SEA-focused funds have seen significantly lower distributions to paid-in capital compared to funds that are focused on other regions, suggesting difficulty in realising returns for investors.
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New sector growth: enterprise, healthtech, edtech, deeptech/AI, Web3/crypto, property, automotive, etc.
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dry powder still growing though ($15.7B in 2022)
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Consumers are adopting digital financial services (DFS) at a rapid pace; cash is no longer king.
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High value users (HVUs) are defined as the top 30% of online spenders — HVUs spend more than 6X the amount non-HVUs spend online, and are more likely to increase spending over time
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For non-HVUs who only purchase offline: lower prices, trust in the platform, and ease of use can change behaviour
A good pimp doesn’t get paid for screwing, he gets his pay off for always having the right thing to say to a whore right on lightning tap. I knew my four whores were flapping their ears to get my reaction to this beautiful bitch. A pimp with an overly fine bitch in his stable has to keep his game tight. Whores constantly probe for weakness in a pimp.
Slim, a pimp is really a whore who has reversed the game on whores.
My father tearfully vowed to straighten himself out and be a man, but he didn’t have the will, the strength to resist the cheap thrills of the city.
He said. “Son, there is no reason except a stupid one for anybody to project on that screen anything that will worry him or dull that vital edge. After all, we are the absolute bosses of that whole theatre and show in our minds. We even write the script. So always write positive, dynamic scripts and show only the best movies for you on that screen whether you are pimp or priest.”
Those pimps back in the joint sure knew basic whorology. I was glad my ears had flapped to all those rundowns. They had said, “Chase a whore, you get a chump’s weak cop. Stalk a whore, you get a pimp’s strong cop.”
If I’m wrong, and I blow her, so what. I won’t give up no matter what happens. If I go stone blind, I’m still going to pimp. If my props get cut off I’ll wheel myself on a wagon looking for a whore. I’m going to pimp or die.
But he sure hates white folks. He pimps awful tough on white whores. When he puts his foot in their asses he’s really doing it to the white man. He says he’s paying ’em back for what they done and are doing to black people. His brain is rotted from hate.
I watched them walk away chattering and laughing. It was like they were real sisters. I looked at my diamond-studded Longines. It was ten-after-twelve. How about it? I was twenty years old. I was living in a six-bill a month pad. I had three young fine mud kickers. I was a pimp at last.
He said, “Slim, a pretty Nigger bitch and a white whore are just alike. They both will get in a stable to wreck it. They’ll leave the pimp on his ass with no whore. You gotta make ’em hump hard and fast. Stick ’em for long scratch quick. Slim, pimping ain’t no game of love. Prat ’em and keep your swipe outta ’em. Any sucker who believes a whore loves him shouldn’t a fell outta his mammy’s ass.”
There ain’t more than three or four good bottom women promised a pimp in his lifetime.
“Slim, you’re in trouble until you cop the fourth whore. A stable is sets of teams playing against each other to stuff the pimp’s pockets with scratch. You got a odd bitch. You ain’t got but a team and a hall.”
“Slim, all whores have one thing in common just like the chumps humping for the white boss. It thrills ’em when the pimp makes mistakes. They watch and wait for his downfall.
In a pimp’s life, yesterday means nothing. It’s how you are doing today. A pimp’s fame is as fleeting as an icicle under a blow-torch.
She collapsed into my lap crying and begging to stay. I had a theory about splitting whores. They seldom split without a bankroll.
I tell you, if you have ever had the flu real bad, just multiply the misery, the aching torture by a thousand. That’s what it’s like to kick a habit. It took two weeks. I was weak, but with an appetite like a horse. In another two weeks I was stronger than I’d been in years.
