In today’s episode, the fellas take a wide view on the industry, starting with a review on Paris EthCC, Apps vs Infrastructure, and the future of interoperability standards. We also discuss the launch of Worldcoin, why it’s important and what problems it may present. The conversation then turns to AI, the future of Twitter, Crypto regulation, and 2024 Presidential nominees. Enjoy!
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Resources:
Worldcoin
https://worldcoin.org/home
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Use code BELLCURVE30 to get 30% off Permissionless 2023 in Austin: https://blockworks.co/event/permissionless-2023
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(00:00) Introduction
(02:52) Paris EthCC
(08:41) Apps vs Infrastructure
(13:32) Interoperability Standards
(17:23) DeFi 1.0, Liquid Staking, Derivatives, Stablecoins, & Spot Exchange
(19:52) Trading Bitcoin, Apple, & Snapchat & the Knowledge of Hindsight
(23:19) Bridges as Inventory Solutions
(30:03) Worldcoin Update
(36:00) AI vs Worldcoin Proof-of-Personhood
(39:11) AI’s Impact on COGS
(44:17) Gen Z’s Demand for Private Channels
(45:39) Future of Twitter/X
(49:52 Crypto Regulation Update
(59:16) 2024 Presidential Nominee Review
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Disclaimer: Nothing said on Empire is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Santiago, Jason, and our guests may hold positions in the companies, funds, or projects discussed.

All right, everyone, welcome back to another episode of Bell Curve.

Before we jump in, quick disclaimer, the views expressed by my co-host today are their personal views and they do not represent the views of any organization with which the co-hosts are associated with.

Nothing in the episode is construed or relied upon as financial, technical, tax, legal, or other advice.

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And to reward you for being such great listeners to Bell Curve, you get a special 30% off code.

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Welcome back to another Bellcurve Weekly Roundup.

You got Michaels 1 and 2, Vance and Yeno.

It's been a while since we got the whole gang back together.

You can tell who's living in like, who's living in hot New York right now and who's living in like probably cold San Francisco, huh?

And then in November we dress like it's just absolutely freezing.

For some reason, the weather in Paris I thought was going to be brutal, but it was really nice.

All their workers are on strike, but somehow ours is the 1 that smells like trash and it's just like a general disgusting mess.

I heard, I've actually read an article about the cleanup that's going on in Paris right now to get ready for the Olympics next year.

Apparently they hope that by summer 2024 for the for the Summer Olympics you can actually go swimming in the river in the Seine It'll be the first time that it's available for people to go swimming in a hundred years

That's bullish Paris bullish Paris man's I'd be curious to get your take.

Like any big takeaways from the conference?

I thought generally it was a great conference, really good vibes, a mixture of kind of like OGs from previous cycles, but also a lot of young, new kids from frankly everywhere.

I also met a few teams from San Francisco of like 21, 22 year old kids who are just excited and kind of have that like first cycle naivete about what they're building and what they're going to do.

That's like a function of just, you know, belief in the space.

And I think that's great to kind of have new people in the industry.

The other thing that's striking every time I go to a conference in Europe is just, there is no domestic technology industry.

And Mike, we talked about this a little bit, But, you know, I feel like Michael and I and probably you guys to some extent, like, kind of starting our careers in California, most of the people we knew who had like made money who had, you know, nice houses, like they either had worked in tech companies or had been acquired by tech companies or started a startup.

And there was like, a very robust ecosystem for us to go from tech company to startup or venture firm or raise capital and go on that journey ourselves.

There really is nothing of that same version in Europe.

There's some, but there's no real domestic startup industry.

I feel like if you ask an average person, a millennial in France, that's probably a young guy like us, how did your friends get wealthy?

They wouldn't say technology, they would say crypto.

For them, crypto is like the Super Bowl of everything.

It's not as much about kind of like the Y Combinators or like the raising venture money like crypto is kind of the be all end all and I thought the attendance at ECC kind of bore that out.

But also you have kind of like this like cryptographer cyberpunk vibe that you don't really get in the US.

Maybe it's a little bit more present in New York, but like, it does feel like there's more of like, emotional commitment to the ideology of crypto, because that's been the centerpiece of, you know, young people making money, young people building things.

And you know, I look at like the OGs that we kind of, you know, Matt or saw around there.

You know, Konstantin from Lido, He's Eastern European, E of Rune, you know, he's from, I think, Denmark, Copenhagen, Cain, a little bit different context, but he's like from Australia and you know, is in Europe a bunch but it's, it's not as American as a movement, especially in like the OG kind of centric circles.

