Chief’s ETH & AI Bull Bet | 1000x

What I think the market is sort of missing on ETH is Wall Street and the powers that be have pretty much anointed two crypto assets, um, as these sort of, you know, digital forms of money that they are going to show their clients for, for a long time. It's Bitcoin and ETH. And I do think ETH is actually competing with, with Bitcoin. I think that'll become kind of more obvious over the next like 2 to 5 years, um, and And the shift that people are missing is ETH is becoming an institutional asset. And given how small it is and how underweight I think people are to it, I think it could see an absolute face ripper.

This episode is brought to you by Perennial Finance, the on-chain DeFi primitive redesigning derivatives for the DeFi native. You'll hear more about Perennial later in the show.

All right, sick. Welcome back to another 1000x Podcast. We've got a very special guest today, Chiefing Zha, the lion smoking a blunt, who's here with us to talk about how he became at one point the number one trader on Bybit and why he's such a gigachad and how we should make money and how to not lose money. So Thanks for joining us. Appreciate it.

It's gonna be good. Everyone excited to be here? Yeah.

So tell us a little bit about yourself. I mean, how did you start off trading crypto? Like, where did this all— where does this all come from? We need to understand the origin story behind how you became such a gigachad trader.

Myth. Myth.

So I've never been— I've never been honestly so flattered as I have been joining this podcast. But no, like, probably like many others in the space, got into crypto when I was in uni. So around kind of 2016, 2017. Yeah, originally was actually enamored by the concept of hash functions. I thought that was kind of like some sort of, you know, pure kind of sci-fi tech. And I thought Bitcoin kind of was sci-fi money. And then obviously, as many do, once they kind of delve a little deeper, they, you know, they find the world of— found the world, I guess, of ICOs, shitcoins, Ethereum. And that's kind of how I, you know, got started. Telegram chats, all the subreddits, the kind of basics.

Makes sense. And so did you start off— were you always interested in actively trading or when you first got into crypto? I mean, were you more of a buy and hold guy? Were you a scalper? Were you trying to trade BTC? What did you start off doing?

Yeah, unfortunately, I think I've always held the mentality that I'm smarter than others, which has made me lose a lot at certain times. So I think I always had this penchant for trading and trying to sort of outsmart the market, and a lot of times kind of failing to do so. But yeah, I always sort of had this inclination of, you know, unfortunately trying to time the market, finding new opportunities, and not necessarily just buy and hold.

So obviously, confidence is pretty important if you're going to go put on some big contrarian bet that proves you right and makes you a lot of money. What are some of the big trades that you've done that have given you that confidence over the course of the last 6 years, 7 years?

Yeah, I'd say there's been a few kind of trades that were sort of backed by doing the research, having high conviction, holding through a lot of volatility, and kind of more or less, like we talked about, just sitting through a trade and sitting through a trend that you kind of have belief in. The first, again, like for many, was DeFi summer. You know, was very involved kind of in that ecosystem at the time. So I was in a position where, you know, I knew, you know, basic things on how to debug, you know, like failed MetaMask transactions, right? Which at the time, time was kind of the essence. You know, the faster you were to sort of the better you did. Same thing with interacting with sort of new smart contracts. So it was kind of uniquely positioned to take advantage of that. Next sort of big trade was actually kind of ETH and ETHBTC in Q2 of 2021, kind of following the Coinbase IPO. Yeah, at the time, like, you know, a close friend and I were always kind of— even now I sort of talk about EPTC, but we were really saying that the market is not really appreciating the change that's going to come from EIP-1559. Um, you know, along with that, you kind of had a very just classic sort of topping structure on, on BTC going into a high-profile event, uh, with a lot of kind of sailor buying baked in, in the sort of final leg. Um, and obviously you had DeFi NFTs happening. So that ETH run was, was one of my larger kind of no-show trades. And more recent, and probably how people kind of found the account, was, uh, was Solana, which, you know, You know, as most people know, I definitely did sell too early, but size it quite hard in the low 20s. And yeah, same idea there. I think, you know, in 2022 or around the merge, obviously ETH became definitely the most consensus trade. Like everyone said, ETH is money. And you had a lot of people even spinning up funds of kind of thinking, well, how do we just acquire, you know, ETH exposure in the most efficient way? At the same time, the sort of vision that you know, the Ethereum Foundation and all that the ecosystem was kind of pitching, you know, you were clearly unbundling the system and this belief system that people bought into. And there were obviously going to be a lot of open questions around that. And Solana obviously offered this, you know, competitor or differentiator in a monolithic chain, which I actually did not expect it to gain as much traction as it has. But to me, I obviously saw at the time a very crowded trade and a very sort of hated trade. And there's really no other sort of smart contract platform that offers any different differentiation, right? Everything else is either some EVM spinoff, L2, another L1, L3, whatever. So yeah, those are kind of the three sort of big, big trades that I've kind of, I guess, hit in my career.

Well, I'm glad we've got you on the podcast today because we've done some builder episodes recently and it's cool to talk to the people writing the code and building the tech and building the future. But markets just got— markets just got spicy. They just got super interesting. And we need to talk shop like we need to talk markets. It feels like there's a ton of opportunity. Right now. And it's, you know, it's good to have like a pretty epic savage trader on the podcast to chop it up with because I think everybody wants to know what to do right now. Like, we were going into kind of despondent bear mode for a while. Things were nuking down into the 50s, and Bitcoin, every— you know, went a little bit lower than most of us thought it would. And then suddenly Donald Trump gets shot in the head And we're so back now. Now there's talk of a kind of like a strategic Bitcoin reserve. JD Vance is a— he's got, he's got coin in his wallet, got $250,000 worth of Bitcoin. He's a millennial. Like, this is— it almost feels like a paradigm shift has happened overnight. And Biden is just self-destructing with every day that goes by, and his administration has been pretty bad for crypto. So Avi chiefing, like what, what are we looking at here? Are we supposed to be 10 out of 10 all in?

