1dc5759b dff4 4139 bcd8 2b4dd016c728

🎙 Gmoney on NFT Projects That Will Make it Through the Bear

Gmoney is one of the most prominent NFT collectors in the space, breaking into the scene with a splash when he bought a crypto punk for 140 ETH last year.  He rose to become one of the best-recognized NFT collectors and is now becoming a creator himself with his Admit One project. 

Gmoney dives into how the current market crash is affecting NFTs. In his previous life, he was a trader in traditional finance and we talk about how he went from trading stocks to trading non-fungible tokens full-time. The state of the bear market has rapidly spread a sense of fear, but NFT creators are still innovating. Gmoney talks about the most exciting trends and projects.

NFTs are a form of representing digital identity and an access point to communities. But what more can NFT’s do? In the grand roadmap of NFT’s, where will the space go in the next 5-10 years? And will they grow to become more than art and collectibles?

Podcast audio and video was edited by Daniel Flynn and Alp Gasimov. Transcript was edited by Samuel Haig.

🎙Listen to the interview in this week’s podcast episode here:

📺 Watch the video here:

🙏 Thanking our podcast sponsors:

dYdX has launched a Grants program with funding allocated to open source builders. Come help build the future of decentralized trading at dydxgrants.com

Nexo’s fundamentals-first model helps you secure your assets and grow your wealth. The company now provides an increased insurance on custodial assets of $775 million. Learn More!

Avalanche Subnets allow anyone build custom, app-specific blockchains – the future of Web3 scaling.

APWine – get your future yield today, speculate on APY evolution or fix APY rates. Discover the latest yield tokenisation trend in Web3 with ‘APwine’

👀 Only paid subscribers have access to the full interview transcript below.

Cami Russo: All right, here we are with Gmoney, one of the most prominent NFT collectors and now an NFT creator. Gmoney, it’s great to have you on The Defiant Podcast, thank you so much for joining me!

Gmoney: Thank you for having me, it’s a pleasure to be on.

CR: Awesome. So let’s start with the obvious topic that’s on everyone’s mind — the huge, dramatic crypto crash, and the broader market crash. You obviously have one of the closest eyes on the NFT space, so I’d love to get your view on how this bear market is impacting NFTs.

GM: I think what we’ve seen initially is there’s been a lot of volume that has dried up, a lot of collections that have remained stagnant. I don’t think it necessarily is a reflection of anything. I think it’s more of a reflection of the fact that people are probably more concerned with the macro picture at the moment, which is why you’re probably seeing some trades where it’s more for people that need liquidity, because these are very illiquid assets compared to ERC-20 tokens, stocks, or whatever. So I think you’re only seeing people transact that really need to transact right now. And I think that’s just the nature of a bear market. I think that usually is what happens in illiquid assets. If you take a look at real estate, I think real estate usually acts in a very similar manner in pullbacks and bear markets.

How has the bear market impacted NFTs?

CR: So I was looking at some of the floor prices just now and was looking at the bigger collections. So the floor price for CryptoPunks has taken a huge hit — according to CoinGecko it’s at below 47 ETH from a high of around 72 ETH. Same with Bored Apes, the floor is at 80 ETH from a high of 150 ETH earlier this year, and so on. So floor prices for the big names are getting slashed, and if you were looking at these blue-chip NFT collections as the ones that would hold up better possibly, even if you compare it to real estate — when the market is turbulent, a lot of people will flock to something illiquid like real estate as kind of safe haven, but that’s obviously not happening with NFTs, and not even with the NFT blue-chips.

How are you seeing this dynamic play out in the big name collections compared with smaller collections? Are smaller collections getting hit even more than the big names, are big names kind of holding up better? What are some of the dynamics that you’re seeing there?

GM: So CryptoPunks hit a high of around 150 ETH… last [year] and it’s had a significant pullback since then. I think the big differentiator between an asset class like real estate and NFTs is [with] real estate, people buy real estate for cash flow, so it becomes more of a safe haven asset in the sense that it has some sort of yield that will support the valuation, more so than an NFT collection. An NFT collection is probably closer to something like art, so you wanna see how art does during those same periods?

