The Asia Tech Podcast reached out to Daniel Liebau, the Chief Investment Officer at Modular Blockchain Fund.  The Modular Blockchain Fund was jointly developed by Modular Asset Management and asset class expert Lightbulb Capital. The Fund offers a long-only investment opportunity in liquid cryptocurrencies.
 
Some of the topics Daniel covered:
  • Doing research and analysis on foundations to pick the winners
  • What makes a good smart contract foundation
  • Sustainability of smart contract platforms leading to the adoption of Web3
  • The issue of unethical behavior in the cryptocurrency industry
  • Does the industry need to up the game with regard to risk management, operations, and general management?
  • The importance of regulation and valuation frameworks for crypto market maturity
This episode was produced by Isabelle Goh.

Read the best-effort transcript below (This technology is still not as good as they say it is…):

Michael Waitze 0:00
The Hi, this is Michael Waitze. And welcome back to the Asia Tech Podcast. Today we are joined by Daniel Liebau. Did I get that right? The Chief Investment Officer of the Modular Blockchain Fund, then I gotta be honest with you. I’m impressed by just saying that anyway, how are you doing today?

Daniel Liebau 0:39
Yeah, very well, thank you for having me. It’s been a while since we, I mean, I was on your show before. So that was that was good. I have good memories of it. But um, it’s been a while.

Michael Waitze 0:48
It has been a really long time. And I was looking at my notes. I’m like recorded bones. Last time we even spoke to each other. I mean, we kind of communicate online a lot like little bits and pieces. But anyway, what’s new? What’s going on?

Daniel Liebau 1:01
So since we last spoke, lots has happened. I think I had left banking in 2014 to start Lightbulb Capital, and Lightbulb Capital basically morphed from a financial engineering sort of a firm that was into index business for US equities, into an advisory company that since 2016, pretty much focused on all things blockchain. So we tackle that from several angles back then there’s an education part of it. So my, the classes that I teach at Singapore management University come under it, we do some corporate work advisory work as well, we’ve worked with private banks and traditional exchanges to help them figure out their sort of crypto strategy. And, yeah, for the last 18 months or so, I’ve been very busy working with colleagues at model asset management to set up this new product that we have now created. And yeah, that’s that’s obviously the most exciting, most recent part of my work.

Michael Waitze 2:07
I want to get to Modular in a second. But I want to talk about your own personal maybe experienced through the Gartner Hype Cycle, right? If you started dedicating all the stuff you’re doing to blockchain in 2016, you’ve been through a through a few of these like, Oh, my God, Blockchain is going to the moon and Oh, my God, Blockchain is going to the, through the surface cycles. At any point in time, did you ever feel like, maybe this is not gonna work? Do you know what I mean?

Daniel Liebau 2:34
Yeah, I don’t know. I mean, what I’ve learned so far is that the adoption of blockchain technology and the tokens that sort of power these platforms is a very cyclical type of a thing. So it’s not something that goes from zero to 100, in a straight line, no. And, of course, as any sort of emerging technology, there are moments where the future looks brighter than it is, and then it kind of overshoots. And then there are also moments where people are really scary. And there’s bad news. And I guess, you know, in the absence of a generally accepted valuation model for these things, we will always have to expect sort of higher volatility than in perhaps traditional markets where there is some sort of consensus around, okay, this is a stock and then you can do DCF, or I don’t know, comparables or something like that is why we don’t have that. And you still have to forget, you still have a large proportion of the market is perhaps not from traditional finance, and maybe, you know, everything becomes extremely sentiment driven, because people are fearful. And then they’re greedy. And then things move move quite a bit. So by now, I think I’m used to it and and what we’re trying to do at the firm has really tried to focus on more fundamental characteristics of these things.

Michael Waitze 4:05
Yeah. And I’m Don’t you think that at the adoption of any new technology, right, that it’s not going to go in a straight line from zero to 100? I mean, we’ve seen this in so many other different cycles, maybe the blockchain cycles are faster to me, when I look back on, you know, any new tech, whether it was Linux servers, or, you know, even email or E commerce, they would always like today is going to be the end of offline commerce, but maybe not. Do you know what I mean? And I think all this stuff goes through cycles. I don’t think this is any different. And the volatility again, is the same thing. Yeah, it’s gonna go away as it gets more mature. Yeah.