What's the, what's the quote? It says, was it in the midst of so over, I found, or we found out, or I found out we're so back. It's on point.

It's amazing. It's always, it's in this market. It's always when it just looks like there's nothing that can save it. When something comes out of left field. When everybody's bearish, when everybody's de-risked, when everybody goes, well, I guess it's over. We're going to trade down to 40s. Alts are done. Everything's fucked. There's always something that happens.

Well, I think that's like if you want to talk about markets, maybe even like top down, right? I think what you pointed out always happens, especially in bull markets, right? Bull markets are characterized by generally positive headlines. And when things are so bad for so long in a bull market, You kind of know something good should be coming along the way. And it's funny, I guess in those, like, whatever, I don't know how long the drawdown was, right? But you had people finally coming out and saying the two words, right? Bear market. You had people kind of questioning whether even, you know, it's funny in this market, I feel like I don't know what has caused this, but I think so many people lack conviction. Like they almost want like their dad or someone to tell them to step up and bid, right? So that's why everyone's like, oh, well, GCR, you know, GCR said this, GCR said that, they kind of are lending their conviction to someone else. Um, and obviously there was a lot of rhetoric around, you know, whether or not it's still a bull market or a bear market. But I think the thing that I would sort of emphasize at least is we're definitively in a bull market. And if we do get in a situation again where it's so dire and we haven't had good news, I think you should expect good news sort of, uh, around the corner because that is kind of what categorizes a bull market.

I think, um, that's an interesting take that you have because I've never thought about like just the general backdrop being bullish and so we should expect bullish news. I always figured the news is kind of independently distributed and not related to like, oh, it's been bad for a while but we're in a bull market so we should be expecting more good news. I've never thought about it that way, but in crypto you do kind of get these you know, multi-month or even multi-year time periods of either just utter despair or utter euphoria. And it is, I guess it's more of a reflexive asset class than some of the other ones that I'm used to in TradFi. But like, okay, so let's just assume that the odds of a Republican administration that's friendly to crypto just went through the roof. And you can see that on Polymarket as well. Like, what are there altcoin trades? Are there, you know, obviously Chief, Chiefing, you've made your, you've made your bread on a few big altcoin trades. Are you looking in altcoins? You looking in majors? What's the, what's the trade?

Yeah, I haven't really— I've kind of been thinking about the market. Like, I tend to be a little bit more passive now. Um, I don't really actively trade with a big, a big portion of the portfolio. I like to think of it as, you know, you have your sort of major of choice. Um, because obviously the majors have just been so supportive this cycle. And then you have different theme sectors that, that you might want to play. Um, you know, for me, I— again, people know this, uh, by now, um, ETH is definitely my major of choice, and we can kind of get into that. And then in terms of themes, I'm not really looking right now for a certain theme that is— would be bolstered by, um, let's say Trump winning, even though I think that is probably— there are a couple interesting trades to be had there. Uh, I'm personally very fascinated by the kind of crypto AI intersection. I do think we're unironically very early there. I don't think there's much that's investible, but there are a few certain things that kind of excite me. And so I like to think of it as, you know, what other opportunities do I think would outpace me just buying and holding, let's say, an 80/20 basket of ETH and let's say, you know, an AI asset. I think people know I like BitTensor. I think Avi actually tweeted this, but yeah, I think a clear sort of trade if you want to trade the The betting odds on the election would be obviously like SOL, um, SOL is going to be, I think, kind of baked into Trump winning just because obviously in a new admin the, the odds of the ETF going through are quite high. But we'll talk about that. Um, I actually think one of the sweeter trades will be nailing the, the SOL top into the March 2025 unlocks, which will coincide nicely with the ETF decision. Um, you know, Lido is so extremely hated. I don't love the DeFi rotation, but I think, you know, Hester Peirce came out yesterday and pretty much said there's no real reason why staking shouldn't be included in the ETF offerings. Um, so I think something like Lido or the staking field might get attached to Trump winning because there really isn't, you know, the only reason for not to be staking is purely political and all investors will want that extra yield. And I don't know exactly how it sort of plays into, into Lido. Other than sort of narrative. Like, obviously from the get-go, clients will want to probably stick with Coinbase. You could see BlackRock and all the sort of institutions build their own offerings, not that complex.

They could outsource their staking to Lido. So you could have like a BlackRock ETH ETF with staking by Lido.

So that would be the real black pill. And it's actually not, you know, unthinkable because BlackRock, you know, the CIO at this Coinbase event pretty much said like the future is on-chain. They have this build fund or this money market fund. I forget what it's called. Pretty sure it has half a yard, if not more, there. So, you know, BlackRock, the biggest financial institution in the world, has committed to putting assets on-chain. So it's not, it's not crazy to think that they, you know, stake some of their ETH or do something with Lido. And then obviously in that world, I don't think it's priced around here.

I'm kind of curious, you said that obviously this is kind of a bull argument for DeFi in general, but you said you're not super in favor of the whole idea of a DeFi rotation. And Jonah and I have talked about on the pod for a bit. It's, it's that I think at some point we have to get allocation to things that are quote unquote useful and people are going to get tired of buying, buying platforms. And I think you're kind of already seeing that with a lot of the things that are performing really poorly this year. It's a lot of the new platforms that are coming out. I'm kind of curious, is it— is your view on DeFi more of a short-term bearishness, medium-term, long-term? Like, what's that?