Hosts: John Cochrane, Niall Ferguson, H.R. McMaster
Guest: Stephen Kotkin
Recorded November 2022
Xi’s perp-walk of Hu Jintao
Not sure if pre-meditated, or if it was triggered by Hu reaching for a key personnel document
Never had an economy this large run by a political system this opaque
China’s Leninist structure never went away – you can’t be half Communist just like you can’t be half pregnant
Central Party School – Soviet collapse is #1 subject there, terrified of Gorbachev reform and the subsequent collapse
Xi will shave off as much GDP as necessary to keep Party monopoly
China’s economy went from $200B -> $18T
$500 -> $20K per capita
Soviets reached US military parity in 1970s – despite 1/3 economic size – but nothing like what Chinese have done
Mao in 1966 – targeted own state, destroyed planning mechanism (planned economy personnel), peasants decided they didn’t want to starve again
Peasants instituted market relations with each other — ignored collectivized statutes and norms
Communist Party latched onto this
Under Deng, grudgingly and in stages, accepted this growing market behavior and tried to control it “Party hijacked the process and the credit for it”
Mao didn’t care about trade, wasn’t economically literate
Deng visits the US, decides to change partners – divorce Soviet Union and marry US
Why? Saw the success of Japan, Korea
China took Japan model — free and open access to US market
Peasants moved to towns, cities, and built enterprises from ground up
Party steals credit too from HK’s success All the foreign money came through HK, which then invested into China’s Special Economic Zones
Niall:
-US essentially sponsored China’s development – technology transfer and access to higher education
-Xi made clear he prioritized Party’s success over the economy
Apple can make 10M phones in Vietnam, but 500M in China — scale is irresistible
At least 600-800M Chinese who are not part of world economy, didn’t finish high school, no healthcare, invisible China
We didn’t think it’d happen this quickly – that China would become a peer competitor in 1-2 generations
Niall:
-Hubris of Xi – reached climax in 2020, thought pandemic exposed US
-now China has a latent economic crisis, controlling covid, “building tower blocks for nobody”
Does the Party need the private sector? Or does it care more about its Leninist system?
ONTO RUSSIA — 34:00
Shocking for young Russians what’s happened to their country
Guests: Ryan Zurrer, Jake Brukhman
Interviewer: Tommy @ Delphi
Ryan – 10 years in crypto, mining in 2012-13, SAFTs / ICOs in 2017, defi summer in 2020, p2earn gaming in 2021
Jake – CoinFund in 2015, one of first to focus on digital assets, 8 years full time crypto investing, invested 150 projects, “technical discipline”
Ryan
More shoes to drop in crypto (eg, FileCoin because DCG in massive selloff)
OGs have driven the market for last decade, crypto native values matter
Starting defi summer, whole space got drunk on debt
Jake
FTX not failure of technology, traditional failure
If we adopted more decentralization, smart contracts – could have mitigated FTX risks
Founder quality has gone up – especially if you’re entering in bear market
Infra is more mature
DCG / Genesis
Ryan – could allow Genesis (lending book) to chapter 11, keep the rest safe
Jake – big dent in institutional investor interest
Ryan
After DAO hack, ETH developers disappointed from $30 back to $10 – but was great buying opportunity
Now possibly generational buying opportunity for ETH
Systemic risks?
Ryan – wants CZ to release audited crypto reserves – thousands of low liquidity projects depend on Binance; if Microstrategy starts to unwind, could be cascading waterfall; would be nice to see Binance buy their way into compliance eg by buying Coinbase
Jake – “should use a DEX no matter what”
Web3 social media
Jake – Twitter cannot become true free speech platform unless its decentralized, which Elon will not completely do; web3 social usability not quite there; Farcaster is familiar Twitter experience (low friction switching); people need to coordinate switching at same time, ideally with token rewards; lots of people jumping to Mastodon
Ryan – thought creator incentives would drive great migration, but haven’t been able to sign up big ticket influencers
Tommy – Audius brought successful musicians early on
Ryan – category of artists most oppressed is musicians; believes NFTs will help unlock for musicians; music needs radically different biz model; would be nice to tokenize record portfolio and have DAO buy it – but still regulatory uncertainty
Jake – what crypto product can you explain and try in 3 seconds?
DAOs
Jake
-Major reason why DEXes struggle is because you can’t move $1M from bank account to a DEX
-2015 Vitalik defined DAOs, everything revolves around smart contract
-2022 a typical DAO – very little is onchain, and vast majority of actions use web2 SaaS
-you need to build 10K iPhone apps to find one that really takes off – we’re in same process with web3
Ryan
-If too much ownership by too few people, there’s resistance to using it – eg, Uniswap “Gini coefficient” is too high
-Financial incentives can enable, but can also be huge drag on apps if you do it improperly – eg, Play2earn gaming
Jake
-DAO use cases today: Governance of public good, Grant writing organization
-future of DAOs – package of software that just works, easily upgrade your entire community
Ryan
-Most current DAOs aren’t decentralized, nor autonomous
-Broad mandate investment DAOs – have any distributed more than their fund back?