And I thought that was pretty interesting.

Definitely going to make it a cornerstone of our trips in the future.

I have a thesis on that, which is that people who come into crypto in the US oftentimes come in for the money right away.

And so then when the money gets tough, like in a bear market, a lot of people get wiped away.

But if you actually look at Europe and specifically Eastern Europe, so I first time I heard about Bitcoin, I was living in Budapest and it wasn't even introduced as a thing that you could make money on.

It was basically, the story was just like, you, you know, my parent, you know, all these Hungarians, their parents lived under Soviet Union, communist regime, and they were used to like growing up, you know, hungry, 1950s, 1960s, horrible place to be after the war.

And, you know, if you go on like the trams, for example, in Budapest, nobody talks.

And the reason nobody talks is because there's like, their parents remember when there was like mics and video cameras that would be watching you.

So the way they thought about Bitcoin and the way it was introduced is like self-sovereign money.

So then when you go into, so if you come into the industry for an ideological reason, the, when, when a bear market happens, you it's the, the ideology hasn't changed at all.

Whereas folks maybe who come in in New York or San Francisco, very, very volatile emotionally because you ride the volatility of the prices.

Yeah, I had lunch with this crypto whale, just won't name him for privacy sakes, but just even the way he was talking about kind of how he thinks about money and his stack is very interesting.

He's like, yeah, I have all my coins and then I have some stable coins and I'll diversify my stable coins at some point, but like why would I ever sell my coins?

It's like Americans are usually just trying to get back to real dollars, but it does feel like there's more of the emotional commitment to the ideology which is cool.

And even the characters, you know, like the pink hair, the long dyed beard, you know, the cryptographers that are trying to make, you know, something private and secure to the nth degree.

And I think the US brings more of the consumer, more of the trad fi experience to it.

But to your point, Yano, when things get bad in the US, you can rotate to AI, you can rotate to building a consumer app, a fintech app.

And yeah, for all of the beauty of Paris and what I thought was just like an absolute jumping conference, I looked at this Wall Street Journal article, you know, Paris house prices are down only for the past like 10 years.

Like there is no domestic tech industry that's kind of like pushing everything up.

It's like only crypto that really is the wealth generation vehicle there.

You know, there's, I was asking someone, I was like, how many, some guy from Spain, I was like, how many unicorns are there in Spain?

And we're not really sure if it's still a unicorn.

So it's like that's kind of what you're working with over there.

It's just very different from the US where I think there's like 1, 200 unicorn or at least there used to be.

I have a question on the content for you guys.

The Twitter talk was in the kind of recaps was like, oh yeah, everyone's building infrastructure, no apps, everyone's building infrastructure.

And I feel like that's a thing people like to say in all their markets.

I'm sure everyone was talking about infrastructure and not really the apps.

Do you guys think that is a problem at this phase of the industry or that's just, look, that's where we're at, is the infrastructure phase?

I think it's not a problem, but eventually I think there's a middle ground.

And 1 of the things I kind of feel like about apps versus infrastructure is there's, first of all, obviously there's a lag in between infrastructure and apps where you actually need good info to build the apps.

And so it tends to lag like, you know, 6 or 18 months or whatever it is.

But the other thing is there's kind of this like chicken or egg problem when it comes to this, which is that in order to build good apps, you need infrastructure that will support those apps.

But ultimately, the infrastructure should be in service of the apps.

Like you need an app that has product market fit that will tell the info guys like, Hey, this is actually what I need to build.

And what we're lacking is that 1 thing, right.

That will like give the infrastructure providers, it's like they're trying, it's very exciting, right.

There are all these different takes on infrastructure, like just to give you a sense of the moment in time that we're in, there was a conference called Modular Summit, which was awesome.

But that's literally the nerdiest thing ever.

It's like, do you build a monolithic stack or modular stack and switch components out?

It just shows you the moment in time that we're in right now.

And I think what these guys are sort of lacking is like 1, like, ah, this is there was a great app.

And like sort of this idea to rally behind that.

I think what you're starting to see is really good entrepreneurs building a product like an app and then supporting infrastructure around it.

So like ZK sync and ZK era is like their version of the L2, but then they're going to build a stack that will allow different apps to build like their app specific environments with different modular components they could shift in.

So it's kind of their bet that like, this is how we think it should be built.

But like, by the way, here are all the components.