Daniel Liebau 4:40
Yeah, I do agree with you that it seems like it’s all crunched into shorter periods of time. And I guess that’s kind of in line with what we perhaps actually discussed last time around we met that and that is that sort of pace of change, accelerates, and therefore these things move more faster than in the past.

Michael Waitze 5:00
Can you tell me about blocked I mean modular blockchain fund?

Daniel Liebau 5:03
Sure. I mean, maybe for context, mandala is a Singapore based, fully regulated asset management firm, the main product of the company’s Asia macro strategy, okay. Founder, Jimmy limb runs very successfully for many years. companies founded by two gentlemen Jimmy Lim and Matthew cannon, who I’ve known for quite a while, at least for me, because I used to work for him in our banking days. Now, as the name suggests, right, modular Asset Management. The second module, after the Asia macro strategy is a blockchain strategy, which is very much designed with. It’s designed with keeping in mind the sort of requirements of allocators and because those are, effectively the types of clients that the firm already serves. And that’s why it’s quite distinct. It’s quite different from perhaps many of the other products that you see out there.

Michael Waitze 6:11
When you say allocators, you’re talking about fund to funds like people that have money to invest and they want to give it parceled out to different investors to sort of diversify their risk. Is that what you mean by allocators,

Daniel Liebau 6:21
fund funds, pension funds, sovereign wealth funds, got it, okay, endowments, those those kinds of folks. And what’s interesting about those, those types is that they haven’t really come into crypto. I mean, everyone in crypto talks about institutional capital. But as soon as you’re not an individual, you know, you’re already an institution. So we have maybe slightly different views. That’s why I stopped calling them allocators, because that’s probably more accurate.

Michael Waitze 6:51
Yeah. And but it’s a great term, right? And this idea that it’s pension funds, and other real institutional investors, right? Because the reality is that in the in the public markets, if you’re more than like five people almost by definition, you’re an institution as opposed to just one guy or one gal somewhere investing from your basement. Yeah, what’s the thesis here?

Daniel Liebau 7:12
So the thesis is very much centered around smart contract platforms, okay. People in crypto land, call them layer ones. I like to think of them as the I would say the operating systems that are required to run smart contract applications on top of, and you know that there are about 100 of them, we monitor obviously, all the developments around them. So out of the, I don’t know, 20 20,400 coins that are perhaps listed today on coin market cap, there are about 100 that qualify as these smart contract platforms. And what’s I mean, intellectually interesting to me around that is that they come in very different shapes and sizes. So while you might have rather high correlation between the token prices, and the charts, you know, look very similar. I think what we will see in the future is that as the market becomes more mature, and the understanding of how these platforms operate, increases, there will be a decoupling from the ones that are really good, in most simple terms, and the ones that are not so good. And all our work basically centered around finding those sustainable ones, and finding those that eventually will make it in the long run.

Michael Waitze 8:43
So are you investing in the tokens of these companies? So you’re making financial investments in the tokens of these What did you say 100 200 viable platform companies?

Daniel Liebau 8:53
So a couple of things, right, so often, the issuers are not companies, right? They’re often foundations. Yep. So it really requires a little bit of a rethink about how, how to think about these, these tokens. But yes, our work is mostly not mostly exclusively actually focus on the tokens that power the smart contract platforms. And as you can imagine, if you think of them as a, as an operating system, our portfolio is going to be quite concentrated. So we don’t take a let’s just buy the 100 of them. China, we do a lot of sort of fundamental analysis to then basically pick the winners, that is the key.

Michael Waitze 9:37
How does your index stock background and your index stock research background help you do this kind of better than anybody else, right.

