Welcome back, this week Lucas and Anita return to discuss the ultimate meme investing crossover episode with GameStop launching an NFT marketplace. We also break down this week’s latest drama with the liquidation of crypto hedge fund 3 Arrows Capital. It wasn’t all doom and gloom as we discussed some of the new crypto funds injecting fresh capital into the space. In their interview this week, Lucas and Anita chat with Naveen Jain. Naveen is the founder of web3 startup Yat which lets people buy their own emoji URL. The marketplace saw some wildly expensive sales this year, but when can pricey emojis tell us about the future of identity?
Welcome back, this week Lucas and Anita return to discuss the ultimate meme investing crossover episode with GameStop launching an NFT marketplace. We also break down this week’s latest drama with the liquidation of crypto hedge fund 3 Arrows Capital. It wasn’t all doom and gloom as we discussed some of the new crypto funds injecting fresh capital into the space.
In their interview this week, Lucas and Anita chat with Naveen Jain. Naveen is the founder of web3 startup Yat which lets people buy their own emoji URL. The marketplace saw some wildly expensive sales this year, but when can pricey emojis tell us about the future of identity?
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Helpful links:
https://techcrunch.com/2021/07/30/yat-thinks-emoji-identities-can-be-a-thing-and-it-has-20m-in-sales-to-back-it-up/
https://techcrunch.com/2022/07/13/celsius-one-of-cryptos-biggest-lenders-files-for-bankruptcy/
https://techcrunch.com/2022/07/12/crypto-focused-multicoin-capital-launches-430m-venture-fund/
Anita Ramaswamy 0:00
Hey everyone, it's Anita and Lucas. Welcome to chain reaction where we unpack and explain the latest crypto news drama and trends breaking things down block by block for the crypto curious. During the second half of today's episode, we'll be chatting with Naveen Jain from yacht. But before we get into that, I want to talk a little bit about a meme stock that we all know and are very familiar with after 2020.
Lucas Matney 0:28
Yes, so when a lot of people think about meme stock investing, some of them think of crypto coins, but a lot of them think about GameStop. So Gamestop has a lot going on for it from interesting perspectives. But they made one of their bigger launches this week. So they launched an NF T storefront where people can buy and trade NF T's online. Right, exactly. So they're, you know, they've got open sea out there. They're where the majority of transactions happen. Coinbase has tried to launch their own NFT marketplace and has gone very poorly in terms of just how the launch went. So people saw Gamestop doing this and thought that this was a big opportunity. A lot of game stops. I mean, investors have bestowed a lot more value on the stock as a result of them getting into the blockchain game, but it's been a little bit of a turbulent time for Gamestop this week. Also, this week wasn't just about them doing this NFT launch. They also had some layoffs at the company. They fired their CFO, it's a little turbulent. Yeah,
Anita Ramaswamy 1:25
the layoffs were really weird and interesting, because they did the NFT marketplace launch right after a couple days after and we will talk about how that went. But you know, the backdrop to this is that the CEO Matt Furlong wrote a letter to employees and he announced that there were going to be layoffs. He didn't say how many employees were being let go. He didn't say what division they were going to be let go in. He was overall in this letter pretty unclear about what actually was going to go on. But in the first line of the letter, he mentioned the word blockchain. And so it really goes to show Gamestop is trying to sort of like capitalize on its status as a meme stock. And I think, you know, go into crypto and see see how it goes, see whether it sticks for them. And it's funny because they actually made a $381 million dollar loss in their last fiscal year. So this is sort of a moonshot, if you will, well, if
Lucas Matney 2:10
you think back to 2018, or when like the big last crypto Bull Run was there, all these companies, companies like Kodak, we're just like, we're gonna put blockchain in our stock ticker. And all of a sudden investors are going to give us crypto like returns because we're a crypto company. So in some ways, GameStop pivoting to blockchain, maybe that would work better in a bull market. But like right now, I hazard the guess that being a crypto company isn't necessarily a big asset for public stock.
Anita Ramaswamy 2:39
Yeah, it's not the greatest time to launch an NFT marketplace. But how did the launch go?
Lucas Matney 2:44
Well, and yet the launch didn't do that poorly. So basically, the way the platform works is it's kind of a separate blockchain. It's a layer two on the Ethereum blockchain called LoopRing. So you have to mint, the NF t's on the platform, and then sell them on the platform. So it's a little self contained in a way. But they did about 2 million in sales on the launch day, which if you're looking at their transaction fees, which is just a percentage or two ultimately doesn't mean that much money, it means just a few 10s of 1000s of dollars, which like to a public tech stock, that's like trying to, you know,
Anita Ramaswamy 3:17
be worth it's probably like less than 1% of their revenue, right? So
Lucas Matney 3:21
it's not, it's not a ton of money. They launched with a number of projects on board, the bulk of this $2 million in sales came from a couple of projects. So they had a couple of successes. The question is, how does this scale? How does this work going forward? Did they get a big bump from it being the first day and people wanted to get at the ground level? Is that gonna sustain? Yeah, these are all things to wonder. But at the end of the day, they did more in sales on their first day than it seems like Coinbase has done on their first day. So it's like kind of showcasing how poorly Coinbase NFT did and their beta launch that even Gamestop could do better. That's actually
Anita Ramaswamy 3:57
wild. Because I mean, GameStop must have some pretty hardcore devotees. Because if you can't really transfer your NF T's from, you know, different blockchain from Solana or Ethereum onto the Gamestop ecosystem, then you really have to be committed that okay, this is like this is my NFT marketplace of choice, right? So how it works?