And like, if you want to change some stuff, you could build it custom the way you need it to, Scott Sanardo, Argus labs guy in gaming is actually very similar to this.

He's got like a game, but then he's also building this set of developer tools where it's like, this is kind of how I think the infrastructure should look.

But there's enough flexibility where if you wanted to customize it, you could do that as well.

So I kind of think it's like not a huge problem, but it definitely was very infra heavy.

And to say the obvious thing, it would have been nice to actually see more app.

You could make the argument Cain is doing the same thing in synthetics, right?

They built the protocol for liquidity here and then now they're also building Infinex.

You're not going to see a lot of app developers at the infrastructure conferences though, just as a rule.

You're going to see them at the gaming conferences.

The DeFi people don't really get invited to the TradFi conferences, but It's a bit of just, you're never really going to see the apps there, just because that's not who they're being built for.

But I also think there's this other concept of, you know, would you call liquid staking an app?

Would you call, you know, stable coins an app?

Like I would probably call those like money apps in some way.

I think there is like this prototypical, you know, we know what an app and web 2 looks like and therefore it will exist in web 3, or it should at least.

I think they're coming but they're mostly gonna look like games.

But I feel like people want us to build like photo sharing on chain and that'll be like a killer app.

And it's like, you know, it's just not really the form factor of the technology, but getting funded.

I will say that, Like we see a lot of infrastructure at the conferences, but there's a ton of games and weird consumer apps that are that are raising rounds and I'm pretty confident they're coming.

I would also say I think we're just at that point in the cycle where they either have been funded and they're building like There are tons of games that have been funded in our building, but if you're starting a new game from scratch right now and you need to get some seed capital to get off the ground or you need to be able to build a team of 50 to build the game, it's going to be incredibly difficult.

I don't know how many they announced in this specific reord, but they've dropped 75% of their staff and they're desperately looking for funding.

The apps are coming, but I think it's also just a terrible time to be raising for an app because you have to be able to prove success and you have to be able to prove usage to get the valuation that you had last time or to be able to raise any capital whatsoever.

So I think it's also just like really simple.

Infrastructure can get funded right now, whereas apps are having a tough time.

Another take that I had as well, this is a little bit more on the, I sort of walked away from the conference thinking interoperability was still a pretty big problem, especially between, it's like the good news and bad news, like different L2 ecosystems, like different stacks.

What it sounded like from a lot of these guys who are building these protocols is that there are 2 problems, which is 1, there's not an agreed upon set of standards.

It's hard to agree upon that set of standards because everyone's built their own and it's like, well, if we're going to use 1 It should be mine so there's this sort of strategic incentive not to do that but then also Because in order for there to be a set of standards that everyone agrees on there probably needs to be some amount like some Something enshrined on aetherium actually which just takes a really long time to do.

But the good news is that interoperability seems to be solved within these layer twos, which is like a ZK stack, like all of these different app chains that are like hyper chains or whatever it's called that will be built will be interoperable.

Same thing with OP stack app chains, arbitrum orbit chains, whatever it is.

But the big friction in between the lack of interoperability between big L2 sort of roll up environments is that market makers and builders are going to be the ones that kind of step in and abstract away that complexity.

I thought that Chainlink CCIP was a pretty huge announcement.

I mean, that is exactly getting into the problem of how do you build a cross-bridge messaging layer between an OP stack versus a ZK stack versus ETH L1.

I mean, to go back to it, I think Synthetix is going to be 1 of the first to use that protocol and you're able to transform Mint natively on ETH L1 and on OP right now, which is the platforms that they work on.

I thought there was some cross-chain messaging that came out that I was excited to see at least.

We've held Chainlink forever and we've been waiting for it to get past price feeds and on to...

I guess that's a broader theme for all of the OGs, the projects that are doing well that have real usage is there's kind of this conception of, just to borrow from Maker, end game for everyone else.

It feels like CCP is the end, CCIP is the end game for Chainlink.

It feels like Infinex and all these front ends are the end game for Synthetix.

It feels like people kind of like, you know, put the final chapter on the table, or maybe not the final chapter, but like, you know, the bridge that would lead them there.

And at least for Chainlink, it was like, I was there with Sergey and Kane before before they announced him, but it was kind of just like this feeling of like, you know, finally, like it's, you know, and it makes sense for Chainlink.

It's like the Internet of Contracts, there's going to be a thousand L2s.

Like you want to know where everything is living.

People watching agnostic, like they already have all these tie-ins.

