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Deep Dive with Linda Xie

Co-founder @ScalarCapital. Previously Product Manager @Coinbase. Advisor @0xProject.

0x posted 1 year ago

with or if you'd like to join the discussion.
parker
When you consider a token investment, how do you build long-term valuation models and what factors do you consider?

How do you know when you're getting a "good price" and what are your expectations in terms of time to realized value (network at scale) and liquidity for the fund?
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Linda Xie
@pt We have a number of different areas we are evaluating investments on including:
- business case (e.g. does anyone actually want this product?)
- team (e.g. do they have a history of shipping)
- community (e.g. number of supporters on reddit, twitter, etc)
- token model (e.g. can this be replaced by a more liquid coin like btc or eth)
- tech/security (e.g. number of repositories)
- incentives (e.g. is there a mechanism to incentivize good behavior on the network)
- governance (e.g. are there ways to encourage network cohesion).

We set price targets which we believe the investment can get to based on comparables to other crypto projects and non-crypto companies so if it's below that we will dollar cost average in to the position. We are long term focused (3+ years).
2
Ben Tossell
What is one thing you strongly believe in the crypto space that others disagree with you on?
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Linda Xie
@bentossell Many people in the crypto space support the idea of cryptocurrencies enabling people to be their own bank and that you must have control over your own private keys. While I believe this is the case for many early adopters and those that might be more familiar with the technology, there's many people who don't want to be their own bank and would prefer to store their cryptocurrencies in a trusted place and that is still perfectly fine.
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Nick Neuman
@bentossell @ljxie I agree with this 100%. I've been brewing up a tweetstorm about this topic for a while now. If I told my mom she could be her own bank, she would immediately respond "Why? I want Chase to keep my money safe." And that's before I mention she could be her own bank, but if she lost her password she would lose all her money.

We'll get to the point where many more people are interested in being their own banks, and I think it's a valuable goal, but massive improvements in UX & innovative safety nets are needed first.
3
ZINC
With Radar Relay announcing Ledger to Ledger trading today. What do you think will happen to centralised crypto exchanges in the 2 years? (P.S. thanks for your crypto resource posts they are awesome!)
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Linda Xie
@r-block Thanks! I think centralized exchanges will face severe competition with decentralized exchanges. The only ones I believe that will have a shot at winning will be trusted, regulated centralized exchanges. It goes back to some people not wanting to store their own private keys so they need to have a trusted exchange they can keep them with.
6
Paul Fletcher-Hill
@r-block @ljxie I agree decentralized exchanges are probably the future of crypto-to-crypto trading, but what's your vision for how decentralized exchanges deal with fiat currency? Do some centralized exchanges stick around just to serve people who are trying to turn fiat into crypto?
5
Emin Sh
@r-block @ljxie do you think crypto 2 crypto exchanges (centralized, decentralized, custodian or non-custodian, all) will loose power once technology such as Atomic Swaps are fully enabled in multiple blockchains?
2
Joonsang Lee
@_R_Block @pfletcherhill In my opinion, it won't be too long until the irresistible benefit of government-backed fiat will lure them to issue them. When that happens it is likely to really decentralise every aspect of exchanges.

https://www.bankofengland.co.uk/working-paper/2016/the-macroeconomics-of-central-bank-issued-digital-currencies
0
Ben Tossell
Hey Linda, thanks for joining us on Launch Day 🚀

How did you build an early community?
A space like crypto has become extremely crowded with a lot of noise around trading and not much else. For people joining or wanting to contribute to this space its key to find where they can speak up (and not get shot down). So I wondered your thoughts on building an early community.
4
Ben Tossell
@bentossell @ljxie That is how I first got started with Product Hunt actually :)

I hosted my own meetup!
5
Linda Xie
@bentossell I'm a big fan of meetups as a way of building an early community. I frequently attended the Silicon Valley Ethereum meetup and later became an organizer for the SF Eth Dev meetup. It's an amazing way to meet others who are passionate about the space and get to know developers. There's tons of cryptocurrency meetups around the world. If there's not one being hosted near you, then you can always start one!
4
Erik Torenberg
Hey Linda!

For those who are new to Scalar, what is Scalar Capital's investment thesis?
4
Linda Xie
@eriktorenberg We have a long term investing strategy with a strong focus on privacy coins. Bitcoin is very transparent as it was never meant to be a completely anonymous coin. We believe financial privacy is a fundamental aspect of money and it's undervalued in the space right now.
8
Nick Neuman
As an advisor for 0x, you get the advantage of a high-level view from above the weeds. What do you see as the major challenges for the protocol (and decentralized exchanges in general) in 2018? Specifically:

