30 Comments 5 Reposts 3 QuoteReposts 5 Reposts 25 Likes 47 Diamonds

Comments (work-in-progress)

@0xAustin - Jun 24, 2023
I really appreciate all the thoughtful feedback I've received so far!
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@0xAustin - Aug 27, 2023
Up to 20k $deso tokens now. LFG...?
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@0xAustin - Oct 17, 2023
Currently up to over 25k $deso at an average cost around $8.
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@JordanLintz - Jun 27, 2023
This is amazing! Why keep all your DeSo off chain? Are you holding like 480k in Coinbase ?
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@0xAustin - Jun 27, 2023
I wish. $500k is my max initial investment in deso that I won't exceed. I currently have ~13k deso in Coinbase. Adding regularly under $10 and aggressively under $7. I keep it in Coinbase unfortunately because I am waiting on the option to store my $deso using a hardware wallet. The team is currently working on this, hopefully it comes soon because I don't like keeping it off chain.
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@JordanLintz - Jun 27, 2023
All our deso is in creator coins! Ours has to be on chain! So we feel you
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@SwiftD - Jul 04, 2023
You can in effect store in hardware wallet already. Connect your hardware device to metamask. Create new account. Sign in with metamask you'll be prompted to sign all transactions with your hardware wallet.
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@0xAustin - Jul 04, 2023
Yea I've thought about that. But can you sign deso transactions with a hardware wallet?
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@SwiftD - Jul 05, 2023
Yes you'll be prompted to sign every transaction. I would create another wallet to store your deso only use it for sending receiving deso, use metamask for signing in to it connected to your hardware wallet I use ledger. Only use for transactions not for social interaction. Works really well.
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@0xAustin - Jul 05, 2023
So you would still sign transactions using the ethereum application on your hardware wallet through metamask? Thanks! I've been wondering if this would work. I'll test it with a small amount to make sure, but this is a good option to get off Coinbase.
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@JordanLintz - Jun 27, 2023
🎯
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@darian_parrish - Jun 24, 2023
Always great to write down thesis and many points to discuss.

In this comment I'll just discuss risk/reward. In general with social - we know risk = very high and reward = very high so ratio is very high/very high. Still an asymmetric bet because max risk as an investor is zero(unless leveraged) and upside is unbounded.

Now, the main question is if the current team actions/plan increases/decreases risk or reward.

I would say that the more generalized infrastructure approach decreases the risk of $DESO going to zero but increases the risk of not hitting a home run(most home runs start with very specific high-demand use cases). Another way to say this last "increase risk" part is decreasing the reward.

So the ratio components have changed to high/high instead of very high/very high, but the ratio "number" hasn't changed.

So does this change the thesis? A bit because it puts it in a different bucket for me. The goal for the investment is different now that it is even more of an infrastructure play... value will accrue to it first but more of the value will be captured by the app layer in the long run. Want to be early on $DESO but will need get into the future top apps to experience its full potential for investment return.

