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The last few weeks (months, really) has highlighted an incredible lack of discernment in the VC-verse wrt the thing we call web3. Now. I have no experience doin
by okwubodu 4y ago
The last few weeks (months, really) has highlighted an incredible lack of discernment in the VC-verse wrt the thing we call web3. Now. I have no experience doing what YC does and don’t claim to, but the jig here was so transparent that the smallest drop of “street smart” should’ve been enough to set off some alarms.
We’re approaching a point where being passed over for “culture fit” is a compliment. Hopefully the embarrassment is enough to expand the founder vetting checkboxes.
- oefrha 4y agoIf they’re unlucky they lose $500k, which is nothing. If they’re lucky they get a Coinbase. Why not.
- okwubodu 4y ago$42 million of real people’s money was lost. That’s a net negative to society whether or not it shows up on a balance sheet.
- ramraj07 4y agoIt wasn’t lost, it went from one crypto idiot to another crypto idiot.
- monkey_monkey 4y agoSure but as long as they (the VC) are shielded from liability, it's not their problem. Society is something other folk can worry about. And if things get really bad, then a quick essay on lessons learnt, we should all move on, etc.
- drewm1980 4y agoThe money changed hands... from people gambling on financial instruments to other people who are probably also gambling on financial instruments. Significant real value was only destroyed forever if the underlying tech for this is based on proof of work. Mining bitcoin destroys an enormous amount of ~real value, and nobody who cares about the advancement of society should touch it. Proof of work crypto mining is something we can and should just ban as a society the same way we ban watering lawns with drinking water in the middle of a drought.
- onethought 4y agoIt's a great analogy because: Banning watering gardens is exactly as dumb as banning proof of work. The vast majority of water wastage occurs irrigating farms supporting crops that are unsuitable for that area. A solar panel connected to a coin miner is only doing good in the world. Where is the negative? You sure it's the mining that is the bad thing and not the dirty energy?
- sylvinus 4y ago> Where is the negative? For one, you are wasting a solar panel that could be offsetting more positive energy usage. And building both the solar panel and the miner is far from emission-free.
- onethought 4y agoWasting a solar panel? Do you think a beach is a waste of silicon? Building a solar panel and a gpu (say) is not emission free? Because they require energy to refine and manufacture. So we are still back to the fact the issue is with the energy generation. Right?
- whatever1 4y agoThe problem is that you need an entire supply chain and manufacturing to provide you with your solar panel and gpu. We are mobilizing all these resources and manufacturing capacity to do what? Run infinite loops on a useless program? Meanwhile at my lab that works on bio simulations they could not find gpus to do their research.
- sgjohnson 4y agoSo?
- davidgerard 4y agoyep. The scam is: 1. VCs provide a ton of money, to incentivise token issuers. 2. The issuers pump out a pile of tokens that would constitute unregistered penny stocks. The VCs buy in. 3. If the SEC doesn't bust the issuers, the VCs make a bundle, and much quicker than they could funding a productive company. 4. If the SEC does bust the issuers, the poor widdle investors are protected from the evil issuers, who have to refund investors - the VCs don't lose. It's the gig economy of penny stock scams, with the legal risk being borne by the issuers.
- shafyy 4y agoI remember YC stating that they will "forfeit" (probably not the right legal term) their shares in companies that turn out to do unethical things. Now, let's see if they stick to their principles.
- nrmitchi 4y ago“Forfeiting” shares in a company that has raised a couple million and funding and lost $42M in user funds seems like a bit of an empty gesture from YC
- blitzar 4y ago> I remember YC stating that they will "forfeit" their shares in companies that turn out to do unethical things. Shares in a company are typically "forfeit" when the company you invested in goes bust. While its a nice virtue signalling headline - giving up something worth 0 (only not worth a large negative number as shares are limited in liability) is not at all noble.
