Living and Investing Across the Pacific w/ Will Patterson (Varys Capital)

**Speaker A:** Foreign. **Speaker B:** Welcome back to the Strange Water podcast. I'm your host, Rex, also known as Haim Salomon or Salomon Crypto. Thank you for joining me for our third episode. Today's conversation is with Will Patterson, the head of venture for Verus Capital. I met Will earlier this year during a round of fundraising for a now shelved company. That particular venture ended before it left the dock. But just like all ventures through Strange Water, there was an incredible amount for me to learn from the experience. In fact, every time I swim in Strange Water, I find myself learning the same lesson. When you find someone who not only makes you rethink how this all works, but makes you excited about changing the world, you found the right person. Will is one of these people. Every time we speak, I walk away with a burning itch to change the world. This episode's conversation covers a lot of ground. Will's personal story, living, investing and thinking internationally. And a special focused conversation on the avalanche Blockchain. Again, when I speak to Will, my mind opens, and I hope yours does too. One final note, please don't take any financial advice from this or any podcast. Ethereum and blockchain technology will change the world, but you can easily lose all your money on the journey. **Speaker A:** There's. **Speaker B:** With that, thank you so much for joining us and let's get started. Today we have Will Patterson, who runs Verus Capital, and Will and I met a couple weeks ago or maybe a couple months ago now. And every single time I talk to him, you know, my perspective change and, like, the way I understand the world and crypto changes. So. So I'm super excited to have him here. Super excited for you guys to be able to meet him. And Will, thank you so much. **Speaker A:** No, this is awesome. Thanks for having me. **Speaker B:** No, of course. Do you want to just give the audience a brief background on who you are and what you do? **Speaker A:** Yeah, happy to. So recently joined Verus Capital. Varus Capital has been around for a few years. I joined at the top of this year. They just launched their first dedicated venture fund. So I have a background in finance. I started out in very traditional M and A investment banking for a few years and then transitioned to full time within crypto. I worked at the business development team of Ava Labs and recently came back, I guess, to the buy side. It's been a very fun journey. **Speaker B:** I mean, I personally know, like, a lot more about your background and, like, there's specific things that I want to talk about. But before we get there, can you like, kind of give us a. The Five minutes on how you found crypto and why, when you looked at this space, you didn't, you know, run. **Speaker A:** I guess I first knew about crypto because in high school or, like, late middle school, I think I had a Wired subscription. So when I was younger, like, one of the things that my. I have two older siblings. One of the things my brother would get me was magazine subscriptions. One was Nintendo Power, and I think I also, like, gotten a Wired. I actually have a stack of Nintendo Power around the corners for, like, the vibes. If you don't know what that is, I'm sorry. So, yeah, Wired had run a piece on the Silk Road guy, like, busting the Silk Road guy. And so, like, I was, like, aware of, like, crypto. And I was also in, like, a couple, like, athletic clubs. And one of the guys there, I think he. I mean, this. He had to be, like, 13, right? He's like, yeah, we got a hard drive full of bitcoin somewhere at that. He'd already lost his hard Drive in 2013. And I just. I. I remember distinctly, like, one afternoon we were both just like, yeah, like, seems cool, but we're like, 14, so we're not gonna try and figure it out. And circling back to 2020, when now I have a job and, like, I have money to spend or invest. That's when I came back to crypto, and I had some other friends were getting really into it. It was December 2020. One of my friends called me and he was like, yo, bitcoin's pumping. I think it was like, 20,000. He's like, buy in. I was like, okay, let me think about this again. It's been a while since I really thought about bitcoin. But what got me over the edge was nano, which used to be called Ryblox or rayblox. I think there was a big exchange hack in Italy or something. A lot of the nano supply was totally lost in one form or another from this hack, and it was down well over 99%. But what I loved about Nano was that you could move value around for free. Now. Now I know more about, like, why blockchains have fees and gas, etc, but so I like nano. It's like this gag blockchain with no fees. And I understood that because, again, I had one of my older siblings was living abroad at the time. Cost me $40 or whatever to send him money. Well, now I can buy Nano, send him nano, and he can sell it on the other side. And maybe it costs a dollar, maybe it costs a few Dollars max. Right? So that's what got me over the edge, was like, okay, there's a use case for this. And so that's why I ended up like making like my first like big investments, I guess in bitcoin. **Speaker B:** Yeah, man, that's awesome. And I think what's like particularly cool about your journey in is that like you found crypto back when you were 14, but you reentered it because you're excited about an actual use case, which I think is like pretty rare just given like the state of the technology. And like, like most people enter it because like they, you know, have like some sort of like financial background or they, they are looking for upside or even like they're computer science nerds and like understand why distributed computing is cool. But like it's super, super rare where someone just like has a real world need and finds crypto to solve that. And I think like, God, I hope that you are like the template for the next, you know, billion or 4 billion people that come on chain. But it was incredible. **Speaker A:** And maybe it's just more rare in the US because typically we're not being cut off access to our money or our money isn't super hyper inflating. So. Yeah, but it was a real world use case as opposed to other ways of onboarding people gaming. NFT is totally real business applications of blockchains. But that was for me, that was what got it. And I was thinking ahead to like the main thing that I thought about. And I'll pause on the nano story, but I was like, okay, if the coffee shop downstairs is paying Amex 4%, why would they not want to have some middle layer where they're instantly transacting in nano and then back USD and saving on fees? So I was like, there's clearly a world where this creates value for people at like a mass level. And so that's why I like nano a lot. Bitcoin's like yo, like as you know, the fees are too expensive or it's too slow, like the finality is too slow. So that's like what really got me over. And I started shilling people on that