-Disappointed in how these funds are organized and operated today
-no multi-B fund has returned above 3 DPI
Tommy – best DAOs have a strong lead, clear vision, high alignment among members
Would be interested in investment DAO that is a collection of sub-DAOs with different themes, small teams
Jake – funds need to be good at 1) sourcing, 2) due diligence, and 3) portfolio construction
-Flamingo DAO has excellent network – one of best investment DAOs
-DAOs struggle at due diligence – voting isn’t the best method, how to allow non-consensus investments
Ryan – “You don’t need 50 people to do due diligence – you need one great guy”
NFTs
Jake
-NFTs are financial rails for many classes of assets
-Movies and music going on-chain
-Stock photography, AI outputs
-Real estate – more of them looking at NFTs to go onchain (instead of security tokens)
Ryan
-traditional art world has strong interest in “phygitals” – some physical manifestation of the digital art
-recommend that aspect to all NFT projects – a print, a physical piece, etc – tactile connection, “necessarily digital and necessarily physical”
-PFPs as social club
-decided to focus on art – personally resonated, impossible to focus on all areas of NFTs
-Hollywood model has not worked for most – better to focus on crypto native experiments
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Tommy
-wish more NFT projects would lean into web2 experts, have good bizdev – eg, like what Bored Apes did
-if PFP collection is successful, automatically boxes out much of the community (bc price is too high)
-PFPs can go in movies / media – but it’s about the quality of the content, not the NFT
-license characters to legit movies and games – don’t need to build it yourself – Ryan: “just go and cut the deal with Netflix”
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Macro
Ryan
-last 2 years saw coupling of crypto and macro
-does lot of MEV, delta-neutral, alt strategies beyond DeFi is now table stakes given high fed funds rate
-focused on timeline to liquidity – no more 7 years for full vesting
-crypto is fastest, most Darwinist industry in the world
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Tommy
-hard to take bullish liquid position given current macro
-crypto sells off ahead – maybe it bottoms earlier
-VC: be disciplined on valuations
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2023 predictions
Most exciting category: AI
Where will be crossover between crypto and AI?
Where does value accrue in AI? Or does it all flow to OpenAI?
If fat protocols is true, can you keep those as open public goods? What will happen to OpenAI?
Tommy – surprised by how quickly AI evolves, MidJourney, ChatGPT, “iteration cycle is insane”
Crypto use cases for AI: Auditing smart contracts, auto-rebalancing Uniswap LP positions
Ryan – early 2020s culture will be embedded into all the AI training data, could have huge impact as AI grows exponentially
Note: I tried my best to objectively capture what Do Kwon said / meant, but I do think he’s an unremorseful criminal who should be in jail. So clearly I am biased.
Guest: Do Kwon (DK) – Terra / Luna founder Host: Laura Shin – Unchained
Since last year, hasn’t been living in South Korea (SK)
Doesn’t understand how Red Notice works very well, has asked for clarification but hasn’t heard back
Disappointed that SK prosecutors are attempting to create new regulations through enforcement actions
DK hasn’t seen copy of the arrest warrant; Laura mentions the PDF is posted online, but DK says he hasn’t seen that PDF
“We are cooperating” with all the document requests (from SK govt)
Laura: Are you in Singapore now?
Doesn’t want to talk about his location for personal security – people broke into his apartment building in Seoul (both reporters and private citizens), personal threats
Laura: What about claims that Korean authorities froze $67M in his funds
“Too many things that are not true”
Went through proper procedures to pay residual taxes, hasn’t used KuCoin or OkEx “as far as I can remember”
“LFG only holds 313 bitcoin”
Hired onchain analysis company, will provide report shortly to give more clarity – should be “in next couple weeks”
Laura: Do you feel any remorse?
“Got carried away”, should have held to stricter standards In personal life “quite a bit of introvert”
Community pull for him to be more frank, transparent
Over time Twitter became his medium to do this “Largely for entertainment value”
“It is quite cringe” – worthwhile to keep up for record keeping and posterity
Laura: many people lost life savings, Taiwanese man who committed suicide, what do you want to say to them?
“My responsibility alone”
Hundreds of thousands if not millions who used Terra – “I own up to that responsibility fully”
“It’s not easy to live with”
In the process of people dealing with this grief, there were lots of accusations of fraud / theft — “important for them to have correct representation of what happened”
Crypto founder for last 5 years “Even to this day, I’m proud of work we did…values we tried to defend”
Laura: SBS News reported Do Kwon moved Singapore profits to Virgin Islands; family used proceeds to purchase apartment “I do own an apartment in Seoul”
Moved TFL corporate structure from Singapore to BVI, no funds were transferred
People who came on Korean shows that claimed to be Terra developers “were literally just interns”
Launched UST early 2021, at that time 20% was not extremely high yield, lots of 3-4 digit Defi yields
Internally, there were questions during launch that the yield wasn’t attractive enough!