Daniel Liebau 9:44
Well, I guess, having developed a an index product before helps because there is a systematic kind of Part Two, our work right, where we go through a whole number of filters and criteria that you can basically use that are purely database. Right. So from that angle, that was very useful experience. But of course, now there’s also discretion, right? And I think in absence of a very mature market, that discretion is very important. And it starts with kind of simple things like, Okay, you have $100, should you? Should you deploy them all at once? Or not, right? These these things are key. And maybe also we’re, perhaps we can show that we have a bit of an edge? Because if you think about some of the indices, right, they assume that you’re always 100% invested. Yeah. And in, in a market where things move so drastically, and sometimes it’s quite irrationally, it’s good to have that sort of human oversight, where you say, okay, hold on a minute, right now, this is kind of a unique event. It’s just rethink how what we do with the output of the model. And yeah,

Michael Waitze 11:12
I mean, I ran, I didn’t run it. But I participated in mean reverting stock trading fund that was global when I was based at Deutsche Bank in Tokyo. And I did monitor that and trade it. And one of the things we had was some kind of discretion if we saw something naughty happening in the market, and we got a signal we were like, maybe not this time kind of thing with a little bit of leeway. Yeah, sorry. Go ahead. Of course. Yeah. Yeah. Um, what is the thesis, though, for how you determined? Can you talk, dig a little bit deeper into like the research? Like, what makes a good smart contract company? And what doesn’t make a good smart contract company? What types of things do you look for when you’re doing this type of research?

Daniel Liebau 11:49
Yeah. So again, our companies and I keep going on? Because it’s interesting, right? It kind of shows a little bit, one of the main misconceptions that exist in the market, right? Because if an issuer of a token is a company, yeah, then it automatically has different characteristics, right. So for example, you would expect that the token ownership is perhaps rather concentrated, right? Whereas if you follow the whole narrative of blockchain and decentralization is to be the other way around, it should be in a in a sort of a community based ecosystem right. Now, is it? That’s kind of, that’s one of the questions that we ask, right? And that we look at on a comparative basis. And we say, Okay, how, how distributed is the wealth on this platform, to, you know, 64 guys hold 80% Of all the wealth on the platform? Or even if that’s the case, in the early stages, you know, what are the plans to change that? Yeah. And in that context, I think it’s quite interesting to share. I mean, we’re doing a lot of empirical research work also, together with our advisors that come from kind of good academic background. And one of the things that we found on a preliminary basis is that if the wealth on a platform is distributed more evenly, that positively affects the token price. And I mean, that’s makes total sense, because if you think about it, the more individuals or entities that have a stake in a platform, the more potential builders you get on the platform, when the

Michael Waitze 13:45
more liquidity to say, again, the more liquidity you have as well, right. Like if five people own 95% of it, they can also true, true,

Daniel Liebau 13:55
true. I do I mean, with regards to the liquidity, and maybe one thing I want to say is, I feel like the whole space a bit over financial lives. So that might sound a little bit funny coming from somebody who does research and investments type work. But I think, if you think about it, finance, in the traditional sense, right has a specific purpose. And that is to basically allow people who have some sort of idea or plan to get on with their work by utilizing capital, they don’t have using capital from somebody else that wants some sort of return. And and

Michael Waitze 14:34
Can I just jump in here for a second? So the idea for the capital markets to me right, or for financial services markets is for the efficient allocation of capital. But I kind of feel like we moved really far away from that globally in the equity markets as soon as there was automated trading and high frequency trading, which has nothing to do with the efficient allocation of capital. Now, I agree with you that I think that in the crypto market since we’re still early and where liquidity does play They have big role in high frequency trading. And it’s going to be really hard to do the same type of algorithmic trading in the crypto markets because they’re just not as liquid. And you’re right, if you can focus on this as an allocation of capital problem, then you are D financialization doing it. That’s not really a word I can’t really find just. But yeah, that that’s an interesting focus for me. Sorry, go ahead.

