Most common question from our NFT customers this month:

"How do people deal with Blur Pool revenue?" and "WTF is Blur Pool?"

Here's what you need to know and how to deal with Blur Pool revenue 👇

WTF is Blur Pool?

Blur is an OpenSea competitor. It started blowing up in January.

Blur Pool: Blur incentivizes NFT buyers to deposit ETH into a pool. Think of the Blur Pool as escrowed ETH.

Buyers use the Blur Pool because they get 3 advantages:
- Earn care packages and airdrops
- Gas-less "cancel bids"
- Ability to place unlimited bids at once. No fees, no gas.

What Blur Pool means for NFT collections:

Revenue can now be earned in ETH or Blur Pool Tokens, depending on what buyers paid with. There is no price attached to Blur Pool tokens, even though they are redeemable for ETH (like WETH).

This means 2 things for NFT finance teams:

1. Update your revenue analytics

Unless you use a powerful web3 finance software, you may not be seeing all your incoming revenue. Consider updating your accounting process or use something like @integral_xyz_

2. Consider redeeming Blur Pool for ETH early & often

Why?
- Reduce risk: if Blur shuts down or gets hacked, you would lose your ETH
- Prevent tax issues: "hidden" ETH can result in a surprise tax bill
- Simpler revenue analytics

How do you redeem ETH from the Blur Pool?

1. Log in
2. Click on your ETH balance in the top right
3. Withdraw from pool

It'll look something like this:


Some NFT collection are taking a hard stance not to trade on Blur. Others have as much as 50% of their revenue coming from Blur.

Either way, it's a good idea to set up a process to handle Blur Pool revenue properly, while reducing treasury and tax risk.

TL;DR: pretty much everyone assumes the tokens are worth $0 until claimed, even though 1 BPT is 1 ETH. However, that's a big risk from a treasury and accounting perspective.

If you need help navigating NFT accounting (including Blur Pool), DM @integral_xyz_. We can help answer things like:

"What % of my income on Blur is ETH vs BPT?"

"How do people deal with Blur Pool revenue?"

"How can I automate complex accounting issues like Blur Pool?"

Understanding Blur Pool Revenue (for NFT accountants)

Now is a good time to brush up on the different types of banks and their roles in the system.

Here's a 3-minute debrief on types of banks, their roles, bank run risks + notes on where Silvergate and SVB fit in.

There are four common types of banks:

- Commercial (and retail) banks
- Custodial banks
- Investment banks
- Central banks

Each fills a different role in our economies, although some banks like JP Morgan operate at multiple levels.

Commercial banks are your "average bank". They provide deposits, loans, and investments to individuals and businesses.

Examples include Bank of America, Wells Fargo, Citi, Capital One...

...and Silvergate and SVB. We'll get back to that shortly.

Commercial banks need to manage bank runs risks because they make money from loans and investments. They don't just keep deposits on hand.

Very different from custodial banks ->

Custodial banks just keep your money/securities safe. They typically don't issue loans. They make money by charging a % of assets held in custody. They're less known by the public because they mostly work with corporations.

Examples include BNY Mellon, State Street, and JPMorgan

Investment banks work with corporations to underwrite securities, facilitate mergers, and advise clients on complex transactions. Their goal isn't to custody assets.

You probably know these banks: Goldman Sachs, JP Morgan, Morgan Stanley and Lehman Brothers.

Central banks oversee a country's monetary policy and regulate financial institutions. They're responsible for setting interest rates, controlling money supply, and managing inflation.

Examples: PBOC (China), ECB (Europe), The Fed (US), Bank of Canada, Bank of Japan, etc.

Unlike corporations, banks can't just change their business at will. All banks have a "charter" that dictates their roles, responsibilities, and activities. Charters are issued by governments.

Different types of banks have contributed to various bank runs in the US in the past 200 years:

Back to SVB's bank run: unlike custodial banks, commercial banks (like SVB) invest and loan out deposits.

Lots of people want to take their money out right now, but much that money is locked in T-Bills or loaned out. SVB needs more cash on hand to let people withdraw money.

There's plenty more to be said here. The history of banks is fascinating.

What I'm most interested in now is how crypto self-custody and CBDCs will change the way our system works.

Shoutout to all the builders out there working on improving our financial system.

3-Minute Debrief on 4 Types of Banks and Their Roles in the Economy

How to pick the right amount for your seed round

Every other week, entrepreneurs ask me for fundraising help. Most don't know that successful fundraisers use The Amount strategically.

Here's how you can be more strategic with your amount:

UNDERSTAND VC SEGMENTS — you may price yourself out of a round because the amount excludes too many funds.

There are more funds that cut $1M checks than $100K checks. For that reason, raising more may increase your chances as you get more at-bats.

"How can I understand VC segments you ask?"

Kickstart your own VC CRM by using a list like this: https://airtable.com/shrkohpeE2AO2ldeq/tbl5Q8N7NuW22z5Bt

Sort by amount and make sure that you have 30+ targets that could lead your round. Lead = 1 VC gives you ~60-80% or the amount.

DON'T ASK FOR TOO MUCH

What you *ask for* isn't what you'll *raise*. It's where you start the conversation. When you start raising, your goal is to kick off conversations and get people emotionally involved before they say yes/no.

Read @eladgil's blog post on this. It's really worth it.

You want an amount where "VCs will view [your co] as a potentially cheap company and kick off diligence, multiple meetings, and will get emotionally invested in the business"

https://blog.eladgil.com/p/dont-ask-for-too-much-money

LEARN ROUND SIZES

How big is the median seed round right now? If you ask for $200K when most seed rounds are $1M, you undermine your confidence/competence.

