Crypto Fund Investing Secrets Revealed! with Rob Hadick

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
People are starting to understand the network effects, the incentive
mechanisms of tokens, the networks effect, of liquidity, and of
having open networks. Basically, everything can be turned into a
tokenized market. Then all of a sudden, you have a
much more direct way to express viewpoints than you've ever
had before.

Speaker 2 (00:16):
Let's say it's twenty thirty or twenty thirty five. Do
you see the majority of companies and brands have let's
say their own layer twos, maybe their own tokens, and
add more value to their brands and companies. Do you
think that's the world we'll headed two?

Speaker 1 (00:29):
I think so.

Speaker 2 (00:35):
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go to vchain dot org. Link will be in the description. Hey, folks,
welcome into the Thinking Crypto Podcast. I'm your host, Tony
Edward and joining me today is Rob Haddick, who is
the general partner at Dragonfly and Dragonfly is a crossborder

(01:42):
crypto venture fund. Rob.

Speaker 1 (01:44):
Great to have you, Thanks, Tony, appreciate you inviting me on.

Speaker 2 (01:48):
Yeah. Absolutely, I'm looking forward to learning about the various
investments that Dragonfly has in the crypto space, most recently Polymarket.
There's some big news there. You guys of course are
invested in that, so I want to dive into the
details there. But let's kick it off with your background.
Tell us a bit about where you're from and what's
your professional background.

Speaker 1 (02:05):
Yeah, so originally from like outside Dayton Ohio in between
Dayton and Cincinnati in a bit of a rural part
of the country. Grew up, you know, I think the
way a lot of people do and kind of suburban Midwest.
Ended up making my way to New York after college
when I was twenty two and kind of have never

(02:26):
left so been. Now I'm in Brooklyn, but you know,
I've been kind of fell in love with the city
the last the last you know, thirteen fourteen years or so. Professionally,
you know, I came to New York to work in finance.
I was had one of my first jobs was was
at Goldman, where I was doing essentially looking at a

(02:47):
lot of internal M and A and looking at a
lot of the kind of internal strategy of what Goldman
was doing to start. So this was right after the
global financial crisis. It was during a period of time
where Goldman was really leaning into becoming a bank holding
company and was really looking at you know, consumer banking
and low cost of capital solutions, and so I spent

(03:07):
a lot of time thinking about kind of like consumer
fintech at the time. And during that period of time,
it was also uh, this is you know, call it
early twenty tens when you know, Bitcoin started to gain
a little bit of interest across you know, the Wall
Street or across you know, uh, you know, Silicon Valley
had gone a little bit more mainstream. You know, Bitcoin
went to three hundred dollars and everybody was, you know, like,

(03:29):
oh wow, this is amazing how this thing come out
at thin air and become more three hundred dollars. And
Goldman actually set up an initial kind of working group
that was looking at crypto. It wasn't uh, you know,
necessarily hey, like you know, Goldman is going to be
doing you know, all of the things they do today,
and they involved in toganization, but it was a little

(03:49):
bit of a focus on things like maybe there is
you know, support that we should be doing for like
OTC for the clients, you know, maybe we should be
thinking about how to you know, provide access, et cetera.
And so I was involved in some of those early
discussions at Goldman and that was kind of my first
foray into crypto and to bitcoin and got really interested

(04:10):
then things at that period of time at Goldman where
we started looking at tokenizations. So people might remember in
the twenty fifteen twenty sixteen era, when you know, I
think there was the initial like digital ledger technology or
DLTS for you know, putting in like essentially a lot
of tokenized things on chain, which obviously is still finally
happening now but was been a topic for a long time.

(04:33):
And then you know, kind of spent the next I
ended up leaving Goldman, spent a little bit of time
in private equity, a little bit of time at a
merchant bank looking at fintech, and really spend those those
number of years being interested in crypto and doing crypto
on the side, but really focused on you know, fintech
more broadly until twenty twenty and twenty twenty one when
DeFi Summer came around and I looked around and I said,

(04:56):
this is incredible, Like, you know, what is happening with
smart contracts, what is happening with reinventing, and you know,
financial market infrastructure is something that I need to be
a part of and really to the dive in full time,
you know, first initially launching crypto at a big traditional
hetch fund called Golden Tree Asset Management, which has about
fifty billion of AUM, and then having met the folks

(05:17):
at Dragonfly and realizing that I wanted to get even
deeper and not just be call it the crypto guy
at a trad fi fund, but be you know, entirely
at a crypto fund and made the jump to become
one of the gps here at a Dragonfly in early
twenty two.

Speaker 2 (05:31):
That's incredible and Rob your journey from trad fight to crypto,
it's very analogous as to what's happening right now with
some of the biggest names getting involved in crypto, even
the big banks. You know, what is it like looking
back at when you you know, first discovered crypto, Goldman
and things like that, and where we're at now. It
seems all of Wall Street, all the banks, all these
firms are jumping neck deep into crypto. Yeah.