I think when you start with that framework, but then you also add on the overlay that these collections are down 50%, 60%, 70%. But what has the price of Bitcoin and Ethereum done over that same timeframe? What has the price of a lot of altcoins done? It hasn’t necessarily performed worse. It’s performed in line [with], maybe slightly better depending on the collection that you’re looking at. So to me, I don’t wanna sit there and be taking a look at the dramatic rise and fall because you can’t look at it in a vacuum. You have to look at it overall.

When I take a look at smaller collections compared to bigger collections, I think the smaller collections are probably down more. But I think it’s because the type of holder that is in those collections probably doesn’t have as much liquidity as somebody that owns $50,000… in either a Bored Ape or a CryptoPunk [or] at one point $200,000 [or] $300,000. You have to figure their liquidity profile is a little bit different, so probably owning one of these pieces is probably a portion of their assets of their portfolio allocation, not all of it. So I think for that reason, you’re probably seeing more of a drawdown in the smaller collections, the same way that you see more of a drawdown in alts compared to Bitcoin and ETH.

CR: That’s a great point, and also a great point to compare performance of NFTs with Bitcoin and ETH ― it is surprising that NFTs, a super new asset class [are] holding up similar to what Bitcoin and ETH are doing. How hard is it to find buyers for NFTs right now?

GM: I don’t know, I’m not trying to sell anything. I haven’t been out there trying to sell anything. I think that it’s harder because when times are good, people have more money to spend on other things. And when times are tough, then people pull back on their spending. I think you [can] see the same thing in the NFT space where projects that probably would’ve minted out six months ago are now stalled mints because people are like ‘oh, that’s really cool, but at the moment, I’m focused on other things like maintaining liquidity and trying to figure out how to weather this uncertain storm that’s coming’. The question isn’t [whether] we are in a bear market, that’s not a question. The question is how long does it last? Is it something that’s quick? Is it something that’s a recession? Is it multiple years? That’s the real question that people are trying to answer now. And I think until we start getting more clarity on that, you’re probably just going to see lower volumes.

CR: Yeah, it’s a great point on new collections, on drops in innovation in this space. Do you see that completely stalling until we get more clarity? What are you seeing in the new drops space? I remember last year there was a time when we had this bot in The Defiant’s server alerting us to all the different NFT drops that were going on. It was just like so many, multiple drops a day, and it was like his really fun, crazy environment. And now it looks like that’s not happening anymore.

GM: I don’t think innovation and drops are going to stall… Much the same way I think you’d use the bear market of 2018 and 2019 as kind of your framework, people are still going to launch projects, people are still going to build, people are still going to do work. It doesn’t mean you’re gonna mint something and it’ll go up 100x right away. I think those days, right now, are behind us. But there will still be cool stuff that’s being made. And I think that that’s what people need to keep an eye out for.

CR: For sure. On that, thinking about that intersection of NFTs and DeFi, it seems like maybe now would be a good time for that class to take off. At least to find a good use case for people who maybe want liquidity but don’t want to sell their NFTs. I know there’s a few projects that are trying to provide a platform where people can use their NFTs as collateral. Do you see more activity on those platforms? Have you tried to use those sorts of tools? Or do you think people are just freaking out for now and it’s too early to use something as sophisticated as that?

GM: I’m sure a lot of people are using them. At one point, I think it was in November or December of 2020, I was the largest loan ever made on NFTfi. That was a $25,000 loan, which at the time was the largest loan taken out against an NFT. I think the space has grown dramatically since then, and I think the use case for the product. I’m in talks with a bunch of these different lending platforms [about] the capabilities of what it looks like to get a loan against my NFTs, or maybe to try to get my collection on there as collateral… so that people in my community could get a loan against the NFT and stuff like that but still get access to the membership rights that come with it ― making sure that none of that gets taken away when they do get a loan against it. So I do think that we’re still gonna have a lot of cool building.

One of the coolest things for me, I had two, ‘oh my god’ moments when I entered space. The first one was when I used Aave the ability to get a collateralized loan with no KYC in under five minutes I thought was incredible. And then the second time was when I actually got a loan against an NFT. I was like ‘wow, both these things are primitives that will change the world because it’s going to be giving people access to liquidity and cash that they otherwise might not be able to get either because of credit score requirements, or whatever it is’. Now, no matter how small the asset is, you could get access to liquidity, which I think is a game changer for personal finance overall in the long term.

Gmoney’s pre-NFT journey

CR: Super interesting. I’ll come back to the specifics of how those protocols work, but I’d love to just take a step back for a moment and get into your backstory ― how did you get interested in NFTs? What were you doing in your pre-NFT life?