This wasn't the case when the blockchain and the primary social app were essentially the same, even though it was always an L1 with the potential for many other successful apps. Now it relies more on these other apps for adoption.
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@0xAustin - Jun 25, 2023
In general, I would agree that risk and reward are both very high for a project like this. But, due to the large treasury combined with liquidity plus a likely future hot narrative, I believe the risk is decreased while maintaining the high potential reward. Under normal circumstances, a company raising 100m might have a $1b valuation. So for $1m, you could buy 0.1%. of the company while they have a 100m treasury to build. However, for deso, they "raised" 100m, but you can now buy "equity" at a 90m valuation. So for $1m, you can buy 1% of the "company" but they still have that full 100m treasury. This drastically increases potential upside and reduces risk. This is a very simplistic example but gets the point across. As for potential reward, I personally believe the opposite of what you believe, which is what makes for a great discussion! An application on deso has limited value, and I believe the vast majority of the value will accrue back to the L1 token, $deso. My view on applications is very similar to applications on Ethereum. They can only extract so much value from their users because they can always be forked/vampire attacked. The user stickiness is the L1 wallet, ecosystem, decentralization, and trust built over many years. Not the application. Uniswap/sushiswap is the classic example. My belief is that many deso applications will essentially have farm and dump tokens similar to defi. Some of them will end up becoming valuable, but their market cap will be a small fraction of the total deso market cap. So for the ultra degen bets, aping into a 100k market cap project on deso could give some insanely fast instant returns, but it is closer to gambling than investing. In my opinion, there could be some big winners on the deso application layer, but their ability to extract value will always be limited and thus their upside capped. But for the L1, ideally, it can scale "infinitely" resulting in much higher upside. Great discussion on risk/reward, thanks for sharing your thoughts!
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@darian_parrish - Jun 25, 2023
I think it is a difference of time horizon. Even on Ethereum apps should be larger at some point. It is like Telecom, got biggest first as infrastructure but then social media apps that can more directly monetize users surpass. Could be a bit different in Web3 but we'll see. Really depends how commodity like L1s come. That's why DEXs are subject to vampire attacks because little to no differentiation. The other point about valuation to treasury ratio. That only matters if we have rights to the treasury(which equity holders do). The DeSo team in theory could stop working on DeSo and just keep the treasury. Extreme(and there would be lawsuits regardless of jurisdiction) and not suggesting they would but would rather the Foundation be a DAO with proper governance.
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@0xAustin - Jun 25, 2023
So far, ethereum has proven there is a huge demand for "valuable" block space. You're absolutely right that deso holders do not have rights to the treasury. Still doesn't change my thoughts about it much though. I don't want the rights to the underlying btc/usdc. I like that the underlying btc/usdc gives the team a long runway to build something special. Normally for a team with a 100m treasury, I'd be investing at a 5-10x market cap minimum. A lot more "trust" is involved when investing in newer projects in crypto/web3 space. Which is why I strictly limit the percentage of my portfolio allocated outside of btc/eth.
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@darian_parrish - Jun 26, 2023
I think ETH block space value persistence will be based on how many additional barriers protect it's pseudo monopoly. Generally regulations do this in other markets and could actually be what does it here too. It's a top two holding for me since I think there is a high probability it persists for quite a while longer but still expect degradation over a longer time horizon.
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@darian_parrish - Jun 26, 2023
I think that's the irony... Web3 is meant to be trustless but in the early stages requires alot more trust...
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@Homey - Jun 26, 2023
Great blog !!!
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@0xAustin - Jun 26, 2023
Thank you!
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@Ashdigital - Jun 25, 2023
You and @bidaskspread should team up and post this stuff on other platforms.

It could definitely catch fire that way.
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@0xAustin - Jun 25, 2023
Great idea! I recently was reading through many of @bidaskspread posts and they are so good.
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@olin_patterson - Jun 24, 2023
Congrats on your holdings and honestly thank you for this great (albeit slightly biased but I know why😂) objective write up. I agree with you completely and share a similar story of coming across Deso. It represents a large portion of my holdings but I only have about 2.5k Deso.

You said this in your analysis

“ Decentralized social media is a desperately needed product that people do not fully understand yet. ”

I believe this is the most powerful product offering of Deso if they can successfully deliver a pos l1 that cannot be taken down. We cannot even begin to imagine the amount of censorship that occurs the world over by big tech companies, governments and more. The slightest fraction in this would unleash incredible momentum and onboard the new age of something like deso.

I would compare the Arab spring to this. Existing political structures and their control of preexisting media could not fathom a new wave of grassroots democratic movements that would emerge from a new tech like social media. There is no doubt the conversation happening then accelerated a whole wave on new users. I think deso is a potential use case one hundred fold that.

But this is all hypothetical and there is huge risks here as well including regulation and powerful people that could shut it down . Make no mistake This could all go to zero and I’m aware . However the potential of what could happen excites me more than anything and is why I follow Deso and bought a bag. I’ll cheer this project the whole way to its success or end. Nader and tram have painted an extraordinary vision that will crash and burn or change the world. That’s the type of stuff that excites me.