Speaker 1 (05:54):
The really interesting thing about it is that a lot
of the themes have not changed. Right, So I talked
about it, right, which is okay. People understood that, you know,
when smart contracts were happening, when ethereum was coming out,
that theoretically you could reinvent the way money moves. It
could be you know, programmatic, it could move instantaneously, it
can you had a fast finality, right Like this is

(06:17):
really interesting for also the ability to swallop different asset classes,
you know, directly in a permissionless way or a permission way,
but across you know, actors who otherwise theoretically would not
be interacting with each other. That story around Internet money,
around Internet capital markets, like that story has been something
that we've been focused on for you know, over a decade, right,

(06:39):
But the infrastructure was not ready. The people understood that
this could happen. The blockchain would enable us, but they
did not understand, you know what, that what we needed
on the infrastructure layer was not yet ready, and that
it would also take longer, I think to build than
people expected. And so it's been amazing to see that,

(07:00):
you know, the initial vision is now really actually happening,
but the initial vision hasn't actually changed that much, which
has also been interesting to see. Because people understood the
benefits of the technology early on, they just needed to
get to a place where you know, we could start
to actually achieve you know, those those those milestones, and

(07:20):
so in many ways reminds you of some of the
early Internet and some of the early writings of the Internet.
And I don't think I think it's it's quite analogous.
But now that acceleration is really happening in terms of
corporates and banks and just you know, everybody across you know,
the financial sector and the payment sector, realizing that this
is potentially for many use cases, you know, a better

(07:43):
way to move value, to move money, to move information
than the current leglacy systems.

Speaker 2 (07:49):
Talk to us a bit about you know, at the
time when you were at Goldman Sachs and they were
exploring these things. At one point, Larry Fink, for example,
a black rock called bitcoin it index of money Laundering,
and they were saying, Hey, the blockchain is great, We're
going to use that to build. But they were looking
to do more of a private, permissioned blockchain versus public blockchains. Right,
but we've seen that flip that they've kind of capitulated, well,

(08:10):
bitcoin has a fit, it has the digital store value component,
and then we need to plug into public blockchains. What
did you see along the way, was that things were
discussed at Goldman and so forth.

Speaker 1 (08:22):
Yeah, absolutely, So you may remember, or maybe maybe you don't,
but I think it was twenty fifteen. A woman named
Lithe Masters who was at the time she was like
one of the eight most senior people at JP Morgan
and she i Think ran their consumer banking business, and
she left JP Morgan to go run a thing called

(08:44):
R three or Digital ass Holdings, right, which was one
of the first companies like providing these essentially these permission
private blockchains. And she went on the front of Bloomber
I think with Bloomberg business Week, and the headline was blockchain,
not Bitcoin, right, And all of the story across Wall
Street at the time was that like, blockchains were going
to reinvent the way financial markets were, but the tokens

(09:07):
themselves were worthless crap that were being used on silk Road,
and we're being used, you know, for money laundering. And
to your point, that story has flipped absolutely because people
are starting to understand the network effects, the incentive mechanisms
of tokens. People have started to understand the networks effect,
of liquidity and of having open networks. Right. I think
about it again. There were private versions of the Internet,

(09:31):
like intranets, right, that existed, and they served potentially a purpose, right,
but those purposes were limited and there were they didn't
accrue value in this way that you started to see
the open Internet, right, which grew exponentially.

Speaker 2 (09:51):
Right.

Speaker 1 (09:51):
And we've seen the same things with blockchains, and we
see the same things. Something with all technology is that
once you allow for open, permissionless innovation on top of
a network, you know, the ability to accrue value is exponential, right.
And so these you know, banks, these asset issuers like
Larry Fink, they started to realize as these networks grew,

(10:15):
as Etheroeum grew, as Salona grew, as as you know
the others grew, that there would be more value that
could accrue to them, and that if they were to
support permissionless networks. Now, what have we seen happen in
you know, recent months, as we've seen a lot of
people say, okay, well, like I believe that story, but

(10:37):
I also believe that I need to you know, necessarily
control the execution environment of how I go and deploy.
And so we see people like Robin Hood say, well,
I'm going to launch an L two that share security
with Ethereum. But that allows me to have the ability
to think through, you know, how am I going to
actually have the right validator set, what type of transactions

(11:00):
am I going to prioritize? How do I think about
accruing economic value to myself versus my customers? You know,
what are the types of things I don't want to
operate in my blockchain. I think we're going to continue
to see a lot of that, right, We're going to
continue to see a lot of people will say I
can build a better business utilizing and have interoperability with
public blockchain. Mine will be public as well. But maybe

(11:24):
I have you know, a permission validators set, or I
have a permissioned way to think about sequencing transactions or
at least incentivizing the type of transactions that I think
are important for my business.