GM: Yeah, sure. So I come from a traditional finance background. I was a trader for 15+ years, trading on Wall Street long, short U.S. equities. And I got into crypto in 2017 and I rode the mid to late cycle of the ICO bubble. And I remember in Q1 of 2018, I was like ‘this technology’s amazing, it’s gonna change the world, but it’s too early’ because I remember what the ‘.com bubble’ was like that’s when I first started investing when I was a teenager. I remember I rode the.com bubble all the way up and then I didn’t sell anything and I rode it all the way back down. So when I saw crypto, I was like ‘this technology is super promising, but I still think it’s too early, I think we’re like five to seven years away’, whereas the.com bubble took about 10 years to get built. The internet that we know today took about those 10 years.

So I was like ‘I’m gonna come back’. I sold whatever I had that was liquid [and kept] an eye from afar, really focussed on equities with an eye on crypto. In Q1 of 2020, in the depths of COVID, when the fed said that they were gonna be printing unlimited money to save asset prices and avoid demand destruction, I wired a bunch of money over to Coinbase. I bought a bunch of Ethereum and I started going back down the rabbit hole. And when I started going back down the rabbit hole I started getting involved in DeFi summer and relearning everything that I had missed up until that point. And I was like ‘wow, people built stuff very quickly’. It only took two years to build stuff as opposed to the five to the seven that I thought. So I was going down the rabbit hole. I was learning as much as I could. I was farming a bunch of stuff. I got caught in the Sushi rug… I was relearning and I remember hearing about NFTs over the summer, but I was like ‘oh, I’m just too busy with the DeFi stuff’.

Then, once DeFi summer died down end of August, beginning of September, I finally looked into NFTs and I’m like ‘oh my God, I’m like, this makes so much sense’ because on the first day of quarantine, I bought a PlayStation [and] I started playing Fortnite with two of my best friends [and] one of their nephews who is 12 years old. And the first thing they asked me is ‘what skins did you buy?’ I’m like ‘skins don’t give me any special powers, I’m not spending money on skins’. But I realized that kid who is 12 years old, 10 years from now he’s gonna be 22. He’s gonna have a ton of disposable income, and he is gonna be totally okay with owning a purely digital asset. So at the time, there’s no publicly traded metaverse plays Roblocks, Unity, none of them are public. So I’m like ‘I just have to keep an eye out on this’. So I keep an eye out on it and when I find NFTs, I’m like ‘wow, this is your skin on Twitter, on Discord, on Telegram, this makes so much sense to me’. I start going down the rabbit hole and it culminated in me buying my CryptoPunk, which I then wrote a Twitter thread about in January of 2021, which went viral on crypto Twitter and the rest is history. That was kind of like the beginning of Gmoney.

CR: Is that the CryptoPunk that you are wearing now?

GM: Yep. 

Spending 140 ETH On A CryptoPunk

CR: I remember that thread popping up and being like ‘I cannot believe this guy has spent 140 ETH on a 24 by 24 pixel image’. Can you go through the thesis that you laid out on why you did it?

GM: So very much like in the real world where people will buy things to flex [and] show off ― you, you buy an expensive watch or you drive an expensive car, it’s not necessarily because a Rolex tells you better time than a $5 Casio, it’s because it sends a signal. So my thesis was very much that in the last cycle, I remember at the top, everybody was always saying ‘when Lambo, when Lambo.’ My thesis was that by the time we reached the end of this cycle, people would be saying ‘when CryptoPunk’ as that display of success, of wealth, of authenticity to the space, of being an OG. All of these things I saw that people would want to do, much the same way in the real world when the stock market is at all-time highs ― luxury cars, luxury homes watches, wine, all these things which are expensive and at the super high-end also get priced up higher because people have more money to spend. I felt like the same thing would be happening in the NFT space with some pretty historic projects, and that basically was my thesis for buying my CryptoPunk.

CR: And why specifically a CryptoPunk?

