Original text compiled and translated by: TechFlow
Guests: Anil Lulla, CEO of Delphi Digital; José Maria Macedo, Co-founder of Delphi Digital; Yan Liberman, Co-founder of Delphi Digital
Moderator: Santiago R Santos, Investor
Podcast source: Empire
原标题：The Untold Story of Delphi Digitals Rise | Jose, Yan, Anil
Air Date: August 24, 2024
Background Information
In this episode, Jason invites the founders of Delphi Digital to share their experience growing from a small research firm to an investment, research, and consulting giant. They detail their unique "umbrella thinking" decision-making approach, discuss the challenges of managing rapidly expanding organizations and portfolios, and provide insights into the current state of the crypto market. In addition, they explore emerging trends in the crypto space, including artificial intelligence, gaming, and the impact these trends may have on changes in industry politics. Finally, they are optimistic about the future of crypto and discuss the infrastructure needed to support its growth.
L1 Community and Culture
Jason proposed to discuss the current state of the crypto industry and the story of Delphi Digital.
Anil shared the origins of Delphi, recounting his experience with other co-founders Yan, MJ and Kevin. They worked at Deutsche Bank and decided to quit in 2018 to form Delphi Digital, initially as a research company, as they became interested in the crypto industry.
Anil believes that the combination of being able to work in a dynamic and innovative industry while being financially rewarding feels like a windfall, or a kind of "cheating" luck.
In the early days, Delphi's research was mainly about writing reports, but no one was willing to pay for it. As their in-depth reports gradually gained attention, especially Yan's comparative analysis that helped predict the bottom of Bitcoin, Delphi began to gain a reputation.
Anil also mentioned that a report on Ethereum they released in 2019 caused controversy, but it also attracted the attention of Ethereum founder Vitalik, and they began to cooperate with multiple protocols, which promoted the development of Delphi's consulting business.
The shift from research to consulting
Anil continued to talk about the growth of Delphi, emphasizing the importance of cooperation with Vitalik to the company. They shared their model with Vitalik and later got consulting opportunities for more projects. Delphi gradually established its influence by cooperating with multiple decentralized finance (DeFi) projects.
He recalled a conversation with Kane, who recognized the value of the Delphi team and emphasized their unique perspective in the industry. Anil believes that this cross-domain expertise gives Delphi a unique position in the crypto market.
Delphi's Diversification
Today, Delphi has grown into a comprehensive company covering multiple areas such as research, investment and project development. Anil emphasized that when making major decisions, they always analyze from different perspectives to ensure that they can stay ahead in the highly competitive market. This diverse perspective and experience enables Delphi to continue to grow in the crypto industry and provide valuable services to customers.
Exclusivity of the ecosystem
Jason mentioned that MJ left to start the fund and asked about the other team members joining.
Anil recalled Tommy’s story, saying that there were not many research companies in the crypto industry at the time, and Delphi Digital was founded in 2018. Tommy’s collaboration with Delphi originated from a meeting with Anil and other founders. Although the meeting was originally planned to be only 30 minutes, it actually lasted three hours. In the end, Tommy joined Delphi and brought his network resources.
Jose and Peirce join
Jose shared his first encounter with Delphi. He was working on token economics and wrote a report on Ethereum. Delphi cited his research, and Tommy invited him to participate in the podcast for a debate. As the cooperation deepened, Jose and Peirce gradually joined the Delphi team and began to work together on consulting.
The shift from research to investment
Jason asked the team when they realized that investing was the main way to make money.
Jose and Yan said the initial goal was to build a foundation through research and then gradually move to structured investments. Lacking an investment background, they decided to focus on research first to build a good reputation and network. Although raising funds was difficult in 2019, they eventually decided to start the Alpha Ventures fund with their own money.
Initial structure and challenges of the fund
In the initial stages of the fund, the investment ratios among team members were roughly equal. Jose recalled that they invested almost all of their liquid assets into the fund and even used credit card financing. Despite the many challenges, they remained positive and considered it a pleasure to manage funds with friends. In the process, their goal was always to promote the development of the crypto industry and ensure that every decision could contribute to the industry.