No, I don't— I'd almost say short-term bullish just because I think so many alt— like, the alt complex is so oversold with DeFi. And speaking of someone obviously who came into the, the world, you know, crypto world really through DeFi, um, it doesn't really have the same— it doesn't really captivate, you know, people or the marketplace really as much as it did before. So I think there's going to be short-term opportunities, but would I want to hold you know, let's say a decently growing DeFi platform or like a burgeoning, you know, new AI L1 or new AI ecosystem. Like one, the valuation cap on the other thing is just going to be so, so much higher. An idea I've kind of been mulling over, and it's actually come from a friend, but I think it's really interesting, right? So many investors are kind of asking themselves or trying to reason with meme coins, you know, doing well and obviously all utility coins doing terribly. I think it ties a bit more into You know, these crypto tokens aren't— they're not, they're not stocks, right? They're, they're something a little bit different. And kind of my friend's thesis on this is that, you know, tokens are a way to almost invest into, into movements, be it political movements, social movements, right? Like holding Bitcoin and buying Bitcoin is you saying, you know, I believe that money and state should be separated, and I'm holding this as a badge of honor, you know. Again, it's almost like a religion. Right. And so I do think if you're a crypto investor and you're long term, you do need to evaluate a project based— like, I don't love the term cult, but it is sort of what it is, right? You need to evaluate, like, is this a religion? Like, is there, is there a movement behind this? Is there an objective reason it exists? Like, do you have all these people working towards a unified goal? Do you have even like a single common enemy that people can rally around? And DeFi, that's why like short term there's going to be trades, right? Like Lido could be a trade on staking policy and would probably do really, really well. But would I buy and hold a DeFi asset for 1 or 2 years versus something else? Probably not.

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That makes sense. It's more about the risk reward and multiples that you're going to necessarily get on this thing. I guess the question is, are these things that are coming out, like these AI projects, these other things that you're looking at, are they not already going to be valued so highly? Right? Are they not going to come out at really high valuations? And then are they actually going to fulfill those valuations? So I get it, but it's always been tough for me. Because I think in 2022, I said horribly incorrectly that the next, the next run is going to be filled with things that actually matter because people are sick of the things that, that don't actually, that don't actually deliver. And then, and then we got meme coins, right? And those were by far, by far the best, the best performers. So I guess it also just comes down to like where you think crypto will be useful. Right. If you think that BlackRock is going to start integrating DeFi assets, then I think everything reprices a ton, or at least the things that they integrate reprice a ton. If you think that crypto is still just best for gambling and for moving money around and for financial infrastructure, then obviously I think changes your answer. But I mean, you've always made your money by basically building massive conviction in things that people hate. Yeah, that's like generally, generally how I've seen you, how I've seen you trade. And that tends to be, tends to work like very well. So with that, with that in mind, is there, is there something that you think people like really, really, really fucking hate right now that you don't hate as much?

ETH.

Yeah, I mean, there's two. I mean, I'm happy here to shill, you know, hashtag shill my bags, but I mean, ETH, yeah, I think like I do think ETH is hated. Obviously it's unfair to say it's like the most hated asset, right? Because it's in most people's crypto portfolios, even though, you know, who knows by now. But to me, yeah, I think ETH fits this bill. And we talk about that, like what I think the market is sort of missing on ETH is Wall Street and the powers that be have pretty much anointed two crypto assets, um, as the sort of, you know, digital forms of money that they are going to show their clients for, for a long time. It's Bitcoin and ETH. Bitcoin was such a successful— it was the most successful launch in their, in their history, right? Like, everyone there is obviously super excited about it. Clearly their clients are. Um, and I don't see any reason why ETH doesn't follow in its footsteps. Uh, and I think the backdrop is obviously ETH right now— one, in general, actually, ETH is so much, so much less liquid than BTC. And I think people are really overthinking this whole, you know, uh, demand side. Like, in the traditional world, the way people make decisions is just market cap leading. They don't make— people don't make financial decisions anymore. There's no, you know, valuation fundamental analysis. It's just, hey, I put money in my savings account and go buy me the Nasdaq or the S&P, and that buys it for you based on whatever the market cap, you know, weighted is. So everyone does a market cap weighted index. So why would ETH not get 30% of the flows? You know, from— I've heard murmurs of obviously the clients are kind of ready for this product to launch and they're ready to move some of their IBIT over to the new ETH product. And ETH is in a position now, right, where the common narratives are it's, it's lost to Solana. Gas fees are low, L2s are parasitic. Um, ETH BTC down only. BTC is the better form of money when if you actually look at it. I mean, I don't have trading in front of me now, but I'm pretty sure ETH BTC hasn't really moved, uh, in like 10 or 11 months. I think it's even higher than it was. Maybe October 23rd is the day I sort of always look at. That ratio really hasn't moved, and I do think ETH is actually competing with Bitcoin. I think that'll become kind of more obvious over the next like 2 to 5 years. And the shift that people are missing is ETH is becoming an institutional asset. And given how small it is and how underweight I think people are to it, I think it could see an absolute face ripper. I do think a lot of things have to go right for it to happen. And ETH has not been dealt the best hand of hand this, this market. But I do think that ultimately ends up being fuel for a pretty, pretty nasty, nasty rally.

You know, one thing I didn't appreciate, I think, as much until you just said it, and now I'm thinking about it, is just how illiquid ETH is. Like, I mean, the thing went up 20% in a day on the, on the news of the ETF approval. Yeah, I mean, if, if it even gets a fraction of the flows of the, of the BTC asset, I mean, I think it's definitely not 30% as liquid as BTC. I think it's lower. So every dollar in. So what makes—

what would be the religion of ETH? This is what I want to know. Like, if Bitcoin is sort of stateless money, uh, that's what you believe in if you, if you invest in Bitcoin, and the enemy is like, uh, the US Treasury and the money printer inside of it. Um, what, what is the ETH religion? Like, what are you buying? What are you believing in?