GM: Because I thought it was very historic. I remember at the time when I first started going down the NFT rabbit hole, I said to myself ‘I wanna buy the next CryptoPunk, not CryptoPunks. I was looking for a lot of different projects and then one day I bought a bunch of Chromie squiggles from Snowpro and I was in the Discord right after I bought a ton of them and he goes ‘what are you doing, man? Stop wasting your money, don’t buy any more Squiggles, buy some CryptoPunks’. And he spent the next day or two really red-pilling me on why I should buy CryptoPunks. Once he explained it to me, I was like ‘okay, this makes sense’. He’s like ‘they’re historic, they’re cool profile pictures, they’re quirky, they’re awesome, they’re beautiful in their own way’. And once I went down the rabbit hole, I’m like ‘yeah, there’s nothing like this, this is what I want to buy, I wanna make sure I own as many of these as I possibly can because I think these will be so historically relevant.’

CR: Perfect. And then in hindsight, it seemed like Bored Apes became kind of the next CryptoPunk, the next major significant project that even surpassed CryptoPunks in terms of floor price. And then [having bought] the CryptoPunk itself, what did you think of all of that playing out?

GM: What do I think of Bored Apes?

CR: Yeah, of Bored Apes becoming the next status symbol versus CryptoPunks. I remember kind of covering it and there being a little bit of like rivalry between the two collections, especially when Bored Apes surpassed CryptoPunks. And now, I’m wondering what you think of both projects and where they’re headed?

GM: I think they’re very different projects, much like I think every community has a different collector base and has its own fingerprint of what they’re like, and no two communities are alike for that reason. I owned a bunch of Mutant Apes at one point. I hope Bored Apes do great, but I just think the value prop for owning one over the other is just different. I think CryptoPunks are very historic. The fact that Bored Apes are technically a derivative of CryptoPunks in that there’s 10,000 of them, they were based on the ape trait from CryptoPunks, to me, it’s like an homage to CryptoPunks, so I never really saw a rivalry there. I think it was just people finding their group and their posse and the people that they wanted to be aligned with and just going from there. So I think they can both be successful over the long run for very different reasons.

CR: Got it. I know we’re going down this CryptoPunk and Bored Ape rabbit hole, but it’s just so interesting to me. So just like one last question on this topic, I’m wondering what you think success will look like for each collection? To put it in context, it’s relevant because they remain the two most liquid, most traded, they’re both the biggest, most well-known NFT collections in the space. I don’t know, but it seems like Bored Apes is going down this route of creating like video games on this whole like world around their IP, and allowing others to create stuff with it. While it looks like CryptoPunks is more like a purist attitude to kind of the art. But I don’t know, I’m definitely not an expert like you are, so I’m wondering what your view on both projects is long term?

GM: I think you nailed it on the head. Board Apes seems to be going down a more commercial path, and that’s what Yuga wanted to do with that, and that’s perfectly fine. I think a lot of the reason we’ve seen Bored Apes go up as high in prices they have is because of all the things that have come from it. Whether it be Bored Apes, the land sale, the APE coin all these things which have been value added to Bored Apes. But I also see CryptoPunks more asalmost like the estate of an artist right, where it doesn’t need to be commercialized because I think it’s a work of art in and of itself. I would like to… see Yuga… kind of be a steward of that heritage and just be honoring a collection that they themselves obviously thought very highly of. The first PFP project that really took off was CryptoPunks, so without CryptoPunks, we probably wouldn’t be sitting here with the PFP mania that we’ve experienced over the last 18 months. So to me, I don’t necessarily want to see CryptoPunks being commercialized because I don’t think that that was the intent by Lava Labs when they created it, and I think that’s fine. Not every crypto project needs to go down the same path in order to be considered a success long term.

Gmoney on launching Admit One

CR: Absolutely, I agree. And then changing gears to your own project, we were talking about how you were a Wall Street trader, went down kind of a crypto rabbit hole in the ICO era, then came back during the pandemic and DeFi summer, then you had this epiphany with Fortnite and your nephew buying skins and how that connects to NFTs being kind of your own digital identity that you can actually own in your own wallet and carry around in your online interactions wherever you are, even on this podcast in your case. So from there, how did your involvement in the NFT space continue, and how did that lead to your own project?