Regardless great write up and thank you for sharing. I wish you all the success in the world !
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@0xAustin - Jun 24, 2023
Well said! I'm definitely biased, but I tried to disclose that up front. I think it's quite important to recognize the risk of an investment like this, so I'm glad you agree. However, the right vision/founder/team combined with a large treasury plus a hot narrative that could allow you to de-risk the investment early makes for an incredibly attactive risk/reward opportunity.
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@olin_patterson - Jun 24, 2023
Agreed. I was half joking about the bias. I try to be objective too but its hard when one cares and is invested 😉 I think the risk short term is low to get money back given bitclout 2 and all should drive the price back to $100 at least. I’ll get my money back then selling 10% of my Deso then hold for the next decade to really see if this can be something world changing (and subsequently for myself too). Time will tell ! Thanks again for sharing your thoughts
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@0xAustin - Jun 24, 2023
Sounds like we have very similar plans. Thank you for taking the time to read and sharing your thoughts!
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@stephend9 - Jul 05, 2023
It would be nice if DeSo couldn't be 'taken down' or censored, however is that really the case? Who's mining it now and why don't they want users participating? My recent posts describe how painstaking it's been to find info on how to mine over the last couple of years here on this platform and my findings are not reassuring...
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@olin_patterson - Jul 05, 2023
they havent launched their proof of stake yet.
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@Randhir - Jun 24, 2023
Where do you find this "toxic group" of users? Most such users have left (at least for now).

Not sure if I am in that category. But, at some point in the last year or so, my perspective has changed and I've realized that if I think of this project and team as someone building a centralized Web2 project, the updates they share and the feedback they gave are truly a breath of fresh air.

There is an occasional talk about Web3 and involving other teams to build on DESO (like Nader's recent Reddit proposal), but then, they barely engage with the teams that do respond including our project (@Squadz). So, at times, it becomes a bit uncertain if this is because they are busy or because they don't trust these teams to deliver or they just have missed the post.

For me, this is the biggest red flag that might get me to change my belief in DESO combined with what I've seen as the core team's struggling to build and market a killer product on their own.

Having said all that, I am still looking at this as a 0/1000 bet and have around 15-25% of my crypto portfolio and potentially 2-4% of my net worth in DESO. Depending on how the proposals are executed upon, I might reduce my exposure or maybe even increase it.

Wait and Watch Mode for me.

PS: Love the details of your investment thesis. Is there a set format you start with to ensure that you look at it from all perspectives and also don't let your biases creep into it.
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@0xAustin - Jun 24, 2023
I think "toxic" was too strong of a word. Thanks for pointing that out. Maybe frustrated is a better word choice. My view on supporting third party projects is that they are encouraged but will not (and should not) be supported either financially or with time from the central team until the project has proven it can bring users on its own. If they supported every team with an idea, the treasury would be drained quickly and their time would be spread too thin. I don't have a set format for my investment theses, but I should. I'm going to this about how to be implement this! Thanks for the suggestion. I think biases are actually ok to have when investing as long as you are aware of them, open to changing them, and revisit them on regular intervals. Strong opinions, loosely held. Biases are what allow you to make concentrated bets on something like deso. You need a pretty strong world view bias to put a significant amount of your net worth in crypto in general.
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@Randhir - Jun 24, 2023
I see the logic of not supporting teams financially to avoid draining the treasury. But, the counter to that is that you won't know until teams spend a few months in, if new users are brought in and there's a significant risk, learning curve and challenges with building on a complete new L1 (especially when other L1/L2s are offering incentives to build there). It's a tough one and I feel the "I won't fund until you bring new users" too idealistic.
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@0xAustin - Jun 24, 2023
I think when the time comes, they will start incentives for teams to build on deso again. At the current deso price plus current market conditions, it doesn’t make a lot of sense to spray and pray deso tokens as incentives. The time will come in the future though I believe. For now, heads down infrastructure building seems to be the plan, and I personally like it.
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@Randhir - Jun 24, 2023
I can see why you like it and think that way as an investor. If I only put on that hat and also, can somehow ignore all the failed promises, I'd probably do that too. My investor hat is what is making me hold too ... although I have to say, I'm on the brink (especially when I try to read between the lines on how they've made the community here feel and extrapolating that to future behaviour). And it's less about actions, more about the communication for reasons behind those actions and the timing of those communications. Hopefully, they'll improve on it.
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@bidaskspread - Jun 25, 2023
this is really great to see and I share many of the same thoughts.

