# Crypto Capitals: Web3 Around the World | Sota Watanabe, Richard Muirhead & Min Teo

- Speakers: [Richard Muirhead](https://streameth.org/speakers/richard-muirhead)
- Channel: [Ethereum Denver](https://streameth.org/ethereum-denver)
- Date: 2024-10-09
- Duration: 29:11
- Topics: blockchain, web3, ethereum, Entertainment
- Watch: https://streameth.org/watch/yt-ET92uUCOLwE
- YouTube: https://www.youtube.com/watch?v=ET92uUCOLwE

## Description

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## Transcript

2012 like polka dot ocean protocol the graph near 1 in Richard has previously exited three software companies as an entrepreneur reaching a cumulative market cap of 2.2 billion and next to Richard and next to me we have Min who is the co-founder and managing partner of ethereal Ventures a leading crypto Venture firm founded by Min and Joseph Luben they have over 40 portfolio companies around the world including Alo IG May Aztec protocol and Spruce ID so yeah can we give them a round of applause thank you for joining us okay we're going to Dive Right In so um I thought we could dis uh start the discussion by discussing the topic itself crypto capitals and for our purposes we can think of capitals in the sense of cities states or even countries the question is do we need crypto capitals um and maybe we can think about this in terms of um men and Richard your portfolio companies and so are your startups does it matter and why anyone can go ahead and Jump Right In okay I can go then sure yeah I think in terms of the company and the project the crypto project is naturally decentralized right we have a 60 more than 60 people from 19 different countries and we have a uh four entity in five regions so it's fully decentralized but uh in terms of the users perspective you know user have to pay tax and uh it is always better to you know clearly Define what's okay and what's not and uh it's also you know in Japan it's super difficult to monitor all transaction and uh understand the tax percentage and actually The Exchange crypto to Fiat and pay tax so I think dle have to be clearly defined for users and then the project can decide which region to start the project I think I would um I mean I Echo that kind of distribution of the different sort of centers of gravity within our portfolio um I think we um we're actually backed by the European investment fund and um you know they naturally want us to encourage activity uh within the eu27 plus aftera and so forth um and uh you know It's tricky because you know you may have uh something that's know legally instantiated in Switzerland for a foundation uh that was originally derived from something that was in Berlin uh and then folks uh actually are now in Lisbon a lot because they went there over over lockdown uh and then the holidaying in in ather and then um I guess you might reflect I mean you encourag us to think about it sort of flexibly um if there are crypto capitals they it could be argued that there are actually kind of Denver and then you know Paris for ECC um Singapore and then Dubai for token 2049 you know that's where often the teams meet for the for the first time uh but you know I think it's a very good point about tax from a user perspective and users are part of these networks actually as well critically um but that's kind of distinct from I think um you know the projects themselves so essentially what we're saying is it depends on what we're talking about are we talking about the user in terms of maybe legality are we talking about teams and where they are working out of uh like we were discussing earlier um we have I've talked to quite a few people who have just met their teams for the first time at this conference in over two or three years of working together and shipping really great products and I'm sure this is not new to anyone so you know where teams are maybe could be distributed doesn't need a capital um any thoughts M yeah I think ultimately if you focus the question on like you know where are people building cool things like you know which is important because I think smart entrepreneurs either want to build close to their users or they want to build close to other like you know talented Builders so that they can learn from each other from osmosis and us and investors we generally go where the smart Builders are you know and we just follow along too so as a result like because crypto is just inherently very Global you do have the emergence of hubs in every single sort of jurisdiction I think in um in the US you have New York Austin you know San Francisco Denver um in Europe you see pockets in like you know London Berlin Paris and in Asia definitely you know in Singapore Thailand Hong Kong um and Dubai is also also emerging quite quickly too um but to me I think this the you know the most important crypto capital is still online like you know I de on forecaster so our online Asian friends can also partake in the discussion uh that's what makes crypto cool um but certainly you know there's um there's a lot that sort of physical presence can't be replicated yeah no I'd AG agree agree with that I think um you want to have those coffee shop moments or or you know be able to sort of sit around the kitchen table when you first going projects going um and um I guess I took a decision actually some of my contempories of University actually went to Silicon Valley to go and start building companies and I took a decision to try and build companies from uh from Europe and and in particular from London um but you know London there are I think in Europe in general um it's more distributed and decentralized um than it has been in the US and we had a sort of thesis around that that was it kind of stemmed a little a little bit from the the the original city states of like you know say 500 years ago that had very strong um academic credentials and universities that grew out of it um and that so therefore you know you you know we've got London and all the whole stretch from kind of Bristol through Oxford through multiple universities in London all the way through to Cambridge they exceptionally strong in both Ai and fintech and then that you know obviously supports increasingly strength in crypto um but across Europe everybody embraced open source quite early uh it's quite it's hard to sort of fully document but you know Linux MySQL they all kind of came from uh from Europe and we've seen some remarkable successes um software companies out of Romania and I just met uh one of our LPS in the LIF uh this morning and told him what we were talking about and