Daniel Liebau 15:21
I guess I guess my point here is that in traditional finance, we have already learned that over financialization of an economy is a really bad thing. Agreed, right? You think about the financial crisis and so on. So. So crypto, while the primary use case, arguably is sort of a financial one is also over financialized. And, and the activity that you see on these platforms today, is often very much related to some sort of financial activity. Versus if you kind of operate under the assumption that a smart contract platform allows people to build products and services, where users can just settle their transactions, then you would hope that most of these transactions are actually not other speculative nature, right, that there might be some, right, because a functioning market is built on sort of real demand for for something. And of course, somebody who thinks they understand the risk better, and then therefore, provide the other side of the trade. But I think right now, we often see like one speculator trading against another speculator. And that’s kind of the unhealthy portion that I hope that we can move away from and then the next sort of cycle or wave of adoption of these platforms that is driven by actually real use case development. And not only speculation,

Michael Waitze 16:55
I could not agree with you more. I mean, we see it in the oil markets all the time, right? oil price spikes, sometimes are just driven by speculators saying I think oil prices are gonna go higher. So I’m going to keep buying futures contracts, we really don’t want to rip the markets. Can you just define because you’re going out and doing all this research? And I’m not going to say the word companies again, because I want to get back to this difference between foundations and companies in a second. But I’m curious how you measure the level of financialization. Right. And also, the the, sorry, the distribution of wealth as well.

Daniel Liebau 17:31
Yeah. I mean, one of the beautiful things on blockchain, at least on public blockchains is that we can inspect the ledger, right. So so that basically means that if you wanted to understand the distribution of wealth, you could, you know, calculate something like a Gini coefficient, based on the sort of distribution of wealth across the entirety of the existing wallets. Now, what that doesn’t take into account and I think it’s also important to, to call it out, is that obviously, one Wallet. So multiple wallets can be owned by one person, right? Yeah. So it’s not perfect. But look, we continue to develop these kinds of frameworks and try to understand these things better. And that that is, I guess, the important part to increase the maturity of the markets, because it’s really data points that I think will will have to be looked at in a very critical fashion. In future as as the adoption grows. There are other I mean, I’ve just mentioned this as like one of the 25 different things that we look at. But another one that’s obviously heavily discussed is this whole idea of, you know, related co2 emissions to sort of the energy efficiency of these platforms. And it’s kind of interesting, because even that has, in my mind, at least, a relationship to whether a platform becomes adoptable. Because in Europe, for example, you now have regulation that demands of companies to report the adverse environmental impact across their supply chain, right. So if you’re a company and you use one of these public smart contract platforms, and that platform has a really negative co2, adverse environmental impact, then then somebody is going to call you out on your next earnings earnings call, right? Because they’re gonna say, Hey, why would you do this? You know, why are you not picking platform a over Platform B, if you know, that platform, if one of them is much more energy efficient? So I think that’s like a natural sort of development that we will see going forward.

Michael Waitze 20:01
Can I ask you this, though? Can we back up for a second? Because I kept making this mistake, which I won’t do. Again, like I said companies twice, I’m not going to do it again. But maybe we can define the difference between what a foundation and a company is and why it matters in this context to people that may not understand.

Daniel Liebau 20:17
Sure. So, if you think about a company, you know, what is a company A company and start with output, a company produces a product or service and it has the workforce that is basically hired by the entity to provide that product or service and then it has a management that oversees this kind of day to day activity. And then the management basically reports to a board and then the board basically is the kind of governance layer if you like, and they ultimately report back to the shareholders and shareholders basically, yeah, hold as the name suggests, shares, shares often come with two very critical feed features, one is control and one is a right to cash flows do so. So in the case of these often called utility tokens, is all very different. Because basically, what they are is they are a consumptive right, to the product or service that is being developed. And, and from an organizational perspective, it is much more akin to some kind of collaborative ecosystem collaboration between different actors, where their roles are not necessarily so separable, as in a company. So you might have somebody who’s a software developer, for example, but he’s also like the most keen use of the product or the service. And at the same time, he might hold a whole bunch of these tokens. So in a way, he’s also a token holder. Stakeholder in that sense. Yeah. So. So that’s different. There, there are now also tokens that confer governance, right. But I think they are very different to a control right in the context of a sharing where basically, you can, I don’t know, vote on the members of the board of directors or something like that, in this more collaborative ecosystem that we have on these blockchain platforms, the governance process basically works in a way where somebody can propose a change, and then the community will vote on that change. And if they reach a quorum, then that change gets implemented in in the blockchain. So I think this is also something that we look at quite a bit, actually, how does governance work? Right? Because Because you need a process to agree on what to do next. If you if a platform doesn’t have that it’s not very good, it’s not

