Haseeb Qureshi, managing partner at Dragonfly Capital – a popular crypto venture firm – and moderator for “The Chopping Block”, one of the best crypto podcasts – is an equanimous and composed man. Qureshi wrote a lucid article about the Terra fiasco and why the blockchain failed. After FTX he enlisted his podcasting colleagues – such as his Dragonfly co-worker Thomas Schmidt, Gauntlet’s Tarun Chitra, and Compound creator Robert Leshner – to produce a series on the fallout of FTX. Qureshi, a VC with keen foresight, is also afflicted by the same problem that all humans have: inability to predict.

This article is an excerpt from The Node, CoinDesk’s daily roundup on the most important stories in blockchain and cryptocurrency news. Subscribe to the full newsletter by clicking here.

He is still unmatched when it comes understanding the current crypto moment. He’s also not afraid to be a contrarian. Qureshi, at Consensus 2023 for example, said that CertiK – an auditing company with a not-so-stellar record – was wrong to offer to reimburse victims who had been affected by Merlin, the decentralized finance protocol Certik recently audited. Qureshi said that this was “explicitly insurance” and that, if repeated, it would increase the cost of audits while not necessarily improving accuracy. CoinDesk interviewed Qureshi about the current state of crypto venture funding, the regulatory landscape and why Ponzi scheme will always fail.

Has your investment thesis changed since in a non ZIRP environment?

The demand for yields derived from [decentralized finance] has been the biggest change. DeFi was attractive because of this theme in a ZIRP-like environment. The consumer’s appetite for risk is totally different now, so you need to do more to get traction.

In the past, you’ve stated that permissionless innovation is one of the key selling points for crypto. You didn’t anticipate any of the emerging trends in this year.

Yes, I was right. I also knew that you would ask the question.


Do you have an opinion on the Cosmos eco-system?

The Cosmos community is a general’s army. Unsurprisingly, it is difficult for a community that was founded on radical independence to other chains to reach consensus on anything.

After FTX, there have been many calls to rethink the crypto market structure. Would you support a redesign of centralized exchanges?

It is obvious to separate trading from custody. Prime brokers such as Hidden Road and FalconX already facilitate this. After FTX, and after the Binance Commodity Futures Trading Commission lawsuit, institutional players no longer feel comfortable taking on counterparty risks or dealing directly with risky exchanges. We’ll see the same decomposition of financial layers as you see with [traditional finance] in this regard.

Opinion


Do You Believe That VCs Should Be Subject to Similar Lockup Periods on Token Stakes as They Are Currently on Equity Stakes?

Equity stakes aren’t necessarily locked in. It’s not uncommon for a company to sell its equity in a secondary transaction, unless the board has specifically prohibited such sales. The reputational damage is usually what stops them. Tokens are no different. We do, however, generally encourage long-term lockups for both investors and the team when we invest.


Will there be more money or less in 100 years?


What is better, to be able do what you wish or to feel forced to do something you have to?

It’s better to be compelled into doing what you have to. It may not feel good at first, but you will live a better life.


Is it possible to design cryptosystems that produce network effects without “Ponzi”-like attributes?

They are not a network. The schemes don’t have any economies of scale, meaning that they are not easier to maintain as they grow. The reverse is true – as they grow, they become harder to maintain. Ponzi schemes can last for a long time if they’re small. But as they grow, they become more unstable.


Do you believe that mass automation will increase productivity in the United States and reduce time spent working for most Americans? Bonus: Any thoughts on the reason why the last century of technological progress hasn’t increased leisure time for most people?

I believe it will increase productivity, but it will have a very uneven effect on the time spent working. I’d guess that poorer people would work less and wealthier people would work the same, since wealthy people like their jobs better. In the last few years, we have done a lot of leisure work. It’s hard to measure one for one.

Ben Schiller is the editor.