I think the ETH religion probably comes down to I guess I know Vance and other people have kind of tried to come up with their marketing pitch, but it revolves around just, right, this completely open, decentralized, you know, app store that anyone can access. Right now it's sort of unstoppable finance, right? Financial services that anyone in the world can access. But yeah, it's something, it's something along those lines. I don't think it's actually— oh, here's another sort of one of my takes is people always say, you know, Bitcoin has this clear marketing message that tradfi can buy. ETH doesn't. That's why it will fail. My answer to that is you want you want to buy before they come up with the message, because they're going to, because they're greedy and they want to sell this product. They're going to come up with some unified message meme to sell their clients. You can get into the trade before they do that. So I don't think it's sort of as important, but it would probably be something in the separating financial services from the state if you have to, if you have to dumb it down. Jordy also has a good, um, a good meme around— I think it's community money. ETH is definitely like— people use ETH as money. They hoard it as a store of value. They use it to trade, to buy NFTs, what have you, use on L2s. Like, ETH is a form of money. It has the SOV aspect and it has the medium of exchange. Um, a lot of the stuff I don't really think, you know, it matters all that much. Like, a lot of this is kind of just philosophical waxing, um, from kind of a market's perspective. Right. I think you have— you have an ability— like, I think the market is just wrong on how successful this ETF is going to be. I wasn't always this big of an eBTC bull. Like, you know, when BlackRock announced their ETF, I was like, yeah, this thing's breaking down, it's over. This is like a 12-month range break, like it's done. And then once the ETF actually— like, all the marketing happened, it was about to launch and it wasn't making new lows, and you had this crazy Solana run, like it was still holding. So I was like, all right, clearly the next trade is going to be this ETF. And it's been such a long build into it. I think sentiment is still so poor I do think most people are kind of convinced they're going to be able to just trade the flows post. So I'm interested to see what happens. I'm not interested in trading it myself because I think it's going to be noisy and the majors continue grinding higher. But yeah, I think the setup is there for ETH.

Interesting. Yeah, I agree with you.

When you think about like actually expressing that viewpoint, are you just buying outright ETH? Are you just like hoarding it? Are you 100% allocated? Are you 50%? I mean, How do you actually make sure that you make the most money on this without getting— I mean, for example, you might have had this view before and then ETH is down 15%, then you're just like, ah, fuck, what do I do?

For sure. It's definitely all like kind of dependent obviously on the type of portfolio you run, right? I'm able to sort of manage personal capital, you know, luckily don't have any dependents or like legal immediate dependents. So I'm able to obviously sit through a bit of higher vol. There obviously kind of have like mental stops in my head, but sort of at this juncture, yeah, I think you just— I'm, I'm personally kind of, uh, diamond handing with, you know, a set percentage of a fairly high percentage of the portfolio. Obviously leave some cash to, to buy on dips, emergency funds. You kind of never know, be responsible. But, um, I don't see, I don't see much downside from these levels. Um, and I do think what I've experienced personally is trying to actively trade majors this cycle I think has been extremely difficult, right? They just, they just tend to mean revert. We have this ETF this ETF buying. I think you generally have people obviously who are just so far down their all-time high coin balance, let's say even from like '21, you know, that cycle, where I do think people are just not that exposed to majors. Um, so you don't have these like vicious fishes drawdown. So I would say the way I would express it, yeah, just spot ETH, no leverage. Um, not very interested in trading, uh, around the kind of ETF flows. I think if ETH would dip to certain levels Um, could maybe try low leverage longs even though I don't, I don't, I don't know if the juice is, uh, is really there. And then kind of the mental, the mental anguish of having to hold a leveraged position.

ETH is my Trump trade. Like, I think that if you install a new regulatory module in Washington, D.C., TradFi, like the way that traditional finance companies work is they have multi-year— It basically takes them the better part of a decade to onboard a new asset class and get their heads around it and build the plumbing and stuff. And realistically, Bitcoin is not— There's not enough going on on that blockchain for TradFi to use it for anything meaningful. But ETH obviously is the first smart contract platform that arrived on the scene and proved to be stable. So That's sort of the one that's been blessed by TradFi. And from my time inside of institutional crypto, I did watch and learn about plenty of ETH rails being built inside of massive conglomerates like BlackRock, Fidelity, and dozens of others. Basically what they're waiting— they've built all the infrastructure for ETH to settle on-chain, to store value on-chain, to move value on-chain. But they're hesitant to deploy because they don't want to get rugged. They don't want to get fired for succumbing to a 2022-like FTX event. But most importantly, they don't want to get sued by the SEC. So I think if you basically extract the current SEC, which I think will happen under a new administration, implant a new one that's friendly to crypto, a bunch of rules get made and enshrined Then I think basically Wall Street, to use a blanket term, will be able to just light up ETH. They'll be able to do all sorts of stuff on top of ETH, maybe even payments too. I think that's the last bottleneck that those companies are waiting for is just the assurance that they're not going to get sued for doing crypto stuff.

I never thought of it that way, but I think that's correct. There's nothing I mean, you could see a lot of these corporates spin up their own L2s, right? Base obviously has kind of showed that that's a viable strategy, and the sequencer fees, honestly, they're a great revenue generator on their own, um, not to mention all the new products you could launch. But yeah, you could totally see a world, right, in a new administration where it just kind of, in, you know, from a macro view, just allows institutions to just get on-chain, right? Creates a framework for them to do so. I'm sure they'll explore other chains, where I think ETH and Solana are probably the two where they go. But yeah, I think it's a good point.

How do you— so you mentioned earlier that there's a thesis out there that says that L2s are parasitic to ETH. So do you believe in the fat protocol thesis? Like, do you think that all the value will— most of the value will dribble down to ETH? Or do you think that these L2s are just going to sort of capture it and not really transfer it through to token holders. And so, you know, maybe the next big trade is actually going to be Solana or something monolithic like that. Like, how do you think about allocating between monolithic chains and ETH-like chains?

