Namik Muduroglu: Token models encourage overselling, governance structures in DAOs fail, and fear of regulation prevents innovation

Key Takeaways

• Many tokens are flawed because they encourage sales rather than holding.
• Current token models benefit both founders and investors.
• Concerns about securities laws hinder innovation in revenue sharing models.
• The shift from investment to short-term trading disrupts incentives to hold tokens.
• Bear markets encourage more exploration in the crypto space.
• Current governance structures in DAOs have not proven to be effective.
• Locking up shares can help startups grow to their valuation.
• The idea that crypto projects can operate without responsibility is absurd.
• Long-term thinking is essential for innovators to succeed in the crypto space.
• The BGD team has been integral to the success and innovation of Aave.
• China is reportedly using bot farms to reverse engineer AI models.
• The intersection of the concepts of large language modeling and robotics will soon emerge.
• AI can quickly analyze large codes, speeding up security research.
• The geopolitical landscape surrounding technology is more polarized than expected.
• Human greed creates a feedback loop that prevents the necessary alignment of AI technology.

Guest introduction

Namik Muduroglu serves as Chief Strategy Officer and founding team member at MegaETH Labs. He previously worked as a Strategic Business Developer at Consensys. At MegaETH, he developed a project launch strategy, including a $20 million seed funding funded by Vitalik Buterin and Joseph Lubin.

Structural problems in the token economy

• “Many tokens are structurally broken because they promote sales rather than holdings.” – Namik Muduroglu
• Brian Flynn’s viral article highlights the race to the top in token design.
• Current solutions such as lock-ins and buybacks are seen as band-aid fixes.
• “In fact, you say you know that the band aid solution does not solve the problem.” – Namik Muduroglu
• The future may involve direct income distribution management models.
• “His proposed settlement is … 100% of the protocol revenue controlled by the token holders.” – Namik Muduroglu
• Founders and investors alike benefit from current token models.
• “Founders and investors have been double-dipped for far too long.” – Namik Muduroglu
• Insiders benefited greatly from the status quo, which is now changing.
• “The insiders were eating very well in a situation that is no longer there.” – Namik Muduroglu
• Concerns about securities laws inhibit innovation in profit-sharing models.
• “People are afraid of going to jail or getting fined by security laws.” – Namik Muduroglu

The impact of trading behavior on the token economy

• The shift from investment to short-term trading disrupts incentives to hold tokens.
• “Everything has gone from being an investment to a business.” – Namik Muduroglu
• Projects need to provide clear incentives to encourage long-term retention.
• “The only way to solve that is to find a way for people to want to hold your token.” – Namik Muduroglu
• Despite the clarification of the difference in equity tokens, investors remain skeptical.
• “Until we get clarity on the equity token difference … people just aren’t willing to write tokens.” – Namik Muduroglu
• Bear markets encourage more exploration in the crypto space.
• “Bear markets are where you get more testing.” – Namik Muduroglu
• Current governance structures in DAOs have not proven to be effective.
• “The DAO will resolve that you don’t need the law… it didn’t work that well.” – Namik Muduroglu
• The structural jump in the token markets makes the price difficult and unpredictable.
• “It becomes more difficult to call the price becomes opaque.” – Namik Muduroglu

Governance and control challenges in crypto

• Locking up shares can help startups grow to their valuation.
• “It’s better to lock people up and give them a chance to grow in that balance.” – Namik Muduroglu
• The idea that crypto projects can operate without responsibility is absurd.
• “The idea that we’re just friends sitting at odds… it’s absurd.” – Namik Muduroglu
• Investors often buy into projects to get a quick profit, not to believe in the project.
• “They buy because if you come in they can sell for 2 x 10 x to 100 x.” – Namik Muduroglu
• There is hope that the crypto industry will create real value after hitting the bottom.
• “I pray that this time we will finally be defeated.” – Namik Muduroglu
• The behavior of market participants is driven by incentives.
• “Incentives are what drive behavior.” – Namik Muduroglu
• The ecosystem’s focus on short-term token exchange is detrimental to long-term development.
• “The ecosystem’s desire to travel is fueled by token exploration.” – Namik Muduroglu

The role of long-term thinking in crypto success

• Long-term thinking is essential for innovators to succeed in the crypto space.
• “You won’t end up ready … that’s worth $500.” – Namik Muduroglu
• Many founders who raise money through ICOs end up failing.
• “There are a lot of people who are stuck building things and they still go wrong.” – Namik Muduroglu
• The ongoing conflict of governance between v3 and v4 of the protocol is significant.
• “This is about v 3 versus v 4.” – Namik Muduroglu
• The BGD team has been integral to the success and innovation of Aave.
• “Most of the v three revenue generated today is driven by the bgp code.” – Namik Muduroglu
• The current regulatory environment makes creating a DAO seem silly.
• “Why on earth would you go and build a dao now.” – Namik Muduroglu
• There are significant financial claims associated with the organization.
• “My opinion is that Mark knows what he’s talking about.” – Namik Muduroglu