Speaker 2 (11:35):
Yeah, that absolutely makes sense. It seems like it's going
to be a hybrid approach, right, a mix of both.
But the public blockchains, to your point, has the true
network effects, and you have to plug into that to
kind of get access to the world because these blockchains
are running like a global market real time twenty four
to seven three sixty five.

Speaker 1 (11:52):
Yeah, and there's shared infrastructure that you know, you don't
want to reinvent, right, Like you know, if ethereum has
all of the infrastructure available for basically anybody in the
world to access it, to interact with it, to and
you know, all of the you know, kind of service providers,
whether it's the wallets, whether it's the compliance, whether it's
the uh you know, the on ramps off MPs. Anybody

(12:15):
can also interact with this global permissionless ledger and pool
of liquidity that you know, people have built a number
of different novel use cases on top of and having
access to that and being able to have interoperability with that,
I'll add a lot of value to grow exponentially. But
you know, you don't necessarily want to compete with you know,
building your execution environment for your business with a block

(12:39):
space that like might also have a meaning coin in
it or you know, that doesn't allow you to think
through you know, how you arrange like for you know,
MTV and how you arrange for economics sharing, uh doesn't
allow you to have you know, potential uh you know,
prioritization of certain types of transactions like like those are
the things that people are really worried about, and they're
also worried about some regulatory concerns around you know, whether

(13:02):
or not you know you're you know included in like
an o faccationed transaction or invalidator set. But I think
it's really more about like business reasons than it even
is regulatory ones.

Speaker 2 (13:13):
Oh for sure, you know, as you were saying that,
I thought about the early days of the Internet, my
backgrounds in search engine optimization, and I remember we would
talk about if you're in a shared web hosting server
or whatever, it is, uh not being in lot on
the same server as other sites at gambling or adult
sites or something like that. You don't want to be associated.
So it's very similar comparisons there.

Speaker 1 (13:35):
Yeah, and we're seeing a lot of people focused on
those things. Yeah, and that's why, I mean, I think
you've you've seen it, but you know, Circle and Stripe
and robin Hood and you know, many more continued to announce,
continue to come out of the wold work. It says
we want to do this, we just want to do
it in a way that you know, is optimized for
our business.

Speaker 2 (13:55):
So, Rob, let's say it's twenty thirty or twenty thirty five,
do you see the majority of companies and brands have
let's say their own layer two or if it's like Avalanche,
or they have their own subnet or Salona, you know,
whatever the mechanisms are. These companies have their own layer too.
Is maybe their own tokens. Because there's the clarity they

(14:15):
can build more brand affinity, engage with their customers, have
more retention, and add more value to their brands and companies.
Do you think that's the world we're headed too?

Speaker 1 (14:26):
I think so. Yeah. My belief is that most of
these organizations they want to have, they want to control
some subsection of how they interact with blockchains, and for them,
right now, it has been less about building an application
and more about building an entire execution environment. It is

(14:46):
easier today to launch a blockchain than it has ever been.
The service providers you know, people or even the chains
like an avalanche like to your point, but you can
launch your own one on top of it is essentially
like a piece of like enterprise software is stk's APIs
that you can like you know, stand up pretty easily.
Some companies say, hey, listen, like we're gonna roll like

(15:07):
our own new l one, right like for instance, you
know when you think about Tempo and Stripe. You know,
the reason that works is because it's essentially a Paradigm's
engineering team, right, and they are you know, deeply technical,
and they understand wrath and like there's a there. They
have the the technical expertise to do that. But the
vast majority of these people are saying like, okay, well,
I'm gonna launch an L two with you know, like

(15:29):
a Conduit or you know, somebody who does you know,
roll up as a service, and I'm gonna use you know,
a DA layer like igen Da or Celestia, and like
they have kind of the service providers there make this
like super easy for me, or you know, like we
talked about Avalanche where you can just they have essentially
have a package for you that you could stand that up.
Because that is so easy now and because it looks
a lot like enterprise software and it allows for customizability

(15:52):
that makes sense for people's business. I think most people
are going to look at that and say, as long
as I have interoperability with other you know, parts of
the ecosystem, with other you know, corporations, with other you know,
permissionless blockchains and liquidity layers, like I should just go
and do that, right And I can do that like
relatively easily without having to make turn my organization into

(16:12):
an engineering one if they're not already an engineering organization.

Speaker 2 (16:16):
What do you think about a scenario like this, Let's
say let's just use Amazon and Walmart for example, they
launch your own tokens. They have done LT's, they launch
your own tokens. Those tokens trade on the open market,
they have value, and they form partnerships with let's say
Starbucks and other retailers who do different things, and I
can go spend those tokens there if I want to do.

(16:37):
You think we're headed to that token economy and you
have this interoperability and the retailers all are like, hey,
I'm going to form a partnership and accept your token
and you can use it here in YadA YadA.