How founders build brands
Jason mentioned that Delphi Digital has no external investors, which gives them more flexibility in decision making.
Anil stressed that this independence allows them to explore ideas that other companies may not dare to try. Although they have no external funding, they are still able to manage hundreds of millions of assets.
Decision-making process and teamwork
When it comes to investment decisions, Anil points out that Delphi’s decision-making process is done through a “collective wisdom” approach. They have in-depth discussions within the team to ensure that everyone can express their views. Although early decisions were made through committees, as the team has expanded, each department now has its own head who is responsible for decision-making in specific areas.
Challenges of investment decision-making
When talking about specific investment cases, Anil mentioned Axi's investment experience. Although many funds chose to sell before the price reached $10, the Delphi team decided to continue holding, partly due to the confidence within the team and their view of the market. Anil explained that the close cooperation and mutual trust among team members enabled them to remain consistent in the face of market fluctuations.
Team growth and structural changes
As the team has grown, Delphi now has about 100 employees divided into three main departments. Anil believes that this structure allows each department to operate more efficiently while still maintaining overall communication and collaboration. They hold more extensive discussions regularly to ensure that all members are aware of market dynamics and their respective investment strategies. This flexible decision-making process and teamwork allow Delphi to quickly adapt to changes and make smart decisions in the crypto industry.
Advice for app developers
Teamwork and Optimization
In the podcast, Jose mentioned that initially many people thought their team model wouldn’t work, but it actually worked very well for their committee team. With limited funding, they had to discuss every problem in depth in order to fully understand the possibility of each failure so that they could be fully prepared. Over time, they gradually understood the strengths of their team members and optimized them to ensure that everyone focused on their areas of expertise.
Teamwork
Anil explained that their research is led by him and Kevin, while Jose and Luke are responsible for the lab, and Yan and Tommy are responsible for venture capital. This division of labor ensures a balance between the teams, and they communicate almost every day.
Employee participation in investment
Yan talked about their third fund. They have been focusing on early-stage investments because that is where they see the best returns. As the company grows, they want to allow high-performing employees to participate in the fund's investments, so they set up small funds to give employees the opportunity to invest according to their wishes. This approach not only maintains investment flexibility, but also allows employees to have more liquidity as the company grows.
Discussions about selling the business
Jason asked if they had considered selling the research or consulting business, and Anil said that they had indeed received some surprising offers, which reflected the signals of the market cycle. Although they had received some very attractive offers, there were different opinions within the team. In the end, they realized that they had more confidence in Delphi's equity than in other companies' stocks, so they preferred to keep the existing business.
Importance of Researching Business
Anil stressed that research is crucial for them to find investment opportunities. Their research team is guided to look beyond surface information and look for new trends that may emerge in the next six to twelve months. In addition, they also require the team to conduct in-depth research on each topic to ensure the depth and accuracy of their analysis.
L1 Differentiation Strategy
In-depth research and teamwork
Anil emphasized that their research team is able to conduct in-depth analysis mainly due to their comprehensive understanding and research methods of each project. They are happy to share specific reports.
To showcase their research depth on projects like Athena and Celestia. Jose added that the synergies between the various businesses make the whole value far greater than the sum of its parts. The research team's work is not only more actionable, but also looks for investment opportunities and trends through the lens of venture capital, ensuring that the research is not just academic, but has actual investment value.
Token Sales in Consulting and Venture Capital
Jason raised the issue of how to handle token sales when doing consulting or service projects, such as the relationship with the Axe founders.
Anil said that they usually hold most of their investments for a long time, but it is reasonable to cash out when the token price rises sharply. They will communicate with the team in advance to ensure that the sales process is slow and cautious. They rarely sell their investment in a project completely and still keep a continuous focus on early investments.
Maintain trust and transparency
Anil believes that it is very important to maintain a trusting relationship with the founding team. They are not just investors, but partners who actively participate in the development of the project.
Yan added that the right environment and timing for selling tokens are also crucial to avoid negatively affecting prices.