Yeah, I, I kind of said this since the start of the cycle. I think L2s are probably, uh, the most uninvestable segment, um, in crypto, definitely for liquid markets. Obviously in venture, like, the returns have been staggering. I guess not everyone is kind of unlocked, but, you know, if you invest in the kind of last vintage, you know, all these L2s have done super well. But no, I think, I think L2s are, they're almost like parasitic to themselves. I think all the value will just flow back to ETH. Again, I don't think a lot of the value, like, you know, we love our boy Andrew Kang, but when he was putting out his threads on, you know, institutions are going to be valuing ETH on a PE basis, like, no one, like, none of that is happening, right? So I don't think that L2 siphoning away transaction fees in the interim are really going to affect ETH's value prop much. So yeah, I think the value there flows back to ETH. I think increased L2 usage increases kind of ETH's form of money, right? Because they're for the most part using ETH as gas. Theoretically, right, in a world where you actually are able to have decentralized sequencers and you can, you know, pass the gas spent to stakers, right? It all sort of looks like L2s kind of look like their own little economies that are passing dividends back to their holders in the form of ETH, which again kind of strengthens ETH as this internet community money use case.

So yeah, but do you think like as a, as a trader, do you think that they're going to move up with ETH when you get, when you get an ETF? Is there, is there a short-term trade that you think we can take or is this just these guys are kind of fucked and you have no interest in touching them even if we get an ETF.

Like, it's funny, it's funny because if I say I think they're fucked and there's no interest in touching them, that's probably when you bid. I don't know, for that I would try to look, I guess, at the market structure data and maybe try to look at positioning, see if it's like lopsided. It's just hard with these markets, right? Because the kind of OTC markets for these things have gone way deeper. People are smarter in terms of how they're actually hedging, you know, at least how these desks are actually hedging these coins out. You haven't really seen any insane, like, just big short squeezes happen in a long time other than, like, the DWF manipulation. You know, you don't have your, your MobileCoin or, uh, your, uh, you're like Aptos. Like, even TIA shorts are paying hefty amounts of funding. The coin's not really moving anywhere. Um, so I kind of think they're just fucked for now. Um, You probably, if you wanted to trade it and you wanted to find alpha there, you'd need a mix of, you know, positioning. You'd have to really dig deep into unlock schedule, track all the tokens that have been unlocked so far, see what investors are doing with them, see on like what dates that there are people usually distribute tokens and how they sell. You have to do a lot of like on-chain forensic work. Um, it would be doable, but it's again coming back to this whole point that Jonah puts out, right? You can do all this work or you can just hold ETH and you're probably going to get a bulk of the return. With way less volatility.

But have you ever considered just calling Andre and telling him?

It's, it's, you know, it's on the list. If things get bad, we might have to break that one out.

But yeah, let's see. That'll be— I do, I do think that there is, you know, it is amazing how much the market has changed from that perspective. There used to be so much, so much alpha and just like tracking all of these, tracking all these people, seeing whether Andre is going to pump something or not. And now even though Bitcoin's trading at $60,000, $63,000, I mean, ostensibly it's doing very well. Even the things like Worldcoin, which have a pretty crazy cartel behind them, like, yeah, just went up 50% and went straight back down. I mean, things just don't seem to work as much.

Worldcoin is the stupidest idea in, not just in crypto, in anything that I've heard in a long time. Like, I think it's, I think it's the stupidest.

There's a lot of dumb things here, Jonah.

There are a lot of really dumb things out there, Jonah, including by the way, that thing behind you.

Yeah.

What is that?

That is a, that is a, a North Korean AK-47 covered in dead butterflies, um, with bullets, bullet, like fake bullets that have, um, commodities inside of them, like gasoline and diesel and jet fuel and stuff. Um, and yeah, I'm not in my usual, uh, place today, but this is, this is a piece of art that I like and it's pointed at my ear. In honor of, uh, current events, you know. I just realized, um, but yeah, no, it's, it's as— okay, so this is obviously a stupid idea that somebody paid for, me. Um, I think that scanning people's eyeball— this is, this is where, this is where I'm too much of a boomer to trade crypto. I look at Worldcoin, I'm like, it's a giant orb that people scan their eyeballs with. Like, not since the— that, like, juice machine that didn't work that tried to value itself as a tech company like 10 years ago. Have I seen an idea this dumb?

I don't know. Let me, let me, let me steelman Worldcoin for you.

Thank you.

So you need some way— there are a lot of bots in this world. There's— with, with AI coming up, basically, you're going to get to a place where it's going to be very easy for people to game systems. And so knowing that somebody is human is actually extremely important, whether you're building a platform, you're building a product, you're trying to incentivize people to use it. Like, how do you know you're not just getting taken advantage of? Worldcoin at least presents an attempt at solving this by saying, hey, if we get everyone in the world to scan their eyeballs, then we can prove that you're a human.

And yeah, I get it. I get the premise, but that's a big if, Avi, like Who the fuck is going to scan their eyeballs? Are you?

I did. I don't know. Like, I'm— I scan my eyeballs to skip the line in TSA.

Yeah, we talked about this recently. I think we were hitting on Worldcoin and everyone's like, well, if you have CLEAR, you did the same thing. And then I was like, damn it, I did the same thing.

And by the way, CLEAR is also— they say the weirdest shit. Every time I go, I tell them to change the little voiceover. But when you scan your eyes at the end, they go, we have finished taking pictures of your eyes. And you're just like, dude, like, say anything else. Anyway, man, you listen to this.

That's how you innovate. I'm making sure the Worldcoin team is listening to this. They can, they can add in a different audio confirmation.

Guys, I will happily take 1 million Worldcoin a year to consult you and tell you how you should, you know, run your project happily. Just let me know.

No, at some point we need to, we need to talk to the people who actually do earn millions of tokens per year advising and helping tokens launch. There's a whole market-making business. The GSRs and Winter Mutes of the world actually do that sort of thing. And there's a lot of that going on behind the scenes in crypto. It'd probably be valuable to talk to those guys. But in the short run, I think those are the only guys who are trading most utility coins right now is the the market makers. I think it's just like, when I look at the liquidity in some of these, I call them altcoins, we could call them utility coins, whatever, anything that isn't a major or a meme, it really just looks like market maker on market maker violence every day. It doesn't look like there's real participation. These things are like loosely correlated with Bitcoin and ETH. And everybody, everybody shits on me when I say they're going to underperform because obviously they're they just trade like levered Bitcoin and ETH. But that's only because like somebody at Wintermute has a correlation model that makes Worldcoin move sort of in line with ETH, but in more percentage terms, more percentage points per day, because it's, it's Worldcoin and it's not a major. I really think that's going to end at some point, especially when these unlocks occur. But I might be, you know, to your point, Chiefing, I might just be missing out on the next big narrative that needs to get written. I think I'm going to wait until these altcoins get so hated and then maybe it's time to start selectively buying ahead of a regulatory paradigm shift.