Lucas Matney 4:13
Yes. So I mean, basically Gamestop is trying to build a gaming NFT marketplace, and you know, trying to be a brand extension, but focus on on games. So like to date, most of the projects that are onboard kind of look like your average NFT profile pic projects. And I think it's going to be a very hard sell to actually bring studios or publishers into the weave of this platform, but they have this big ambition. They want to see how it shakes out, we'll see I am very skeptical. It's going to work Gamestop has defied a lot of conventional skepticism just by virtue of being kind of the collective internet meme coin stock. So
Anita Ramaswamy 4:53
I'll give you a sense of this move. Okay, I'll give you the one defense of this move. And it's not it's not major but basically if they do this on online marketplace and they move more into online products. I mean, they're the bread and butter of their businesses, brick and mortar retail stores. And those have huge overhead costs. So they're not making a ton of money off of this. They may not but also the initial investment. I mean, they had to invest to actually build out the NFT marketplace itself. But every time there's a transaction on it, the cost of that revenue is super, super low. So maybe that's what they're thinking that, you know, this is just sort of some, like extra icing on the cake that they can they can grab if people are interested. But it's also not as high risk because the investment for that revenue is low.
Lucas Matney 5:32
Yeah, operating a tech stock multiples, and still being a company that has brick and mortar stores as your main business doesn't seem the most sustainable, so I can understand them wanting to be a true tech company live up to the tech hype. Well, exactly. And I mean, it is just not the greatest time to be putting all of your hopes and dreams into NF T's. But you know, maybe it works out.
Anita Ramaswamy 5:56
Yeah, maybe there'll be calling you from the moon Lucas next year. Who knows? But
Lucas Matney 6:00
I Well, yep. Maybe? Who knows?
Anita Ramaswamy 6:05
Speaking of it not being a great time for crypto,
Lucas Matney 6:08
yes. So there was some some action happening this past week and over the past several weeks with a very large crypto hedge fund. What went down there, Anita.
Anita Ramaswamy 6:17
So three AC has been the name on everyone's lips this past couple of weeks. They are a hedge fund. They were founded in 2012. And they as of March managed $10 billion in assets. So that's pretty large, okay, pretty established, like sort of maybe not a well known name, but a name that had their hands on a lot of different crypto projects. And that all came crashing down because of the bear market. And three AC ended up having to file for bankruptcy. And because of their troubles, they also affected a bunch of other different projects like Celsius, and their collapse was linked to three AC in some way, like a lot of these different big headlines that you've been seeing about crypto companies collapsing. We're in some way linked to this hedge fund because they they were everywhere. And so their founders they filed for Chapter 15 Bankruptcy on July 1, so just not not too long ago. And that was in a British Virgin Islands court. So this court in the BVI is supposed to take them through the bankruptcy proceedings, essentially liquidate all of their assets and sell them to other people or distribute all the assets of the company. But there's one little problem which is that the two founders, allegedly according to the liquidation firm have disappeared. Yeah, so, I mean, they did resurface on Tuesday, right? But basically what happened was that neither of them sue Sue and Kyle Davies, those are their names. They were both former traders for Credit Suisse. And last week, they had a zoom call with liquidators to, you know, talk about what they're going to do get a plan together of what the bankruptcy proceeding is going to look like. And apparently neither founder turned on their video. Both were muted for the duration of the call. All dialogue was conducted through their legal counsel, and they said that they plan to cooperate with the proceedings, but they said they promised liquidators like Hey guys, we're gonna send you the information that you need after this call. And they never sent it. So the liquidators are still upset. And they're saying these guys are nowhere in sight. And they disappear. They did a post on social media, one of them deleted their Instagram. But then on Tuesday, this week, zoo broke his silence on Twitter. And he wrote that the firm's efforts they had been trying to cooperate with predators and he said that they had been met with quote, unquote, baiting, you know, he was he was really upset about how the proceedings had gone. I don't really exactly know what that means. But zoo also mentioned that, you know, they're working under a lot of time pressure. They had received threats of violence, which is, you know, not great. And they were basically trying to convey the message of like, Look, guys, there's a lot of shit going on in our lives. We don't have time to send you all the documents that you need. The liquidators, on the other hand are saying, you know, they're saying they're trying to cooperate, but they're not actually trying to cooperate because they haven't sent us any of the information. And there's one big concern that comes from all of this. People are worried that zoo and Kyle have actually sent funds from three AC outside, right, that they're actually trying to sort of get out of the situation by transferring their funds. Like there have been some reports of some of their NF T's being transferred to other crypto wallets outside of Singapore, which is where they're headquartered.
Lucas Matney 9:03
Yes. So this whole scenario is a little bit of a nightmare. I mean, if you look at kind of the backdrop of the past few months of the crypto bear market, there have been a handful of kind of triggering events. Big one was Tara and ust and a lot of people were just like hating on duquan, the founder of the project immediately when all of that stuff went south three AC has been another one of these big scenarios. And when you've got $10 billion in assets, and like all of these crypto lending firms had money tied up in three AC like, block phi has been having a tough few months. And they mentioned that they had like 10s of millions of dollars that they lost because they were invested in the three ACS projects. So on one hand, I can understand why they would want to be silent on Zoom, and they would want to let their lawyers communicate for them because $10 billion is a lot of money. So I remember them saying that they're getting death threats. I don't doubt for a second because I feel like me scrolling Twitter I see a lot of people just like saying some some awfully bad things about them. And when you lose $10 billion, you're probably kind of setting yourself up for that. So it's a bit of a cautionary tale. But I'll be curious how this shakes out. I mean, it seems like it just has to shake out in a really, really messy way that I don't see how it could be clean in any capacity. So the fact that it's starting off messy, like this is only going to get Messier in my mind.