a community-driven "Investment Thesis" blog or wiki would be an extremely valuable resource and would make it easy for people to share when spreading the word about DESO.

this is a great foundation to build from. well done @0xAustin!
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@0xAustin - Jun 25, 2023
After reading through many of your posts, I can definitely tell we share a lot of the same thoughts. It is refreshing to see, because sometimes it's easy to get in the echo chamber of your own mind and think you might be crazy. It's really good to know there are at least a few others that see the opportunity that I see. I love the idea of a community-driven "investment thesis" blog. This is a ridiculously rough draft I put together quickly, but we could really make something good. Thanks for reading it!
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@stephend9 - Jul 05, 2023
Thanks for sharing your DeSo thesis. It's very detailed and thorough. I really ought to do something like this for my portfolio as well...

I would add that I think it's important to ask who's been dumping DeSo over the last two years and to speculate on why this is. If those same people, such as early VCs or miners, still hold large bags and the token gets a new influx of users/money, will they cash out again??
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@0xAustin - Jul 05, 2023
Of course some will cash out as price rises. I would expect this. But you can see the distribution from the transparent initial sale of $deso tokens. It is well distributed for the age of the network. Only thing that would concern me would be the central team dumping a large percentage of their tokens. Whoever has been dumping DeSo at these prices is not a very sophisticated actor... Buying in peak bull market mania then dumping at a big loss in a bear market?
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@deann4ik - Jun 25, 2023
Thank you for the tag!
Always interesting to see how others joining later view DeSo. Always inspiring when that view is positive.
As far as toxic OG lol we’re like an old married couple that keeps secrets to themselves. We’ve been through a lot and “you had to be there” to understand.
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@0xAustin - Jun 26, 2023
I think I'm glad I wasn't there! Hoping I came around at the right time.
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@0xBenE - Jun 24, 2023
Cross posting to OG thread.

Excellent write up. A few points to consider:

Early investors appear to still be holding majority of initial position

Worth adding details about the credibility and strength of the team. Happy to share more here.

Downsides:

L2 scaling solutions combined with IPFS and sufficient decentralization allowing social experiences to be deployed on more established L1s with developer and user base already (eg, ETH). Unclear how important full on-chain capabilities of DESO will be as user bases scale.