You don't think they already are?

I mean, not enough.

I'm kind of with Joe. I mean, I meme on Jonah on Twitter when he does the threads of like, here's why, like, here's why altcoins are fucked, thread below.

And he absolutely deserves it, by the way. He absolutely deserves it.

He did that. He did that with Bitcoin. Soul at 20, and he was like, here's why Solana is fucked. And I remember trolling him on that one before it went vertical. But no, I, I like, I think obviously these things can remain hated and, and do terribly at the same time, right? I do think with inflection points, oftentimes you kind of, there's some catalyst, like there's some trigger. So if it's for some category, right, like there's something that incites people and you can see the market react, and I think you generally have time to act like the only, the only other alt that I hold a sizable position in is TAO. Like everything else is for the most part a trading position. So I'm with Jonah. I don't think there's much that is investable. Obviously there are. Might not have done all my homework, but most of these things are, as Jonah says, are they're kind of fucked.

So take me, take me through. The day of figuring out, well, what is investable even for the short term? You say most of some of these are trading positions. Like, how do you find the alts for trading positions when you're constructing your book?

For sure. So set aside, let's say, like 5 to 10% towards if you want to call it more active trading, you know, things that could happen there would be obviously you're kind of just watching news. You could be trading kind of news headline events, could be some catalyst, you know, protocol upgrades. There are certain times, obviously, like trending environments where I do think you can gain signal also from just what other influential, like, accounts are posting. You can kind of get a sense for what the zeitgeist of the moment is, and it's kind of up to your intuition to decide how much sort of juice there is. Obviously, you're watching, you know, your Velo dashboard open, you're kind of seeing what positioning looks like. Um, I don't know, I thought about this even for this podcast, like, there's some kind of loose general frameworks, but I do consider myself, I think, more of like a vibes investor and trader where I do think you have to lean on intuition a bit in some of these situations. But in terms of unearthing new opportunities, obviously it's like monitoring news flow, monitoring market structure. What are people trading, you know, uh, in terms of what's gaining volume, what's decreasing in volume, where's sort of attention, where's the general kind of flow of liquidity. That's sort of what, uh, what I would look at. But not many things actually even, you know, I think, I think I look at more opportunities and say no than I'm like, yeah, let's do that.

So how did you walk us through using that playbook that you just described play by play to arrive at the conclusion that you should accumulate like a slug of TAO? How'd you do that?

Yeah. So again, even starting top down, right? So I'm assuming one, we're in a bull market. So I think you want to be structurally long these assets. Um, two, from a, from a thematic perspective, um, Big believer in crypto AI for a few reasons. One, I think crypto AI reminds me a lot of DeFi in the early days and even Bitcoin. I mean, I wasn't around in the earliest days, but where you kind of have this unifying theme and rallying cry that kind of gets everyone together, right? I think I tweeted this. Yeah, Bitcoin is we're going to separate money from the state. Ethereum, right, we're going to separate finance from the state. And to me, decentralized AI is we're obviously going to separate AGI from the state. You know, and Ethereum obviously does piggyback on Bitcoin, but I think Bitcoin and AI are probably the two most— those are the two most powerful narratives that can exist. AGI, we obviously have no idea what this is going to look like, but we can— I think we can be pretty certain it's going to be kind of life-altering. Um, it's not really hard to imagine a world in which any single state actor, you know, will want to sort of control and influence this. Um, and that, that power to me is just too great for it to be kind of confined into the hands of a single power. Now, I'm not saying anything that interesting has been built so far. I'm just saying that the rallying cry, the narrative, the message is very, very strong, and it's going to entice people into it, and it already is. You know, you're seeing a lot of kind of independent AI developers just sort of tinkering with these systems in their spare time. No, no, many that have kind of spun up, um, you know, BitTensor subnets or mining certain subnets. You saw Gary— or sorry, Barry— launch their decentralized AI investment trust. So it's very clear this is going to be a movement that's going to see a lot of capital flows. And then I do think it's true, right? You know, retail people, they don't really have an avenue to access investing in kind of the best AI talent. You can buy Nvidia, Microsoft. Who knows if those trades have played out, but obviously they've done really well. But you can't really get access to private market valuations. And again, in crypto, I don't think many things are investible, but there are going to be sort of a few projects that, that are— you kind of have to do the work of finding them. Um, so I think you have this story in this theme, this very powerful story that I think can last cycles. I think it's actually an objectively good movement. Like, the world would be much better off if we can separate AGI from the state. And I think you have— you will have a pretty steady flow of capital because, one, any new capital raised by, you know, your traditional funds, like, they will have to look at this category. And then I think— do you think retail— you know, there's a good chance that retail capital flows in as well. So I start kind of from there. And then when I look across the things you can invest in, you know, they're all very narrative-driven to an extent, but BitTensor is the only actual kind of decentralized community or something that looks to be forming into a decentralized community that has kind of grown organically and in a grassroots manner from day one. I think back in like October of '23, they might have had like 4 subnets. I think they're up to 38 now. And the quality of them is increasing. There's one called Subnet 8. It's like a, just a trading bot. So you have all these miners that are creating different trading algorithms, um, and the best ones you can kind of copy trade behind them on Bybit. And I actually, I haven't backtested it. I kind of followed on Twitter, but I think they've lost maybe 2 or 3 trades out of maybe like, I don't know, 50, 60. Um, they're definitely like kind of just momentum trades. Like they just, they buy big dips and sell rips. But I mean, this is like investing in systematic strategies, basically. Yeah, pretty much. And they just built it as a BitTensor subnet. Um, other things too, honestly, like the monetary policy mirroring Bitcoin is interesting, right? I think it's an asset that, that just tends to be hoarded when it's that scarce. Um, you know, the founder is definitely like a zealot-like figure. And again, right, I'm kind of deep in this thought of you want to invest in these movements and you kind of need, you need these types of leaders that almost sound sound kind of deranged, right? Like almost an AI Jesus. And I think Kwon has taken on that form, which is good, right? I don't, I don't know if it's all going to work out, but you need, you need someone that can, can constantly rally the troops and paint, you know, paint a world that is different from today. And really, I just like, in the beginning, when I first kind of looked at it, I was just hanging out in the Discord watching, like, it was honestly all engineering-related questions, right? It wasn't like, please, sir, price target, my family. Um, the types of things you normally see in a crypto Discord. Uh, there was no— there's no price— there's no price talk allowed in the main one. But I just saw a genuine community forming around it. And from a trade perspective, at the first— like, I think I first bought it like $2.16 back in— back in Q4. It had just done like a 50% correction from like a huge move. I'd heard about it on the initial run-up, was feeling insane FOMO. I didn't— I didn't enter, um, but it was a lot of like sharp people around me that were getting into it. And The thing that I think that people don't get about it is it's not really using— it's not using a blockchain for any of the actual, like, AI computation. Um, it's just creating this incentive game around building models, and it's super meta, and it honestly probably might not work. Um, but it's kind of starting to work, and if it does work, I think it can be pretty big. If anything, I think it can have just an insane kind of, you know, hype-driven, uh, move. And I do think it's one of the only— it's one of the only investable, like, assets in AI you can buy where you're like, it might not work, but it seems to be growing. It's grassroots and I need to put money in the space somehow. So let me do it. And, you know, Barry Silbert being a huge backer and holder, it's not going to hurt. He's obviously going to pump resources into this just like he did with ETC.

