Delphi Office Hours Call Ft. Ledger (September 1st, 2022)

Below is the full recording and transcript of the Office Hours call our team held on Thursday, September 1st, 2022.

• Markets, Price Action, and Technical Analysis with Ledger (00:50)
• Duncan’s Macro Outlook (41:12)
• Could Conflict Spark Productivity Gains, Leading to Another Economic Golden Age? (49:24)
• Fat Protocol Thesis vs. Fat App Thesis (50:30)
• MakerDAO Drama (56:41)

Transcript

00:33 • Brian

Welcome, everybody, to the September 1st edition of Office Hours. Happy to be here, happy to see everyone here. We have a very exciting show today, today, along with a special guest, Ledger. For people who don’t know, I have known Ledger for quite some time at this point, probably about five years. He is very well versed in markets, technical analysis – he’s also the co-host of UpOnly and I believe a co- founder of Flip, the NFT platform, so happy to bring him on today. He’s going to join us to give his thoughts on the markets and then we will dive into the agenda after that. So, without further ado, welcome Ledger and how’s it going?

01:13 • Ledger

It’s going great, thanks for having me. Yeah, co-founder of Flip, I can’t call that one just my own. So, got two co-founders, Sam and Jennifer, and we’ve been working on it for about a year. And I cannot believe we’ve known each other for five years, maybe six at this point. It’s crazy, it’s ridiculous. We’re old.

01:33 • Brian

Yeah. Ledger and I are boomers in terms of crypto, so we’re trying to keep up with the young ins like Duncan, who we will have speaking here eventually. But anyway, Ledger, just give us a little bit of background on you, how you got into the industry and then we’ll get into what you think of the markets, where we’ve been, maybe where we’re going, what you think are the most prominent things to pay attention to in terms of the market. And we’ll go from there.

02:01 • Ledger

Sure, yeah. I’ll try to be quick on background. I was in the web world for ten years, starting in about 2011, full-time after being kind of a hobbyist web developer before that, and was working primarily in the open source world, so open source software. And that’s what really made crypto click for me, and in particular Ethereum was what made me finally actually take action. Unfortunately, I’m one of those people that saw Bitcoin, was publicly tweeting about Bitcoin at $7, but didn’t own any – depressing – but it was mostly because I thought of it as internet cash. And so when programmability became a thing on a blockchain, that made a lot of stuff fall into place for me. So I got excited about Ethereum and got interested and involved in crypto in 2017 with my actual first purchases. And once you put some money on the line, you can’t stop paying attention to it ever again. So that’s when I went deep and then honestly kind of redefined myself in crypto in 2020 when DeFi summer hit, because it forced me to relearn a lot of things and change a lot of my assumptions.

03:10 • Ledger

Whereas previously Dex experiences on chain liquidity was atrocious and you just couldn’t do it. And UniSwap really changed the game on that and kind of that boom of what happened with DeFi and normalizing on chain stuff and then seeing that with NFTs. It was a revelatory time for me to both do a bunch of stuff with DeFi and a bunch with NFTs, get really excited about actually doing things on a blockchain, which was the promise all along, right? Like you use a blockchain to put stuff on it. And I was like, hey, look at this, we’re putting stuff on a blockchain.This thing may not be a scam, and ended up starting a business with two other people around it. We got it off the ground in the spring of 2021 and initially we’re like, hey, let’s do nerdy on chain stuff and realize how much of a place there was in the market for kind of doing an all encompassing thing around NFT data, but also the execution layer. So Flip is an aggregator for NFT stuff. If you want to normalize it, you could say kind of like Zillow for NFTs or Kayak for NFTs, but there are other aggregators in the market as well from execution perspective.

04:20 • Ledger

But we also provide like a visual layer and that’s what I work on most of my week. But I also host a couple of podcasts, a couple of technical podcasts. One I’ve done since 2017 with a friend of mine named Josh Olszewicz, and then Weekly Open,  another technical podcast that I talked to, CryptoCred and DonAlt. If people know them, they’ve got a lot of great educational material and we do weekly open on Mondays and then most people from a podcast perspective know UpOnly, where me and Cobie interview people. And through all of that I try to just absorb knowledge from people smarter than myself and then figure out what might happen in the world and try to turn it into something actionable for myself and then share what I’m doing with whoever listens. So thanks for everybody here that’s willing to listen. In terms of where we are. Obviously we’re in a tough market environment where liquidity has been decreasing and it just makes markets more difficult. And the dollar index is really the only chart that I asked Brian to show because this is driving pretty much everything else in the world.

05:31 • Ledger

And you can see there was this consolidation over the course of five years. This is a monthly chart, so you really can’t belittle how important something like this is because when the dollar is strong, pretty much every cross currency is affected. Whether that is a commodity currency like Bitcoin or Ethereum. Or if you’re looking at national currencies like the euro and you see the effects that the strong dollar has on the rest of the world and the way debt is denominated the way that liquidity exists in the system. And this may continue until things break in a significant way, but we’re definitely watching the impact that this has on all markets. And our two previous bull markets align really well with those little red down moves. So we had these huge cryptos bull markets, huge speculative markets beginning in late 2016 and again in March 2020. And now this upswing has engulfed both of those. So in terms of the pressure that it could put on the market, crypto’s nascent didn’t really have macro level potential until the last five or six years where it was even moving alongside broader markets. But now what we’re seeing is in a bear market, it’s also coinciding with the first significant pressures on the legacy market since cryptos existed. Right?

07:04 • Ledger

So Bitcoin came around in 2009 and it’s been a great economy since then. So we’re seeing pressures in the legacy market. We’re seeing a combination of high inflation across most currencies and then also demand destruction as that inflation affects people’s pockets and trying to figure out like, what the heck does that mean for crypto? And nobody knows exactly, because we haven’t faced this. This is probably not the same as a bear market in previous times. But what I will be looking for is when does this chart start to turn and does that give us the opportunity not only for is the bottom in, but is there upside? Like is there willingness for markets for speculators? Because JPEGs are risk assets you know? I can argue about is Ethereum or Bitcoin, how can they operate in inflationary environment? We found that they operate really well with the expectation of inflation, but they have not operated very well with actual inflation once it hits the mainstream narrative. Like, of course there was real inflation while we had these speculative runs, but by the time everybody got worried about it, then these disinflationary assets became just as unloved as everything else.

08:31 • Ledger

So we really need to see when there’s an appetite for risk in the markets and then see how far down the chain of that risk appetite is crypto. How does it stand relative to growth stocks, for example? Right? Like do we move faster than growth stocks when people think that there’s room for them to buy these things? And what we’ve seen in traditional markets is honestly it’s just multiple corrections, right? As in multiple your earnings or your profit or whatever. And unprofitable companies are being punished more than others. And the demand for growth companies to turn into profit companies is higher than in decades. And as somebody goes from a 50x sales price to like a 15x sales price, it has a tremendous impact on their bottom line, even if their core business doesn’t change. It’s just the appetite of the market for how it’s willing to price those things. And it’s not necessarily as easy to measure in terms of crypto prices, what that means. But we’re seeing essentially the same type of result where there’s just a g