use case specifically as like a way to onboard them. **Speaker B:** Yeah, no, you're totally, totally right in that like Americans experience crypto in a different way than at least most of the world. Like maybe, maybe the other European, you know, G7 economies are in the same boat as us, but you know, for us it's, you're, you're totally right that, that for most people, like crypto is Interesting. Specifically because of like the real world use case. And like, sometimes it's about sending money and sometimes it's just about like having access to, to an asset that isn't like political. And so I think, I do think there's something that like separates, let's say Americans that work in this space by like, have you been international build or not? And it sounds like the way you tell your story that like a huge part of that for you is your brother was studying abroad and you know you've been doing things and you realize there's a better solution. But I have to just like directly ask and get into it, like on top of you, your brother studying abroad, like, you lived abroad and you experience like what life is like outside of our economies. And so I would love to like hear just like whatever you have to say about like the time you spent, I'll let you give the country. But I'd love to hear just like what your first initial impressions are. And like, specifically like, what does crypto mean in those kinds of societies versus, like where we are today in America? **Speaker A:** Yeah, yeah, for sure, for sure. So, like, my background, I would also like, it's like kind of important context. I have two older siblings. They're eight and 10 years older, so they're like kind of older. And one of them, my brother is like very into foreign languages. And like that like rubbed off on me like very hard because when I was 4 to like 8, we would have like a Japanese exchange student staying with us or like a German exchange student staying with us kind of like in alternating years. And so when I'm like 4 and 5, I was playing shogi. I was like doing like, you know, little Japanese cutesy stuff. So my Japanese pronunciation is still great. I don't know any Japanese anymore. But like, and then the German as well. So like, you know, get the high school and stuff. And I studied German and Spanish like a good American boy. But I was very interested in like studying abroad. And like, just because one of the other things I realized along the way is like, I need more like data points to figure out what I want to do. And so I saw languages as like this very clear path to getting more data points just in life, other like, worldviews that can then influence or like inform my decisions about a career, etc. And so that led to German first. And there's a story I can tell about this. Like, my first trip abroad is in 2015, summer. I went to Germany and like a very small, very small town. But what you're alluding to is in 2017, 2018, 2017 for the first time. I moved to China for the first time and lived in Beijing. And so I was like studying abroad at one of the top universities there and like, yeah, so I was in China for three months there and then I moved back for a full year. During senior year I was directly enrolled in classes in China. I had a Chinese roommate from like the middle of nowhere. I did a four year intensive language program studying Chinese seven days a week with a tutor and in classes. And so I can take that any which number of ways. But obviously like China was huge for crypto adoption. I guess like kind of still is. My understanding today is that, you know, and I've even invested in a team with it with Chinese developers. They just can't market it domestically. There are a couple of like NFTs marketplaces that have sprung up, but it's all sort of like closed permission blockchains, right? Like these enterprise chains, like these closed off ecosystems. So I think like China is, China is an very interesting case and can take this any which way that you want to discuss. But it went from like our path to 100k BTC to then like closing off super hard. We still have the China exchanges and now you have like some domestic NFT marketplaces. My hope is that it's a matter of time before they kind of reopen and become much more crypto friendly again. **Speaker B:** What is particularly poignant, like in our industry and more broadly like in our society and in our economy is that seems like when things are going well, like our system just works better than like let's say the Chinese system or any other system. But when things go wrong, like we get so locked up in arguing with each other that like we're not really able to do anything. Whether that's like handle a pandemic or like fix like the streets in the most expensive city in the country, right? And I think a lot of, I think it's like really easy for people who stand on one side of the Pacific or the other to just like either say they're doing it better or they doing it worse. And then it gets like really political really quick. But for someone who is like not only experienced both, but like has like worked on building a career in both, like what, what do you think are like the real differences and the real things that like Chinese do well and the real things that like we really do well that the Chinese could work on. What's your takeaway? **Speaker A:** Oh, that, that was very well said. So I think one of the, I like to draw parallels and analogies and like how I think about many things. This reminds me of, and I'm definitely gonna answer your question, like give you some China examples, but I took one class, right? It was on like the ethics of like international politics or something. And we had one like two and a half hour section and it was about where do you draw the line on treating someone the way you'd like to be treated? And it gets, I mean, ulta. It very quickly goes like this classic debate of like, you're in the hospital, you can easily save this kid, but the parents don't want you to kind of thing. And what do you do as the doctor? So I had that experience that was the first time in a classroom setting, I think after I'd already lived in China for the first time where I realized like some things people just have personal preferences and it doesn't matter if you think something's right or wrong, like at a certain level, you have to let someone else make that decision for themselves. And so fast forward to, you know, maybe it's a Thursday or Friday morning at 3am Getting street food with some Chinese university students and they're like, we love, you know, like our country's leaders, like you know, 10,000 years of prosperity. Let's, let's freaking go. And in the back of my mind I'm like, wait a minute. The trade offs that you're paying for like this are exorbitant to say, yeah, or vast. Said another way from the environmental perspective, also any number of other issues on the other side of the country or throughout the country. And I realized through many conversations and keep in mind some of these people don't have almost none of