We invested in a hedge fund that only invests in cryptotokens recently called Polychain. I wrote about that when we did it.

Here’s a conversation between Olaf Carlson-Wee, the founder of Polychain, and Chris Dixon where they talked all about tokens, protocols, and Polychain.


Comments (Archived):

  1. LIAD

    This is the ballgame.Olaf is very polished. A great exponent.

  2. William Mougayar

    Olaf has a strong conviction that decentralized protocols based on the blockchain is where value is (vs. the apps). In my opinion, the lines aren’t still well demarcated between protocol, products and applications. The term “protocol” is used loosely within the crypto-tech industry. Olaf will participate at the Token Summit in NYC May 25. We will have that discussion with him and others. (www.tokensummit.com)

    1. LIAD

      I get his rationale intrinsically. Own as deep in the stack as you can whilst there’s still value to be made.Joel/USV laid it out in his fat protocol post ages ago.” the market cap of the protocol always grows faster than the combined value of the applications built on top, since the success of the application layer drives further speculation at the protocol layer.”

      1. William Mougayar

        Yup, then the challenge is to get user/developer adoption for your protocol. Without adoption and an ecosystem around it, the protocol is not worth much, in the long term.

    2. Richard

      Centralized systems are not standing. Isn’t the India Stack effectively the fasting growing technology the world has ever seen? Also, the taxation problem seems to be a headwind against assets like cryptocurrencies, see the outstanding IRS order requiring coinbase to disclose all of its accounts.

    3. Twain Twain

      In AI, protocol would be the RankBrain-Knowledge Graph-data algorithms, products would be Google Home and apps would be Spotify.Protocols are the nervous system/backbone/bloodflow. Products are the organs. Apps are the blood vessels.

  3. awaldstein

    So good.Amazing what articulation and vision can do to tell a story to those such as myself to get a grasp of this.

  4. Frank W. Miller

    I bought Red Hat at the IPO. I’m a true believer, I still have it.

  5. Thierry Ascarez

    Hi Fred, sorry nothing to do with the topic even though I love all about cryptocurrency news but just fyi every time you post a Soundcloud link, it appears blank and non clickable (see picture attached). I’m using Mail Version 9.3. Thierry https://uploads.disquscdn.c

  6. Matt Breuer

    I’m a relative novice to blockchains, is my understanding here correct?- Golem builds its product (software to enable distributed computing) and releases a token-based currency for users to pay each other for computing resources- They assign an initial value to the tokens – let’s say $100 per token, for 10,000 tokens – and sell tokens on a marketplace. This is their “IPO”.- The community buys up the initial supply of tokens, until the only way to get a token is to buy one from another community member (ignoring the introduction of new supply)- If a user who doesn’t own any tokens needs to compensate another user for their computing resources, they have to go to the marketplace – since supply is limited, the best they can find is someone who will sell their token for $110- Now that the marketplace recognizes the value of a token as $110, users are accepting ~0.9 tokens as payment for computing resources (the dollar value of computing resources is tied to the real electricity and hardware costs + opportunity costs)- Therefore, as long as demand for tokens continues to increase relative to supply, the value of a single token will go up; if the demand goes down and token-holders want to liquidate, the value of a token will fall- Companies like Polychain will buy and hold Golem tokens to bet on the success of the network – i.e. the demand for tokens going up – thus resulting in a similar alignment of incentives to making a minority venture investment.It does seem worrisome for the networks that an individual or company who holds a large portion of tokens could liquidate after making a quick buck and destabilize a fledgling marketplace. In venture, investors have no liquidity until IPO, where lock-in rules apply to prevent destabilization (and by that point, the company is mature enough // the venture stake is small enough to weather a sell-off). Can the networks do anything to prevent speculative investors?

    1. jason wright

      the circulating supply is 820,000,000 GNT tokens.total supply is 1,000,000,000. 1 GNT is priced at approximately $0.077 as of right now.a large holder could dump, or place a sell order, which may be authentic or may be fake, to drive the price down to then buy up more at a better price.the fud/ hype machine is monstrous in the crypto token market.fomo is another strong sentiment, although people have become wise to scam coin ICOs.

      1. Pankaj Garg

        I am a novice here as well.If what matt is saying is right about the equivalent of IPO, how do founders raise intial “seed” money or “seed” interest in the community to value the IPO

  7. jason wright

    is Chris Dixon’s voice becoming ever deeper in tone to engender an even greater sense of authoritative ‘gravitas’?

  8. jason wright

    does Poly buy tokens only directly from founders, or OTC?

  9. Shawn Wilkinson

    Some great analogies (like the domain one) that I will definitely use to describe some of this in the future. Leaves me curious for more examples on coin driven decentralized governance. I’ve been in crypto for 5 years, and it always seems to end in tears long term.

  10. DanielHorowitz

    USV has made some great investments over the years, but I wonder if Polychain could be the best one of all…Another really great and slightly more in depth interview with Olaf and his partner Ryan can be found here, https://soundcloud.com/arth

  11. pointsnfigures

    Curious how they measure risk/reward, and decide how big to trade in each crypto. Can see making some markets, but a lot of them are like Roach Motels. Different exchanges have different rules. Best quant in their organization might be the Chief Risk Officer!

  12. pointsnfigures

    http://streetwiseprofessor…. this is a great blogpost about blockchain, interesting thoughts that will test your faith in bitcoin