And so I think like the winners are just going to really compound their advantages here.

I'm a little bit more suspect on like the newer infrastructure.

I'm sure things like Espresso and Suave and the monolithic stack are very interesting, but like, they're playing catch up to a large degree.

The other takeaway I had just from everything is like, there's going to be so many interesting things that you can do with your ETH.

You know, you can stake it, you can put an eigen layer, you can, you know, in the future, stake it with Espresso or stake it with Suave or like there's gonna be more restaking systems.

Like, you know, it does feel like there's just a lot there with ETH in a way that in previous years it was not as ETH centric.

It was like, go to Solana, Go to Avax, go to Luna, go to Anchor, you know, whatever.

I think I'm actually pretty starting to get kind of bullish on the DeFi 1.0, like OG guys.

Actually there's a funny, I think we're within 1 week of when, remember when DGN Spartan started that like 3 years ago?

in November, which was like 6 months early before, like DeFi went up like 10x before the bear market started.

But I was just like, fuck, you know, calling it and he knows what he's talking about, too.

is probably not good on a long term time horizon and a lot needed to be fixed in DeFi.

And, you know, everyone was just incredibly just cash flow negative.

But now you look at the OG protocols and it's like,

Like S and X did a $500 million, $600 million a day the past couple of days.

If you stake S and X, you're earning 30% APY.

Maker's spitting off, I think like a hundred million in earnings.

Lido is close to a hundred million of ARR and like they added, I think, I think it was, yeah, the 25th, they added a hundred thousand ETH into their liquid staking protocol in 1 day.

Like they're growing so quickly or they're already so profitable.

And like again, if you were dropped in crypto and you didn't know anything and you were told to point to the endogenous profit centers, they would be liquid staking derivatives and stable coins.

And that's where like the OGs have really prospered and it feels like there's

you know, there's Uniswap too, but then beyond that, it's like there's a big distance between 1 and 2 in each of those categories.

I would say I would add to that spot exchange just historically.

But like even Uniswap has this new endgame.

I think they have like all the layers of the stack.

It's like they've got the front end and they've got the consumer wallet.

Then they've got Uniswap X, which is the aggregator.

Then they've got Uniswap V4, which is the liquidity layer.

And I actually do wonder if they've thought about this is the settlement layer below it, which would be their own chain or their own roll up or something like that.

But like, dude, they're kind of yeah, it's been there.

I was like, there's literally no shot we're gonna be trading Bitcoin in 3 or 4 years.

Like the market's totally going to change like ETH probably is going to get knocked out.

And Michael and I talked about this with Apple where it's like if you wanted to play like the iPhone revolution and all the apps like what should you have done with knowledge of high-end?

The math is, from the time that the iPhone was announced until today, Apple has done a 65X.

There's no series of 1 to 2 venture funds over that period of time that have also done a 65x.

It was announced in I think March of 2007, launched in June or July of

When I was in like sixth grade, my dad was like, I want to get you into investing, so you pick a stock, pick a stock and I will buy that for you and we can track it together.

And the iPod had just come out, came out.

And my dad is like, I will buy you some Apple stock.

He bought like polymer, like Rochester polymer or something.

When you're looking, when you're like, you know, I'm sure you didn't know this at age, whatever age you were when you tried to buy Apple with your pops.

But like when you're thinking about something that can literally change the structure of the human fabric, optimizing for price slippage, or is the RSI oversold, or just fucking buy it.

I remember when I was in college, freshman year, this guy came in, and he was a big New York hedge fund manager.

And so I was like, where do you get your like info?

Like what's the best source of info on like how you like what like do you read research or whatever?

He goes, you know, what's the best source of alpha?

He goes, I bought Apple when my daughter started and all of her friends started requesting Apple the iPhone, you know I bought snapchat or I invested in the in the like second round of snapchat when Everyone started like using Snap and he just had like 5 of those examples.

There's a guy named Barry Eggers, who was a partner at Lightspeed for a number of years.

His 15 year old daughter went to San Francis High School here in the Bay Area, and she and all of her friends just became obsessed with Snapchat right when it launched I think in 2012 or

And his daughter comes to him and says, you need to look at this.

And so that's how Lightspeed did the seed round.

Coincidentally, the endowment for that high school put in, I think, $25, 000 at the seed seed round, like the initial capital that came in.

And it was on the cap table when they went public.

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Worldcoin: The Power & Pitfalls of Proof-of-Personhood | Roundup