Speaker 1 (16:47):
I think that the token questions a little bit more
of a complicated one because there's a question around what
does the token represent? Right, So does the token represent
like equity and Walmart? Well, okay, like you know, maybe
we believe that all equities on chain. I think there
is a portion of the equity markets that will probably
be continue to be tokenized over time. I think there's
real incentives to do that for capital market participants. I

(17:08):
think there's a question around the form factor that takes
and the legality and the actual owners and the voting mechanisms,
et cetera. But in that case, I expect that we
will have tooknize equities, but I don't know if I
would be shocked if they were able to be permissionlessly traded.
Right now, there's the question of like, okay, well, is
there like a loyalty mechanism or a stable coin or

(17:31):
something like that, which I think is more of what
you're getting at for like a Walmart. And I think
it's very clear that there's gonna be a Walmart loyalty
token right now. Maybe that is a stable coin, or
maybe that is a points token that is like pegged
to the US dollars, so it essentially has the ability
or the form factor of a stable coin. That seems
very clear to me that like most people are looking

(17:52):
at at that type of form factor as something that
they want to do. Now, the question will be incentives,
right and so you know, is there an incentive for
Walmart to make that open permissionists or is there an
incentive for them to you know, make that a walled
garden right right now? What happens is you know, I,
you know, get a whatever some like you know, a

(18:15):
delta mile right or some sort of loyalty point, and
now I'm like locked into you know, potentially you know,
buying something at at at Starbucks or wherever, right, But
they've already recognized it's already deferred revenue, so it's a
liability on the balance sheet when they gave me that token,
and so actually getting that off balance sheet and getting
that back into the consumer is is actually, uh, it's

(18:37):
an uplift and earning for share for them. So I
actually think that is a clear value add for them
in terms of doing like tokenized loyalty. Then the question
is like who do they actually want to interact with, right,
because like, you know, I'm sure Starbucks does not want
me to be able to want to swap my Starbucks
point for Tim Horton point, right, but maybe they're happy
to do you know, some sort of like go to

(18:58):
market with like the you know, the New York giants, right,
And so I expect there will be called it open
token or somewhat openly semi open like loyalty type tokenized
marketplace that will exist, and we're I mean we're seeing
it right now. Like them, I think FIFA is doing
some like World Cup loyalty on avalanche. And you know,

(19:21):
the only place you can actually guarantee you take it
to the World Cup right now is like through their
loyalty program that is tokenized on Avalanche, and so I
think we're going to continue to see a lot more
of that.

Speaker 2 (19:29):
Yeah, that absolutely makes sense, and I'm looking forward to
that that day when we have this interoperbility with the
different tokens. And obviously these companies are going to have
to look at the cohorts and the demographics and make
sure they all align and so forth. But if I can,
for example, just using the Amazon example there, if I
can get an Amazon token and you know, for holding it,

(19:50):
they maybe there's some staking or additional discounts that are added,
and I can even put it in the open market
and sell it or put into DeFi whatever it is,
or lend it out. I don't know, I'm just spitballing here,
but that would be really cool and I would be
more engaged, you know, maybe going to Amazon dot com
more often than I should.

Speaker 1 (20:09):
Yeah, I listen, no doubt about it. The I mean,
the vast majority of consumers, even with their loyalty points.
You can actually you can see some data on this.
A lot of people don't use their loyalty points, and
so the incentive for someone like an Amazon or someone
like a Starbucks just to go and say hey, listen,
if we're going to give this to you, we want

(20:31):
you to do something with it, right, Like, we want
to have you engage. They don't want you, they don't
want to actually give you these points and then have
you not do anything and then just sit there for years.
And so they're going to want to make ways for
this to be usable, and I think they're going to try,
and we're going to see a lot of form factors
specifically within defied to do things like lending that are

(20:53):
able to increase the way that you know, people get points.
And so I absolutely see that future.

Speaker 2 (20:58):
Yeah, it's exciting and there's so many possibilities. And I
think I don't know if you agree with this, but
maybe once the market structure build the Clarity Act passes,
we're going to see a boom and innovation and companies
you know, looking to do get creative with these type
of things. And maybe right now they're you know, holding back,
waiting for the full clarity.

Speaker 1 (21:17):
Yeah, there's the Clarity Act and the Genius Act have
been very good in terms of getting people excited, and
the board level is saying, hey, listen, we need to
have a plan, we need to think about this. That said,
they're still a little bit wait and see nobody. Very
few people want to be the first mover. They want
to see how the regulators act, they want to see

(21:39):
how the infrastructure plays, and they want to see how
the investors, you know, react to these things. So we've
seen some announcements by some big public companies that have
come out and they've been positive or negative for the
share prices. That will continue to be a big focus
for people. So people have plans. They are focused on
thinking about how this feature looks, but they don't want

(22:00):
to put their traditional business or the rest of their
business at risk. And so as you know, they move
into the space, it will continue to be kind of
step by step slowly to make sure it doesn't you know,
have some sort of adverse effect on the rest of
what they're doing.

