Jose Macedo, Founder at Delphi Labs, and Ari Paul, CIO of Blocktower Capital, dive deep into crypto token valuations and market dynamics. They discuss the impact of token unlocks on prices and the often deceptive nature of circulating supply. Macedo emphasizes the psychological aspects affecting investor behavior, while Paul critiques venture capitalists' roles. The duo also compares today’s market conditions with the ICO era, advocating for more transparent investment practices and challenging the short-term strategies dominating the space.
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insights INSIGHT
Unrealized Gains & Market Cap
High unrealized gains to market cap ratios signal potential sell pressure for tokens.
This makes it difficult for new buyers to absorb unlocked tokens, especially with alternative investments like meme coins.
question_answer ANECDOTE
Solana's Bullish Unlock
The Solana unlock in January 2021 was a rare bullish unlock.
Most holders were bullish and not looking to sell, coupled with strong fundamentals and new buyers.
volunteer_activism ADVICE
Verify Circulating Supply
Don't rely solely on reported circulating supply figures, as teams might manipulate them for better optics.
Verify by checking primary data on Etherscan and project blogs, focusing on actual user airdrops.
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The problem of low float, high fully diluted valuation (FDV) coins is one that is frequently discussed in crypto. But there’s another wrinkle: investors need to understand the unrealized gains of these coins to really understand the price.
In this episode, Jose Macedo of Delphi Digital and Ari Paul of Blocktower Capital explain the various metrics that reveal what a coin is really worth, why a wave of token unlocks that will be hitting the crypto markets in the next few years are not bullish, and whether there is a better way to design token unlocks for teams and insiders.
Plus, they cover whether venture capitalists are extractive to crypto, whether these games with circulating supply and FDV have caused investors to turn to memecoins, and why they believe the ICO era was better for retail investors.
Show highlights:
00:00 Intro
01:58 Why upcoming token unlocks are creating market jitters
10:22 How the ratio of unrealized gains to market cap influences token price movements
12:22 How some token projects manipulate their reported circulating supply
20:24 Whether and how everyday investors can uncover the truth about token projects
23:37 What secondary market trading says about the potential impact of upcoming token unlocks
34:50 Why Jose believes that the current token launch strategy, despite its flaws, is still favored by insiders and unlikely to change soon
41:02 Why some projects favor decisions that are more likely to result in short-term gains over long-term success
46:36 Why Jose believes that simple time-based token unlocks often work better than complex metrics, and how projects can balance funding with realistic success metrics
53:04 Why Ari believes the SEC's investigations into VCs for acting as securities dealers might be justified, and how these practices resemble pump-and-dump schemes
59:11 With numerous token unlocks looming, why the outlook is bearish for many projects, and what challenges they face in mitigating potential sell-offs
1:05:52 Why many crypto investors might end up holding the bag in the current cycle, despite plans to sell early and avoid losses
1:12:27 What the future role of VCs is in crypto, and how the influx of token unlocks and the rise of memecoins could shape the bull cycle
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