Anita Ramaswamy 10:24
Yeah. And a lot of legal experts are saying it's going to take forever for any of this to actually get resolved. And for people to get their money back. I think it's another example. We've been seeing a couple of these in the past few months, that really erodes trust in crypto, what happens when you lose a lot of money? It's a giant fuckup. And the founders, you know, seem to be missing an action and instead of, it's hard, yeah, it's hard to take accountability for losing $10 billion people are gonna be mad at you, no matter what you say, or what you do after that, but cooperating with the bankruptcy proceedings seems at least to me like sort of bare minimum. And if they really are, I mean, I'm not, I don't know whether they are or not. But if they really are siphoning funds away to other accounts outside of the jurisdiction of this BVI court, then that's an even worse look, because then it's possible that they could be saving themselves and letting everyone else get screwed.
Lucas Matney 11:11
Yeah, I mean, the core ethos of crypto is often just like trying to advance your own interests. And the fact is, you can lose a lot of money incredibly quickly in crypto as evidenced by the collapse of this fund. But it's a lot harder to kind of navigate through the legal proceedings in order to make some of those like stakeholders whole again. So I think looking at this, like, I don't know, even like the biggest crypto maxis, and bowls are kind of looking at the scenario thinking like, hey, maybe we need some like vague regulatory oversight in order to ensure that some of the big lending powers in this space aren't taking money from one pocket, putting it in another saying that they have the same money and putting it somewhere else, because all of the situation is just a p&l. Disaster. Yes.
Anita Ramaswamy 11:57
What's crazy to me about this is that there have been so many calls for more regulation and crypto for so long. And in this particular case, it seems at least to me that the legal system proceeded the way it was supposed to proceed, like things worked things function, right, they filed for Chapter 15, the court ended up running those proceedings, they appointed a firm to do the liquidation. And the firm is trying to liquidate those assets in the legally correct manner. But you know, just because you have a law, just because you have a regulation doesn't mean it can be enforced. And I think that's a lot of the challenge that crypto is going to face. Even if we do get more regulation, how do you actually ensure people aren't skirting those regulations and sending money to a different country that might have different roles?
Lucas Matney 12:34
Yeah, I mean, working as designed is like, I don't know people? Well, no, I mean, the people who are like on the losing end of this three AC deal are probably they're not looking at this liquidation process. Like, like regulation at work. Yeah, they're thinking, how can we stop this from happening in the first place? Which was not a question they were asking two months ago, when this company was minting money, which is always the issue. They want to fix things after things work out poorly for them. But while it's going good, they have no follow up questions to ask. They're just like, where do we send the checks? So I don't know everything in crypto was a learning opportunity. But like for people who lost 10s, and hundreds of millions of dollars with this, like, you got to think that maybe they have different questions that they asked during the next bull cycle. But at the same time, when the money's flowing, you kind of just you put it somewhere and you don't ask questions, and you just hope it grows. So this might not be a scenario where anyone learns anything, but people lost a lot of money. And that's all that comes up.
Anita Ramaswamy 13:34
It is unfortunate. But you know, I think that does tie in nicely to our next topic that I wanted to talk about, which is that there are still even though all of this shit is going down in the crypto markets, and it's a really rough time, you know, prices are down. Funding for individual startups has gone down. There are still a lot of crypto funds out there that have been raising a ton of capital from their investors.
Lucas Matney 13:55
Yeah. And we covered a bunch of them this week for TechCrunch. One of the things is that like it takes a while to raise a fund. So I'm sure some of the conversations with their limited partners to raise this money were happening before things completely imploded across the board. But at the same time, all of these big venture firms spent a long time trying to get their investors on board with the idea that crypto is a very long term investment and buying into it like the key to riches is just waiting and being patient. It's a lot waiting, I'm still waiting. It's a lot easier to buy into some of this stuff during a bull market when you're just riding the wave up when you don't know what the bottom of the wave looks like. Things are a lot more complicated, but there are a few different funds. So who raised the money?
Anita Ramaswamy 14:39
Yeah, so we got a couple different funds that raise money. But before we get into that, just to give you a little backdrop on how bad the overall VC market actually is for startups, according to CB insights, we got q2 numbers recently and venture deals in the second quarter of 2022. Were down 23% from the first quarter. And this was the biggest quarterly percentage drop in deals and the second The largest drop in funding in a decade. So this isn't just like any bear market for VC. This is actually very, very bad startups are struggling to get cash. But on the other side of it, you asked which funds raised, I mean, we had a new crypto fund announced by Lightspeed multicoin protagonist, there's a couple others. But just to talk about the Lightspeed one for a second, you know, they've been investing in crypto for years now, I think, you know, eight or nine years, and they unveiled this new independently managed crypto native investment team. And so it's through joint venture with faction VC. And it's going to be led by two investors, and one of them is the former co founder of blockchain ventures. So, Lightspeed has raised $7 billion total across four different funds. And most of that isn't for crypto, they weren't clear about how much is actually going to be allocated to the crypto native team specifically. But Lightspeed has been a really big player in this space. They invested in blockchain.com. They invested in FTX, before it took off. And I just think it's really interesting that now is sort of the timing for them to announce this fundraise. Obviously, we don't know when all of the capital actually closed. We don't know if that was, you know, earlier, and they're only choosing to announce it now. But it's still a very, very big fund launch in the crypto ecosystem at a time when people are not very optimistic.