GM: So from there, I’ve obviously been a major collector in the space and I realized really early on, especially when I wrote that thread and the reaction that I got to it, that I was seeing the space very differently than many others at the time. And to me, it’s like ‘okay, I see the space differently, so I want to talk about it’. And as I started going further and further down the rabbit hole, I was like ‘to me, this is the future’. There’s no doubt in my mind that as the world becomes more digitized, NFT tech and the whole blockchain tech behind it will be the future of digital asset ownership. So to me, it’s like, ‘how can I help increase the adoption of that?’ That’s why, when I worked with Adidas, I was really excited to work with them because a company like Adidas can do more for the advocacy and adoption of crypto tech than the entire industry can do together over the course of the next decade. They’re just so plugged into the social fabric and understand the concept of what’s cool and what consumers generally want. So to me, I’ve been very much focused on two things. One is disruption, and I think I’ve done that because I’ve been investing in a lot of startups in the space over the last year and a half. And two is adoption, and that to me is by working with brands such as Adidas and other major brands that are interested in the space, but don’t necessarily know what they’re doing, or are still learning how they want to go about it. 

I think it was in March or April of last year, I sat there and I was like ‘okay, I’m ultimately going to build a community, I don’t know exactly how I’m gonna do it. I don’t know how it’s gonna be structured just yet, but I’m gonna start laying the groundwork for building that.’ And that’s when I started with my first co-op event in BTC Miami, which also happened to be the week or the weekend that we met at a dinner, I believe. To me, it’s like I’ve been going around doing this in plain sight knowing that I wanted to build community without exactly knowing exactly how I wanted to do it. And then in the beginning of this year, I said ‘okay, it’s time I want to start laying the groundwork for doing it because I know that now is the time to start doing it’. I wanted to let the space develop a little more, I didn’t necessarily want to be exactly the first person to start this type of community, I wanted to learn from people that have been doing it before me, the pros and cons from different communities and different founders and put my own spin on it, which is how I ended up with Admit One. It was ultimately a free mint after spending a lot of time debating on how we would distribute it. I felt like a free mint would probably be the best, and I’ve been really happy with the results so far.

CR: Okay. So breaking that down a little bit first who is this NFT four and, and and what can they use it for?

GM: So the NFT is for people that were allowed to mint. I had a curated list of 200 people, of which 59% were women because I wanted to make sure I had a good representation of women in the community. And then, the rest were people that had collected my co-ops either at in person events or had supported me in some shape, way, or form, so that there are people that are in my ‘wolfpack’ in the game Wolf Game, which received a co-op for staking with me… I just wanted to reward the people that believed in Gmoney from day one and bring them into this community. And that’s basically the basis for how it was formed and how it was started. As to what it will be used for, it’s your gateway into all things that I will be working on in the future. I can’t disclose any of it at this point, but I think I’m working on some really cool and exciting stuff that I’m really excited to share with the community when the time is right.

CR: Got it. And then you said that you wanted to see what had worked and what hadn’t worked from other founders? So what are some of the lessons that you took and applied to your own project?

GM: Well, one was probably starting small. I wanted to make sure the community was manageable. I had never done a community of this size before, and I wasn’t not sure if I wanted to start with 1,000, 5,000, or 10,000. To me, the advice I’d received was to start off small and to not necessarily have to charge a price for the actual minting. That, to me, was super interesting as well.I wanted to make the community super organic the way that I distributed it, the way that I brought people into the community and just really go from there, and understand that it is a learning process. I don’t have all the answers, nobody has all the answers. All I can do is try my best and then learn from my mistakes and iterate, and make it better the next time.

CR: So starting small. So how many people weren’t in that initial cohort that was allowed to mint for free?

GM: There’s 1,000 NFTs [and] I believe we’re at 890 unique owners, so I got a really good distribution of it, which is what I wanted. I didn’t want a gas war and I wanted people to be really happy that they were in the community. I think I hit all those things that I was trying to solve for the mint. And I’ve been super happy with how the community has played out, even through this bear market. We’ve had a significant reset in prices over the last two to three weeks, which has taken its toll on everybody in the space. But being able to talk to people, whether talking about what the price action is like from my days as a trader, to also just being there for emotional support where some people are going through hard times because they haven’t experienced something like this before and being like a sounding board for them.

CR: When was the the mint?

GM: It was three weeks ago, it was on May 25th I believe.

CR: Oh, okay, so really as things really started to crater, I guess. So you still have spots left? Are you saving those for like the supporters in the future? What’s the plan?

GM: Yeah, I’m just giving them out at my discretion to people that I think will be very valuable to the community at this point.

CR: Is discord the main place that you’re using to communicate with them?

