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Cobie And Chris Burniske On How To Navigate A Crypto Bear Market

People want to stake their APEcoins, so we should do staking, and the staking proposal was just like, we’ll pay you if you stay in coins. It doesn’t practically do anything. It has sort of co-opted the name staking, so it looks like what a proof of stake blockchain does in order to secure the chain, where you’re paid coins for posting collateral and promising to do good work.

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It was like everything was hyped. Everyone was foaming at the mouth. It was, you know, not even thinly veiled anymore that it was all about the money, and that just doesn’t sustain, right. It’s like this hot ball of money that’s growing and growing and growing, folding over on itself but has no substance, and so you could just feel that we were near the end. So, Chris, I happened to notice a Tweet that you made on November 8 last year in which you said, easy to become entitled in this environment. For those who haven’t seen a bear, things are not always so free flowing.

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  • Getting more specific with what Cobie just mentioned about DeFi, from ICOs in ’17 into DeFi that got built, I think the same thing is going to happen to NFTs.
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  • When I see them, I think a lot of the secrets of crypto and how you predict the future.
  • I did the really early research at Ark in 2015 on Bitcoin’s transaction fee once the block rewards go away.

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Being grateful for things you’re getting now creates the goodwill to carry you through a bear. I think proof of stake, proof of work, big debate each have their own place in the world. This new form of staking, which is just like…I don’t know…it feels more like fraud because it doesn’t do anything. It encourages people not to sell.

But because these planets became more complex than 2017…2017 it was like the only thing that happened on the planet was fundraising. You could go, and you could buy an ICO token, and then you could lose money or make money, and you moved on. Whereas in 2020, 2021, 2022, you had different things happening. You had all these things, and the capital would sort of rotate around those things without the same desire to sort of move in and move out.

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And we’ve had a major move in rates, but they can’t go up all that much because it’ll start to put stress on how the US government funds itself, right. The bottom of the bear market for crypto assets and equities because it’s basically…that bottom will happen in max-Fed aggression, max-liquidity withdrawal, max-panic, and everything I was just saying about what I basically anticipate for Q4 is relief, right, inflation coming down. The Fed doesn’t have to be as aggressive because we’re through midterms, and also inflation’s starting to come down.

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I think they had 10 billion or so redemptions go through, and that happening I think is a very good thing because now that is also slightly derisked still. I personally don’t believe that it will, but you have to test these things otherwise you can just be building on the sand or whatever that old fable is. And then, you know, specific to Terra, https://xcritical.com/ I remember Alex Evans, myself, and Joel Monegro met with the Terra team and Luna was up a dollar, and I want to say it was at Defcon in Osaka, and I just had this one question. I didn’t understand the system in full, but my one question was does Luna either have to stay stable or go up for this system to work, and the answer was yes.

That’s the exact right answer. It’ll be the US government that launches, you know, the effective algo stable. I don’t think it’s our last of this bear. I think we need at least one more, and I’ll pause there. This episode of Unchained is brought to you by Beefy Finance, the multi-chain yield optimizer. Beefy is the easiest way to earn more from your crypto.

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Next choose a secure password to secure your MetaMask wallet, this password is not your private key or seed phrases, you only need this password to access the Chrome Extension. What I use…so I very much pay attention to market structure, but what I use to keep me sane is again looking at past patterns, right. I think you’ll start to see with DeFi, you’ll start to see delineation between punk and permissionless DeFi, which basically puts up the middle finger to regulators versus white-collar, regulated, sealed off DeFi, and then that will allow a lot more institutions to come in. Getting more specific with what Cobie just mentioned about DeFi, from ICOs in ’17 into DeFi that got built, I think the same thing is going to happen to NFTs. So, ’20, ’21 for NFTs was what 2017 was for DeFi, so ICO was the OG static DeFi in a way. There wasn’t that much that you could do with it but speculate.

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Even if they weren’t in Luna, they were using Anchor in some way and had things liquidated. I think the main difference is it needs extremely large demand for some reason. They’re basically confidence dollars, right.

The regulators will be like, we’re here to protect the little guy, but actually all the rules that come in benefit VCs like me, and so I see it very clearly. So, I think those people focused on things that were a little more simple, and it led to this sort of fractured and different bull market, how do you make your own cryptocurrency which will hugely impact the bear market, but I’ll talk about that in a little bit. It’s a project worth checking out…yes. It’s built on Balancer, and it’s basically nested pools of stables, and so they use a primary automated market maker for creation against that pool and redemption.

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I did the really early research at Ark in 2015 on Bitcoin’s transaction fee once the block rewards go away. This has been a problem forever for Bitcoin people. They’re talking about it a lot right now, but I do believe Bitcoin is going to find ways to solve it, and Bitcoin’s brand is the strongest brand in all of crypto.