Jose further noted that selling tokens would only be considered if there was a significant change in the investment thesis, which is usually an opportunity cost decision.
Separation and coordination between businesses
Jason was concerned about the potential conflict of interest between venture capital and consulting businesses. Anil and Yan believed that the relatively independent relationship between their investment and consulting businesses could effectively avoid this situation.
Yan stressed that although the team is smaller, they are able to leverage other resources to provide more value in both investment and consulting, ensuring there is no conflict between the two.
Current development of crypto business
Future Vision and Flexibility
Anil said that it is unrealistic to make five to ten-year plans in the crypto industry. Their success lies in being able to adapt to change and remain resilient. Their goal is to accelerate the development of the crypto industry so that it can be achieved faster and better than without them.
Anil also mentioned that the research team is exploring community features such as inline comments and Alpha Feed, which will enable the research team to add value to the community together with other members.
Project incubation and resource integration
Anil introduced their work in Labs, incubating projects by proposing ideas, forming teams and providing resources (including token design and legal compliance, etc.). They are currently focusing on the advancement of existing projects rather than adding new incubation projects, and this year will be an important year for them.
Investment strategies and market dynamics
Yan said they will continue to invest and flexibly adjust strategies according to market conditions. Their investment ranges from liquid venture capital to early and late stages, and the investment strategy will change with market changes.
Synergy of research, investment and incubation
Jose concluded that research is about discovering Alpha in the industry, venture capital is about investing money in these discoveries, and Labs is about using intellectual capital to fill market gaps. They are incubating some new projects, such as Legion, which aims to restore the ICO model so that ordinary investors can participate more fairly. At the same time, they are also incubating Gabe Shapira's new project Metalx, which aims to improve the flexibility and efficiency of decentralized governance. Jose hopes that in the next decade, Delphi will continue to discover opportunities and promote the development of these projects.
Future Prospects of Ecosystem Applications
Yan pointed out that compared to previous cycles, not all assets are rising now. There are more and more tokens in the market, and the participation of ordinary investors has decreased, which has led investors to be more cautious in choosing investment targets. He mentioned that past strategies are no longer effective, and many investors have learned lessons in this regard, especially after experiencing the volatility of token prices and the impact of survivorship bias.
Speculation and market sentiment
Yan also mentioned that the growth of meme tokens in the market has affected the inflow of funds to other projects. As more and more people participate in meme speculation, this behavior becomes more attractive, resulting in funds being drawn away from other potentially valuable projects. He believes that the current market environment is more suitable for short-term trading rather than long-term holding, and the strategies of many investors have become more transactional.
Market Anger and Culture
Jose pointed out that many long-term holders suffered heavy losses in the market volatility, and this survival bias led to anger in the crypto market. He emphasized that despite the volatility of the market, the concept of decentralization and anti-censorship remains the core value of the crypto industry.
Market cycle analysis
When talking about the market cycle, Yan believes that it is still in the early stages and the future trend will depend on several factors, including the upcoming election. He believes that whether it is Harris or Trump's presidency, it may have different impacts on the market, but Bitcoin still has great potential for growth.
An optimistic outlook for the future
Anil expressed optimism about the future of the crypto industry, believing that the government may play an active role in promoting the development of crypto. He mentioned that the progress of ETFs and changes in the political environment may bring new opportunities to the crypto industry.
Anil stressed that some catalysts in the current market, such as Trump’s attention to Bitcoin, could bring positive changes to the industry.
Anil suggested that investors should reduce over-trading, focus on major assets, and maintain good mental health. He encouraged people to step out of the virtual world, focus on real life, and maintain a positive attitude to cope with market fluctuations.
The importance of interoperability
The multipolarization of the global market
Jason and Jose discuss the current economic environment and its impact on cryptocurrencies.
Jose mentioned that as the United States retreats inward, the world is becoming multipolar, which creates conditions for the long-term success of cryptocurrencies. He believes that as global markets change, the traditional financial system may be broken, especially in the way assets and commodities are traded, and more and more transactions will be conducted on the chain.