Lucas Matney 16:06
Yeah. Lightspeed is an interesting fund. I mean, so there have been a number of kind of like web to quote unquote, funds that have been doing larger crypto deals and they building up like separate crypto arms. Lightspeed has been like a little slower than some of the others like Sequoia Sequoia recently put together their crypto fund. I mean, Andreessen has had several crypto funds Lightspeed, their big partner was Amy Wu, who left Lightspeed to go and start FTX ventures. So after she's left, they've kind of been a little, you know, they've been searching a little bit. So I think like this is it's interesting that they're doing this now. I'm curious how quickly they're going to be making investments in the space just because the timing isn't entirely the best.
Anita Ramaswamy 16:49
That's what doesn't seem to square up for me, you know, these VC firms are raising a ton of capital, but it doesn't seem that they're actually deploying it. So
Lucas Matney 16:54
well. Doing it through partnership is interesting also, because it's like maybe they can just end the partnership without like firing the people potentially. I'm not saying this is what they're gonna do. But I'm, you know, it's different than starting Lightspeed crypto.
Anita Ramaswamy 17:06
Yeah, it's a way to de risk in a way. Yes.
Lucas Matney 17:08
So that's, that's interesting. $7 billion, a lot of money. And like you said, a lot of venture capitalists are just sitting on funding right now. They've seen all of their public deals just completely crater, they've been trying to catch falling knives, and seeing these deals get worse and worse and worse. So I'd imagine if you're like, hearing about some hot new deal, you're not going to be immediately writing the check, you're gonna be like, alright, well, am I getting the best possible deal right now? Or am I could I do this deal in a month at half the valuation?
Anita Ramaswamy 17:36
Yeah, so get a discount,
Lucas Matney 17:38
I'm honestly shocked that it's only down 20 something percent, because when you look at like the number of public stocks that have dipped from half or 75% of their all time highs and the public markets, I can see them being a little hesitant to drop significant dollars on new private companies.
Anita Ramaswamy 17:54
What's interesting, though, is that I have heard a little bit about different VC firms taking bigger stakes in the public markets, even though that's not really what they do. But I guess, you know, the public markets are looking a lot worse right now. And maybe they kind of think now's the time to get in. And you know, the prices are looking really low. And they'll get some sort of discount, whereas private markets, they're still waiting for the second shoe to drop, and in some ways,
Lucas Matney 18:12
right? And I may say the same thing about like, if you're a startup employee or something, would you rather go work for a big tech company that has already taken a huge market cap hair cut on public markets, and have like your stock package be tied to whatever the public stock is right now? Or go work for a company that raised in 2021, at a $5 billion valuation, and go get a sock package where that's obviously completely divorced from reality? Yeah. And it's an interesting facet of a lot of these firms having become registered investment advisors, which allows them to hold a lot more tokens, but also allows them to invest in public stocks.
Anita Ramaswamy 18:45
Yeah, well, let's be as a web two firm, as you mentioned, are, you know, that's sort of what they are known for, and they are investing in crypto have invested in crypto, but that hasn't been historically their focus. There's been a couple other fun launches from crypto native funds, and one of the highest profile ones this week was from multi coin, they raised a $430 million fund, and that was actually their largest fund to date. So I just thought that was interesting.
Lucas Matney 19:07
Yeah, they're interesting, fun. And I think being a crypto native fund, raising a big pile of cash right now is fascinating. One of the things a story in the block noted that the founders of the fund are actually the biggest LPS in the fund, which means they've got a lot of money that they're putting up to, on their own. They're putting a lot of money in themselves. Yeah, the
Anita Ramaswamy 19:27
founders are investing as angels in the venture fund multicoin, essentially, right. So it's like they're investing in themselves kind
Lucas Matney 19:34
of are the biggest LPS in their funds, according to the blog. Wow. Their capital makes up the lion's share of the capital of the fund. It's fascinating, Ben and I think it's like a lot of the crypto money stays insular in some way and it's just like, gonna ride out this winter. They want to have most of their net worth in crypto. It definitely speaks
Anita Ramaswamy 19:53
to their optimism. I mean, I don't know that I'd make such a big bet on my own skills or my own talents, but
Lucas Matney 19:59
where I put my two on vermillion personally, I put it elsewhere probably. Yeah.
Anita Ramaswamy 20:04
But good for them. You know, having that confidence. I think that is one of the quirks of crypto. And just one of the things I find so fascinating about this space is like you said the money has stayed fairly insular compared to other industries where, you know, it seems to be like people who made their money in crypto are supporting crypto startups right now. And this crypto startups are eventually they're hoping return enough to enrich those people who invested in the first place like it's sort of this closed loop thing that just happens in crypto. And maybe that's why even though the markets are suffering so much right now, it seems there's a little bit of optimism because it's sort of just people in crypto who are already rich, like transferring money around to each other in some way.
Lucas Matney 20:38
Well, that's that's a whole nother conversation. But yes. Oh, it is. Yeah.
Anita Ramaswamy 20:43
We'll get to that next time.
Lucas Matney 20:44
Exactly, exactly.
Anita Ramaswamy 20:50
For this week's interview, we talked with Naveen Jain, founder and CEO of yacht about digital identities and web three yacht provides unique emoji usernames that people use to link to their crypto wallets and other online services.
Lucas Matney 21:04
Naveen, it is awesome to have you.