he pointed to uh a technologist out of sfia Bulgaria who's building a you know an exceptionally efficient large language language model so I think you know it can CR crop up everywhere and we like to encourage that so it can naturally emerge from what's Happening locally and then it just starts to attract um and grow from there actually this is a perfect segue into the next part of our question or the next part of our section is are are we seeing are we seeing Builders shift towards any particular capital or space or region maybe more over the last 6 or 12 months um you've mentioned a couple of you know places in Europe you've mentioned Dubai any any thoughts on where people are moving congregating yeah I I I live in the Singapore right now and originally from Japan and I'm traveling a lot I visited I think four or five City in the last two months so uh I think a lot of the developer goes to like you know good friendly environment like Dubai or maybe Singapore and so on but I at the same time in terms of the Capital Market it's obviously led by the US so but in terms of the adaption I think a lot of the users are in Asia because let's say nft or you know gamey and so on it doesn't it does not make sense to ear let's say $5 or $3 per hour in the US but it doesn't make sense in Southeast Asia for example so there are lot of users so much more valuable yeah yeah yeah so developers are located in Europe I guess Europe or maybe uh Dubai but actually users are in Asia and financially speaking it is L by us so from the entrepreneurship mindset it is really important to understand the Dynamics of the market and leverage the best part of the country and I think in terms of sheer numbers obviously Asia has some of the largest um populations who are increasingly or rapidly coming online yeah and getting familiarized with with crypto and and we and we made the point earlier as well made that obiously you know users need to know where they're going to get sort of taxed um but underneath that um as a group when we were preparing I think we reached a consensus we didn't particularly want to talk about uh regulation um because the toip ahead time and again um but you asked where we could see a kind of um should we say a surge of activity um and you know we definitely have seen um people getting a little bit frustrated with the uncertainty that exists within the US and know a lot of people are doing good work to to resolve that but there's it seems obviously to still be fairly politicized um and um whereas in Europe there are some regulations that have got given sufficient Clarity um in general you know Miko being one but and then jurisdictions that can comfortably support you know kind of neutral entities like foundations in particular uh you know Switzerland that I think has encouraged people to to build there which has been um great and I think there's a lot of clarity in Dubai that's already been mentioned uh we we've been drawn into whole series of conversations uh in Dubai uh and other places in the in the region um so I I I think and then we've seen obviously famously a16z crypto has both open an office in London London and S crypto startup School in London we welcome them just as they've been welcomed by um the UK government um it's an unexpected result of brexit in some senses um um and that's and that's good and that that's a reflection I think of everything I just said about the frustration um but I think um and we were also talking about this a little bit earlier it's going to become if we were to get a point to what how it should work is that we should have uh builders get together work out how regulation can be addressed addressed from the bottom up on an emergent basis through Innovations you know around individuals and how they attest to their their status um and that's going to be increasingly necessary in this sort of multi-layered cake of of you know abstraction that is being built um uh where you know you you know one particular D May sort of hop between M multiple different chains uh and that may of course even be dynamic and how you going to how's that going to be regulated from the top down it's an impossible task so I think it's a a call to to builders to try and get regulation or kind of uh find ways of making sure that we're comfortable with the way that criminality can be managed from the bottom up so just on that I I mean so we're talking now a little bit more around regulation and how that could work I mean we've had so many conversations over the past week in terms of new technological developments that have been happening we've talked about con abstraction chain abstraction modularity um if Builders were to participate in a groundup you know um how things should be set up regulatory in in in regulation how would they even begin could they even think about it how would they even think about it well hope they W have to think about it I mean hopefully this is something that it can be in for in the spirit of this sort of open permissionless you know immutable coders law you know movement it's something that you know if you're using the systems uh you will be able to prove that to anybody who cares in the network that you are who you are you say you are um that um there's there's not something that your kind of counterparty needs to know about you before you transact um it's not know your customer or business it's know your transaction um and that and that um you know even stuff like source of funds and and so forth can be you can be get comfortable with it which you can happen at a effectively at a protocol level and so we need the builders to innovate to build that um and maybe The Regulators to understand this as a new paradigm right um any thoughts on how I mean the two could come together because you know so this year's is quite an important year for crypto in terms of Elections we're seeing general elections happen in major capitals around the world so in the US obviously in the European Union Indonesia Pakistan India UK um potentially how do we have these two different parts the the whole emergence of all these new technologies happening rapidly and then governments trying to figure out what's going on in the space And then trying to provide a layer of guidance guidelines for things to actually F flourish for things to actually move forward um SOA we were talking earlier about how um entrepreneurs can only um take risks when there is Clarity yeah and so without Clarity it's almost like how do we move forward and I had lots of these conversations in Europe before Micah came about and it