Power Law of crypto investing, with Haseeb Qureshi of Dragonfly Capital
UpOnly: Chats with Crypto Experts
The Impact of ZK and Ethereum on Scalability
Avalanche is like the capital city of everything in crypto it's just like New York City. The problem is here is become super expensive right there's crazy congestion all the time. Instead of trying to build a separate city we are going to invest in skyscraper technology and we're gonna build bigger skyscrapers in Manhattan. It does help at the margin but it's sort of not an or that way I see it.
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Show Notes
Cobie & Ledger <> Haseeb Qureshi
UpOnlyTV Notes
Haseeb Intro
⁃ Managing partner at Dragonfly Capital (@dragonfly_cap)
⁃ Formerly a professional poker player then learned to code and became a software engineer at Airbnb before moving into crypto
⁃ Full time crypto in 2017 doing security research, worked at 21/Earn, a stable coin startup and then into the investment side
Poker & Crypto
⁃ Cobie: Why are there so many poker people in crypto? Haseeb: They’re willing to do weird things to make money, predisposition to it. It rewards being a little bit obsessive
⁃ Very few poker players in VC roles much more that are traders
⁃ Poker has also been getting worse as an economy and harder to make a living from it
Dragonfly Capital & Investing
⁃ Multistage firm, will invest at all stages of a project, doing both equity and token deals
⁃ Ledger: Is one easier than the other when it comes to making decisions? Haseeb: Equity liquidity is decided for you, the rest of the time you’re along for the ride which makes things easier
⁃ Long term investments in tokens and will have lockup’s 2-4 years but tend to hold beyond that even when liquid. Sometimes things run quicker than expected and it makes sense to exit but still holding most things today
⁃ Crypto markets aren’t efficient so even knowing marginally more than the average trader is enough to make money
⁃ When it comes to project performance: Winners keep winning
⁃ If Dragonfly buy tokens that are already live they’ll negotiate with the DAO or OTC
⁃ Ledger: Do you give any weighting to revenue back to token holders tokenomics? e.g. Uni vs Sushi? Haseeb: Markets are forward looking, lack of revenue to holders right now is less important than them being the market leader and future developments
Biggest Misses?
⁃ Uniswap. Hayden wanted Dragonfly in the round but it didn’t seem sustainable and completely missed it
⁃ Has seed round memos for Solana @ .04 but they didn’t act on it (~4000x) as well as for Terra
Making It & Diversification
⁃ Haseeb: Multicoin Capital became a titan from leading the Solana round
⁃ Cobie: Great example of only needing one big win to make it. People come in with too low of time horizons and have losses leverage trading trying to play catch-up.
⁃ It’s like making 10 high conviction thesis driven investments and watching them carefully to see if what you expected to happen, happens. Am I right, am I wrong, and why?
⁃ Haseeb: Diversification is powerful. If returns are power of law distributed the optimal strategy is to be maximally diversified
⁃ Ledger: I used to mock the idea of keeping moon bags but I’ve seen enough that’s just kept going up so much more than anticipated
⁃ But, you also can’t put your fate into something that continues to underperform
Multi-chain Future & L1 vs ETH vs L2
⁃ Line of sand is between EVM chains and non-EVM chains
⁃ The EVM is the lingua franca , all of the tooling has been built with one ecosystem in mind. Equivalent to JavaScript, it wasn’t the best language but it became the thing you had to write in
⁃ Thesis has been broadly that the L1s end up winning over L2s due to L2 constraints e.g. security model
⁃ L1s have more flexibility
⁃ Cobie: What about Bitcoin? Haseeb: Bitcoin is digital gold, it’s been around long enough and held up – so it’s strength now is in not changing. Ledger: Feel like it will underperform in emerging bull markets but hold up better in bear markets
What’s Next?
⁃ Synthetic assets still feel under-explored and under-appreciated
⁃ Grandmother is old-school and was buying gold instead of relying on the Rupee. The reason people aren’t buying other assets is due to a lack of access
⁃ Crypto is about global permission-less access and it’s not about being able to offer it in the US but elsewhere
⁃ DeFi has evolved less and not grown that much since DeFi Summer ended. There aren’t enough people that are technical enough to build it out
⁃ Vast majority of people in the world are living month to month and not concerned about interest rates
Final Alpha
⁃ In crypto it’s really easy to overthink things and the obvious thing is usually right
Notes by Luke
Music by GiovanniPickle
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