In this episode of UpOnly, Cobie & Ledger talk to Haseeb Qureshi about broad investment thesis, VC stuff, L1s vs L2, emerging trends, and more.
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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