them have perfect information. Like they have very limited access to certain massacres or parts of wars or like, you know, certain data from wars. So these people are operating on like somewhat limited information which should be taken to effect, but even with information that they do know about, like the environment, right? If you, if you were to make an argument with let's say Chinese college students. I studied abroad at two of the best universities in China. And you're like, well, you know, do you mind like the short term sort of drawbacks of having such a centralized or authoritarian like government? And most of them are going to say, or most to all of them are going to say like, this is like if we had to choose one or the other, like we definitely choose this way now. Part of that is because it's the only way they know Part of that is because they don't have perfect information, but part of that is also cultural. And that's the part where I want to dial into, where it's like people are allowed to have preferences and we are allowed to not have like the final say on, like, this is the most morally correct or like this is the most efficient, you know, way of doing something. And then I'll say one more thing which, to your other point, which is like the drawbacks and like how I've used this to sort of inform my, the way of my life. I think like, when I, when I personally think about politics, like, I try, I remove almost all emotion. I mean, like, I will try and make like an ethics call. I'll try and make like a practical call. I like to mix both. Whereas I think in China they don't need to do that. You know, to them it's just like we have a centralized actor who's going to make the best decision for us. And so there's definitely like a middle ground of like just leaving it up to the forces that be, as well as like having your own voice. But I think key for me personally is just like not becoming too attached to one thing or the other just because of how other people seem to feel about it. So trying to make it more efficient, slightly less emotional. **Speaker B:** I really think that there is, if not broken, about the way Americans see their place in the world. There's something super just introspective and self focused and that like, we have trouble like, understanding the way that other people do stuff because, like, our assumption is the way we do things is like morally correct. And I think that like, there's a group of Americans that like, for one reason or another, like, have been kind of shattered out of like the American, you know, conversation or milieu or whatever. And I think, um, you know, like, you just described in like the six different ways that you were pulled out of that. Um, like for me it's like pretty clean. It's. I started dating this girl who like, is Russian. Um, I was born there and like her family still lives there. And then like, not only does that just give me like my international flavor, but like the last year has just like giving me a lesson in the real way the world works. And so like, when I'm sitting here listening to you talk about like these like, really just like nuanced, difficult conversations with Chinese students, I can't help but think about. I just listened to a podcast with a Chinese expert came on and basically described like, what was going on in China and what was going on in the US as mirror images of each other. Exact mirror images. And like, the. The image that's being mirrored is like, both societies are dealing with just, like, the uncontrolled rampage of capitalism because, like, capitalism is a good thing. Like, that is how we develop. That's how technology comes up. Like, that's how we distribute technology. It's like, it is a good thing, but, like, by its very nature, it, like, creates massive inequality. It, like, exploits, like, the most vulnerable. Like, it does some, like, pretty awful stuff, and it, like, tears apart societies. And so when within that frame, if you look at what's going on, you can see, like, okay, like, the American character is about, like, freedom and, like, standing up for yourself and, like, fighting for the sake of fighting. And just like, like, you know, it's like, very European and, like, the biggest sword with the strongest hand wins. And. And like China, it's. They're dealing with the same problems, but it's like, much less about, like, might is right, and much more about, like, the system needs to survive. And like, I, you know, they. Where does morality fit into that? I don't know. **Speaker A:** Yeah, I don't know if it fits in or to what extent it fits in. In the. In the near term at all. But, yeah, I mean, if there's one thing that is constant, it is an iron grip on the CCP's, you know, like, control over the country. That is the one constant. And I think most largely the Chinese people are, like, totally down for that. And what I was trying to, like, my takeaway, what I was trying to, you know, summarize was like, that doesn't have to be, like, a right or wrong thing now. There are things that are objectively wrong that happen in China. But when it comes to, like, exactly, exactly. Now, we're not here to, like, debate which is worse, which, which country has, like, worse things happen inside of it, but there are two systems. And if almost all the people agree, like, this is the system we want. Yes. They don't have perfect information, but, like, it's. It's tough to argue with that if, like, they don't want to change. Right. **Speaker B:** So how do you see, like, crypto interacting, like, both with. With China specifically, with the US specifically, And then, like, as these two powers become, like, more aggressive and more hostile to each other, like, do you see crypto playing, like, a big role in that? Or do you see this just kind of being, like a different part of the story of humanity? **Speaker A:** Yes. You remind me of A conference I went to a while back. There's a student led conference at Duke and UNC every year called the China Leadership Summit. I went three times. One time, I can't remember his name off top of my head because I'm a bad student now. But he like created neoliberalism. He also like did a lot of research on this one principle that I forget the name of, but effectively says, as a superpower rises, are they bound to go to war with the other superpower? And I think the one year of the conference was kind of about is that going to happen with the US in a military way or can we avoid that this time around with globalization? Neoliberalism, however you think about that, because the opportunity, the opportunity costs or like the, you know, like the sacrifices like from like an economic perspective you'd have to make to like attack another country today is higher than it has ever been. And so with that in mind, like, so that is one of the things that I think about just in terms of like framing competition. I think of it more at like an economic level than a military level because I think like the cost to, you know, really like go head to head with another