Naveen Jain 21:06
Thank you so much. And Ian Lucas. I'm really excited to be here. Yeah. So
Lucas Matney 21:09
I mean, I think just starting things off. It's a very interesting time for web three. I'm curious, do you feel like we're living in the metaverse right now? And if so, what are we missing?
Naveen Jain 21:18
We're totally living in the metaverse right now. Life is a simulation. No, in all seriousness, I think that the metaverse is more of like a concept. And I think we are totally like in sort of the emerging Metaverse, you know, this world where we actually own like our digital things, and we connect with each other in unique and different ways. So I think we're sort of at the beginning of it
Lucas Matney 21:40
does in your mind, does the metaverse like really involve ownership and capitalism at the core of it all? Or like, does it? Is the culture different? Does it look different? Like how does that
Anita Ramaswamy 21:50
what does that mean to you is kind of what we're asking here?
Lucas Matney 21:53
Yes, yes. Well,
Naveen Jain 21:55
I think the core primitive of web three is the idea of verifiable digital asset ownership, right? Like, that's like the core thing. And I think when someone owns something, it says a lot about them, you know, far more than just, for example, clicking on a like button on some website. So when you own something, it's sort of like conviction in that thing, right? You have something at risk, potentially, if you own something, you've spent some money or time or whatever it is to like, own the thing. And there's many dimensions of ownership. Are you the first person to own the thing? Do you own multiple of the thing? How long have you owned the thing? So I'm not gonna sit here and say like, the metaverse is all about capitalism. But I do think that there is a core primitive here we have in web three. And I think that is sort of like a core building block, if you will, for the quote, unquote, Metaverse,
Anita Ramaswamy 22:45
I mean, I want to talk to you a little bit about your company yacht that you've built, that everyone has sort of been talking about lately, which gives you a unique emoji identifier for people who want to purchase one. And you have described it as a self sovereign identity solution. So I'm curious if you can just explain to us a little bit, what does that mean? And what about that solution makes it a web three company?
Naveen Jain 23:04
Yeah, totally. We think it's sort of like really interesting how in the real world, we all own our names, right? Like, we own our identities, and there's many dimensions to one's identity, like, our identities are far more than just our names. For example, maybe like the job we do the hobbies, we keep, you know, the fashion choices we make, you know, these are all like dimensions of identity. And on the internet, the world that we've created together so far, is one where we don't really own our identities. You know, when you go register an account on a traditional social network, or some like web platform, you don't really own the account, and they can shut it down whenever they want. And that happens all the time. So we think that it's really important for people to own their internet identities, just like they do their real life identities. So the idea behind Yat is that you create this emoji identity, which is really expressive, it's really beautiful. They're super fun. It's a universal language, because emojis are a universal language. You know, everybody on the planet who's connected to the internet speaks emoji, they don't all speak English. And you can use these strings of emoji to really tell beautiful stories about yourself that may otherwise be like harder to tell with just a traditional alphanumerical username. And then the idea is that you actually own these yachts forever. So the whole model behind yacht is that it's like pay once owned forever. And then ultimately, these yachts are on chain identities over time. So that's like part of how they're connected sort of to the web three ecosystem.
Lucas Matney 24:28
I guess. Like if I was in the real world, though, I could change my name to Elon Musk and be bored maybe before. Yeah, probably unwise don't wanna get accidentally said. But in that case, you know, exclusivity is not necessarily innate to the real world, but it does feel innate to the web three world. Sure. So I guess like, why does it mattered that someone else can't have the same emoji identifier? I know why it does, because it's a URL and it only goes one place, but why does the future have to be like exclusive?
Naveen Jain 24:58
So I would argue that Even if you and I had the exact same name you and I probably feel like we own our own identities, right? So I could be named Lucas as well. But I'm probably going to be a different Lucas than you, right? Like, you and I are going
Lucas Matney 25:13
to make it still feel that way. If our names were dot yet or something if we had the same dot name, I'd still feel like I was a unique person just because that's my
Naveen Jain 25:20
right. That's that's certainly true. But I guess the question is, is, is there a way for you to be able to see my identity. So say, for example, like I'm really into astronomy, and my dad was like telescope, explosion star or something like that, is there a way for you to see my identity and learn something about me, just from my identity, right, and that's the real power of yet is that you can actually learn a story about somebody just by seeing their identity for the very first time, like the first impression. Whereas if you just saw that my name is Naveen. I could be like one of a million Levine's out there in the world, you're not really going to know anything about me. So the idea behind GATT is that they're really expressive. They enable you to tell stories, and they can be your own story. Now, can someone create a Yap that is similar to telescope explosion star, like someone else who's really into astronomy? Of course they can. And that's part of the fun of it is that you can own it, it can be your unique version of that story. And it's also your unique identity. Gotcha.
Anita Ramaswamy 26:18
So one question I had for you intervene on yet and what you're building is I've read about some of the context. And it seems like you've really been taking it slow and entering web three. And you, you know, have sort of expressed this view that decentralization is sort of a progressive, gradual process. And even today, I mean, please correct me if I'm wrong, but to my understanding jots are still paid for in dollars rather than in cryptocurrency. And your domains are sort of registered, like traditional web two domains. And I know that you're sort of talking about transitioning in the future. But can you talk to me a little bit about why you want to take it slow? Why you've made that decision and what your plans are in the future to make this a project built on the blockchain?