Straight to the moon. Now, I believe, I believe it was a compelling, compelling, very compelling vision. I, with AI coins in general, I always thought that if somebody was able to actually build a real product in AI, it would just attract so much damn usage or so much damn investment because of exactly what you said. You can't access anything in the AI market right now, right? That's why when you look at Bitcoin miners, Bitcoin miners across the board just had this massive, massive, massive rip solely because they said they were going to start building up facilities to— for, for backing up AI, right? Basically saying, okay, we're going to give you We're going to give you guys high performance compute and we're going to build this over the next 5 years. And they all like tripled. But even then, it's like, that's not really— I think that's like super, super overblown because it's not even a direct investment in AI. It's an investment in something that maybe is going to build out good warehouses. So it's— I think if, you know, if they actually do build out a good, a good product, it was kind of the only place you can go. To get exposure.

The other thing with BitTensor, I'm realizing that the— my view on it is definitely more of like a longer— it's a longer-term investment. This isn't, this isn't a trade. Like, in terms of a trade, I, you know, I bought, I bought a fair amount honestly at, um, even like at like $2.12, $2.20. There was actually a huge dislocation, decent dislocation between like the wrapped version on-chain and, uh, what it was trading on centralized exchanges because the chain went down for— it was a small vulnerability, but the chain was halted and the only way people could offboard is if they held wrapped TAO, they could just sell it on-chain and just get their liquidity out. It was trading like a 10-15% discount. And if you read the Discord, like the bridge was coming back online, right? So that was a pretty quick— you can't size it that aggressively, but you could, you could still size it. And that was a free like 10-15% right there. And then prices, I think, are up like 40% since then. So that was, that was a fun little tactical trade. But yeah, the other— my other view on it as well, from like a longer-term view, is Most of the AI coins you see, stuff like Livepeer, stuff like Render, IONET, all of these things can actually just be their own BitTensor subnet. And I did notice a trend a bit earlier. I think that the ecosystem got a bit derailed with some of the stuff recently, but it'll be back on track. But in like Q1 and Q4 of last year, you saw a lot of projects like Kaido and then MyShell, Inference Labs, doing their actual initial kind of product launch as a BitTensor subnet, right? Because obviously there is this big reward in subsidies if you launch one of the better models. But to me, I was like, this is actually— it's working and it's a clever way of bootstrap. It's a clever way of pretty much saying, hey, instead of launching on your own with no resources, come launch on BitTensor and you'll sort of be paid to do so. And if you kind of create that flywheel, like there'll be sort of enough demand on the other end to offset the, the emissions. And obviously, I think we're in probably year 3. I actually don't know exactly when they went live, but we saw with Ethereum, right, like the, the concept of high emissions, like these things can get changed by the community. This is a dynamic thing, it's not a static thing. So, um, yeah, I think that's one of the more interesting kind of grassroots ecosystems that has developed this cycle that I don't think is getting as much love, uh, as it could or as it should.

That's super exciting. I mean, one, if I may, I just want to try and poke a theoretical hole in it because that's, that's one of the best trade pitches I've heard in a long time, the one you just gave, uh, for BitTensor. Here would be my, like, let me posit something to you and, and have you defend it. Um, what, you know, we all in crypto as crypto participants witnessed the vicious brutality of the bear market of 2022. It's fresh in everybody's mind. There are multiple ways to lose money. You could get exchange rugged, you could get wormholed, you could just be down bad on your bags. Lots of ways to get fucked over. But the anatomy of that bear market is very clear and present in all of our minds. So wouldn't you say that AI is at the peak of the hype cycle and perhaps primed for maybe not a vicious bear market, but a bear market, like what happens if Nvidia trades down 50%? What happens if AI cools? Does that impact BitTensor or, or valuations in crypto, or is it just completely distinct and undervalued?