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Posted: Sat, 19 Feb 2022 08:00:00 GMT [source]

Cosmos is the most thin pieces loosely joined. You have Solon as consensus at the speed of light and more financially oriented. 2016 it was kind of all for naught. You probably remember this, Laura, but I went through this catastrophic hack where I got SIM-swapped, and then all my accounts got drained, and I Tweeted on Twitter I’m getting hacked, and so actually, Emin Gün Sirer, now the founder of Avalanche, who saved me and helped me build out my perimeter, but I basically lost all my ETH, not all my BTC. And then the final thing is managing your own emotions in this marathon of investing I think is increasingly difficult. I’ve seen people that were very, very, very stable five years ago, and this toll of crypto starting to get to them, and now they’re going insane, so figuring out how you can be happy and self-sustaining through that entire time.

And for me, when I was like, when you are requiring a very volatile asset to either stay stable or go up permanently in the crypto market, that is eventually going to get severely tested. And so, it’s not like I had all these models and proofs of like, okay, UST’s probably going to fail. It was more like, UST had gotten severely tested before the, you know, some basics of the design were suspect, and there were, you know, other very smart people that were doing deep research to prove how this wasn’t going to hold. One, trying to operate an algorithmic Stablecoin is basically like trying to be a central bank before 1971 where you have limited reserves to defend your peg, and those reserves are actually…they tend to be even more transparent, so people know when you’re tapped out. Like, for example, I don’t think…I don’t anticipate we get a 1929-style great depression because the form of monetary and fiscal policy is now very different and evolved, so that’s one thing. SSW has been down 99.81 percent over the last three months, and with its small market capitalization, it is very likely that such price movement may continue.

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But then it raised all this capital that allowed DeFi to emerge, and you had early things emerging in ’17, right, with 0x, and I think Maker launched at the end of ’17 with Dai. My answer is probably the safest or most sound answer. By the end of ’17, I had published Cryptoassets and started Placeholder, and I would say I was too cocky. That was my big mistake of ’17, and that led to emotional downfall in ’18.

I think that is one of the…my least favorite things that we’ve come up with as a community in the last couple of years. And I think repurposing these cryptocurrency terms that did mean something into something that only impacts the price is sort of a symptom of how new entrants see the space or how big nonbelieving actors see how they can extract money from the space, right. We also have a public market’s practice.

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We now go through smart contract failures and just different kinds of risk these days. 2019 got horribly whiplashed after being exit liquidity for people in ’18 because ’19, I think, BTC went from 3K to 14K. I think we went back and retested that, but then April we started taking off, and I believe the range was BTC 3K to 14K and ETH, you know, at 80 to 3 or 4 or 500, and then roundtripped, right, and so I thought I was having FOMO that the bear was done, and you know, as an at-scale money allocator, I can’t miss, right. I have to be disciplined and preserve my capital, but I also can’t miss, so I got caught up in some FOMO and whiplash in ’19.

Cobie And Chris Burniske On How To Navigate A Crypto Bear Market

It’s like confidence that the system can hold up, and you’re happy to sit in those dollars as long as you believe, and if everyone believes and there isn’t enough people that want to exit, so the system has equilibrium of people wanting to enter and wanting to exit at the same time. I think that maybe an algo stable could work. I don’t want to be the person that says no, it will never work, and then five years from now, there’s a perfect algo stable, and everyone’s dunking on me.

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So, I wanted to ask both of you this question. Both of you have been through multiple bull and bear markets. What mistakes have you made in past cycles that you have learned from, and if you could impart those lessons to the listeners, I’m sure they’d be grateful. And then, it’s really proved to me…and I’m always asking myself why will this time be different. It’s not that I’m not going through that exercise, but the starting point is to assume that the patterns are roughly the same because we as humans don’t change that much, and so that’s where I’m using the same heuristic to navigate the current bear market. But anyway, one of the investors on the APEcoin board did this proposal, which was like, oh, we should have staking for APEcoin.

Though generally better to be a buyer now than six months ago. Yes, I definitely agree with Cobie that sentiment has totally turned, and we’re majority bearish, which again when you zoom out over a long time is generally when you want to be buying, counterintuitive. And then, you know, if you look at the charts and you mention the prices, Laura, you know, just looking at the majors of BTC and ETH, they currently sit about 60 percent down from all-time high.

First of all, it is just paying people for not selling, and you get paid in the currency that you’re also not selling, so it’s just diluting the overall supply. If everyone was staking, you own the same amount of…you own the same percentage of the network but more coins. But the coins are probably worth less. Then you’ve incurred tax obligations for nothing.