Michael Waitze 23:17
very good. And doesn’t the government then rely on this concentration as well? Right? In other words, there’s

Daniel Liebau 23:23
a huge impact, right? Because if it’s very concentrated, then there’s always one guy who calls the shots. Yeah. And in the long run, that’s not very good. I can understand that. That is always the case in the very early stages. Because otherwise, you lose too much on speed, right? If you have to kind of agree on every single change, then that’s maybe not good in the early stages. But as these ecosystems grow bigger and mature, we want to see some sort of decentralization, centralization of the wealth across the platform, and therefore also the control rights of the voting power.

Michael Waitze 24:01
What do you think about this idea of decentralization at scale? Right? In other words, do if we end up I have so many questions about this idea of mass adoption of these types of systems, right? Part of the reason and maybe we can start with this, is that all the nomenclature around it, right? In other words, if you ask your mom or your cousin who’s not involved in the crypto world, like what’s the difference between a regular token and a stable coin, they’d have no idea. You just have no idea. Like what has to happen on the terminology front? Because I think about this in the context of like E commerce, again, go back to your mom or your cousin and just say, what’s the one term in E commerce you don’t understand? You know what I mean? Or if we change some of the terminology, as opposed to like next day delivery, you just said like, instantaneous procurement people would just be like, what are we talking about? Kind of thing? What do we have to do on the terminology front to make sure that people can actually understand this stuff?

Daniel Liebau 24:56
So this is a very interesting one. Question and in a way it relates back to something I think I have said, last time we spoke Go ahead. And I kind of remember that because we spoke about my mum. And I would, I would say something like FinTech platforms cannot be mass adopted unless my mum knows how to use them or something like that. Okay. And you know what? I changed my mind on this a little bit. And I’ll tell you why. Because I realized that one user experience is very important and great. And if if there is great user experience, nobody’s going to complain, right? Sure. But 50% of mankind, or slightly more, are now millennials. They are not my mom. And they struggle much less with a lot of the technology that is being put in front of them. And that’s kind of interesting, right? Because it has a it has an impact on how adoptable something becomes right? If, for example, somebody pitched to you and me, because, you know, we’re also not Millennials anymore. But you know, you’re not afraid to access your funds you need you need like a private key and public key. And it’s all very cryptic. And we’re like commands to complicate it. If your first ever investment that you made isn’t a cryptocurrency, sure, you know, it kind of comes natural to you. It’s like, what do you mean, it’s very difficult to access a brokerage account on Saxo Bank because I need this little device and, you know, give me a break. In my defy class, I always put up this tweet in the beginning where somebody said, and I think they said it right before, sorry, right after the Coinbase IPO, they said, I’m gonna buy some Coinbase shares when I can do it like a normal person on uniswap. You know, uniswap is one of the largest decentralized exchanges in the crypto land. So so to them clearly, you know, interacting with a decentralized exchange on a blockchain seems to be much easier than going through a brokerage account and adhering to trading hours from the US and all that sort of thing. So I think that’s why I changed my mind a little bit about this whole, top the ability based on, you know, user experience, and so on.

Michael Waitze 27:22
Yeah, we’re just we’re just making a generational bet that like, and again, I was gonna say earlier, right, when I was trying to interrupt you that you and I are not good examples of this, because we’re too deep in the morass. Like, we understand it too well, and when I use your mom, again, a bad example, but still like, if your contention is that the millennials are adopting and and I love this quote, like when only buy them when they can do it like a normal person, the way it happens on a decentralized exchange, an awesome example, right? But the idea is that there’s just a generational change is going to take place. And they do think that like a stock market that opens at nine o’clock in the morning and closes at three o’clock in the afternoon is dumb. Right? And so less accessible. So fair enough, right.

