Interview, Fireside Chat
Nick Tomaino: The Future of NFTs, What Will Happen with FTX & Who Should be Held to Account | E1076
- FTX Fraud Analysis: Nick argues the FTX collapse was a "fraud of perception" involving politicians, regulators, and investors who now attempt to deny knowledge, rather than a simple financial fraud.
- FTX Accountability Timeline: Nick predicts that while the "truth will reveal itself in time," full accountability for the broader ecosystem's role in the fraud will likely take years to manifest.
- Coinbase Departure: Nick disclosed he was effectively "pushed out" of Coinbase due to difficulties with office politics and bureaucracy, a painful event that ultimately led him to found One Confirmation.
- One Confirmation Fund Formation: The firm was established in 2017 with a $26 million seed fund, launched by Nick after his tenure at Coinbase and a bridge role at Runa Capital.
- Pre-Fund Brand Building: Nick built the necessary credibility for his first fund through a newsletter ("The Control") and founding the "Token Summit," a 400-person event in 2017 where tickets resold at four times their face value.
- Self-Assessment of Success: Nick estimates his success is 90% skill (grit, determination, and self-belief) and 10% luck, rejecting the narrative that success is primarily driven by external factors.
- Major Personal Loss: Nick lost his entire bankroll of approximately $50,000 in Bitcoin to a phishing attack in 2015, shortly before Coinbase implemented two-factor authentication.
- Resilience Strategy: Following his phishing loss, Nick used the incident as motivation to "level up" and grow larger rather than leaving the industry, viewing the loss as a catalyst for his career.
- Fund Growth Trajectory: One Confirmation raised a $50 million Fund II, followed by a $130 million Fund III (2021 vintage), with a separate $80 million NFT fund.
- Investment Discipline: The firm maintains a strategy of making 20–30 early-stage investments per fund (initial checks of $500k–$1m) and has avoided "zeros" (total losses) in its first fund's 22 portfolio companies.
- Return Milestone: Nick reported a 5.13x return distribution on early fund vintage, noting that liquidity was derived primarily from equity exits rather than token sales.
- Venture Fee Justification: Nick asserts that VC managers must significantly outperform a passive "50% Bitcoin/50% Ethereum" basket to justify 2% management fees and 20% carry.
- Industry Transparency: He calls for annual or biannual public reporting of venture returns, criticizing the current focus on vanity metrics like fund size and prestige.
- Future Fundraising Landscape: Nick predicts a contraction in crypto fundraising over the next three years, with LPs becoming more selective and rejecting billion-dollar funds lacking unique insights.
- NFT Creator Economics: Nick views NFTs as a superior business model for emerging "internet-native" creators because they align incentives between creators and fans through ownership stakes, unlike traditional paywalls.
- Mimetic Desire Theory: Nick applies René Girard's theory of "mimetic desire" to explain market popularity, arguing that human preference is largely driven by the desire of others rather than intrinsic utility.
- OpenSea Strategy: One Confirmation invested early in OpenSea (led in a $500k round) based on user experience (reducing fees from 5% to 2%) and views it as a critical, long-term on-ramp for the NFT asset class.
- OpenSea Valuation: Nick confirmed the OpenSea position is currently trading at a significant discount to its $13 billion last valuation, though it remains a core holding for One Confirmation.
- Solana Skepticism: Nick admits a potential "dogmatic" blind spot regarding Solana, noting he missed the opportunity due to viewing it as a "tourist" project rather than a "purist" innovation.
- Prediction Market Bet: Nick admits being wrong on his conviction that prediction markets would become massive immediately, citing the failure of early project Augur, though he remains convinced of their long-term potential.
- Future Firm Vision: One Confirmation aims to remain a bleeding-edge investor focused on "first-of-its-kind" products, with the goal of seeing crypto adopted by billions of users by 2033.
- Preferred Learning Resource: Nick recommends René Girard's book The Scapegoat as the foundational text for understanding human social dynamics and mimetic desire.