Terra’s whitepaper doesn’t describe tokenomics – intentionally written in high level academic way – why decentralized algo important for industry
Didn’t initially consider need to have a stablecoin reserve
All-time high for UST/USD was $1.09
Would use SDT reserves to bring down UST price
Also made SDT stable coins available to ecosystem apps for initial / bootstrap liquidity
Initially used market operations to maintain peg – but gradually became “negligible % of overall volume”
UST became one of largest liquid stable coins, Luna was one of largest PoS networks
Eventual goal was UST would be backed by every large and promising crypto (eg, BTC)
Laura: there’s onchain evidence of cashing out $2.7B into USDT (via MIM), sent to Binance, Huobi, others
“Definitely did sell UST and Luna to fund operations” “$2.7B or anything to that effect…was not used to cash out or anything like that”
Laura: why continue to claim Chai brought millions of users to Terra, when that arrangement had ended
2020 – Daniel Shin (ex cofounder) left TFL to focus on Chai full-time, while Do left Chai which he also co-founded to focus on TFL “Consider myself the more active cofounder in building both of those companies”
In terms of Chai, limited visibility into its user data, “I should have been more consistent in how I fact checked numbers”, “definitely shortfalls on my part there”
Laura: Sam Kessler claims that Terra unilaterally re-awarded coins to an investor who lost private key (Translink capital) without discussion “Terra can’t unilaterally decide to do an upgrade”
“Validator driven process”
Laura: Basis Cash failed, why so confident about Terra still?
Saw TFL as accelerator to create lots of different apps – Pylon (yield), Anchor, Mirror
Initial Anchor team (5-6 people) spent a lot of time yield farming DeFi – Yam, Yearn – DK first got into DeFi through this
These early devs wanted to do implementation of Basis protocol and launch it anonymously
They assumed Rick & Morty pseudonyms – asked him to be “Rick” “Terra pre-dates Basis Cash”
“Currency failure of developing nation isn’t because monetary policy, it’s because underlying economy is weak”
“Don’t think there’s any underlying problem mechanism wise, it’s because no solid economy built on top” In terms of Basis Cash, “essentially all I did was join Telegram rooms and shitpost”
“I had no involvement in those things”
“It was an educational experience…why pseudonymous founders makes sense in crypto” “Basis Cash isn’t something he designed or operated…it’s something he encouraged”
Laura: Have you ever anonymously founded other projects?
“No”
Do’s description of de-pegging event
May 7, Singapore time – UST had de-pegged 2.5%, large trades against Curve LP, depleted pool
Didn’t think it was a serious problem
Over time the disparity got worse and worse
Patterns of large sells against UST
Sentiment was catching on, rumors, runaway situation
Deployed a few hundred $M to market maker, bought a bunch of UST – re-pegged briefly, “then the sells just got worse”
Luna falling, people dumping
War room of OGs, tried to raise fresh capital to buy more UST
Midnight fundraising round – got leaked – even more shorts piled up Once Luna market cap fell below certain level, the rescue fundraise became untenable
Laura: 5 months later, why no accounting or trading logs of those market makers / peg defense?
“Bound to some confidentiality” “Lot of transactions… finally in closing phases [on this report to be released]”
“I haven’t personally taken any tokens from TFL from May 2020”
Laura: Monthly unlock tokens (3M+, up to $300M USD value per month) were going to employees / operating expenses?
“Contract obligations and things to that effect”
Laura: After South Korea passport invalidated, what will you do? “I’m not using it anyway”
“I don’t feel comfortable talking about location”
Laura: When will USDT / USDC disbursements occur?
“Until litigation resolved, not able to distribute tokens”
“Don’t have a lot of clarity on how long process will take” “Not a refund…more of a goodwill effort” [to re-distribute the 313 BTC they’re still holding]
Laura: How do you feel about direction your life has taken? “Never about money or fame or success…I like making toys, simply tinkering with things”
“I enjoy building furniture…sometimes cook” “What happened with Terra wasn’t a scam, it was a massive market failure”
“Believe in need for decentralized stable coins more than anyone else”
“I’m 31 and I would still love to contribute”
“I get to do a lot more engineering”
Laura: Anything you’d do differently?
“Maybe building onchain BTC reserves earlier, more significant” “Being less aggressive less joking on Twitter”
“Next attempts at decentralized money will look a lot different”
“Without [decentralized money], what are we even doing here?”
“Deeply regretful of how things panned out with UST” but developers need to keep building
Laura: Anything else?
“Working on lots of different things…highly experimental”
“Not working on Luna Classic at all”