GM: Yeah, we have a Discord channel where I’ve been pleasantly surprised at how amazing the community has been with regards to chatting and sharing ideas and stuff that I wasn’t even expecting, especially right out of the gate, and how the community has been really proactive.

CR: Nice. And right now, people who minted Mint One, are they trading it in the secondary market? Is it a transferable NFT that people can trade?

GM: Yeah, people have been trading. I think the trading volume has been pretty active, I think around $3,000 or $4,000 each at this point. That’s being done on secondary markets, it’s just like any other NFT, right? It’s not bound to me, I want people that want to be involved and want to be part of the community, and this was kind of my way of creating that community that wants to be along with me for the ride and my journey of where I want to be going in web3.

CR: Got it. I know you said you can’t disclose much, but can you give a general sense of where you plan to go? Is it art-related? Or trading-related? Is it [that] you are going to be creating content? Whatever you can disclose of your future plans?

GM: When I minted it, I wrote specifically that there will never be a roadmap. I very much have my vision of where I want it to go, I’m not ready to share that just yet. But I think if you’ve been following me for a few months, you can have some sense of what I’m interested in and the places I want to be interacting in the future.

CR: Got it. So from this experience, what advice would you give to founders and teams starting their own NFT communities?

GM: I would say get some sleep before you do this because you’re definitely not gonna have that much sleep once you launch. I think starting off smaller is better than starting off bigger. And I’d say take the feedback from the community and run with it. You will generally have a group of people that are enthusiastic about what you’ve initially put out there and I think that’s kind of the beauty of the NFT space ― you can build a community really organically and build together as opposed to finding consumers to sell a product to.

NFT Innovation Amid The Bear Market

CR: Okay. Then going back to the current state of the market, you said there will be maybe fewer drops and things [ginning] 100x, but people will continue to innovate and your own project is an example of, of new things happening in this space. What are some of the trends you’re seeing, or the projects you’re seeing that you’re excited about? What’s some of the innovation you’re seeing right now?

GM: I think it’s just more than just the PFP. People are realizing that you can do more than just make a PFP project, and I think that that’s super interesting. I think the lending stuff is interesting. People messing around with the compression so that the art can be fully on-chain is really interesting. I think right now, in a bear market, is when we’re gonna see a lot of cool and innovative things happen. And I’m sure there’s a lot of stuff that I don’t even know about. I find out about new things every day, where I’m like ‘oh, that’s pretty cool, I’d like to keep an eye on how that develops’.

CR: Okay. Breaking down the examples you gave, creating projects that are more than PFPs what’s some of the utility you’re seeing that’s exciting?

GM: I think we’ve seen the rise of the membership token, which is what I’ve been doing. Stuff like proofs, there’s many versions of that at this point. I think that these trends take time to develop. So it’s like, just because you see one project do it doesn’t necessarily make it a trend. I think we’re just at the beginning of it, I’m excited to see what, what else is coming.

Structuring lending products around NFTs

CR: On lending, we talked about it earlier in the interview, but I’m interested in the mechanics of it… In DeFi, collateral has been done with fungible tokens ― ETH, Bitcoin, stablecoins ― because what you’re putting in… you can easily price the value of the collateral and take out a loan against it. But with NFTs, that’s a lot harder to standardize. So how do you think that can be solved [for NFTs]?

GM: Well, it’s solved in the real world already. People get mortgages all the time, people get loans against portfolios and complex products all the time. So valuing an NFT is not impossible, it’s being done every day in the real world. So to me, it’s just bringing it on-chain. So I think that argument to me of ‘oh, these things are hard to value’, they’re not right. There’s a lot of things that are really hard to value in the real world. We just are trying to come up with a framework mechanism [where] there is some price that somebody is willing to lend you at some LTV depending on how much risk they want to take. The key is just finding the person that wants to give you that loan, and if you agree to terms, that really is what all that loan is.

At the moment, there’s no peer-to-protocol lending, it’s more peer-to-peer. I think the issue that people are trying to solve is how do you make it a peer-to-protocol lending environment? Because peer-to-peer exists already in a ton of complex products that are much harder to give a value to than NFTs.