Speaker 2 (22:17):
Yeah, that definitely makes sense. Let's segue into Dragonfly. Give
an overview of Dragonfly and your guys approach to investing
in the crypto space. Are you investing in token projects
as well as companies and things like that.

Speaker 1 (22:30):
Yeah, so we invest in both tokens and equity. You know,
early on, the vast majority of investing that we did
was mostly focused on things that value accurle to the token.
And why was that? It was because that was where
most of the value was being seen in the market.
The you know, people wanted to invest in those tokens.
There wasn't necessarily an ability to accrue as much value

(22:52):
to equity. There wasn't you know, an open IPO market.
There wasn't open MNA market. That has shifted a little
bit over time. I think if you look at, you know,
the pillars of what has accrued the most value in crypto,
those pillars have really been you know, finance, right, so
whether that's sea FI or DeFi, those pillars have been

(23:13):
stable coins. And the third pillar is really like the
blockschains themselves.

Speaker 2 (23:17):
Right.

Speaker 1 (23:18):
So if I take those three pillars as the things
that are accruing the most value in crypto, there is
pretty much an even mix there between a token project
and an equity project, because the stable coin projects are
some of them have tokens. You know, Athena we're very
large backers of and that's kind of a mix between
the stable coin and DeFi. But then a lot of
the other you know, large stable coin businesses, whether they're

(23:40):
paymous businesses or issuers themselves. Those are equity businesses, and
we've seen circle Go Public can be well received by
the public markets. We've seen anything we're going to see,
you know, more of that on the finance side, you know,
again DeFi very protocol driven, very much token driven. But
on the sea FI side, the biggest businesses in the
world are exchanges right alongside tether, right, so it's like

(24:03):
tether and then it's finance, right, those are two biggest
crypto businesses in the world. And these are businesses that
accrue value to the equity, right, And so we've we've
invested in by Bit, which is the second biggest exchange
in the world, invested in Pickett was the fourth biggest
exchange in the world, and so we've seen a lot
of a value you know, a crew there. And then
you have the blockchains themselves, and of course the blockchains

(24:23):
and the protocols they need tokens for intective mechanisms, for
coordination and for a secure in the network. And so
what we view that is really important in the market
is that the business or the protocol knows where the
value should accrue. They're opinionated about it, and they're focused
on that specific whether it's the token or the equity,

(24:44):
and that's where we care about, not necessarily if the
form factor is in and of itself a token or equity.

Speaker 2 (24:50):
Now, I did notice that you are invested in polymarket,
and there were some very big news this week of
the Intercontinental Exchange investing I believe about two billion in
polymarket and the Intracontinental Xchange for those listening and watching
who don't know, they're the parent company of the Neukstock Exchange.
So it seems like a pretty landmark moment. Rob What
are your thoughts on your initial investment in poly market

(25:11):
and this news, of course.

Speaker 1 (25:13):
Yeah, so I'll start with the initial investment and why
we made it and what we were excited about because
we so we've known chain for a long time since
you know, kind of the being in a poly market,
and you know, we had you know, looked at prediction
markets before that. You know, obviously poly Marker is not
the first calshit was actually started before poly market, and

(25:33):
there was augur famously it was like more cryptonative version
that was started before that. But what we saw over
period of time was that while a lot of crypto
natives really saw the benefit of you know, prediction markets.
They weren't necessarily being seen you know in more mainstream
parts of the financial services industry or you know call it,

(25:56):
you know, other types of whether that's consumer business or
you know, et cetera. And so we were always a
really big fan of Shane and of the idea, but
I think we were slower to the uptake than maybe
some other firms in terms of thinking, you know, what
this could be in the future now, you know, fast forward.
We continued to stay close, We continued to track. You know, obviously,

(26:19):
probly market did quite well during the the twenty twenty election,
and you know people were, you know, really excited about it,
but then you know, kind of volumes came down again.
They obviously famously had the sort of the settlement with
the CFTC in twenty twenty two. And we continued to
see Shane be just maniacally focused on this idea of

(26:42):
the markets for everything and having financial markets for all
types of things. And I became really impressed with even
during the downturn in twenty two and into twenty three,
just how unwavering he was and what this market should
look like, where he should be going. That was the
pointnumber one. I was like, Okay, this is a founder

(27:02):
who has an unwavering and maniacal view on how the
world should be, and that is something that you seem
very rare, right, and so that was really impressive for us.
But the other thing that really clicked for me in
twenty three was that we could see poly market start
to become more social. So I think it was July

