January 22, 2023

wagmi.

For those of you not deep into crypto twitter – wagmi means “we are all going to make it”. And wow. Does 2022 stand out as a year of chaos and turbulence. From inflation to crypto crashes and fraud to monkey pox – its been a bit of a wild year.

• Ethereum is down 68%
• Bitcoin is down 65%
• S&P 500 is down 20%
• Nasdaq is down 34%
• VC Funding is down 53%
• The Fed Discount Rate is up from 0.25% to 4.5% 

The world is in a radically different place than we were a year ago. But as I wrote last year, the pace of change is increasing in the world. And this shows no signs of slowing down. This is deeply reflected in just about every area of my life.

Work

Blocknative

On September 15, 2022 the Ethereum blockchain went through the largest network upgrade ever – known as the Merge. Think of it like doing a brain transplant on a plane in mid-flight. The network moved from proof-of-work — where miners used energy and computational resources to produce blocks and secure the network — to proof-of-stake — where individuals could stake 32 ETH to run a validator node and secure the network. As of Jan. 21, 2023 there are 504k validator nodes – which represent over 16M ETH (roughly $26B USD) of value that is securing the network.

This network upgrade has been in the works for several years – I first learned about the move to PoS at Devcon in Prauge in 2018. This is the largest network upgrade ever. And this upgrade shows that Ethereum is one of the most vibrant and progressive technological platforms in crypto. The move to Proof of Stake results in a more secure and decentralized network, reduces energy consumption by 99.95%, and lays the foundation for future upgrades and more scalability.

Oh – and I have to shout out Chipotle for their Proof of Steak promotion to celebrate the Merge. Best meme. Much success. Many steaks.

The Merge created a net-new class of economic actors – block builders. These block builders are specialist providers that compete in a real-time marketplace to perform block construction on behalf of validators. The term ‘block building’ is used to describe the process of precisely ordering the transactions that end up being included in blocks. A ‘block builder’ is a network participant that orders transactions into blocks and proposes those blocks to the network.

Before the Merge we established Blocknative as a leading infrastructure provider — supporting top wallets, protocols, and networks. Since the Merge we have moved closer to the core of the Ethereum network. We now operate one of the leading Block Builders and Relays – and support over half of Ethereum validators. In many ways I think we will look back at the Merge as one of the key dates in Blocknative’s history.

On the back of the Merge, Blocknative raised a $15M A-1 to scale our infrastructure.

As I look ahead to 2023, I am pretty stoked about the opportunity that is in front of Blocknative. This is, by far, the highest caliber team I have had the privilege of working on. And I have a very high conviction about our ability to execute in this rapidly evolving space

Crypto Markets

2022 was not a kind year to crypto markets. After a long bull run, tightening monetary policy led to sell-offs – and we saw the implosion of projects like Terra, Celsius, and FTX. My biggest lesson this year was that the majority of the failures were in centralized systems — having little to do with the underlying technology. The failures of 2022 were largely driven by fraud, theft, and irresponsible lending and leverage.

For the most part, the downturn is a welcome relief of sorts. Lower asset prices have driven focus on solving real problems with real tech. I feel for those impacted by layoffs and downsizing — but no one should join emerging technology markets for stability.

Personal Wins and Reflections

January 2023 marks 4 years since I started working with the Blocknative team and 5 years since I started working in crypto full time. This is my third market down-turn and second crypto winter since joining the industry. Markets are going to market. A few of my lessons from working at the bleeding edge of an emergent technology market:

• Play infinite games – I show up to my office every day to solve interesting and hard problems with good people.
• Focus on survival – especially in emerging technology markets, survival is the key. The firms that lasted through the dot-com bubble were able to thrive on the other side.
• Balance the short and long term – build for what customers want and will use today, not in 10 years.

I am also happy to report that I was able to take on the role of a Board Observer at Blocknative. Digging in and learning more about this aspect of corporate governance has been incredibly rewarding.

Outside of my work at Blocknative, I was fortunate enough to take on two advising roles. One to Spritz.finance -the easy way to pay bills with crypto earned from DeFi, GameFi, and more. The other is with Nifty Apes – a Harberger-style NFT lending protocol. Over the past year I helped both Spritz and Nifty Apes hire their Chiefs of Staff and worked with the founders on a variety of go-to-market projects. It has been rewarding to collaborate with great people doing great work.

I made fewer investments in early-stage companies in 2022 than the year before. Partially due to crazy valuations in the start of the year and partially due to the downturn and slowdown in markets. I’m still an active investor with Rolling Fun – and Eric and team continue to make fun and interesting bets at the Seed Stage. I also was thrilled to get some allocation in HackMD‘s round – which was raised to help build out web3 native functionality.

Technology That Has My Attention

Stable Diffusion

Earlier this year, I went pretty deep down the rabbit hole of stable diffusion – a text-to-image AI tool that enables you to generate photo-realistic images from any text input. There are some pretty profound implications for this tech going mainstream and I expect an explosion of artwork to come as a result. Several years ago, when I tried to launch a NFT-enabled Sci-Fi Universe, one of the limiting factors was the capital expense of hiring creatives.