country is just extremely high. I don't know if it's, I don't even know if it's possible at this point for the US to ever go to war with China. I mean, knock on wood, right? Because we're so intertwined these days. So how does crypto like play a role in that? This opens up like years of like questions. One of the things I thought was super interesting, I think some blockworks guy. Sorry, I don't remember your name, but I read an email and it was the first time, this is a couple weeks ago. It was like, wait a minute, the USDC or stablecoins are amazing for the US dollar. Very rarely I'll read an article and I'm like, wait a minute, I didn't even think of that. This was one of those moments where there's also that great, I think Arthur Hayes recently where this guy thought through 10 steps ahead for us. Like those are the articles that are like, yeah, the cherry blossom one. I'm like, so amazing work, so good. So every once in a while like there is something that comes up and I'm like, I didn't even think about that. So when I read this blockworks guy, I think it's blockworks. And he was like, look, if the USDC USDT are like the more widely that is used, like that is great for the value of the US dollar. Now again like the US you know, like as a currency goes up, it makes exports more expensive for other countries, right? There's like, but on the whole like great for the US dollar. And I love this little newsletter because it also gave like the downsides to that. But I think crypto, you know, I think the first country to realize that crypto can be used in positive ways to unlock value for businesses. Like the thing that doesn't, I mean it doesn't drive me crazy yet because I am an optimist and I do think the free market and like private interest will eventually make its way through Congress and they will see that crypto unlocks value for businesses. And we can talk about ways that that's possible. I mean the Amex thing, right this, and it's got not great for Amex unless Amex creates the platform that crypto goes through, right? So like there are like these really interesting lines of thought where the, you know, crypto unlocks value by making the market more efficient for consumers, for retail businesses. And the first country that starts seeing things like that, that's not like the end all, be all of crypto, but the first one that sort of is either more friendly to or quote unquote just gets it right. I think not only one is it going to be great for unlocking value in the economy in a high level way, but also I like the idea of stable coins and just making proliferating these countries currencies throughout global trade or online trade. Now it remains to be seen though in my mind when I think about crypto at a very macro level and how does crypto work in the world long term? I try not to think like too, too far ahead and in some cases will we get rid of. I'll give you one example. Like does crypto get rid of governments? No, no. So like you have to. So. But does crypto get rid of like Visa and MasterCard? If you put a pin in that and you think about the possibilities like, well, how do we get there? How do we not get there? Those are the kind of scenarios that I'll think through in my head. And where along the way are there businesses that I can find and invest in that lead to certain parts of that and which of those businesses have the greatest tech moat where they create the most value? Those are some of the analogies and things that I think through going back to original question, it remains to be seen, but I think a lot of it is going to have to do with some level of official stance in terms of like, how do we use crypto most beneficially to like forward our financial services sector, which is the US's crown jewel of the tech and entertainment, but also like financial services we have a huge monopoly over out of New York City. So yeah, like, which country is going to like, let it flourish in, in those ways? **Speaker B:** You're saying like a couple super interesting things, but like, for me the most interesting thing is that like the second you start talking about any of this stuff in terms like geopolitics, you've like a little bit lost the plot. And like we're, we're just so primed to like talk about this technology. Like what's important here is like monetary theory and like all of these like super esoteric arcane things that like literally only exist because the federal government created them. And so by saying like we're coming for them, it's like super a problem. But what we're actually really building here is technology. And like technology is agnostic and it just provides like capabilities and features and like that can, I mean the, the most like schizophrenic thing that this industry does is complain about a cbdc. Because like, can you imagine anything more bullish for like using this technology to actually like run business than a real government putting their real currency in the, to the technology, like whether or not it's on a permission chain or whatever. Right, like that, that's good. And somehow like the only way that we're able to process this kind of like potential future is like, oh, if a CBDC comes, like Ethereum is dead. And yeah, I mean, I think maybe the answer to this like question about like China and Ethereum and the United States is like, I don't know, policies makers are going to policy make. But like the reality is is this is going to enable like better businesses. And like if we know nothing about the world, we do know that like competition is what rules everything. **Speaker A:** Yep. Yeah. On like the CBDC note, like I, on the one hand I think like why people gag at the thought of it and like depending on which side of the bed I wake up, I will be in or out of like this bucket. I think it comes down to like, who has the information of like who owns what CBDC right now people are fine that your wallet address says that you have this much usdc. As soon as you change that USDC to the US dollar, official US government dollar coin, how much of that actually changes? I think like at first thought like, oh, now they know who I am, now they don't know who I am. I think it just. I think obviously it all goes back to implementation. Like, and like, if you're getting change back from McDonald's and it's in like the official US dollar token, I don't know if that means that. Maybe it does mean they know exactly, like, who you are and how much money you have. That to me is like, not ideal. But if there is like an official US Government token and they don't need to know who has how much at any given time, I don't know if like, that's bad at all. But it's totally a matter of implementation versus, like a knee jerk reaction of like, should this exist or not? **Speaker B:** No. Well, I think you just said it best ever, which is like, you really need to think about what the difference between a CBDC in the future is versus, like, literally usdc, which we have today. And like, maybe the difference isn't quite as big as like, Twitter thinks it