- Development of the protocol
- User adoption of relays built on 0x
- Anything else!
3
Linda Xie
@nneuman I think one of the biggest challenges is getting people outside of the crypto space to understand how to use decentralized exchanges (e.g. needing to use wrapped ETH). It's a lot less straightforward now than linking up a bank account and transacting. There's also not clear regulatory guidelines on how relayers will be regulated. Since they don't actually custody any of the funds should they be treated in the same respect as centralized exchanges or have separate regulation built? Another major challenge is figuring out how to handle decentralized governance with ZRX.
2
Linda Xie
@nneuman Radar Relay has published helpful content on their website https://radarrelay.com/how-to/
2
Nick Neuman
@nneuman @ljxie Good points. Do you know of any good information out there explaining some of these basics for people new to decentralized exchange? Asking for a friend and not because I'm researching a future post or anything *cough.
0
Soona
What's one of your favorite products currently being built on the blockchain? (or what's one you'd like to see)
2
Linda Xie
@soonaorlater I’ve been impressed with the relayers that are being built on top of 0x like Radar Relay and Paradex which are already live! They are making it easy for anyone to trade ERC20 tokens and I love that with Radar Relay you can exchange directly from your ledger.
4
Soona
@soonaorlater @ljxie oooh that's a good one (and timely!)
1
Kurt Grela
Where is the crypto community not focusing enough effort on?
2
Linda Xie
@kurtgrela There's not enough focus on usability in this space. There's a lot of interesting projects out there but I often find them difficult to understand how to use.
3
Alex Hardy
Hey Linda, thanks so much for participating in Token Daily! In the past two days, I've read through all of your Beginner's guide series -- I'm so grateful you made them! My question is: for someone trying to get up to speed on all that's going in crypto, what's the best way to organize your notes / research / thoughts / tracking of all the different projects? I feel super overwhelmed trying to get a lay of the land. Thank you!
2
Linda Xie
@canthardywait I actually keep all of my notes and research in a spreadsheet. There's an overwhelming amount of information and it's nice having a place I can refer back to.
2
Linda Xie
I'm heading off to a meeting. Thanks everyone for the fun questions! I can answer additional ones later today.
2
Soona
@ljxie Thank you!
0
Lisa Marrone
"I think the tipping point would be being able to point to actual mainstream decentralized applications that people are using." --> if you had to guess, what do you think those first breakaway d-apps will be?
1
Linda Xie
@marronelisa prediction markets or gaming if I had to guess
1
Tigran Shahnazaryan
Can you explain why a version of 0x without the native token won't win this protocol war?

Using the token to vote on protocol changes seems low value since protocol users will pick the version they want to use regardless of vote. (this question/topic came up on Twitter)
1
Angus C de Crespigny
At what point do you believe we could confidently say that cryptocurrency/public blockchains are here to stay? We are believers here, but there is still significant skepticism in the mainstream: what do you believe will be the tipping point that eliminates that skepticism?
1
Linda Xie
@anguschampion I think the tipping point would be being able to point to actual mainstream decentralized applications that people are using. In order to get to that point we need to work on usability and scalability. Right now it's very clear that the primary use case is speculation and that doesn't convert skeptics.
3
Jamie Pitts
Linda, great to have you participating here.

This field/space has developed a special vocabulary and often employs analogies, by necessity. New users have a lot of terminology to learn and there are costs for getting things wrong.

In your product mgmt experience, what lessons about terms and metaphors did you learn in user testing or feedback? Are there any UX analogies for cryptographic primitives (e.g. keys, tokens) or common cryptocurrency actions (e.g. send ether to...) which you feel should be replaced?

Thanks!
1
Linda Xie
@jamiepitts I think one thing that specifically needs to be made clearer is that you can purchase a fraction of a coin. On many of these exchanges and coin metrics all you see is the total price of the coin and users are comparing it to what they are familiar with which is the stock market. So bitcoin looks expensive on an absolute basis compared to other coins.
2
Jamie Pitts
@ljxie That is a good one. Perhaps reasonable denominations can help (and IMO Ethereum's denominations may be difficult for most to remember).

I see it come up in various conversations about equities too, such as GOOGL or BRK.B. People say something like "that stock is expensive" when they mean the share price is high, not considering that there are ways to purchase a fractional unit.
0
Erik Torenberg
What do you think of stable coins?
1
Linda Xie
@eriktorenberg I like the idea of stable coins and think it's critical to this space succeeding. I'm a bit skeptical of some of the algorithmic ones being able to respond to black swan events or hold up against a motivated attacker. I think the first majorly successful stable coin will be a fiat token that is a better version of Tether in that you actually trust the entity has fiat reserves backing it.
2
암호화폐 공부방
What make you create great resources for new people into crypto world?
1
Riccardo Arvizzigno
Which will be the first decentralized app that will become mainstream in your opinion?
1
Linda Xie
@riccardoar I think it'll be something that people find fun and/or can make money from so prediction markets and gaming maybe
1
Paul Fletcher-Hill
What dapps developed today will be popular/widely used in 2 years? Anything other than decentralized exchanges?
1
Linda Xie
@pfletcherhill mentioned this in some other comments - possibly prediction markets and some sort of game
1
Samuel Ulloa
When Bitcoin Core adds privacy, what do you think will change from a regulation standpoint? How will exchanges, such as Coinbase, be involved in these regulations? I hope for less and less regulations, but I would like to know what is reality.
0
Linda Xie
@bosstiat I think there will be increased KYC and AML on these exchanges.
1
Ben Tossell
How did you get into Crypto?
0
Linda Xie
@bentossell My friend and I came across bitcoin in college when we researching interesting topics we wanted to write our economics paper on.
4
Shlok Vaidya
One trend I'm noticing - teams in this space, as are most 'non-crypto' teams that are deep stack/API driven, have a lower ratio of product managers to rest of team vs those further up the stack.

It shows when you get to the usability layer of most of these efforts. Does this reflect your own research? and b) if so, do you think this trend is going to sustain?
0
Linda Xie
@shloky Yes I agree with this trend but think that as more attention comes towards the crypto space (even if it's just news about the price) that more people are going to learn about how exciting the technology is and what it can do for society so the product managers and designers will come.
0
Jeger Ali
first, I love 0x and I have invested. My question is what is the future of decentralized exchanges, if regulations come in place in a way that would be challenging for decentralized exchanges to comply.
0
Linda Xie
@jeger-ali great to hear! It might be difficult for some decentralized exchanges to comply but in the end I feel it's the same as centralized exchanges - you'll have some that focus on complying with regulations and others that don't make that a priority.
1
Matt McCool
Hi Linda - Do you subscribe to the “fat protocol” thesis? How does this fit in to your firms investment strategy, if at all?
0
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