was almost like a standstill so any thoughts on maybe even from a Japanese perspective what the government is doing yeah um I I would like to share the Japanese perspective I I think the first things first most important things is The Regulators are not our enemy and the worst case is the regulator Define crypto row without knowing crypto this is the worst case so we have to speak with them and regulator has a lot of the task to Define right so we have to get the Mind share and from the Japanese perspective we completely lost in web two we don't have a global Web Two company but Japan used to be number one in terms of the growth of the economy and then we have a global company such as Toyota Sony and so on and if we miss web three we may lose another 20 years this is the narrative we are using right now and then the government understand we three is coming and they also understand they have to invest in web three because they missed web two and our economy is not growing uh this is the kind of narrative everybody agree on so that's why it's easier for us to speak with them and the Japanese government made w three as a national strategy two years ago and they already changed two or three crypto tax on unrealized gain and uh uh tax on companies so which is also good move um and I think if and the good things is because Japanese government clearly Define what's okay and not and made we a national strategy big company enter to the market so for for for example in our case we we got the seed investment from Sony so we capitally aligned and we created a joint venture together with Sony and we are going to deploy public blockchain together with Sony uh incoming months is we are kind of St mod right now but once we launch the chain I think this going to be one of the biggest project in the world I believe yeah awesome yeah I think maybe it's it's lesser known right now what the Japanese government is doing but I know the prime minister is very very involved in what's happening web 3 so maybe it's one that you know everyone could pay a little bit more attention to yep I think we can move on to some interesting topics thinking about the future and Trends so I think one thing that investors and you know public relations have in common is that we often get a glimpse of what we're going to see in the news headlines but 6 months earlier you guys are in rooms with entrepreneurs who are developing very new technologies so take us into these you know smoke field rooms what kind of new trends do you think we're going to see in the headlines in 6 months and are they emerging from any particular capitals um I think on that front especially as it relates to adoption um we're personally really very excited about like the Advent of stable coin payments I think we now recognize that stable coin is a preferred mode of transaction between people and it's super useful as a transport mechanism also a second settlement mechanism for mides and crossb payments um certainly I think like you know not just in um areas like you know latam or southeast Asia but also in Africa we're starting to see a lot of adoption there and a lot of amazing Builders they're also building startups that are sort of Next Generation payments a continuation from the fintech kind of you know micro payments lending Neo banks that we saw um and I think that's really going to take center stage and highlight how stable coin points can actually permeate people's lives on an everyday basis and provide real utility well I'll start off by echoing that to we we did a little panel with folks from PayPal and uh Circle and salana and Ledger on stable coins and we have folks like um du and and uh you know NEOS and um uh about a dozen different payments related uh companies in our portfolio and we've seen um really great success from Cosmos uh which is a uh you know a very well adopted arguably one of the most well adopted daps running in the near ecosystem which is uh got a bunch of interesting things converging within it actually to sort of get on to um to to your question um it's got a elements of sort of social commerce and and loyalty and so forth B baked into it uh which we see have seen as being particularly strong coming out of um Asia um and there are thesis is a little bit about um people call it different things you know people as the platform headless or lead leadless sort of um uh marketplaces or networks um where you get this intersection of of you know Defi and web three social to kind of people can aggregate around you know something they believe in and then and transact around um so it's that combined with uh to kind of to make to a strap line the ability to out strip stripe uh in terms of embedded lowcost you know kind of uh payments you know using stable coins and then um also combining actually something that um we think Builds on some of the strength across Europe and we've seen you know Mistral obviously in France and as I mentioned the AI strength uh in in the UK uh and that is the um the extremely popular topic of ax crypto the popular at least um cly here in uh the conversations not I don't think the Smoke Filled rooms uh here in E Denver that's not really been the vibe coffee I would say more um um and I was pleas pleased to read by the way of there's a nutritional uh outfit that uses AI called Zoe in the UK and and the the founder posted today that uh he he used to not drink coffee and now he's drinking coffee because the research is telling him that it's actually good for you in a number of ways I was overjoyed to to read that this morning yeah um but but I think the that we're beginning to see in those kind of daps um the movement a really fundamental movement which is going to be um a convergence of the capability the AI capabilities should we think of it as an llm operating system with a kind of blockchain operating system uh some folks calling it a sort of sovereign operating system which ultimately will deliver you know contextual application experiences to you that don't require apps and therefore don't require app stores in the same way um so that's you know it doesn't take um a genius to work out that if you're uh taking out the 30% rake that exists or tape that exists with the App Store and circumventing um Apple in different ways that that's a it's a fundamental shift so how would users access them uh well it's open permissionless systems that that that you're um you have multiple devices that understand uh both your personal context because you've shared you know they know your identity they know some of the history of what youve