is. **Speaker A:** Yep, it totally depends. Totally depends on how they want to do it, who issues it, etc. I mean, what if us. What if Circle now issues the official US dollar token of the government, you know, or banks do? I mean, there's too many unknowns for me to, like, get emotional about it. That's another, like, macro. How does Will. How does Will Patterson act on a daily basis if there are too many unknowns? I'm not going to get emotional about it, like, Cause I don't know. And I, like, could not be paid to. Oh, maybe I could be paid. I could not be bothered to, like, care enough about something if I am not an expert or like, have all the. Have all the parameters filled, you know, to make a decision, man. **Speaker B:** Well, that you're a better adult than I am. So that is something that only. **Speaker A:** Only on a good day. **Speaker B:** Cool, man. Well, I want to talk to you about China forever, but, like, let's move this conversation along. One of the things I really wanted to talk to you about in this hour is like, Avalanche. Specifically, like Avalanche. And that's because, like, your background and like, you, for those of you that were paying attention earlier, like, Will actually worked at AVA Labs. And since then, like, you're still investing in a lot of, like, Avalanche adjacent projects. Correct me if I'm wrong, some of them. Yeah, yeah. And so my. From where I sit, like, I would never like, proactively describe myself as an Ethereum maxi, but I think that that's probably fair. And so when I look at Avalanche, what I see is the same kind of narrative that we all understood during the last bull cycle, right? Which is we see Ethereum, we see that it works, we see that it's cool, we see that it's super, super slow. So let's build a faster one. I would love Will, for you to tell me, like, what am, what do I not understand about Avalanche? Like, what am I wrong about? And like, why do you still like, get excited every day about like, what's going on over in that ecosystem? **Speaker A:** Thank you. For this platform to describe Avalanche because. And I say that not because, like partially because it's all related. I've invested in a couple of projects that are integrated with Avalanche, like Multi Chain Use, Avalanche or Avalanche Native. The reason like Avalanche, which is not commonly understood by VCs or generally the market, is that there is pure blockchain distributed systems innovation happening natively on Avalanche. One of the things, I mean, I'll be frank, I got very lucky in that I got this job at avalabs, I interviewed one other sort of ecosystem fund and knowing what I know now about how blockchains work, how does transaction contention work? How do consensus models work? Not all blockchains are created equal. And I have these recurring conversations with founders or with investors or job candidates about which chains are you active on? What do you understand about consensus models? And they'll speak often in terms of user experience instead of the underlying technology. I used Solana a lot when I first started using crypto because to me I understood user experience. To equal blockchain tech, I would submit a transaction. At the time, it felt instant. I used Salon a few weeks ago and I actually could tell that now, knowing what I know now, like there's like 30 to 50 second like true finality. And at the time, you know, if a transaction failed every once in a while or like half the time, when grape or radium, you know, was like exploding with like NFT bots, I totally discounted. That was like totally fine because I'm paying a ten thousandth of a cent for a transaction. But knowing what I know now, they're like core, not, you know, in, you know, all the power to Solana, you know, assuming they'll like fix a lot of these, like fee market issues, etc. But I would rather work on a chain knowing what I know now that has none of these issues. Like if the bar is already set with like a chain that like has solved for very fast finality, zero chain reorgs, no transaction contention. That's what I'm interested in. I'm less focused on Gas fees for the sake of gas fees. So taking a half step back again, back to one of your points. I like Avalanche because they invented something totally new. I think the original white paper is from 2018 or 2019. What it is effectively is it's just a new way to finalize transactions. At its core, Avalanche is. It's a consensus layer. Now they have a public EVM chain. **Speaker B:** Real quick, I feel like those of us that are in the know throw around this word like finalizing transactions. Like people should know what it means. And just in case, like real quick, like what finalization means for a blockchain is like you cannot undo a finalized block without like massive, massive economic damage. And then that economic damage is depending on, you know, how proof of stake is set up, like how the, the actual system is. But what Will is talking about here is like blockchain is so cool because like, you know, you can do a financial transaction and no one can like mess with that or undo it or whatever. Solana, the what like kind of the trade off they made is like we're okay with sometimes like not really having finality because we just think that what people care about is like speed and cost. And what Will is saying is like if all you care about is speed and cost, like you probably don't necessarily care about blockchain, blockchain technology and you might just like be more interested in doing financial transactions on something like aws. Is that fair? **Speaker A:** That's pretty fair. Yep. Okay, cool. **Speaker B:** All right. So sorry, I didn't mean to cut. **Speaker A:** You off, but for sure, no, thank you. Thank you. So Avalanche invented in there. There is a, there's a white paper that came out. These are new mathematical proofs that say we have a new way of finalizing transactions in a faster way than Tendermint. You know. And one of the Avalanche co founders like co created Tendermint. I mean like his Twitter username is Tenderminant. So Tendermint I know is used across Cosmos and some other chains that I couldn't even name off the top of my head. At fastest peak, peak performance. Again, relatively centralized. There's a hard cap on network participants from a validator, block producer perspective, Avalanche consensus or you know, Snowman plus plus, you know, whatever is in the Avalanche white paper solved for. We can finalize transactions even faster. So there's a subnet you can go to like Abascans, a third party indexing website. Some of these Avalanche chains, these subnets, they're finalizing transactions in roughly a 1/3 of a second and the number of network participants also scales, you know, as high as you would ever need it to go. So what that means in practical terms is when you said it extremely well, what is. What makes blockchain interesting is censorship resistance. That's like the only reason this is interesting. This technology created a censorship resistant, decentralized ledger. And that's, I