The future of on-chain transactions
Jose envisions a future world where all assets and commodities will be traded on-chain. He believes that as the market becomes more isolated, on-chain transactions will become the only global permissionless market. He emphasized that the current market is dominated by memes, but more other assets will enter on-chain transactions in the future. This requires the establishment of corresponding infrastructure to support this transition.
The potential of the gaming industry
When talking about the upcoming cycle, Jose pointed out that the gaming industry will be a key area to attract users. He believes that games can bring a large number of new users, especially since many members of the crypto community are game enthusiasts themselves. He mentioned a game called Godzilla that they recently invested in, and believed that this game could demonstrate the huge potential of combining crypto with games.
Yan added that games have a long development cycle, and although the market has high expectations for short-term feedback, good games can continue to attract users. He also mentioned Hi Topia, a Minecraft-like game that aims to improve user experience and provide content creators with a better way to monetize. They believe that this game will become an important tool to guide a large number of users into the crypto world.
What are the criteria for a successful application?
Two directions of development in AI
Jose mentioned that there are two different development trends in the field of artificial intelligence (AI). One is a model dominated by large technology companies, which own all the models and computing resources and are able to monetize through their products (such as WhatsApp and Office). He believes that although these companies dominate in the short term, more small specialized models may appear in the future, which may be trained based on large models to meet specific use cases.
The need for decentralized intelligence
Jose emphasized that as intelligence and computing power become the world's most important resources, the market demand for decentralized intelligence will continue to increase. He believes that current AI resources are mainly controlled by a few centralized entities, so a decentralized and censorship-resistant form of intelligence is needed. This view is similar to Bitcoin's decentralized currency concept, both of which are designed to avoid being manipulated by centralized forces.
Trends for regular investors
Jason mentioned that AI as a mainstream narrative will continue to attract the attention of ordinary investors. He predicts that ordinary investors will seek investment opportunities in the field of AI, and the only obvious public market investment option at present is Nvidia. He believes that as interest in AI increases, investors may turn to related tokens in cryptocurrencies, such as Akash and Render, to gain indirect exposure to AI.
In-depth research and market understanding
Jose suggested that if you want to gain a deeper understanding of the application of AI in the crypto field, it would be very helpful to read Delphi Digital's reports. These reports provide theoretical and practical reasons for decentralized intelligence, as well as insights into which market segments are most attractive in the crypto field. He emphasized that these resources help investors build confidence and understand the potential of the AI field, rather than just staying on the surface of the buzzwords.
Monad and Berachain Competitors
Decentralization trend in the crypto ecosystem
Jason pointed out that the current crypto market is experiencing a trend of decentralization. In the past, different crypto assets tended to fluctuate in sync, but now this situation is changing. He asked which blockchains are likely to stand out and become the leaders in activity and returns in the upcoming bull market.
Selection of the main chain
Yan believes that Ethereum and Solana are more consensus choices. He pointed out that if you consider Layer 2 solutions, Base is the most obvious choice because it can reach a large number of users and can provide additional incentives through Coinbase's user base. He believes that although Layer 2 solutions will have a certain negative impact on Ethereum, they also provide more opportunities for finding successful applications.
Execution environment for successful applications
Jose added that Layer 1 and Layer 2 are essentially testing grounds for successful applications. Every successful application will eventually want to have its own execution environment to better control consensus and execution. He mentioned that projects like dydx and USDC have begun running on their own chains, which shows that successful applications tend to pursue more fine-grained control.
Solana’s Diversity
Jose also mentioned that multiple specialized Layer 2s have emerged on Solana, and these projects operate independently to avoid inheriting the design choices and trade-offs of Layer 1. He believes that the current interoperability experience between Layer 2s is poor, but this does not mean that there is much demand for synchronous atomic composability.
Building a stable currency ecosystem
Jose believes that stablecoins are the "killer application" of the crypto market, and building a complete chain around stablecoins is a reasonable direction. He mentioned that the launch of Athena Chain is a good example of the potential of building an ecosystem around stablecoins.
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