Naveen Jain 26:54
Yeah, totally. So we believe very strongly in the concept of progressive decentralization. So decentralization involves many trade offs. So one of the key trade offs is around user experience. If you think about it, there's like close to 5 billion Internet connected people on the planet. And we would argue that most people who are connected the internet probably don't really care about whether or not something is decentralized. Like they care about convenience, they care about, you know, saving time saving money connecting with friends, like these are all the things people generally care about on the internet. So how do you create a product that is really easy to use really beautiful, really gets the user experience, right, and at the same time, ultimately becomes decentralized. And we think that you do that sort of in a sequence. So the sequence is, from our point of view, nail the user experience, create something that people really, really want out there, make it really fun to use and easy to use, and then work towards decentralizing it. Because then you can actually like, retain the ease of use, you can figure out what the user patterns are, that really make it you know, easy to use and fun to use for a wider range of people versus just people who are crypto native, because the reality is, the crypto native community is still really small. You know, what's the latest count? I think the latest count is there's like 81 million or something Aetherium wallets out there. Like that's the latest count of Aetherium wallets compared to the nearly 5 billion Internet connected people like it's a rounding error today. Right? So that's the first thing. The second thing is we care deeply about how products like yet are born and what the ultimate outcome is for a product like that. So something you may not know is that yeah, is actually a product of Tari labs, like our parent company is called Tari labs. And Tari is actually stewarding a new default private digital asset protocol, like a new layer one. And the goal there is really that, gosh, you know, if you think about protocols like Aetherium, and Solana and these other existing protocols that we all use today, they're not private in any way, shape, or form, right? If you have someone's wallet address, you can see their entire transaction history from the beginning of time. And we think that's a real challenge for people over the long haul. So the vision for yet is first, let's make yet a beloved product by many, many people, people who are native to crypto, and also people who are like, adjacent to crypto are early adopters, sort of generally in web two, and then second, let's decentralized yet on Tari. So that we have the privacy benefits that we think ultimately are really going to matter in the future web that we want to like CO create with our community.
Lucas Matney 29:22
I mean, privacy centric blockchains have been kind of challenges for people. I mean, like how are you planning to go against some of these kind of underlying issues they have in terms of like, all of a sudden, if they're not verifiable by the public, you're just waiting for you to verify it, in which case, how does that change anything?
Naveen Jain 29:39
Well, so I think that this really comes down to I mean, again, this is our point of view, and there's some ideology here. But our point of view is that human beings deserve agency over their stories. So for example, the three of us are having a conversation here today. And each party came to this conversation essentially as a closed book, right like we're all the three of us are Choosing to share what we want to share and the manner that we want to share it. And the way the internet has evolved is sort of like a very different thing, right? So the minute you connect to the internet, you're essentially being tracked in a variety of ways, like your Internet Service Providers tracking you, every website you visit is tracking you. And now when you engage with existing blockchains, like Ethereum and Solana, etc, now, like everyone is essentially tracking you, and all these sorts of ways. And what that results in is a world where you've lost all agency and control over your own storytelling. And we think that's really negative, because it's kind of crazy to think that someone can just be judged by a single transaction that they do on Aetherium. Like, I have a really good friend as an example, who recently was one of their wallets on Aetherium. You know, they they transferred a bunch of assets from wallet a to wallet, B. And then they started selling a bunch of these assets on wallet B and everyone thought like, oh, my gosh, this person is fire selling their assets, what the heck is going on. And they started to get judged on Twitter, like people are like judging this person for selling assets, in some cases, fire selling assets, selling them for below, like market value. But what they don't know about this person is that the person is actually going through a divorce. And you're not going to see that the divorce is not metadata on Ethereum, like that's private information. So people are judging the person based on transaction data on Ethereum, they don't have the whole story. And I think there's like lots of examples like that that are just really, like, patently unfair. And so I think our view is that we should create a world together where people have control over their stories, they can choose the way they want to tell the story and the stories they want to share. And that's our vision. Ultimately, for Atari enabled world, I want to go
Anita Ramaswamy 31:35
and link this back to what you were saying about your earlier, which is just that it is this product that you're trying to build into this consumer facing, beloved, your brand. And what I guess I'm struggling to understand is a lot of people talk about the pros of blockchain being providing transparency, right, but it sounds like what you're talking about is a little different. And so I'm just curious, like, what's the need to put this on a blockchain if people are sort of interacting with these emoji identifiers if they're using them? And if it sort of turns into the social network? What is the added utility of putting it on a blockchain? And is that something people even want?
Naveen Jain 32:04
So the value of having something like a yacht on a blockchain is it really comes down to ownership, right? So we want to create a world where you can actually own a yacht in a completely self sovereign way. And if like, we cease to exist over time, that ownership doesn't go away, right, that's like one benefit to it being on something like a blockchain number one, number two, there's a whole concept also around censorship resistance, which we think is also really powerful thing that you get with something like yeah, being issued on a decentralized protocol, like in the future, like Tari. So those are two like very distinct benefits that you wouldn't get if something like a yacht is just issued by us using like a centralized service. So ultimately, that's our goal is we really want people to own their identities. We want their identities just like our names, like my name can't be censored out there, you know, in the world, we should be able to, like, tell our stories in the way that we want to tell them share what we want to share. And we should have true ownership on the internet for our identities.
Lucas Matney 33:03
I think, you know, there's been this kind of like meme in a way of like, do consumers actually care about ownership at all? Sure. And I know that like, if you look in the grand scheme of things, like there are certain reasons that they would, but people aren't acting entirely rationally during a bull market. So a lot of these habits that people in the NFT community are building up aren't necessarily things that are going to last forever, I guess, like, what do you think is going to last? And what do you think won't last, like? What's a trend what's like, baked into the ethos of crypto and went through.