mean, you might have to like sit down, like drink some tea and think about that. But that's like the core of what blockchain is. That's why it's interesting. So what Avalanche did was they said, all right, we can increase vastly the number of people maintaining that network or securing that network for the first time since Bitcoin and proof of work like Ethereum and still kind of Ethereum today, but at the trade off of finality. So they took Nakamoto consensus like the property of like near infinite network participants. But they took the best part of Tendermint, improved it even in terms of how they finalized transactions and can talk about that, but that solves for a better user experience at the end of the day. And so they released. Now I'll take a breath in just a second, Rex. So the Avalanche EVM chain that people know as just like other EVM chain, that is a public EVM network, but Avalanche at its core is a faster way to finalize transactions and launch new chains on top of that. It's really just like a consensus layer and they have tooling that they released early last year for creating your own new networks. So what I think we're going to see is the narrative and the power behind the Cosmos brand, I think will come to Avalanche. Once there are a few proof of concepts for where people are launching, like these open networks within avalanche zones or subnets, if you call it a zone, I think it becomes more sexy somehow. But within these Avalanche subnets you can launch multiple chains, which cannot be done anywhere else as far as I'm aware. Same validator set multiple chains, custom GAS rules. You can use the same GAS token if you want. Custom VMs. And recently what they announced the interchange communication standard. So there's a lot of native innovation happening behind distributed systems. And I know the people that work there, these are like very professional people, which does mean something, by the way. And so I don't mind being a couple steps ahead. As long as I'm not like 30 steps ahead of the market, I don't mind being a couple steps ahead. So that's why I really like spending time here. **Speaker B:** So I again, just for the sake of conversation, I'LL just say Ethereum Maxi. Right. And, like, when I think of Cosmos today, what I think of is like, take all of, like, the energy and the excitement about innovation of Ethereum and, like, give it a space to, like, grow and breathe away from, like, the, like, the pristine, like, it cannot break blockchain. And then, you know, like, out of the, out of the cosmos worlds, like, we've seen some, like, super interesting stuff, like, actually genuinely interesting. We've seen some, like, super horrible stuff, like terror and, you know, like, everything in between. Right. And so, like, that's just how I've, like, understood Cosmos. It's like, basically like the. The skunk works for blockchain. And so I think what you're telling me is that, like, if that's how I think of Cosmos, what I should think of Avalanche is like, the exact same space, but, like, with like, true innovation and, like, things happening actually at the consensus layer, as opposed to Tendermint, which is about, like, kind of ossifying a consensus engine and then like, building at the application layer. Is that fair? **Speaker A:** That is. That's pretty fair. That's pretty fair. Yeah. Yeah. **Speaker B:** And again, like, come on, Tendermint is not trying to like, ossify. And like, Avalanche obviously cares about building applications on top of things, the. The blockchain, but. **Speaker A:** Yes. Yeah. **Speaker B:** Okay, that's super cool. And so can you talk to me a little bit about, like, I guess they're called zones now. I always knew them as subnets, but, like, how does that. **Speaker A:** They are subnets. I was just. Yeah. For sake of conversation, like, if it's sexier, call it a zone, but it's called a subnet. And. Yeah, I'll go into that. **Speaker B:** Yeah. So. But okay, so how. How does this work? Like, I know a huge part of it from before. This conversation is about, like, the shared validator set, but that you can have your own token. And I remember the first time I learned about this was that Crab game. So can you just, like, for those of us outside of the Avalanche world and in like, kind of the Ethereum frame, like, can you describe, like, what is a subnet and how does that work and how does it interact with, like, the main Avalanche. **Speaker A:** It stands for sub, network and validators, which is, like, about as good of a name as, like, you can get. Because unlike a zone, which is just like a chain, right. A subnet could be multiple chains. I mean, each chain could have its own virtual machine. Each chain could have custom. Like, maybe it's totally permissionless. Maybe it's permission. There's one team I'm working with on something around this. And you can also secure. So you secure all these chains with one validator set today, like the Krabada subnet, the DFK chain, and there's like a couple other like play to earn games who've launched their own subnet. There's a couple more coming. Shrapnel is one that's like totally public. There are institutional defi chains coming that are permissioned. KYC Chain KYC @ the chain level, which is another conversation like why avalanche for enterprises? What enterprises think about crypto or financial institutions think about crypto in avalanche, all validators have to stake Avax now within subnets. On the one hand, that does create some level of upfront cost for people that want to launch their own chain. On the other hand, it's a huge feature. And the reason I say that is with Avalanche Warp messaging, which is their interchain communication standard, the way it works is because everyone lives on the one validator chain as well. They can effectively check does this wallet have assets somewhere else and communicate that properly. Should we allow their assets on this other chain to communicate with this other chain? All within the avalanche ecosystem. So it's a feature, not a bug. First of all, that you have to stake Avax on top of what is optional, which is also staking the native subnet token. So on day one you have access to a world of validators. There's something like 1200 validators in the bull market. I think it's closer to 1600. In any case. That's a very large number for people that are actually helping create blocks. And in theory, people are going to be building subnet validator marketplaces. And so if you wanted to launch your own chain on day one, you can access decentralization. In theory, right? In theory there will be a market for people who want to have these new native subnet token subnet tokens like emitting just by validating those networks so you can access decentralization on day one. They're also solving the cold start problem of access to users and liquidity on other chains. And so there's a lot of security benefits that you get by having all validators on one chain as well as whenever they want to validate subnets as well. **Speaker B:** What are the types