purchased your loyalty all of the different tribes and Dows that you belong to uh what used to be known in the sort of Facebook sense as your kind of Interest graph um but now maybe you it's easy to share it and it's going to be um token attested uh through your you know your travels um and then also understanding your precise you know I'm I'm here in Denver I'm you know up here on you know in the rodo center um and it will work out what it is that you need what do you want to hear about it work out maybe even if if it's allowed to know that um who you're talking to um and so the point is that the concept of an app um doesn't exist anymore yeah it's just a continually personalized experience almost almost in a sense of a stream to you and so but that's a it's a fundamental ship but I don't think it's very far away there's the rabbit badge you probably might have seen La launched that I you know I know nothing about other than what one has seen through the launch um that is starting to kind of deliver on some of that uh but I think it will you know lots of different devices around your person will collaborate in order to to deliver what you need yeah interesting yeah uh for me I would like to you see a m adaption so our mission is web 34 billion and I would like to make the wall where people are using web3 in a daily life just like internet of today and to do so I think leveraging the existing business is easier than correcting getting the user from scratch so I personally would like to see more Enterprise adaption to leveraging existing business I mean integrating web3 protocol decentralized technology in into existing business how do you think those conversations are going I mean they're also I guess trying to wrap their heads around how all of this works we are trying to wrap our heads around how how all of this works um have you seen any of these conversations happen and how the movements are going yeah I'm a big we three believer so I think protocol have to be decentralized but in terms of the interface in terms of the user or maybe corporate strategy it can be centralized the community and that protol are different and we have been working with Sony so you know uh it is they think it is not possible to compete with let's say Google or maybe Facebook by making centralized platform so it is better for the Japanese company to create more demog demographic you know the platform which can be web three so they are still looking for the you know possibilities but I hope we can convince them to make it happen yeah I totally support that um we have some experience in um the enthusiasm around sort of there's an event called cgp that n has sponsored to try and create a new relationship between the athletes and the fans in there um I think and and we also see it around um the ICC international cricket Council um and then a whole whole series of um other support Sports um that one could tap into and obviously Sports has become an increasingly welcome commercialized and very lucrative um you know business it's attracted the attention of private Equity it's a different kind of part of the kind of ecosystem and buying them up and backing them but I think you know exactly was just described um there's an opportunity to get away from today's platforms like if you want to create a relationship between the athletes and the fans you don't have to do that on Instagram or do that on Twitter or do that you can you can create your own community Through web you know through Technologies and one that is much more poent um you know both in terms of the long tale but also in terms of how you can serve the the the classic thousand true fans if you've read that post um so I think that's another really exciting kind of Frontier well we've just got a couple of minutes left I thought you know since we've not talked about the US that much we're sitting talking about the rest of the world here um in terms of the conversations you guys are having with your portfolio compan companies and so like your own plans and other builders that you work with where do you see us placed on the short and Midterm plans so I think from our perspective and disclosure you know more than half of our portfolio it's us-based I think we talk a lot about adoption happening in the East and that might be true in terms of numbers like you know in terms of like daus and Maus but the spend is definitely the highest in the youth in the US still it's probably 10x higher um than what you see in Asia for example so it continues to be a really important U market and I think you know we've encouraged our portfolio companies to continue engaging us users um you know I think for certainly like depending on the type of protocol or business that you're building um we've seen say some Founders who are building more trading or like centralized exchange type projects like move out to Asia move out to Dubai where they have a little bit more clarity and they have the ability to get licensed and operate in a regulated way um or if you're building a protocol maybe moving to Europe because you know they feel um like there's a little bit more protection if they're like you know with the sort of foundation model there as well um but certainly I think the US is front and center one of the key markets in crypto and we also see it in New York that's uh become such like a hopit for great talent and great Founders who buildt good teams and they get together very often so lots of great osmosis there yeah I think we don't have much time so to make the long story short I think money and talent us is going to Le but adaption Asia is going to Le yeah I think yeah I mean I I think um we invest globally so we see projects around the world but about 2third in uh in Europe um I think it'll continue to be very distributed and and borderless um I think if I was to um try and prompt people in Europe to um further Propel that ecosystem the main challenge over there is actually um LP's to back venture firms um and so you know I we can't argue with the strength of the funding profile within the US um so LP's LP's assemble great um well that's the end of our conversation for this morning um if you want to reach any of the panelists um feel free to find them on soota on Twitter you can find them at w a t n a so watab I think so so and then Richard um his full name as well on on on L uh sorry on Twitter that's Richard M Mirad yes and and Min on on Twitter as wellcore mintio and I'm on Twitter as well Deborah Nita 28 thank you so much for joining us and I hope you have a great rest of your day hello hello