Uh, I'd say I think they're, they're— I think they're somewhat loosely connected. I don't think you can make the argument that they're highly correlated because Nvidia ran, I don't know, maybe did a double and, and really pretty much took over everyone's imagination in the stock market while crypto AI coins fell like 70%. If there was a tight relationship, that shouldn't have happened, right? People should have been like, hey, I'm buying the dip on AI coins because Nvidia is up. Those flows obviously aren't there. I think the AI coins are really just a reflection of the alt market in general and any idiosyncratic things that are happening in that ecosystem. I don't— I think it'd be foolish to say that if Nvidia really, really drew down that it wouldn't be bad for AI coins, but I think they're so relatively under-owned, like, to the kind of global, you know, like, the market cap of Nvidia. I think, I think these things are so small, um, that it won't really matter, right? Like, they're just— these things are tiny in the kind of grand scheme of things. Like, there's just a finite number, you know. I think Render is— makes no sense to me, like, why people buy it, right? But people hold it, they want to believe it. It's, it's small. Like, you kind of run out— you run it— you run out of sellers at some point. So I think crypto is just so small comparatively that I don't think the flows would matter over, let's say, like a 3-month time horizon. Could you have a week or 2-week pullback? For sure. Could you have people try to play that trade? Definitely. But I don't think it would be sustained by any means. I don't think that people are— I don't think the price discovery in these coins is happening on the basis of what's happening in AI.

That's actually a really good way of phrasing it. And maybe, maybe they're not even comparable. Maybe we can't even compare BitTensor to NVIDIA. Maybe it's more like, hey, look at what Cisco did during the tech bull market of 2000. And the Bitcoin equivalent at the time was the TCP/IP protocol underlying the internet, right? Like Cisco was selling the network switching equipment and the hardware, kind of like NVIDIA does, and TCP/IP was the protocol, right? Now TCP/IP wasn't investable, but right now you could easily have a situation where Nvidia comes off because GPUs are oversupplied and suddenly, you know, compute is cheaper. So that's bad for Nvidia, but it's bullish for protocols that need compute, right? So that's, that's kind of interesting. I hadn't thought about it that way. Um, wow. It's cool to have somebody actually do like a proper, like altcoin shill that I could buy into, you know? There's been a lot of it and it doesn't make a lot of sense to me, but that one, that one I can get behind.

There's not much that makes sense to me either.

It's beautiful. Honestly, I love being in an industry where nothing makes sense.

Well, let me, speaking of nothing making sense, uh, Chiefing Zaa, you mentioned Discord. Now you and Avi are obviously a lot younger than I am. When I look at Discord, to me it's, it's the same as when I walk into like a not that I do this that often, but when I walk into a nightclub these days, Gen Z can't focus for more than 20 seconds, so the DJ switches the song every 20 seconds. It's like this ADHD, um, twisted apocalyptic nightmare for me. And I kind of view Discord the same way, like it's just like just millions of messages per second, uh, of like utter brain-melting ADHD nonsense. So I was kind of wondering You mentioned that you use it for alpha purposes. Like, how on earth can you find alpha in that mess of a fire hose of garbage called Discord? What do you guys do in there? And what do you look for, both of you?

The question of what do you guys do in Discord is so hilarious to me, but it's like, what do you do on Bloomberg chat, Jonah? It's the same shit.

Talk to my buddies. Yeah, but there's like 3 messages per minute. It's not like 3 million per minute.

Yeah, it's just funny. Um, you just gotta find the right channels. I don't know, what do you think?

Yeah, I mean, you're just kind of just stalking the conversation. Like, if, you know, if you were around back in the day, there was, uh, in the Synthetix Discord, there was a trade— there was a channel called Degen Trading. That channel might have found like the most 100x's probably in history. All this community, people are just like sharing ideas in there. Obviously it was, it was DeFi Summer, it's a different time. But like, yeah, just, you just sit there and just read, like read the conversation. There's all these like subchannels. And a lot of it is organic too, or like not even, I don't say organic, but a lot of like these channels are just engineers are trying to get stuff done and they don't think anyone's actually following it, right? Because there's no reason for anyone to be in that channel other than like engineers trying to get stuff done. But you can just stalk browse and kind of get a sense for, you know, is the project like, are the docs like well done? Like how much help, you know, do they need from these engineering teams to get stuff off the ground? Like you can kind of get a sense just by the discourse, like how well a project's run. But I think you have to go autist mode a little bit and just sit there and read.

Yeah, maybe I'm just too social and normal and not on the spectrum. I was wondering.

You just take like 20 grams of Adderall, 20 mg of Adderall, and you just sit in front of the Discord and you just like let it stream into your eyes.

This is financial advice.

I promise you, you will come out a richer man on the other side.

Not financial advice. A lot of people, they're always asking. It's kind of like the Ronnie Coleman thing, right? Everyone wants to be a bodybuilder, but no one wants to lift no heavy-ass weights. Everyone wants to make it in crypto, but no one wants to face 20mg of Adderall and sit in the Discord all day. It's not that hard, folks. It's really not that hard.

I mean, it's so funny because like, it's so true. And also, you know, as I, you know, as I get to meet you guys and meet this sort of like, this crypto crowd, the really like the real OG on-chain, degen traders who actually made it and made it big, the more I realized that these guys, these are self-taught traders who are far better than most of the traders that I've worked for at like premier white shoe like institutions of high finance. So, you know, you guys are putting in the work. It's just a different kind of work than maybe digging through a 10-K or a 10-Q. You're instead, you're just trying to find signal in a fire hose of noise called Discord.

Speaking of a fire hose of noise, which this podcast is, uh, I think, I think that's probably a good amount of noise for the people today. Dude, love talking to you as always. This is, this is a ton of fun.

Yeah, guys, really appreciate you having me on. This was fun.

Thanks for coming on, Za. I know what to call you now. Let's keep talking. This TAO thing is interesting. None of this is financial advice, of course. We don't know anything. We're two people and a green lion that smokes weed. Don't listen to us, do your own research, etc., etc.

Good luck out there, everyone.

Until next time, stay safe, don't get assassinated.