Daniel Liebau 28:02
And I think, you know, this, this kind of brings me to another point that I think is quite important in the context of adoption. When we were young, right? It was very cool to work for an investment bank. In fact, it was like the coolest thing ever. And maybe a decade later, it was the coolest thing to work for Google, large tech company. Now, you know what the coolest thing is? To work for yourself Self? Yeah. And how are you gonna, you know, where you’re going to build your thing? Probably on top of a smart contract platform. Yeah. So you combine that with the large amount of millennial human beings that we have on the planet? Now, I think, you know, this is this is also part of the, of our thesis of why we believe that these platforms will be a lot adopted a lot more. I remember times in crypto land where everyone was talking about corporate adoption, you know, once the corporations, you know, start using Aetherium Oh, my God is gonna be so amazing. And then what happened? Well, not much on that front, to be honest. But what did happen is suddenly somebody said, Oh, why don’t we just build a separate finance stack on top of blockchain and call it decentralized finance, you know, and then this whole ecosystem came out of nowhere. And then somebody in the art community said, Oh, actually, we should record art on the blockchain, and then you get the whole NFT movement. So it’s kind of all organic movements that effectively are happening, probably also largely driven again by those millennials, right. So that’s not going to stop. And that’s kind of part of why we like smart contract platforms, so much

Michael Waitze 29:42
of this idea. Can you talk to me about it’s so hard to talk about this in the context of geography, right, but I think that the newer the technology, the more likely that an underserved geography gets to leapfrog. Do you think that the uptake of this type of stuff and the activity We should see over the next five or so years, I’m just picking a random number yet in Africa, which is now really coming into its own as a technological Center of Innovation and Implementation is going to drive some of this growth in the smart contract businesses that sorry, smart contract foundations or implementations that you’re seeing, do you know what I mean?

Daniel Liebau 30:23
I think, Okay. Number one, full disclosure, I, if you ask me anything about Africa, I’m probably not the right person to comment, because I don’t really know much fair enough about about Africa. But what I would say is that in a context, where you have many people who are, for example, underbanked, I don’t want to call them unbanked, because unbanked people in my understanding, also don’t really have a mobile phone. So there’s a whole different problem, but underbanked of people who basically have a phone, maybe have a checking account with a bank, but don’t really get access to credit, or cannot really invest anything like that, in small amounts. I think those are an interesting group that eventually can benefit from some of the more sustainable, smart contract platforms. And again, you know, I’ll give you the kind of counter example, recently, there was a NFT, mint that eventually had transaction costs of up to $14,000 associated to it. So you know, that platform is not really adaptable, adaptable, right? If you think about the transaction costs, that is required in that kind of context that we’re talking about here. And maybe I’ll throw around this financial inclusion word, right. And then that becomes one of the kind of important characteristics that you can settle at an attractive price point, even for folks who perhaps have access to much less, then some of the ones that are more fortunate in the world, like, like us, right? So I think that’s, that will become increasingly important. And it’s also something that we actually pay attention to right? What can be built on top of these platforms? If because of the super high transaction costs, any financial inclusion use case basically cannot be built on a platform. That’s not

Michael Waitze 32:25
very good. What has to happen to lower the cost, though, that again, what has to happen to lower the costs?

Daniel Liebau 32:33
Not as a design feature, right? So there are other platforms that obviously have different mechanisms to reach? consensus and the price point? And then, yeah, transactions can be cheap today. I mean, there are platforms, let’s say, I don’t know, platform, like agora and for example, okay, can settle for a few cents, right? And fast and secure. And it’s already, it’s already there.

Michael Waitze 33:07
Can we go back to the numbers that you introduced at the beginning? And I want to make sure I have this right. So if I get them wrong, or if I’ve remembered them incorrectly? Just correct me? Sure. You said somewhere around 20,400 issued tokens? And I think you said I can’t remember, was it 100 or 200? That wore smart contract based platforms? What’s the number that you said?

