all these better things. You said you were a skeptic of Solana. Why? And then also, what's the relationship between Solana and Sam Bakeman Fried?”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“You know, the Warren Buffett, the JP Morgan, all of the comparisons that people make. But you looked on chain, you could see serum, and you could see the activity. And serum for people who don't know, it's a central limit order book. And so unlike AMMs like Uniswap, where everyone pulls their capital together and you're trading against a contract, in serum, you can actually see the makers and takers that are making the order book. And on a given daily basis, 90% of the liquidity was facilitated by Alameda. And so you just had this weird, like Russian doll of circular money flow and just what seemed like, you know, at least if not fraudulent, then ethically dubious. And that was just the other thing that didn't sit well with us.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I mean, the first thing is it was a seven year lockup, extremely unheard of, and you kind of slowly drip fed tokens to the market. At one point, Serum traded at over $100 billion valuation. And I think it was like less than 2% of the float was available. And so this thing was like financial napalm from the start designed to torch retail if they got anywhere close to it. And that is kind of the thing that made us feel deeply uncomfortable. If you look at a lot of the DeFi, you know, the Ethereum DeFi fair launches and the token distributions. tokens were given away for free the whole supply in many contexts you know if that wasn't the case all the transparent vesting schedules were out there and people could understand where tokens were sitting relative to the fully diluted valuation and that was good but with serum they didn't seem to really care about any of that and you know we pass on it and it felt like a dumb idea that we pass on it for a while and people were kind of giving us shit that you know sbf was going to be the next”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I just pulled up the balance sheet that was leaked by the Financial Times of FTX. And so before FTX basically melted down, they were valuing their serum tokens at $5.4 billion and their FTT tokens at $5.9 billion. Can you talk about the valuation techniques? Basically, you know, if why might those valuations be”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Bandwagon of Scaramucci and all these big firms giving him money. It just felt like he was going to run with the DeFi idea and just make it a strange perversion of itself. And that's when it got a little dicey.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“When SBF really got into DeFi was around the time that he raised for serum, the SRM token. And we had passed on FTT. We had entertained Serum and then passed on it. But we kind of kept tabs on the round. And I remember the thing that I remember the most was at a certain point during the middle of the round they doubled the valuation from like $250 to $500 million. And we asked why or who got what or like who would be in which tranche. And they just didn't really seem to care. It was really just like this run and gun financing to get as much value out of this prospective token as possible. And it felt like at that point you had two versions of DeFi. You had DeFi Ethereum-based decentralized, robust, permissionless smart contracts. And then you had SBF kind of saying like, all right, you Ethereum kids have done all right. I'm going to take it from here and institutionalize it. And it's going to look like this. And once that happened and once you had the...”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Not afraid of anything, but I think a little bit more context is that we've always been very vocally anti-SBF, anti-Salana, anti-decentralization. And what we thought was a weird perversion of the values of why we got into the space to start. And so we've kind of been the perennial bears on SPF. And for a while, that looked really dumb. People thought that that was not a great strategy and it wasn't for a long time. But spiritually, we're Ethereum people. That's what I think we're invested in. And I separate Ethereum from kind of the rest of crypto because Ethereum is the thing that embodies the values that I really care about. Decentralization, transparency, and open permissionless platform that anybody can build or transact on. Those are the things that I care about.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Some of the portfolio When SBF and the FTX guys got in, it just felt like there was sharks in the water and they smell blood. That was kind of the vibe that I got at least.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“And I think the beginning of 2021, that felt very organic. It was the movement that was around in the bear market. We were all using the products. We could feel the value. We didn't know how big the market would be, but we thought it would be massive. And things started to turn with Sailor. Bitcoin on everyone's balance sheets. And, you know, he started giving these weird webinars. And I got a little bit of red flag sticking up at that point. But I just thought it was part of the cycle. Elon started shilling Dogecoin. I thought that was just more of the speculative excesses of things like that. But really, when I started to sense that things were going south was when kind of the metaverse and NFT stuff really started to pop its head up. That felt like really the most pure form of the excess in the market. And you had that along with the rise of FTX and they're kind of getting into DeFi. And once they got into DeFi, I was pretty much on high alert. And we did make some moves around that time to kind of derive.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so we started in a bear market. In the last bear market, it was just so embarrassing. There were no use cases. Everyone basically hated us. Nobody wanted to talk to us about the fun, let alone give us capital. And we were very fortunate to have only one outside LP in our first fund, which was later very fortunate. But we were really looking for use cases. At that point, and blockchains were built for value transfer, so it made sense that DeFi would be the first one to really kind of get some sort of adoption. And a lot of the reasons why it got adoption is because I didn't have anywhere else that I could get financial services. I had a bunch of crypto, you know, stablecoins didn't even exist at that point. How would I even use this productively? How could I get a loan against it? How could I make it productive? There just wasn't anything. And so Uniswap and Aave and Synthetics and Curve, like they came out and it made sense. And we were the vanguard of staking assets and being aggressive on chain and being in these DAOs. And that first 2019, 2020.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“I think that's probably what we're best known for. Since then, we've gone into things like crypto games and front ends and infrastructure and security products. But really at our heart, we're a venture firm. We do take very concentrated liquid bets in our portfolio. That's just like a nature of kind of being an asset manager in crypto. But yeah, we love crypto. It's been an interesting year, certainly not as bullish as 2021. But I think it's a pretty good time to be here. And we're, you know, content where we are right now. you know, slowly deploy and help bring about the rest of that resuscitation of the industry.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT
“Sure, yeah. So I started my career at Netflix and corporate development, worked there for five years, quit Netflix, started and sold a small crypto gaming company. So it was like, you know, 2017, 2018 when really nobody was even using games, let alone like crypto on blockchains. And that was a good experience and use that money to start framework ventures with my co-founder, Michael. And we raise our first fund in 2018. We've since raised three more vehicles since that. Our last fund was $400 million. I believe we're one of the largest asset managers in this space today. And really kind of what framework made our name was on was the initial wave of DeFi. So Ave, synthetics, curved, uniswap, all of those, the graph, chain link, Wi-Fi, those became marking investments that we led and really kind of developed alongside the entrepreneurs that actually built the protocols like the DeFi, not only software and use cases, but the culture.”
2023-01-06 · Forward Guidance · Crypto’s 2023 “Health Check” | Vance Spencer · IDENTIFIED FROM THE TRANSCRIPT