- photon12 4y agoThere were funds that did due diligence and built out models of the Luna/Terra/Anchor ecosystem and realized it was unstable. You can talk to the people who built their models and they have lots of fun things to say about the ordeal.
- hcks 4y agoDo you have any links / references regarding that? I'd like to read more
- photon12 4y agoNot that I can share publicly unfortunately.
- josu 4y agoWe considered putting some of our treasury in Anchor. I didn't build a model, just one hour of DD was enough to see the risks. Here is the message I shared with my team on Slack with the findings from a very brief DD: https://twitter.com/josusanmartin/status/1524323026942242818 https://twitter.com/josusanmartin/status/1524323026942242818
- grey-area 4y agoAbout 5 seconds thought would be enough to see the risks, and the same goes for the rest of the crypto ecosystem. Even the name of UST is clearly meant to con people who confuse it with USDT. It's scams upon scams all the way down. Even if your figures seem out of date, your argument against UST also holds for USDT (which underpins much of the crypto price bubble): There is 7B USD in circulation and the market cap of US(D)T is 74 BILLION USD All this perceived wealth is going to melt into air soon, and yes a bear market has already arrived.
- lbriner 4y agoYou say this, possibly as someone who knows a lot about this stuff but there are plenty of people (including engineers) who don't know enough to refute the bold claims made by the crypto-evangelists and who be convinced that "obviously X is bad, but our product is completely different". I personally have lots of misgivings about various crypto but I really don't have enough expertise to argue against someone telling me that I just don't understand and everything is fine.
- paganel 4y agoProbably not much else to invest on right at this moment, at least not at this level ("small" start-ups wanting to "change the world"). I was honestly believing that the web3 bullsh.t were just some young people who didn't know any better or some scam-artists (or both), I didn't actually think for a second that a "serious" VC like YC would put money into something like that. Looks like I was wrong.
- grey-area 4y agoa16z is also heavily invested in crypto and nft startups.
- bombcar 4y agoHuh, my take all along was that web3 terminology was specifically designed to “pretty up” blockchain related things to make it palatable to VCs, by implying that it was going to be the next internet and you need to get on now.
- jamal-kumar 4y agoThis seems spot on to me. It's all just a tower of dumb greed in the end. Web3 is just stupid expensive P2P without a pure disruption model so they just ate it up
- genezeta 4y ago> the thing we call web3 The thing some call web3.
- hardwaresofton 4y agoI think this is something like AI -- where people who are calling it "AI" are often sales people/hucksters (I mean this as little a pejorative sense as possible), and the people calling it "ML" are the practitioners/people you should be listening to. Once a phrase gains mainstream adoption and starts to rapidly lose meaning, I find that people who care dearly about that thing start calling it something else. That said -- I really struggle to find the people who are really all in on crypto in a technical sense. Where are the people building cool things and trying to push the boundaries with crypto? Surely it's still happening but just hard to find it in all the debris/trash.
- puranjay 4y agoAs someone who went heavy into crypto/web3, it does pain me to admit that there really are no use cases besides making money. Which isn’t a bad use case by itself, but after using practically hundreds of protocols and projects, there’s not a single one I’d use if there was no prospect of making money off of it. My dApp usage has cooled off almost completely. And all data shows that this is true for most others as well
- hardwaresofton 4y ago> As someone who went heavy into crypto/web3, it does pain me to admit that there really are no use cases besides making money. Which isn’t a bad use case by itself, but after using practically hundreds of protocols and projects, there’s not a single one I’d use if there was no prospect of making money off of it. My dApp usage has cooled off almost completely. And all data shows that this is true for most others as well I appreciate the candor -- I still hold out hope, thinking maybe PoS (with equally bought-in parties) could work, but at that point you might as well have regular old paper and pencil coordination/contracts... The tech is novel, but the applications just don't seem to be falling into place at all... I even consider the ability for it to function as cool points (not NFTs but just a way to make and check exclusive tokens) is OK because it gives community builders a way to pull forward revenue. If I think of it like a self-hosted app for managing exclusive tokens then I can kind of see a use -- if before people didn't have an on-ramp to enforcing their own manufactured exclusivity then maybe it has some positive effects... Unfortunately right now it looks like the ecosystem is just a backdoor to unregulated securities. Some of the automated exchange stuff (uniswap and co) seemed cool too though I haven't looked too deeply at them.
