Conversation

2) NOT INVESTMENT ADVICE

3) My background is in arbitrage, and short timescale quant trading. Tokens, stocks, currencies -- they're just tickers and prices; you buy at the lower price and sell at the higher price. But over time I've started to hodl.

4) In decent part this is natural. Over time I've gotten to know the crypto landscape better and better, which means I've developed opinions I trust more. In decent part this is because I now have the space and freedom to.

5) Many people think about coins in terms of fundamentals and technical analysis. I guess I use a variant on that. Short term I mostly look at hype and tokenomics. Long term I mostly look at fundamentals.

6) Let's take an "easy" case: $ETC. I don't feel very conflicted on its long-term fundamentals; they're bad. It used to have great hype, but mostly that's died down. So I certainly wouldn't be excited to hold it long term.

7) How about $LINK? Well I fucked that one up. I _massively_ underestimated both the magnitude and the importance of its hype short-term. It still has lots of hype! But its hype isn't _increasing_, it's mostly constant; it's already been baked into the price.

1:07 PM · Sep 11, 2020Twitter Web App

8) And for long-term fundamentals, I don't know--it probably has more than XLM and less than most exchange tokens. But those two have about the same market cap, so idk, it's kind of hard to say.

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9) Many of the food tokens don't make any sense in terms of long-term fundamentals. Eventually they run out of additional tokens to give you for agreeing to hold their token. That doesn't mean they always go down! Sometimes the short-term tokenomics and hype win.

10) Sometimes you can get a 10x from that. But _long_ term, most will fail if they don't have any fundamental backing. And most don't have any. But some do.

11) One, for example, gets 5bps on every trade on the second highest volume DEX in the world. even once the APY of sushiswapclassic.org/farms dies down, sushiswapclassic.org/staking will still be there. Will the volume be sustained? I don't know, we'll see!

12) (It's not the only one with some fundamentals -- if you read @bluekirbyfi's twitter you'll probably have a guess at another one. Few. Am I doing this right?)

13) And one of the great things about coins with good fundamentals, is that you can stare at tokenomics and hype in the face and say "so fucking what". At some point nothing else matters.

14) In an extreme case, if USDC is trading at $0.75 and the redemption process still works, you can buy it, and that's a good trade, because you can redeem it for $1. Few coins are that clear. But you can try.

15) Now this only matters if you can hold long enough to get to the long term, or if enough people realize this that the long term is realized in the short term. And be careful: if you disagree with the market, are you sure it's the market that's wrong?

16) But anyway, I see a lot of people talking about how to value things longer term, and by and large they say reasonable things. But sometimes they say things that seem to miss the point a bit.

17) If something really is going to be revolutionary, and that's not priced in yet, maybe it's tokenomics are besides the point. If something has tons of hype and no circulating supply, maybe its fundamentals don't really matter short term.

18) I've felt that way a few times about tokens. FTT and SRM, obviously; also BTMX, HT, SXP, and RUNE at various times, along with a few equity investments. And maybe a few more, but those I'm not quite done buying yet.

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