So while yes they are trying to back-in to a social experience on DeFi rails, only time will tell if that’s not feasible. Web1 and web2 protocols were and still are a mess, and it works well enough.
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@0xAustin - Jun 24, 2023
I think early investors still holding majority of their initial position is a positive sign overall, even though it comes with risks. Interested to hear your opinion on this. Please share more details, or point me to where to find them, about the team. I've done some research on them, but admittedly not enough. Mainly spent time researching Nader and listening to his interviews. Those downsides are definite risks and things to consider. I know just enough about the competitors to be ignorant if I'm being honest. I've researched and used them, but I have a hard time seeing how they both scale and win long term. I've been looking for reports on all the different decentralized social options, but there really isn't anything good out there. Messari has a mediocre one.
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@0xBenE - Jun 25, 2023
I agree initial institutional investors holding their position is a positive sign. The team around Nader has the incredibly legitimate credentials and experience one would expect of any serious venture backable business. Engineers have deep AI/ML and cryptographic experience and backgrounds from Facebook/Meta, LinkedIn, and other Big Tech. The product team also has deep experience from tradfi. Yes, no one really knows which model will win out at scale, and history suggests it's not always the technologically most elegant one that does. So just because DESO is optimized for web3 social doesn't necessarily mean that it will win. I highlight this only as one additional risk to keep in mind as you're considering portfolio construction and total risk exposure. That said, I agree with your thesis and DESO is still the only way to get direct financial exposure to web3 social. There's a reason I'm still active here, and continue to increase my position after 2+ years.
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@0xAustin - Jun 25, 2023
Thanks for sharing this! You're right, it's pretty much impossible to know which model will win. I'm constantly looking out for anything else promising that comes along that is also investable, but I haven't found much yet. My simplistic mental model framing this new type of blockchain is that it is the third iteration of a blockchain. I do think this is the start of a new type of L1 design optimizing for something completely new. Whether or not deso is the one that wins... we'll see 1) Bitcoin: peer to peer digital cash a) Juiced up forks like litecoin, doge, etc. 2) Ethereum: smart contracts a) Juiced up forks like bsc, polygon, etc. b) Juiced up smart contract L1s like solana, cosmos with a different design 3) Deso: infinite state blockchain optimized for social and other use cases beyond just financial The first 2 iterations (btc, eth) were 100% optimized specifically for financial transactions, just numbers and math. If I'm right and infinite state is a new class of L1 that takes off, and history repeats itself, deso has a huge first mover advantage in the 3rd iteration of L1 blockchain design: less decentralized, ultra juiced up, super high hardware requirements, but not financial first, so security and decentralization are less important. This is the framework created by someone with a 5th grade understanding of this technical stuff.
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@ceponatia - Jun 24, 2023
It’s good to see analysis from someone who can track an entire year. $DESO is currently only about $1 higher than your 2022 analysis but there’s been a great deal of fluctuation in that time.

I disagree with the belief that having Bitcoin holdings means $DESO will more or less follow $BTC. The price of $DESO is based on buy/sell orders, not the price of $BTC. The price does currently follow $BTC much of the time, but this is more because improving market conditions increase the appetite for all crypto assets. Functionally, this may mean that the prices sometimes move in tandem, but it’s important to not be confused about why that is.

I don’t consider CC to be great for investments because taking profits on them is generally frowned upon (aka you’ll get accused of rugging people). So you can invest in a creator and the price can increase a great deal, but there’s no appropriate off-ramp for profits without having people not want to be associated with your account. I think there will be a better system for this in the future which will make CC much more useful. Right now I think of them more as a game.

Otherwise, I agree with everything you said. Even though the price of DESO is only $1 more between your two measurements, there were times in the last year where I made considerable profit from holding and selling $DESO, and I think we’re heading into a good period now!
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@0xAustin - Jun 25, 2023
Great point about $deso price not following $btc price! I should clarify: my thought process was more along the lines of the deso market cap seeming to have an imaginary floor that matches the deso treasury amount. This doesn't have to be true, but it does make sense. And due to the deso treasury having a lot of $btc exposure, if $btc has a big run, it will likely drag up the $deso price with it. Definitely not guaranteed or 1:1 correlation, but I do like that the treasury has btc exposure and not just usd. In the short term, deso price will definitely not follow btc, but over time, the imaginary floor based on the treasury btc/usdc can increase if btc price increases drastically. As a long term btc bull and dollar bear, this is attractive to me. I absolutely agree that for myself personally, I am not a fan of investing in CC unless I just want to support someone. To me, investing in CC is for either gambling or supporting creators. Both things that many people will want to do! Just not me other than occasional support. Well said, they are more of a fun game that makes social more interesting, but not a viable investment with any significant portion of your net worth. It's been a solid year following deso, and I am quite optimistic about what the future may hold!
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@anonymousi - Jul 03, 2023
My average price is around 12$/deso
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@0xAustin - Jul 03, 2023
You’re in a good place I think 👍
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@anonymousi - Jul 03, 2023
I will keep it for the next 5 years. maybe I'll buy some more so I can average the price down to 10$
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