- Ambolia 4y agoThe problem with web3 and crypto in general is that most people and energy get attracted by the potential to get rich, and being useful is an afterthought. I would be more attracted if I saw more products that tried to be useful first, and then try to make money for it afterwards. But it's harder to direct so much energy into projects like that.
- sumeno 4y agoProducts that are trying to be useful first do their due diligence and realize that blockchain is wholly unsuitable for anything other than creating speculative assets and just use a normal database instead.
- junofan 4y agoWell, they also have to pick a payment processor. And find somewhere to host it all. And pay for all of the above.
- lbriner 4y agoCrypto doesn't solve this, you still need to pick a currency/exchange and pay them transaction fees. That on top of the potential delay issues/fraud is much harder to deal with in the crypto-sphere etc.
- JofArnold 4y agoVCs are unfortunately, on the whole, all too discerning when it comes to Web3. It's a meme now in the community that when a VC and tokens are involved, there's a good chance they are getting preferential treatment and using the end users as their exit liquidity. That's not necessarily the case here but "greed" has become a general theme and the motivations behind otherwise-puzzling investments become clear when viewed through that lens.
- rchaud 4y agoWithout wanting to defend the VCs, this is the same deal they would strike by buying equity in a company. It's in their interest to take a stake at lowball prices so they can 100x or whatever when it's time to IPO.
- redisman 4y agoThis scheme is certainly faster than an IPO which usually takes 10+ years
- cycrutchfield 4y agoThank goodness the SEC is protecting people and their money… by sitting on their hands and doing jack shit.
- JumpCrisscross 4y ago> the SEC is protecting people and their money… by sitting on their hands and doing jack shit It’s unclear if they have jurisdiction. The likes of Coinbase’s Armstrong have certainly been lobbying hard to constrain it. In any case, it’s hard to be sympathetic when escaping regulation is the rallying cry of so many crypto enthusiasts.
- rchaud 4y agoWhat legal jurisidiction do they have to intervene?
- ZeroGravitas 4y agoOr, they knew all that but thought they would probably personally benefit anyway? You can get rich in a gold rush selling shovels. And it doesnt really matter if there's no gold, or not enough for all the miners to make a living. And why would a shovel salesman focus on the negative like that?
- webmaven 4y agoFrankly the shovel salesmen were relatively small time, since some miners brought their own, some quit and sold theirs (whether bought or brought), and some shovels were, um, just found lying around, "Goodness, whatever could have happened to that poor miner?" The real money was in services (brothels, gambling, baths) and consumables (food, booze).
- ryanSrich 4y agoVCs mostly fund crypto to make incredible amounts of money by pumping and dumping on retail. Take Solana as an example. 40% of their initial supply was allocated to insiders. Giving those VCs and founders the ability to dump on retail. It’s truly abhorrent behavior [1] 1. https://youtu.be/nBHH0k8EOHE https://youtu.be/nBHH0k8EOHE
- NelsonMinar 4y agoThe participation of big-name Silicon Valley VC in some obvious financial frauds is really disappointing to me.
- sumeno 4y agoIt's the least surprising thing in the world to me
- nradov 4y agoI guess that's no worse than Tim Draper of DFJ continuing to defend Theranos even after it was exposed as a fraud. https://www.cnbc.com/2018/05/10/early-theranos-investor-tim-draper-defends-elizabeth-holmes-and-her-vision.html https://www.cnbc.com/2018/05/10/early-theranos-investor-tim-...