(27:23):
of twenty three when Sam Altman was fired. You probably
remember that as well. You know, he's fired on a Friday,
he was rehired on a Monday, And that entire weekend,
every text chain that I was on, every group chat
that I was in, was speculating is Sam Altman going
to be rehired? What is going to happen of the
future of open Ai. But not only were they speculating,

(27:47):
you know, with each other and within the conversation, but
they were talking about speculating on Polly market. And actually
that market, on Parlad market, was I think the largest
market they had had outside of politics up that period
of time. Then the same thing happened with the around
the LK ninety nine room temperature superconductor chip. So for

(28:09):
people who don't know that there they came out that
there was potentially a superconductor that could be done at
room temperature, and nobody really undersood like that was a
new novel, really historic thing if that was true, and
nobody understood whether that was true or not, and there
was a lot of speculation whether that that was actually
able to be reproduced. Turns out it wasn't, right, but

(28:31):
the same thing happened on polymarket. And so during those
two things, and during me understanding or seeing in my
you know, uh, my group chats and my friend group,
that the social aspect of the conversation also became part
of the polymarket conversation, or those two things merging was
when it really clicked for me that the markets for

(28:52):
everything now is the time Shane's Shane saw this before
I did, and some other investors saw this before we did.
But I now clicked for me that I do believe
that this is going to happen and that people are
going to start seeing poly market as not just a
place to make money but also a place to be social.

Speaker 2 (29:12):
Right.

Speaker 1 (29:12):
And so it was that time the end of twenty
three that US and Founder's Fund kind of did this
this deal into them. That was our first investment and
then founder's fund obviously a guy Joey Krug, who was
one of the founders of augur, so he had you know,
been a believer in prediction markets for a long time.
Did that deal because we were really excited about you know,

(29:34):
what we saw was we we thought was kind of
early j curve adoption. Then, of course in twenty four
they had this incredible run into the in the US election.
They raised another round right before the US election, which
we participated in again, you know, but what was really
interesting to see was they and this had happened in

(29:57):
twenty twenty, but it happened in even a more real
way time. They were just the information was more right
than the polls. Like it was clear that you know,
poly market and the story around putting money to work
to express a view resulted in a more accurate information

(30:17):
than you know, something like a poll. And they predicted
everything that happened, you know, all fifty states in the election, right,
And so then it clicked again that you know, okay,
all these politicians, all of these journalists were citing pollly
market as you know, one of the ways of which
they should think about, you know, potential outcomes for the election,

(30:38):
but then it clicked to that maybe it wasn't just
one of the ways, but it was the most accurate way, right,
And so again we invested in that round. And a
lot of people you know had said, oh, well, like
after the election, the prediction markets will go away again, right,
because he had seen it in twenty twenty, and then
they picked up again in twenty four, and I was
of the mindset that won't happen in the same way
because of what we had talked about in twenty three.

(30:59):
And behold, that's what happened, right. You know, these other
business markets, these other crypto markets, these other mentioned markets
as they as they call them, they all started to
do well. And it continued to do over billion dollars
a month of volume, you know, into post election timeframes.
So then Founder's funded an investment or let an investment
out of their growth fund earlier this year at a

(31:20):
one point two billion dollar valuation, and we participated again
because of that. And so we just saw you know,
what was Shane's you know vision from the beginning, just
really to start to take shape in a real way
in twenty three and kind of accelerate through this year.
And it culminated in now this intersection of traditional finance
in ice in the New York Stock Exchange, wanting to

(31:42):
partner up in a real way with a polymarket, a
defive first prediction market, a defive first financial market, and
wanting to build this business in a regulated way in
the US. As we continued to see that growth and
so like listen, is the culmination of many, many years
of hard work and maniacal focus and ambition from Shane

(32:05):
and his team, and we couldn't be more more excited
for them.

Speaker 2 (32:09):
Now, you were mentioning the social aspect, and as you
were talking about that, I thought of the blockchain is
allowing these social interactions and conversations and even memes like
we're seeing with meme coins to go on chain and
we're able to financialize it and tokenize it. It's a
fascinating concept, like human behavior on the blockchain. So you

(32:30):
and I, you know, maybe meta for coffee and we're
talking about who do you think my win this or
who do you think is happening here? And that can
go on the blockchain. And if I send you a
meme that I think it's funny. You know, That's what
we knew each other for a long time, and I
sent you a meme that can go on chain. It's
kind of wild.