of applications and use cases that you think are the perfect fit fit for? Whether it's like straight up avalanche C chain or if it's a subnet or whatever, Just what are the types of things that are best for the Avalanche ecosystem And what are the types of things that you think, you know what that actually just belongs on Ethereum or some sort of chain that makes different types of trade offs? **Speaker A:** That's a good question. And I think in the near term, near to midterm shall we say. And I'll call the avalanche C chain being the avalanche public EVM chain for those who the C chain, it's kind of a confusing name but the contract chain, the smart contract chain, the EVM chain, all the same thing. All the same thing. I think in like a run rate sort of scenario, if the EVM is popular forever, which is something that I sometimes think about, it'll be very popular for the foreseeable future for sure. So in the current run rate crypto crypto hypothesis, the C chain could become just like a defi hub. The current life cycle of Dapps on avalanches and Krabada is like the main case that saw this happen because we're very early in the need for app chains because crypto. Side note, crypto is still a small industry. It's still quite small. So Kurbana what happened was they had huge adoption, maybe tens of thousands of daily active players and the C chain gas fees get more expensive. It's like one of the ways I describe it's a defense mechanism of the chain and some people hated it. Obviously it's making their transactions more expensive in a weird, how do you call it, mental gymnastics way. It also gives certain level of value to the Crabata token because you're spending more money create it. But they offloaded everything to their own chain to lower gas fees. And there are issues with play to earn tokenomics that have kind of sent it into a little bit of a downward spiral. But this is a case where an app had a bunch of users, they wanted to improve the user experience by lowering gas fees and they can do that if they want to launch a permission chain. Right. If you want to have a limited number of validators, certain things are permissioned, then you can almost. You can set custom gas fees if you want. So over time you're going to see apps that same case with parallel to Ethereum Mainnet gets expensive. How do you make that less expensive? You need to batch transactions. Well, how do you batch transactions? So it's the same idea in this case of solving for gas fees, which is fine because economics are very important. So that's totally fine. The reason I like Avalanche is because subnets are decentralized or can be decentralized. Whereas today sequencers roll ups, they live, correct me if I'm wrong, Rex, they live on one computer, right? Like they live on a sequencer. And so that's why in the medium to long term, I love the vision of more networks, of more chains until someone can convince me that sequencers and roll ups do solve for this. Not say they won't exist in a run rate scenario, but I think more people will be comfortable with the security assumptions of subnets over roll ups over time. Currently, that's my belief. **Speaker B:** Yeah. No, I mean I think, I do think that that's correct. And I can't remember if I had this in my pitch when I first met you, but like one of the things I like love to say is that like cryptography, right, was like invented in World War II to like in World War I and World War II to like encrypt messages so that the enemy couldn't read. Like what was your battle plans were, right? And then for 70, 80 years like we made encryption better and better and better and like that's what cryptography was. And then in 2008 Satoshi came along and like showed us that like, here's an application for cryptography that is like totally unrelated to like encryption, privacy, like any of that stuff. This is like totally new and it uses the same science. And like again that was part of my pitch. Cause like what I would say is like just you think there's only two like uses for cryptography? Like of course there's like infinite. And it's our job to like figure out what those other use cases are. But like the reason I bring this up is because like until you're like deep, deep into blockchain and into crypto, like it's hard to understand what, what the, what we're doing and what the point of any of this is. And like put it very simply, like, right, Ethereum, Bitcoin is the first and all it is is this like shared computer that can like send and receive coins, right? And Ethereum after that is this shared computer that can do arbitrarily large amount of things, right? Like we, it's called Turing Complete. That's not important. The point is it's like a general purpose computer. But the cool thing is it's shared. **Speaker A:** Yes. **Speaker B:** And then so like now we're building all these things and like everyone enters the crypto conversation at the layer above that, the application layer, whether they're talking about like DeFi or NFTs or like the thing that goes on top of the shared computer. But I think will what you're saying about like the potential of avalanche is that someone needs to take a step back and, and say like there has to be different and possibly better ways to build shared computers. And like yes, today the only application is the EVM or this like shared state machine or like whatever crypto is today. But just like cryptography is not just for this one thing, like it's up to us to figure out and like enact what all the use cases are like distributed computing is not just for defi or for sending tokens or like whatever, whatever we're doing right now. And so yep, it sounds like what the thesis of avalanche is is like consensus which is like the process which makes shared computing possible. Like we don't believe that that's done yet and like we can make it better and whether that's making EVM better, great. But like there's so much more out there than that. **Speaker A:** Exactly. So I think even self proclaimed the, the company avalabs, they want to help create the Internet of blockchains. That's their thing. Maybe that's a cosmos. I don't know who said it first, but I know that they've said it because it is, you know, like they have the proof of concept, they have the EV of the C chain. But what's coming, we may not even know. I'll give you one brief example. It's a company, Varys Capital invested in one of my first investments here, if not the first this year in a company called Blockstel. It's, you know, I won't tell you everything that they do because they have a website, they have a public white paper now as of a few weeks ago, but it was an enterprise use case I could have never thought of because these are people that came natively from the telecommunications industry. These are guys who have been, you know, they have 19 plus 20 plus years of work experience in telecom either as a chip designer, as a software, as a software engineer, as a product manager, as a network engineer at, you know, these, the chip manufacturers, the large