FIX TOKENS

“I mean, I think everyone overcomplicated, and something like the four-year cycle is clearly in effect here. And if you look at how this has played out in the past, there's the initial dump, then there's actually an initial recovery faster than you think, that no one really believes, because it doesn't translate business sentiment and activity lags price by about six months.”

“By the way, all of that whole data layer is powered by AI, right? So the days of, I used to be a consultant, any analyst knows the pain of like sorting through two and a half year old 10Ks, and you're looking for one line item, all of that is going to be answered by AI. Like, we can do this stuff way, the exciting thing about this is that we can actually do this much better than TradFi does.”

“The days of tokens, just being able to launch this liquid instrument, not really define what it is, provide no disclosures about ownership, sales, those days are ending. And by the way, they should end. This does not work. Refer back to the data that we just showed. It's broken. It doesn't work. So there's actually a layer of disclosures that is the bedrock, which is just super table stakes, basic stuff.”

“We used to, hey, crypto, we're in a bear market because FTX blew up. We're in a bear market because Gary Gensler. We're in a market because Jane Street is selling. I mean, it's just hilarious to me that now we're blaming Jane Street. I mean, if you think of the villains list, like how low the bar has gotten. But now I think we're realizing there's no one to blame but us.”

“The Coinbase example is so interesting because Coinbase gets punished from volatility because the analysts consistently miss on the direction of just how cyclical crypto is. In bull markets, if you go back and look at the analyst's expectations versus especially the transaction based revenue, it's always off. So Coinbase benefits a huge amount. Their stock rips because they outperform the analyst. They get punished, though, on the way down. That transparency, having the real time data, if the right amount is displayed, actually smooths volatility.”

“We are the connective tissue that powers these on chain capital markets with a layer of standardized disclosures, standardized data, and we connect investors who wanna deploy capital with on chain businesses that require that capital. The days of tokens just being able to launch this liquid instrument, not really define what it is, provide no disclosures about ownership, sales, those days are ending. And by the way, they should end. This does not work. There's actually a layer of disclosures that is the bedrock — what does the ownership structure look like? What are the emissions schedule look like? Who are the insiders? When are they selling?”

“It's not just a revenue story. It's not just build great products, generate tons of revenue. We're actually doing that and the prices still aren't going up. So what it tells you is there's a trust problem. Investors have stopped. They never really understood what the difference was between a token and equity in the project. Token investors have been rugged so many times along the way in ways which would never in a million years happen to equity investors, like just buying out all of the IP and team behind a token. And the token holders get nothing.”

“If you had not even every token, because it's not gonna be every token. 10 to 15 tokens. If 10 to 15 tokens started to compound in return, I think it would solve every problem. I actually do think that's how we get out of this bear market, is that a few tokens say, we're gonna maybe kill our equity. We're gonna drive all the returns back to the token, and we're gonna have one simple structure. We're gonna generate revenue, and those tokens will get rewarded in the market. And then other founders will see those tokens get rewarded, and the flywheel will start to happen.”

“If you're not following along on your screen here, we've gone from about 2 million some tokens to just over 35 That is an explosion of the supply, right? So if you were to look at the normalized market cap and look at it on a per-token basis adjusted for the supply, it's this blue line here, which is way worse, which is basically, as crazy as this sounds, the average token is essentially where it was in July of 2020, pre-two bull markets ago.”

“Crypto in many senses was an industry and a technology, but it's also kind of a political movement in a sense. And there's an ideology that underlies that political movement. And I think, actually, funnily enough, what's causing the sentiment drift here is that that ideological movement industry blob that is crypto won. And so now that it won, it moved from being a movement which is on the fringe, on the outside, and countercultural to one which is in the mainstream and it's struggling with an identity crisis.”

“One of the other big problems that I think has existed with tokens so far, which is the founders and the team treated the shareholders and the customers as the same person. And that was kind of actually the vision, which was a fun vision for a little bit. It's like Uber bootstrapping the network and the people, the early Uber customers end up owning the Uber tokens. But in reality, what's happened is that your shareholders are very different than your customers. So this idea of governance tokens maybe was kind of the wrong vision.”

“So we actually went the opposite way, and we went down into the bedrock and the foundation. And if you look at a lot of our branding, we're keeping that signature Blockworks purple, but we have a lot of imagery of stone and solidity and caves and identifying things via echolocation. And that's the reason why I think this is so cool. And it informs what we view as the opportunity for this space, which is, for lack of a better word, it's the seam.”

“But really, what is happening here is that capital markets are getting rebuilt and they're getting rebuilt on chain. That is the big opportunity mega trend of the next five to 10 years. And so when you think about capital markets, what powers capital markets is trust and infrastructure that connects investors and people with capital, the people that want to use that capital businesses, on-chain businesses. So that is the opportunity that we're orienting Blockworks around.”

“Everyone overcomplicated it, and something like the four year cycle is clearly in effect here. There's the initial dump, then there's kind of actually an initial recovery faster than you think that no one really believes because business sentiment and activity lags price by about six months. Look at 2019. Bitcoin doubled that year, and I remember it as one of the most depressing years of the time that we've been in crypto. So that's what I think this year will be. And then I think you'll start to see a resurgence, and people will think, oh, everything is back, and then the winners pull ahead.”

“The median net return of a token over the last five years is down 80%. That is that's the problem with the industry. And there's a lot of startup market structure reasons for that. But there's a broken structural piece that's unique to tokens, especially, I think, at the moment.”

“So what this actually is, is a kind of ideological, political movement, new technology that moved from the fringe into winning. This is literally what winning feels like. But now some of the parts of our ideology that hasn't survived contact with the real world are going to have to get changed. And that is the moment that we're currently in.”

“Net net, what can you take away from all of this? It's not just a revenue story. It's not just build great products, generate tons of revenue. We're actually doing that and the prices still aren't going up. So what it tells you is there's a trust problem. Investors have stopped. They never really understood what the difference was between a token and equity in the project.”

“One is your actual business and the product or service that you're selling, and the other is your instrument. So the CEO or the CFO of a publicly traded company spends a lot of time on their business, on their internals, all that kind of stuff. But they also spend a lot of time selling their other product, their stock, to their investors. And the honest truth is that you just have to do both of those things.”