Speaker 1 (32:47):
Yeah, it's you know, they talked a little bit on
the press release session with ICE, but they talking about
tokenization and they talked about data, right, And two of
the things that we just talked about, which is, Okay,
information that you can glean from people putting in their
money to work is just purely better than things like
polls or you know, other types of information. But then
also now what we've said is that basically everything can

(33:10):
be turned into a tokenized market. Right. And if everything
can be turned into a tokenized market, then all of
a sudden you have a much more direct way to
express viewpoints than you've ever had before. Right. A lot
of what happens in you know, financial markets, for when
people think about, Okay, well I think X is gonna
happen on the geopolitical stage, and so I had to

(33:30):
figure out not just that X will happen and be
right about that, but also the second and third order
effects to be able to then go express my view
and you know, to make money in the financial markets
that no longer needs to be happening. I can just
be right on that X thing, right, I can just
be right on you know, there was a lot of
volume this year and like who would be Pope and
you could be expressing in view and that now it
happens to my financial markets. But now it's just like okay,

(33:50):
I could bet on that directly, right. But then that
becomes at the same time where there is a financialization
aspect happening to a lot of different parts of our
lives that you and I can now more directly just
you know, interact with each other, but we can interact
with each other in those tokenized markets and through the
group chats and through you know, going to get coffee,

(34:11):
and it just becomes a much more social way to
put money to work or to interact, right. And I
think we've you've kind of seen the beginning of that
with sports betting, right where like a lot of people
now like they want to you know, be putting five
bucks to work while they're also you know, watching the game.
But now you know, I also can put five bucks
to work when we're debating any other aspect of life.

Speaker 2 (34:35):
Yeah, I was going to ask you about that because
you know, can this be so drilled down or so
niche where me and my co workers. Maybe it's just
a group of about fifty people can form some sort
of polymarket betting group or something on anything that we.

Speaker 1 (34:52):
Want essentially, right, So there is you know, a conversation
around like can you get the right liquidity and can
like the market scale to support like both sides, right,
you need market makers or somebody to take the other
side of something. But you know, if you ask Shane,
you know, he believes that there can be a market
for anything, and I think within some parameter that is

(35:13):
probably true, right, And I think we're going to see
a lot more of that, and we're going to see
that go you know, very far down you know, the
Niche curve to your point, how far down and go
to the Niche curve from a market structure perspective is
definitely up for debate. It's so fascinating, man, what's happening.

Speaker 2 (35:30):
It's on one hand it's it's incredible, But on the
other hand, I'm like, are we going to go nuts? Rob?
You know, trading twenty four to seven with these markets
and you know, we'll have to find our way where
maybe we'll use AI agents to help us out and
things like that.

Speaker 1 (35:44):
I think people I mean, I don't know if your
audience is most of the US, but you know, we're
obviously both in the US, right, And I think people
in the US kind of don't appreciate just how much
like financial or how because people are on financial markets
like in Asia, right, and so like trading being a
part of like daily life and like Korea and in

(36:07):
Japan and in parts of Asia is like actually very common, right,
And it coming to the US, like you know, with
Robin Hood and with you know, kind of more democratizing
access to those financial markets like that is a relatively
recent phenomenon here, but it is a part of life
and more digital first economies. I mean, Asia was much
more digital than the US was for many years. That's

(36:29):
been how it's evolved. So I expect that's how it'll
evolve here as well. And the key is to do
it in a way that is like healthy for everybody
and that allows for good habits to exist. But I
think you know, allowing for interaction with you know, all
types of markets across all types of you know, different
aspects like that is clearly net better than not having that.

Speaker 2 (36:51):
Yeah, absolutely, BROB, I know where we're coming up on
time so I wanted to ask you about what are
some interesting investment trends you're seeing from the fun point
of view. Right from the outside, I'm seeing digital asted
treasury companies, ETFs, and tokenization much more. But are you
guys looking at those things? What you know? Maybe you
can't give away your secret sauce, but what are some
things you're seeing you know, as far as future trends.

Speaker 1 (37:12):
Yeah, I think in the markets this year, the focus
has really been on a couple of things. So it's
been on it's actually been on prediction markets. So you know, we've,
as I mentioned, been deep poly market for for a
while and so we continue just to you know, support
poly market. But there's been a lot of new prediction markets,
whether it's niche or you know, more affinity group focused,

(37:32):
that has been that raised a lot of capital this year.
There's also been a large focus on stable coins, a
large focus on tokenization. Genius Act really changed the way
that corporates think about stable coins, so that's continued to
be a big focus for us. We've it's probably our
biggest focus over the last couple of years. We continue

(37:52):
to still be very focused on DeFi. So yeah, you'll
remember maybe I talked about the pillars you know earlier
in this conversation. You know, this is starting to sound
a lot like you know, us being continued to be
focused on those pillars. We think DeFi is a form
factor that makes also like tokenized assets better. Right, If
I can take a uh, you know, a tokenized equity,

(38:13):
but then I can do better and easier securities lending
on on chain on Camino, right, versus doing it or
on ave or on Morpho versus doing it through my
broker like people. I think that is a better form
factor and another thing that people are going to do.

Speaker 2 (38:28):
Right.