CR: Exactly, that’s what I was getting at. It’s how do you standardize it? Because [with] peer-to-peer, someone can look at your collection and decide what price they give it and how much they’re willing to lend for that collection. So peer-to-peer works, but to do something like an Aave for NFTs where anyone can just interact with a smart contract and take out a loan against it without having to individually agree on terms and go through that process, that’s an interesting problem to solve. I don’t know if you can say CryptoPunks collateral is worth $X when there are many different prices for CryptoPunks.

GM: Yeah, I think that’s a problem many teams are trying to solve. I’ve heard many pitches on people trying to solve them and I know a lot of teams are trying to solve this problem.

CR: So I guess that’ll be one thing to watch in this bear market when there’s less distraction. It’s when we see all these new projects come to life. So besides that, with crypto more broadly and DeFi, are you interacting with those protocols at all? Or are you just 100% focused on the NFT space?

GM: I probably spend 98% of my time on NFTs. I’m in crypto and I talk to a lot of crypto-native people, so when there’s an opportunity that pops up and I think it makes sense, I’ll dive in. But yeah, at this point, I think my time is better spent helping bring people into the NFT space… increase adoption of NFTs and how do I help founders come up with cool and interesting use cases for NFTs and projects helping build the tech around that, as opposed to trying to figure out some sort of complex DeFi protocol that is probably above my pay grade anyway.

NFT innovation in a bear market

CR: So what do you hope will get built this cycle?

GM: There’s just so many different things, the infrastructure around NFTs is so archaic… A lot of stuff where… if I’m a creator and I want to come in and launch a project, there has to be a way that I can do that with no code and do that securely in a time-tested manner, [things] as simple as storing stuff on-chain. There’s literally a plethora of things that can and will be solved. If you can think of it, then it’s a problem that probably needs to be solved at this point.

CR: You’re right. So far, all of the creators and all of the innovation has been around different kinds of collections for NFTs, different PFPs, different art, and different kinds of ways to generate art programmatically. Even different NFT tracking sites, stuff like that. But yeah, you’re right that there hasn’t been a lot of infrastructure for like NFT creators themselves there.

GM: I mean, there’s a ton of them. I’ve invested in close to a hundred of them over the past year. It just takes time to build stuff. So yeah, there are a lot of people that are building out the infrastructure, too many to list ― there’s new ones that pop up every day. But it just takes time, the same way that when Aave did their raise in 2017 it took a couple years before Aave was actually functioning as a site. I think you’re gonna see the same thing happen in the NFT space

CR: Oh, that’s interesting. So that infrastructure is getting built, but we haven’t seen it yet?

GM: Yeah, exactly. It takes time, it doesn’t get built overnight.

The transformative transparency of blockchain

CR: Right, so that’ll be for the next bull run. And then, to start wrapping up, I’d love to get a broader view on what NFTs can do. We’ve talked a lot about them being part of your identity, of how you express yourself online, them being kind of a ticket to a community of like-minded people. Do you think that’s where a lot of the activity will be in the next few years? Or do you see NFTs taking off [in] different industries? A lot of people talk about how it will make sense for real estate transactions, to use NFTs in supply-chain finance, stuff like that’s outside of the art collectible space. What’s your view there, where do you see the broader space going, say, in the next five to 10 years?

GM: Yeah, it’s a no brainer that NFTs are gonna disrupt every industry on the planet. Everything in the real world isn’t NFT. So as things come on-chain and become digitized, they will come on-chain not as an ERC-20, but as an ERC-721 or some [other] sort of NFT standardization. When I first got into the space, I was super interested in the fact that a mortgage is an NFT, real estate is an NFT…

I think we’re seeing that play out in real time currently with the whole Celsius margin calls and people who are under-collateralized. This is replaying everything that happened in the financial crisis except then you didn’t know who had what, you didn’t know who had what exposure, you didn’t know what their mark [prices] were, you didn’t know how under-collateralized they were. You didn’t know whether you were solvent just because you had a counterparty risk with somebody else. But if we fast forward to 10 to 20 years from now where if we had the same sort of situation, but instead of banks holding onto their portfolios and reporting them once a week at some imaginary mark that they make up until all of a sudden they start getting margin called and they have to mark to the real mark. If we had these mortgages on chain as NFTs which were then put into portfolios, which act as CMDS indexes that get marked to market every single day, guess what, the lower it goes, you have to post more collateral in real-time where you get stopped out of it ― we’re seeing that play out in real time. 