Daniel Liebau 33:29
Yeah, I think it’s around 100 smart contract platforms, okay, of varying sizes. So there are some that are already very well established. There are also some new comments, right? Yep. Yep. Do you? And then yeah, I think I mean, no, go ahead.

Michael Waitze 33:44
I was gonna say. So, at the end, I always like these to make analogies, right, because I think it makes it easier for people to understand. But if you go back to the origins of the car industry in the United States, and probably in other countries as well, yeah, there were hundreds of carmakers, hundreds of them, right. Everybody had their own idea. And everybody had their own productions idea and designs and stuff like that. But at the end of the day, there were five and now maybe three, do you see the same consolidation happening in the smart contract space? And do you see it happening even faster, because of the way we talked about before just the speed of evolution in this space?

Daniel Liebau 34:17
I think there will always be a limited number of successful smart contract platforms, which is also reflected in kind of our work, because we have a fairly concentrated portfolio. But I think one interesting thing in this context is also this misconception, you know, why do they have to be 20,000 cryptocurrencies, like, you know, we already have like a means of payment. But if you go back to this idea of a utility token as a consumptive right for products or services, these different tokens are much more similar to companies that offer different types of services and comparing them to the Traditional work now, where where you have a an entity that provides a product or service. And that is not always payments. And that can be anything. Yeah, it can be, I don’t know, secure browsing or something like that. So therefore, I’m not very worried about this increasing number of tokens overall, is actually something that we monitor as well. I believe that that number is gonna continuously grow. Because eventually, if if you buy into this whole idea of millennials, one all have their own company. Sure, there will be some consolidation. But it basically means that there might be a lot more niche type of services. And I don’t know what the exact number of equities in the world is, but it’s probably above 20,000.

Michael Waitze 35:47
But again, you make this really good point, right? Why do we need 20,000 of anything, but if everything is going to, at the end of the day be tokenized. And I think we can probably agree, to some extent, maybe we can iterate around the word everything, but if a lot of the services and products that we got are going to be tokenized, well, then like you said, and if everyone’s going to work for themselves, we’ll need way more tokens. And we already have, I will think,

Daniel Liebau 36:13
yeah, no, that doesn’t mean that many of the ones that are in existence today, and I’m gonna fail, sure, just like businesses are all all of these. Not all, but many of them are basically, kind of start up right there very early stage. And the nature of son of entrepreneurship is that 90% of these just don’t make it right. So what so that I fully expect that to be similar in the world of blockchains?

Michael Waitze 36:43
I agree. I like how is that different in the startup world? Before I let you go, and you’re talking about this, you know, we talked about consolidation. I want to talk a little bit more specifically about like, how this matures and what this maturing maturity looks like to you. Does that make sense?

Daniel Liebau 37:00
Yeah, so a few things need to happen. The first is this perhaps D financialization, and refocus on actually using the platforms for providing products and services, not just speculation, that’s one. The second one is more regulatory clarity. You know, there’s a lot of back and forth about what is a security is not a security. I mean, eventually, we need to reach agreement on how these things are going to be regulated. And we can only hope for that the regulation looks similar across jurisdictions, right. Right now is very scattered. Right. So that’s also, I mean, it doesn’t help with adoption. And then I guess the third thing is, we need to make progress on understanding the differences between these different platforms and services, which is obviously, I mean, we’re trying to contribute to that. But I think eventually it has to end up with one or more generally accepted valuation frameworks or models. Because once people can, at least in principle, agree what something is worth and then that is a big sign of market maturity. So I would say these three things would, would be quite good to have.

Michael Waitze 38:30
Okay,let’s do this. I’m gonna let you go. Daniel Liebau, Chief Investment Officer Modular Blockchain Fund. This was awesome. You have to come back sooner than you did the last time.

Daniel Liebau 38:38
I promise, I promise. Thank you for having me today. Michael, this is really good. Good chat. Thanks.

 

 

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