Speaker 1 (38:28):
One of the interesting things we've seen for on on
coin base right, and and so you know, Coinbase is
obviously for more cryptonatives, but the the growth of their
non custodial lending program like through Morpho has been tremendous, right,
And I think we're going to see a lot more
of this like ce FI to DeFi interaction that's gonna

(38:48):
gonna all over time. And so that continues to be
a big, big focus for us. And you know, then
we're very focused on really continuing to build out that
core infrastructure that allows for payments to actually exist on
chain allows for interoperability between all of these different chains
that we've talked about before. That is I think, very
very important. What we don't get caught up in, frankly,

(39:10):
has been a lot of the stuff that we think
are you know, more hype focused, right, So things like
you know, AI crypto crossover to date, frankly has been
primarily like meme coins attached to some sort of like
you know, AI agent and you know, people acting like
it's like some new you know, financial primitive that it
doesn't really exist, right, We've I think the vast majority

(39:34):
of the AI crypto prejudice has just been straight up
vaporware if I'm being honest, right, and people don't even
plan on launching like, you know, real projects around it.
I think that's been true of a lot of like
you know, call it the social aspects of what people
have tried to do in crypto. So I talked about
you know, poly market being social. Well, poly market is
an exchange and you know kind of at its core,

(39:56):
but it is also like a social exchange. That's how
I think people will do social on crypto rails. I
don't think a decentralized social network is necessarily going to work,
and because being decentralized is not a product, right, you know,
a product is something that like, you know, people want
to interact with because they get a better experience, and
decentralization doesn't add for that better experience. Right, you have

(40:19):
to build something that you know has a good social graph,
has a good interest graph, et cetera. Right, And so
I say all of that to say, you know, what
we continue to be focused on is the things that
blockchain do does does very well, which is the transfer
of value, the transfer of money to the transfer of information.

Speaker 2 (40:37):
Yeah. Great, great thoughts on point of view on the
social network because anecdotally, you know, I have not found
any value and I'm not hating, just I don't want
to be on the platform because I don't see what
the difference is. I could rather be on X or Instagram.
There isn't that incentive, isn't that value? Oh wow, this
is something different and I can get this benefit. I
just don't see it.

Speaker 1 (40:57):
Yeah, I think that's completely right. It's you have, like,
the reason people interact socially with different social platforms is
because it adds a new way to discover something that
can go viral, a new way to discover information new
way discover what our friends are doing. So, like if
you think about you know, the way Instagram evolved, right,

(41:20):
you know, you took what was our social graph and
you made it into pictures, right, but it was really
around interacting with people in maa network, right, Like that
was what Facebook started, you know, the social graph, but
they started the social graph just completely and written form.
Instagram has the social graph, but it's completely in picture form.
That allowed for you know, more fomo to exist because

(41:42):
and more people to want to you know, engage with
different activities and et cetera because of that. But then
when you take the next form factor, which was like TikTok, right,
tech talk really reinvented the social graph because it became
interest graph, right, and it became about like what are
everyone that I'm social with? What are they interested in?
And it does that imply something about how I am interested? Right?
And the reinventing of the form factor of the type

(42:04):
of information that I see in the way I can
see information that is the thing that makes for a
better user experience, the things that makes for a better product.
What does it make for a better product? Is say,
and I'm going to give you Twitter, but it's going
to be decentralized.

Speaker 2 (42:18):
Yeah, yeah, well said. And maybe somebody will come up
with something interesting like you said, that has that in
the new social graph, that has the appeal the incentive,
but it's not there yet. No, Okay, Rob, I know
I'm keeping you over time, So got some wrap up
questions here for you. First, if you could create your
own metaverse, what would the theme be?

Speaker 1 (42:37):
I am a really big movie buff and so, like
you know, there are two things I really like. It's
financial markets and crypto and movies, and so absolutely it
would be you know, like classic movies, that would be
the theme.

Speaker 2 (42:49):
Nice rapid fire questions, favorite food chicken parmesan, Favorite musician
or band.

Speaker 1 (42:54):
My most listened to musician is Kigo. My favorite musician
grow growing up was Blink. We needed to do favorite
movie Boogie Nights.

Speaker 2 (43:04):
I didn't expect that one, but I remember that movie.

Speaker 1 (43:08):
Favorite book Big Paul and tom As Anderson fan, so
like everything that PTA has done, favorite book House of Leaves.

Speaker 2 (43:15):
And when you're not working at Dragonfly, what are you
doing for fun?

Speaker 1 (43:17):
So dimension movies earlier on the metaverse side. And then
I'm a big traveler, so I love to travel everywhere internationally.
It's a huge part of I think it's a huge
part of crypto, but it's also a huge part of
just being able to understand human nature, and I get
a lot of value out of that.

Speaker 2 (43:37):
Absolutely, I'm the same way. I love to travel. I
love new experiences, meeting new people, new foods, and things
like that. So I'm with you there, Rob, absolute pleasure,
appreciate your perspectives and insights. Thank you so much for
joining me.

Speaker 1 (43:50):
Thanks Tony, I really appreciate the time

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