So what if you take this to the mortgage market, what if you take this to any asset-backed securities market where you now have a mark to market in real-time, and you don’t have to worry about counterparty risk to the extent that you do in traditional finance… You’re talking about trillions of dollars worth of assets and commerce that happens at that point, but you can’t bring all that stuff on-chain today. You need to prove the models the same way in DeFi where you base stuff on TVL. The longer something has been around, you expect a higher TVL because the contract is considered safer.

Each successive dollar that’s put into the protocol is that much bigger of a honey honey pot that encourages [hackers] to try to exploit it if there’s an exploit there. And I think the same thing is gonna happen in the NFT space where it started off with these pictures that were generally worthless that now have some sort of value. And as people become more comfortable with technology, more and more valuable things will be coming on-chain. And that, to me, like the mortgage and the MBS example, is probably the best example I’ve seen for bringing high-value assets on-chain long-term.

CR: That will be super exciting to see, bringing that level of transparency to financial markets and providing that kind of safety for investors [so they can see] exactly where their collateral lies, and what the risk of being able to prevent a big collapse from happening is.

GM: To that point, I know we’re all experiencing what might be a more exaggerated draw-down at the moment because of [the] solvency risk that’s on the table, but that’s way better than them marking their book [then] all of a sudden [saying] ‘oh, wait, we need a bailout from government entities or the entire system is at risk of collapse’. So that’s really the fundamental thesis for why Bitcoin was born, [it was] because we were bailing out every bank on the planet because of their poor decision making, They were bailing out people with public funds ― we haven’t seen that in crypto. And this is the reason why, because you can see in real-time what people’s solvency is, and that’s the beauty of it. And we need to be bringing more of these markets on-chain, in that manner.

CR: With the whole Lehman and MBS situation, the issue was that there wasn’t transparency and the risk there wasn’t clearly priced. People thought they were buying AAA mortgage back securities, but in the end they were buying a bunch of trash, and that whole thing unraveled from there. But yeah, now, if you had all that on-chain and you were able to see that in a transparent way, you wouldn’t have that level of risk. And I guess that’s kind of a difference between what happened with LUNA versus what’s happening with Celsius ―in the case of LUNA and Terra, yeah, it was a spectacular collapse, but I think there was just more clarity on what was happening because everything was a little bit more transparent than what happened with Celsius, [which] one day said ‘oh, we’re freezing accounts’ because it is a centralized entity and you can’t really have the same access to their books as you had with Terra, [where] you could see in real-time what was happening.

GM: Well, I think with Terra and the Terra Foundation, they were centralized in the gate-keeping of what they were doing with their actual positions. And, that’s where all the speculation comes from, and the same thing with Celsius. I think when you’re taking a look at both of these entities, the centralization of it is really the issue there, but we have less centralization on it than we do in tradfi, where the real issue with the mortgage-backed securities crisis wasn’t necessarily that people were buying assets that they thought were AAA that really weren’t, it was that it was kept on the books at such a high mark for such a long time so that these banks or these counterparties that kept them on the books would mark it at like 90 cents on the dollar ― when in reality, they were worth like 20 cents on the dollar. And when it finally came time to kind of shore up that counterparty risk, there was a massive shortfall, and that massive shortfall is what led to that whole panic.

Even though we’re having our own liquidations and our own price extremities because of these two situations, there’s no government bailouts, there’s no government funds that have been used to bail out any investors for undue risks. Now, there might be some issues with disclosure and investors being told that they were investing in something that maybe they weren’t, but that’s an issue that regulators and probably lawyers and attorneys will be handling over the next few years, but it never brought the entire system to the brink of collapse. And I think that that’s the main key difference there.

CR: Yeah, I totally agree. And you’re right, CeFi is still more transparent than traditional finance, and DeFi is a step further, and hopefully where we are headed, because it isn’t in those centralized entities like the Luna Foundation and Celsius where you get those blind spots for users that don’t allow them to really assess risk. Ok, we’ve definitely deviated from NFTs in our interview. But that’s super interesting. And I just wanted to wrap up by asking you Gmoney, what makes you defiant?

GM: What makes me defiant? I think the fact that I am in crypto. I think all of us are defiant that are in crypto. I think we challenge the status quo and we want to see the world be a better place and more equal for everyone in it.

CR: I love it. Thank you so much for a really interesting conversation. It was a pleasure having you on the podcast.

GM: Awesome, thank you for having me.



, ,