telecom companies. And they said wait a minute, blockchain can actually be used to solve some of the like scaling latency security issues with telecom networks that I had to understand over the course of your due diligence process. But effectively moving away from the current system that says all right, AT&T said that my SIM card is good to go, I can access Internet now and how much of that can we put in a public key on a chain and then encrypt just within the device so that now I don't have to go directly through a centralized entity that says, all right, this person can roam across these networks wherever you are. And so they're creating, well, the, it's kind of a two part solution. One is decentralizing the sim, so putting a public key on a chain, putting the rest of your private subscriber information on a chip in your phone or on encrypted software than your phone. And then the second is the blockchain enabled layer that allows people to seamlessly roam between the AT and T's, the Verizons as well as, I'm going to call them the Helium 2.0s, because I don't think it's going to be Helium 1.0. So they're creating the layer that allows IoT devices, it can be a phone, it can be a, it can be a Tesla, to seamlessly roam across all types of networks as well as the SIM that makes that work. So the sim as well as the system that communicates with that sim. And that I would have never thought of, I just simply am not capable of coming up with that. So we're going to see more of those again. **Speaker B:** Could go all day on Avalanche as well. But let's pivot, as we've discussed, kind of offline, like, I really don't want a boring. Just like, who are you? What do you do? Tell me about Verus. But that being said, like, what. What are the most important things to know about Verus? Like what do you think is like special about what you're doing? **Speaker A:** Yeah, in no specific word, I guess, like headquartered in Thailand, by the way. It's like we have a pretty diverse range of backgrounds. Like we are founded by an American guy, a New York guy with a background in law, real estate, private equity. I have a background in finance, hired a guy under me I know from finance, but we're also like a very international team. Like we have like Thai natives, we have, you know, people from all over Europe on like the quant side as well as like on like our back end, like dev side and like middle office. We just hire like a quant researcher out of Australia. So we have a great mix of personalities, perspectives which going back, I forget if I harped on this or not, but like when I think about how I operate, as will Patterson, more data is helpful for me to like make my life decisions. So like if you're 16 and you're thinking about applying to colleges, like tour as many as possible, get more data points. Right. And then when it comes to making Investment decisions or like anything along those lines, more perspectives are helpful. So I'd say Varys Capital. We're global in nature. We have people in you know, handful of different countries and we're headquartered in Southeast Asia. Huge for crypto adoption. Of course we have a quant desk which I kind of alluded to people with, I mean just like all star backgrounds in like Tradfi, hedge fund trading, quant development, quant trading. So we can market make for our projects. We also, I mean like myself, I worked at an L1, right. So one of the things I like to tell people is like you know, I work there, I have great things to say about them. But I can also help you think about all the chains, the people there, the culture there, general chain deployment strategy, which infrastructure pieces do you need to launch your project there, how to think about every step of that process, the level of support you can get from different chains. And then the person right under me is kind of a rex. He's like an eth. Super eth native guy. The milady PFP type type beat, you know. So like we have a great mix. Not you but like Bijan under me. So like we have a great mix of like perspectives that we bring to the table every time. And I will, you know, we always will put the founders interests first. That's another thing like reputation is everything in venture. It's a relationships business, you know, in a world where like the money is commoditized, like it's relationship, you know and like perspective based on. And so I will always try and be as objective as possible when working with founders. So I think all that combined makes us pretty differentiated. **Speaker B:** Yeah. Yeah. Awesome. And I don't think it's really good uses of anyone's time to go through the what makes you special and what makes you different. So I will do that on your behalf just briefly. I think that will at it actually perfectly. Which is like we live in an era where like money is commoditized and like if you have a good idea, like you will get money for it. And like especially like as a founder if you set up all the pieces that need to be set up, like I don't really care what people are talking about, how the industry is and all the money's gone or whatever like that the money is commoditized, like it's there for the people like who need to get it. Like the only question becomes is like what? I guess like especially with the bigger firms you can say like what services do they have and like can they, like, give you developers or all this kind of stuff or whatever? But, like, really, really what it comes down to is, like, this is an industry of, like, hustlers and, like, people that, like, neat that so badly want to help you succeed because they know that if they. They help you, you will help them, like, down the road. And, like, what. What I'm looking for in a vc, like, when. When I'm in that stage of my career is, like, I want, like, somebody who, like, knows who I need to talk to and, like, more than that, like, knows how to, like, get on their calendar and, like, make that person excited about talking to me. And so, like, what I will say about, like, Various, but, like, I don't, you know, specifically about what Will is like. Will is that guy who, like, somehow knows every single person. And somehow when Will sets up a meeting, like, that person has already decided that they want in. And so, you know, like, that. That is what I think, like, you're good at. And, like, I'm really happy that you took that to, like, Various and, like, a real firm that, like, where you can put that into action. But anyway, for all those wondering at home if they should give Will a call for their idea. Yes. Well, with that, I won't take up any more of your time. I really appreciate just. Just everything, man. Like, your personal story, the insights about, like, China or, like, I learned about Avalanche, and just, man, every time I talk to you, I get smarter. So thank you so much. I really appreciate the time. **Speaker A:** Dude, the high praise, man. I don't know if it's warranted, but I appreciate your time too, man. **Speaker B:** All right, thank you so much. Have a good one. **Speaker A:** Don't.