Complexity of Aave governance and token distribution

• Aave Labs holds a significant portion of the token supply.
• “A quarter of the token supply is sitting with the ave team.” – Namik Muduroglu
• The situation surrounding Aave is complicated by the different views of the stakeholders.
• “The situation is not the same at all.” – Namik Muduroglu
• The situation with Aave seems to be tense beyond negotiations.
• “I don’t think there’s a happy way out of this.” – Namik Muduroglu
• Frustrations in DAOs come from the difficulty of working with multiple stakeholders.
• “It creates frustration and agitation.” – Namik Muduroglu
• China is reportedly using bot farms to reverse engineer AI models.
• “China has apparently been creating these bot farms.” – Namik Muduroglu
• The number of fake accounts used by Anthropics seems to be insufficient.
• “There are only 24,000.” – Namik Muduroglu

Rapid advances in AI and robotics

• The intersection of the concepts of large language modeling and robotics will soon emerge.
• “We are seeing the intersection of llm inference and robotics touching us very soon.” – Namik Muduroglu
• AI can quickly analyze large codes, speeding up security research.
• “AI likes to go to town.” – Namik Muduroglu
• There is a risk that AI may unintentionally perform harmful actions.
• “What is the chance that he will just go and try to get in.” – Namik Muduroglu
• The geopolitical landscape surrounding technology is highly fragmented.
• “The geopolitics of this is very interesting.” – Namik Muduroglu
• The transition to new forms of machine interaction is unique due to the non-deterministic nature of AI.
• “We have this which is like an indeterminate classical equation.” – Namik Muduroglu
• The fear surrounding advanced AI is based on its potential autonomy.
• “It will have a life of its own.” – Namik Muduroglu

Behavioral and strategic considerations for AI in crypto

• We must be careful about giving powerful people independent agents.
• “Do we really want them to have independent agents.” – Namik Muduroglu
• There is an avoidance of the integration of AI and crypto.
• “It’s just the way it’s going to be.” – Namik Muduroglu
• AI trading bots can cause financial mishaps indirectly.
• “The bot messed up the decimals.” – Namik Muduroglu
• The rise of AI will dramatically change the way people interact with crypto.
• “It will be done by agents and agents don’t decide.” – Namik Muduroglu
• The economy may actually freeze due to recent developments.
• “The economy could literally go to zero.” – Namik Muduroglu
• The acceleration of AI-related problems is likely to worsen before it improves.
• “It’s going to get worse before it gets better.” – Namik Muduroglu
• There is a 30% chance of immediate departure from AI development.
• “It’s like a 30% chance of immediate departure.” – Namik Muduroglu

The future of AI containment and alignment

• We should focus on containing AI rather than trying to stop its progress.
• “The best place to focus their energy is to stay where they don’t try to stop you.” – Namik Muduroglu
• We have no control over AI once it exceeds human intelligence.
• “We have no way to bring them back.” – Namik Muduroglu
• Human greed creates a feedback loop that prevents AI alignment.
• “There is such a thing as a response to human greed.” – Namik Muduroglu
• There is a risk that unstructured AI can lead to serious problems.
• “If it doesn’t work out, you know it’s over.” – Namik Muduroglu
• Polymarket is not profitable because it does not charge money.
• “How will those who pay money, brother, make a profit.” – Namik Muduroglu
• The forecasting marketplace is rife with opportunistic behavior.
• “We will do more than that.” – Namik Muduroglu

The power of insider trading and market insights

• Meteora has publicly stated that they no longer participate in insider trading.
• “We no longer do the things we used to do in the past.” – Namik Muduroglu
• When Zach teases something, it indicates that he has done some research.
• “To force him is like giving yourself a deadline.” – Namik Muduroglu
• The term ‘grass map’ for Ethereum’s new initiative is confusing.
• “Who came up with the grass map.” – Namik Muduroglu
• Concerns about possible insider trading related to project announcements.
• “People were like, ‘Anybody’s going to trade inside.’ – Namik Muduroglu
• Ethereum’s roadmap suggests it could reach unprecedented transaction speeds.
• “He’s like a magic math ethereum of the moon that can do a billion transactions per second.” – Namik Muduroglu
• If Ethereum successfully uses its own road, it will be difficult for other blockchains to compete.
• “Is there any other blockchain that will be able to compete with that.” – Namik Muduroglu

Challenges and opportunities for Ethereum growth

• Ethereum had a marketing and communications problem.
• “It had a big marketing problem and a big comms problem.” – Namik Muduroglu
• A new generation of leaders is emerging within Ethereum.
• “There’s new blood in ethereum the old guard is being taken down.” – Namik Muduroglu