Two VCs on Why This Is the Perfect Time to Invest in Crypto - Ep. 522
Despite the doom and gloom, Placeholder VC partners Chris Burniske and Joel Monegro are highly bullish on the present moment. “We’re all going to look back on this period and remember it as fondly as we remember ‘18 and ‘19,” Monegro tells Laura Shin. The two long-term investors explain why the confluence of macroeconomic factors and crypto-native (and AI) innovations make this the ideal time to invest in a Web3 future. They cut their teeth on Bitcoin, they grew up with Ethereum; hear what they think is next.
Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Stitcher, Castbox, Google Podcasts, Amazon Music, or on your favorite podcast platform.
Show highlights:
why Chris says crypto’s four-year cycle will likely play out once again
the role of interest rates in asset valuation
whether the crypto industry has learned its lessons from the “crypto carnage” of 2022
whether there’s a future for KYC’d DeFi
when failing in crypto should be considered a crime, as in the Do Kwon case
what could happen with the rate hikes and how the macroeconomic environment affects the markets
how the ruling in the Ripple case impacts the development of new crypto companies and user adoption
whether Joel felt relieved by the ruling, considering Placeholder has invested in many tokens that were named as securities by the SEC
what Joel thinks of the new crypto bill in Congress and how he wishes that smart contracts were used to self-regulate the industry
what Joel and Chris think of the delicate situations of crypto giants such as Binance and DCG
whether the fat protocol thesis still holds up and whether it colors Placeholder’s current investment thesis
why most of the Layer 1s will become rollups, according to Chris
why Chris is bullish on Solana, despite the massive collapse in value following the FTX debacle
how NFTs will play a significant role in “establishing the provenance of content”
whether AI agents will become crypto power users
Thank you to our sponsors!
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Guests:
Chris Burniske, partner at Placeholder VC
Previous appearance on Unchained:
2022 in Review + How Cobie and Chris Burniske Are Playing the New Year
Cobie and Chris Burniske on How to Navigate a Crypto Bear Market
How To Value A Crypto Asset
Joel Monegro, partner at Placeholder VC.
Placeholder’s Joel Monegro on the Fat Protocols Thesis
Links
Fat Protocols by Joel Monegro
The Blockchain Application Stack by Joel Monegro
Decred Thesis by Joel Monegro and Chris Burniske
WSJ:
Binance Lays Off Over 1,000 Employees
Binance Cuts Back Employee Benefits, Citing Decline in Profit
CoinDesk: Unpacking the Latest Lummis-Gillibrand Bill Draft
Reuters: US SEC accepts six spot bitcoin ETF proposals for review
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62 - Governance and Capital | Joel Monegro
Joel Monegro is a partner at Placeholder VC, where he invests in decentralized networks and companies that democratize data, wealth, and power.
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Bankless Podcast #62 | Governance and Capital Guest: Joel Monegro
Joel Monegro is a partner at Placeholder, a venture capital firm where he invests in decentralized networks and companies that democratize access to data, wealth, and power. He started the firm in 2017 with his friend Chris Burniske and mentor Brad Burnham after three years at Union Square Ventures, developing the firm’s early blockchain thesis and portfolio.
In this episode, Joel explores the relationship between Governance and Capital, broadly used terms in desperate need of proper definition. Governance focuses on the decision making process in regards to capital. Capital is a broad term for economic resources – that which has utility. Governance can refer to autocratic individual decision making, but we dive into governance as a mechanism for collective decisions and achieving consensus. It is typically tied to a social and/or economic system and is made of structures that drive decision making among groups of people.
Capital represents influence, power, or control over economic resources. Capital and its utility are natural social phenomena and are relative in nature. Governance and Capital are deeply linked and arguably synonymous. The optimization of governance over capital and capital instruments are priorities of blockchains, which involve both financial and governance technology. The utility of capital can increase when pooled, especially when governance is scaled and effective.
A core argument of the crypto industry is that blockchains offer a more advanced instrumentation of capital, creating maximally efficient pathways for the exchange of value. They allow the transaction/contract settlement layer to migrate away from a state-backed system, which involves the use of courts and violence to achieve security. Replacing violence with cryptographic consensus is a powerful but challenging concept – one explored deeply in this episode with Joel Monegro.
------ Resources:
Placeholder VC Blog https://www.placeholder.vc/
Joel on Twitter https://twitter.com/jmonegro?s=20
Generations - Strauss and Howe https://www.amazon.com/Generations-History-Americas-Future-1584/dp/0688119123
------ This Week on Bankless:
🧢 Weekly Action Recap (4/24): https://newsletter.banklesshq.com/p/ethereum-at-aths-weekly-recap 🗞️ Weekly Rollup (4/23): https://shows.banklesshq.com/p/-rollup-venmo-huge-eth-q1-canada ⚫ The future of synthetic assets (4/22): https://newsletter.banklesshq.com/p/the-wild-future-of-synthetic-assets ✏️ A Short History of Ethereum Hacks (4/21): https://newsletter.banklesshq.com/p/a-short-history-of-ethereum-hacks 🏴 Coinbase Goes Direct (4/21): https://shows.banklesshq.com/p/-sotn-43-coinbase-goes-direct-jeff
------ Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research.
Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures
a16z Podcast: Cryptonetworks as Emerging Economies (Done Right?)
with Chris Burniske (@cburniske), Joel Monegro (@jmonegro), Denis Nazarov (@Iiterature), and Jesse Walden (@jessewldn)
When designing cryptonetworks -- really, emerging economies -- how do we avoid some of the monetary and fiscal policy failings of "real-world" economies? Like not separating currency and capital, which accelerated and spread economic growth through the former... but also concentrated the latter into the hands of a few? Yet how can we empower users to access capital while also managing risk?
If the promise of cryptonetworks is to better align incentives and value capture, then we can't make the same mistakes as we did in traditional economies. We also have the chance to do novel things not possible in the physical world, through software. So this episode of the a16z Podcast -- featuring voices from Placeholder VC and a16z Crypto -- goes deep into the nuances and mechanisms of cryptonetworks, tokens, and decentralized applications at every layer of the "stack". Chris Burniske (who has written a lot about financial modeling-influenced frameworks for analyzing crypto) and Joel Monegro (who has written about "fat protocols", and once managed the Digital Economy Department at the Ministry of Industry and Commerce of the Dominican Republic) of Placeholder VC discuss and debate all of the above -- and more! -- with a16z crypto's Denis Nazarov and Jesse Walden (co-founders of Mediachain, which was acquired by Spotify).
Throughout the history of information technology, we've gone from hardware to software, and software to data. So what's next, what's the layer above data? The answer is governance -- which gives more people a way to participate in decision making around a given network -- but the answer for how to implement the best governance isn't so clear.
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Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures.
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20VC: Why Most The Value In Crypto Will Accrue in Governance, When Institutional Capital Will Enter The Space and How To Think About Liquidity In Crypto with Joel Monegro, Founding Partner @ Placeholder.VC
Joel Monegro is Founding Partner @ Placeholder.VC, one of the new venture capital partnerships that invest solely in crypto assets and more specifically in decentralized information networks. Prior to founding Placeholder, Joel spent three years at Union Square Ventures developing the firm's blockchain investment thesis and portfolio. Before USV, Joel started the Digital Economy Department at the Ministry of Industry and Commerce of the Dominican Republic, a government office in charge of developing the country's national and technology agenda.
In Today's Episode You Will Learn:
1.) How Joel made his way into the world of VC with USV and what created his love of crypto and led to his leaving USV to found Placeholder? What were some of Joel's biggest investing lessons from his time with USV?
2.) How does Joel approach portfolio construction in building out a crypto portfolio? How does the use of reserves and building positions change when comparing VC to crypto? Why does Joel believe that the most interesting place to invest in crypto is in the assets themselves, rather than the companies?
3.) When does Joel think we will see institutional capital begin to move into the space in a meaningful way? What needs to happen/change for this institutional interest to materialize? How is the element of "custody" crucial to the entrance of institutions?
4.) In terms of fund construction, liquidity is often an attractive element to crypto, why does Joel believe that a traditional venture fund structure is necessary for Placeholder? What are the benefits both to the fund and the projects it backs? How do LPs both traditional and non-traditional respond to this?
5.) Joel has said before the 2 core elements are crypto economics and governance, why does Josh believe this? Why is governance the foundational layer where value will accrue in the space? How does the lack of defensibility of crypto projects make governance ever more valuable?
Items Mentioned In Today's Show:
Joel's Fave Book: Antifragile by Nassim Taleb
Joel's Most Recent Investment: Decred Investment Thesis
As always you can follow Harry, The Twenty Minute VC and Joel on Twitter here!
Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.
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Placeholder's Joel Monegro on the Fat Protocols Thesis Today - Ep.65
Joel Monegro, partner at crypto VC firm Placeholder Ventures, describes how well his seminal blog post, "Fat Protocols," is holding up, why he and his partner Chris Burniske opted to found a crypto VC firm as opposed to a hedge fund, and what main factors they think will determine the success of a blockchain. He also describes how crypto and blockchains fit into the evolution of technology, how the business models in the crypto space will be built, and why their first publicly known investment was in Decred. Plus, he reveals why their firm is called Placeholder.
Placeholder: https://www.placeholder.vc
Joel: https://twitter.com/jmonegro
The Placeholder investment thesis: https://ipfs.io/ipfs/QmZL4eT1gxnE168Pmw3KyejW6fUfMNzMgeKMgcWJUfYGRj/Placeholder%20Thesis%20Summary.pdf
The Fat Protocols Thesis:
https://www.usv.com/blog/fat-protocols
Decred investment thesis: https://www.placeholder.vc/blog/2018/5/12/decred-investment-thesis
Blog post on information technology cycles: https://monegro.org/work/2018/2/20/information-technology-market-cycles-a-brief-history
Joel's blog post on the shared data layer of the blockchain application stack:
http://joel.mn/post/104755282493/the-shared-data-layer-of-the-blockchain
and on the blockchain application stack: http://joel.mn/post/103546215249/the-blockchain-application-stack
Two episodes featuring his partner, Chris Burniske:
http://unchainedpodcast.co/how-to-valuate-a-crypto-asset-s3e08
http://unchainedpodcast.co/want-higher-returns-invest-in-bitcoin-say-arks-chris-burniske-and-coinbases-adam-white
Another episode that I forgot to mention during the show, the interview with Bill Tai, which contains ideas that overlap quite a bit with Joel's:
http://unchainedpodcast.co/maitai-globals-bill-tai-on-why-blockchain-is-the-6th-wave-of-technology
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