Naveen Jain 33:32
So I actually think people really care a lot about ownership, right? There's a lot of in real life, examples of this. Like, if you are really passionate about a thing, and it could be anything like maybe you're passionate about cars, or watches or music, or whatever it is, like say you're passionate about music, and you own a t shirt, you know, for your favorite band that you bought, on tour, like ownership is a story, right? It's like a story that people can tell about themselves. So for example, my favorite band in the world is raising as the machine. So I'm really excited. I'm definitely gonna go to one of their shows that are on tour right now. I'm so excited about it. And I'm one of those people who's going to pay for a T shirt at the merch stand. And I'm going to own that T shirt. Right? I'm going to own it. It's a story. So in the future, when I'm wearing that shirt out, someone goes, Oh, man, I you really I love h2. That's really awesome that you love Rage Against the Machine. I can say, oh my gosh, yeah, actually got to see them at Madison Square Garden or whatever venue it was. And I bought this thing at the venue. And it's a story, right? So ownership is really connected to storytelling. And I think that the way people tell stories about themselves tied to the things that they own is a really powerful, very human thing. And I think that's something that should absolutely exist with regards to digital assets just as much as exists with regards to our IRL assets.
Lucas Matney 34:54
Yeah, I mean, I think about the things that I would be disappointed if I lost in the world and like some of them would be like, I Have a certain affinity towards my Twitter handle or something. And I realized that if the company went belly up, I wouldn't have that anymore. But I also recognize that some of these things are innately valuable because of the platforms they're tied to. And as you talk about kind of the platform opportunities for your company, sometimes the individual identity doesn't matter as much as you know what it fits into. Sure. So I guess like, do you feel like you have to build a whole ecosystem just to kind of give people more value for their emoji username? Or like, how does that work? Yeah, so
Naveen Jain 35:30
I think at the end of the day, and identity is kind of worth what you make it. So I mean, that's really ultimately how identity is valuable out there. Obviously, we have a responsibility in that regard as well. So for example, you know, we have partnerships out there with like wallet companies like blockchain.com, and cake, wallet, and my Mineiro, where you can use your yachts to send and receive crypto with other users, you know, we have a partnership with opera, the web browser, where you can actually just type in emojis in the URL bar no.com, no HTTPS or www required just literally emojis in the URL bar, and it will resolve to whatever website you've associated with your yet. So these are examples of utility or things that people can do it their yachts today, and then obviously, that will expand as time goes on. Now, the vision for yacht ultimately, is that it's an open platform. So ultimately, people can integrate with yacht in basically any way they desire. There's no like cost to do that, or anything. So as yacht expands as type of identity on the internet, our hope is that more and more people want to integrate it in various things. And then we also have our own ideas. So you know, we have our own ideas around things that we can build on our own. So like, you know, we have a new version of yet that we're rolling out that has like new capabilities. So we also have like our own ideas in terms of things that people will be able to do with their yachts.
Anita Ramaswamy 36:51
So I'm curious to hear more about that. I mean, I've talked to a lot of different founders in the space. And I've heard a lot about this idea of the crypto wallet sort of becoming a new way for people to express their identities. Sure. One founder I was talking to was sort of likening it to the mobile phone, you know, like, you go there for your financial transactions, your social interactions, and it sounds like that's sort of similar to the vision that you're building with yacht. So I'm wondering, as you think of the idea of letting folks own their own identities, what sort of tooling Are you building around that? I mean, the classic example that I can think of is like the eath wallet, right, the ens domain and how that integrates with the ether wallet. Do you want to do that on one chain? Are you looking at it with multiple chains? Like what sorts of tools will people have to actually own their own identities?
Naveen Jain 37:32
Yeah, really great question. So first of all, thinking about like the mass public, I don't think people are ultimately going to care about one chain or another. You know, ultimately, these chains are essentially databases. So I don't know that people long term are going to care about Ethereum versus Solana versus Tari, versus some other blockchain in the future, number one, number two, I think the wallets have an important role to play for sure. I mean, that's sort of like where you have your stuff, wallets are also very challenged, because there's like lots of complex UX baked into a wallet experience. So the idea of a wallet being ultimately some kind of a Super App is sort of like a challenging idea in a lot of ways. But I agree with you that a wallet is something that someone can own and control. And that's where you can store your assets, including things like yachts, I mean, yachts can be minted on Aetherium today, so you can certainly have a yacht asset in any Aetherium wallet today. But over time, we think that a wallet is really a tool for interoperating, with lots of different types of applications, right. So you can, you know, attest to ownership of your wallet. And then you can literally use that as a way to like connect with lots of different types of products and services. So our vision isn't necessarily to create a wallet experience, our vision is to create an identity experience that integrates with all kinds of wallets and then also create adjacent services that people can use using their yachts,
Lucas Matney 38:51
I guess, you know, if I'm setting up a crypto wallet, I have that unique identifier. And it's not very sexy, because it's like, you know, 20, random alphanumeric characters, never going to remember it. Nobody else's either. But I guess in the grand scheme of things, like people buying like a two or three character yet, like they are kind of buying into a certain version of the exclusive exclusivity in the cloud. But do you feel like Cloud is like a powerful enough motivator to bootstrap a network?
Naveen Jain 39:19
So first of all, yet start at only $4? Right? So the majority of yachts are $4 their pay once and forever sold some expensive ones, though. We have we have so we've sold for example, a single image yacht for many hundreds of 1000s of dollars, right? So that's certainly true. And yeah, just like in any other worlds, you know, there's varying degrees of rarity and scarcity with yachts. And just like people care about that sort of thing. In other dimensions of identity. Same thing of someone like deciding to buy a Ferrari or someone deciding to buy an expensive car, you know, that is like a flex. So we think that, you know, there's like lots of reasons why people like to do that. It's status. It's a way to show off. It's a way to Do like connect with people in a certain way have a certain level? There are lots of reasons why people do that. So we think that the same is true within the yacht ecosystem. But it's certainly not focused on that, right? Like you're, you know, it's not like a board eight or something where the minimum price to buy in is like six figures. It's like, you know, you can buy a yacht, you can create an incredible yacht for only $4.
Lucas Matney 40:20
I am. I'm a little curious on this part, though. And this is just a general NFT question. But like, for a lot of the networks that are having some of these super high dollar sales right now, like that just happens in a bull market generally, like your network might not be selling as many single character yet in a crypto winter, for instance. So I guess, like, how do you mentally prepare for that in terms of just being a startup and knowing that, like, maybe all of this funding coming in right now isn't necessarily recurring, but you have to kind of like build for the future?
Naveen Jain 40:48
Yeah. So I think at the end of the day, our job and I think any builders job, any startup founders job is to figure out ways to create as much value for your users, your community as humanly possible. And money really follows the value that you create. So from our point of view, sure, I mean, you're certainly right that in a more of a bear market, people are not going to be as open to spending huge sums of money on things. I mean, that's certainly true. But you know, I think there are lots of ways that we can create value for our users, regardless of the market cycle. And I think there are lots of ways for us to expand the pie grow the pie for our user base, regardless of the market cycle. And I think for NFT projects, I think the same is probably true to you know, lots of NFT projects, as you know, are really focused on their IP, you know, it's like, oh, we're going to create the next Star Wars, or we're going to create the next Pixar or the next, you know, Mickey Mouse, or whatever it is. And so they're thinking of other ways to expand the pie in terms of creating value for their users, we're doing the exact same thing, except we think about, okay, how can we make yachts really powerful in terms of self expression? How can we make yachts really usable and functional in lots of different ways? And how can we create like new kinds of social experiences around yachts that don't really exist today?
Anita Ramaswamy 42:04
So I want to end with this question of as you grow the company, how are you going to sort of balance this idea of accessibility with exclusivity? I mean, I know that you use an algorithm to determine the price of each individual yet. So I want to know a little more about like, you know, how does that algorithm work? And is it sort of like, as people continue to buy out more and more of these emoji combos, the prices are just going to continue to go up? Or are you thinking about accessing in a different way?
Naveen Jain 42:27
Yeah, currently, within five characters within the ecosystem, today, there's over 20 trillion possible combinations for a yet so there's more than enough yacht combinations out there for like, many, many, many generations of humans, you know, that will exist in the future. And so our point of view is that, you know, like, Absolutely not like in terms of price increasing over time, like our goal is to keep Yeah, it's as accessible as possible in terms of our pricing model in terms of how the algorithm works. So the way the algorithm works, as you pointed out, it's called rhythm score. And the way it were them score works, it's number of between one and 100, that's algorithmically generated based on the length of the Yat, the popularity of the emojis that make up the IAT. And then also what we call like the pattern of the yet so for example, is it like three of a kind is it what we call an I Heart like I heart ice cream is an example of an I heard yet, etc. So there's like lots of different patterns that we have defined sort of within the ecosystem that are more popular than others. And that's ultimately how rhythm score is determined. And that's how price is determined. But to be very clear, the vast vast majority of yachts are for dollars, and we have no plans of increasing the price regardless of inflation. And regardless of other like macro economic pressure. Like we're like, literally, our goal is to keep these as accessible as humanly possible.
Anita Ramaswamy 43:45
So last question for you. What's your gut?
Naveen Jain 43:48
So my Yeah, is Eagle. So I am single emoji Eagle. I love birds. And so Eagles fan. I'm not an Eagles fan. Actually. It's funny. We're we're members of Unicode. And so we get to like, learn more about what future emojis are going to be added to the overall like global emoji set. So my favorite type of bird is actually a raven. But they didn't have a raven emoji. So I picked the second best thing I could find, which was Eagle.
Anita Ramaswamy 44:16
Cool. Yeah, I really want to biryani emoji. So if you can.
Naveen Jain 44:20
That'd be awesome. That'd be totally awesome. I agree. I'll work on that. I'll work on that.
Anita Ramaswamy 44:25
Awesome. Thank you so much to me. Yeah.
Naveen Jain 44:27
Thank you for having me. Really, really appreciate it. So yeah, thank you guys.
Lucas Matney 44:31
Thanks for chatting. Thanks for listening. We'll be back every week with the top crypto news and interviews with experts in the space. You can catch us on Spotify, Apple Music or your favorite podcast platform and subscribe to our companion newsletter also called Chain reaction@techcrunch.com. Forward slash newsletters. You can also follow us at chain underscore reaction on Twitter for the occasional Twitter space about breaking crypto news. We'll see you next week. Chain Reaction is hosted by myself, Lucas Matney along with my co host and Anita Ramaswamy. We are produced by Yashad Kulkarni and our associate producer is Maggie Stamets with editing by Cal Keller Bryce Durbin is our Illustrator Alyssa stringer leads audience development and Henry pic of it manages TechCrunch his audio products. Thanks for listening