My hack: buy crunchbase.com for a month, dump a CSV of all recent seed rounds in your market, and do the math.

WORK BACK FROM SERIES A

Example: "We need at least $1M ARR to raise a Series A. It'll take use 2 years (or $1.5M) to get there. We want an extra $500K as a buffer." → Ask for $1.5M and expect to get to $2M as you go deeper with investors.

WORK BACK FROM IPO — too few founders realize how long the road is.

Plan for an IPO because public markets revenue/valuation multiples help you understand 1) money you'll need 2) dilution you'll have and 3) how VCs will think about your startup.

"How can I work back from IPO?"

Pick 5-10 late-stage/public companies in your market and list their rounds and valuation multiples.

For example, for @integral_xyz_ we'd look at Intuit, Xero, Ramp, Brex, Stripe, Modern Treasury, etc.

Your sheet could be as simple as this:

Then, write out what needs to happen at each stage for you to reach meaningful amount of revenue.

You'll likely be wrong about every number. It doesn't matter. Doing this basic exercise helps you get a feel for later rounds.

Again, keep it simple:

https://twitter.com/laliberteg/status/1580204163501203458

All of the above should take a few hours. If done well it'll allow you to triangulate the Strategic Amount and increase your chances of success.

Once you know how much to ask for, build out your deck:


https://twitter.com/laliberteg/status/1580204163501203458?s=20

How to pick the right amount for your seed round

HOW TO HANDLE COMPETITION STRESS

Every founder in a good market will at some point stress about competition. Usually competition comes up when investors, customers, or team members share competitor news.

Here's how you can reduce competition stress 👇

COMPETING IS A LIMITED ROI ACTIVITY

Competition-focused activities have a limited ROI. You want to spend time on high ROI ceiling activities like team building, positioning, market network, and customer work.

TRANSMUTE COMPETITION TO COMPETENCE

Shifting my mindset from "shit competitors are annoying" to "to beat them, I need to be the most competent version of myself" was really helpful. Competition is evolutionary pressure. Without pressure, we don't get better.

COMPETITION IS SIGNAL

People fear competition, but it’s generally a good signal. If there were no one else in my market, I’d think “oh shit maybe it’s a bad industry to be in.” Every good market has multiple players.

WIN CONDITIONS (1/2)

Moats or "win conditions" for your market are more important than anything else. Most of your competitors likely have not identified the win condition for your market. Figure out what it is and do nothing else but that.

WIN CONDITIONS (2/2)

Examples of win conditions:
- Facebook: win all campuses
- PayPal: reach escape velocity
- Opensea: win PFPs
- Uber: fill supply in key cities before regulation kicks in
- Carta: win lawyers in SF & NYC
- Mercury: win the YC batch

ERROR CORRECTION COMPOUNDS

People likely aren’t 10x smarter than you and your team. They go through the same challenges/questions/problems. What you need to do is just make sure you learn/error-correct 1% faster MoM than others for long enough and you'll win.

FOCUS ON CUSTOMERS

Aside from huge network effects businesses like FB, Uber, or Google, you’ll likely do just fine if you deliver something your customers love (which helps you error correct faster).

Cx-focused companies win: Stripe, Figma, Apple, Notion, etc.

POSITIONING & DIFFERENTIATION

Sometimes a customer will ask about competitors. Don't try to be better; just be different on something that matters to the buyer.

HAVE FUN

Don't forget to work on things you enjoy. You'll learn that much faster, and your mind will shift from a fear mindset to a more creative one.

For CEOs: managing competition is as much about managing your psychology as it is strategy. Be aware of competitors without getting distracted. Use competition to make you a more competent founder. Work on things that bring you joy.

How founders can reduce competition stress

Super proud of our team: we built a new finance tool for NFT teams, and now @RTFKT, @Azuki, @SuperRare, @DegenApeAcademy, @OrangeCometNFT + many more are using it.

If you run an NFT project, you'll want to take a look 👇

What NFT founders & teams told us:

"Idk which marketplaces bring me the most royalties"

"It takes my team 4 weeks to do month-ends"

"I want to see my NFT revenue by marketplace and collection"

"I want a live inventory of all my NFTs"

"Bookkeeping costs me $100K per year"

TL;DR: Managing accounting in finance at an NFT company is painful, expensive, and stressful.

Our goal was to build an NFT Finance and Accounting platform that elite finance teams would love using.

This is the result: https://www.integral.xyz/nft-accounting

If NFT accounting problems sounds familiar, give @integral_xyz_ a try :)

NFT Accounting: how RTFKT, Azuki, SuperRare and DegenApes automate NFT accounting

As a founder, nothing beats seeing a product idea have a big impact on users.

Here’s the story of how one of our first users leveraged our Web3 accounting stack and NFT RevRec to save ~$50K/yr and close their books 2x faster.

The user: @OrangeCometNFT is an NFT entertainment and technology company.

They’ve created NFT collections for @TheWalkingDead, @AnthonyHopkins, @StationCDRKelly, @ScottiePippen, and some of the world’s largest IP.

The OC finance team had 4 common Web3/NFT accounting challenges:

1. Get visibility into primary/secondary sales revenue
2. Calculate royalties owed to IP holders
3. Report gains and losses
4. Produce reliable financial statements

It took them weeks to do this each month.

We (@integral_xyz_) worked with the OC finance team to build a product that could deliver:

- Real-time NFT revenue and royalty reports
- Automated gains and losses calculations
- Reliable, audit-ready crypto financials

And it feels amazing to see great results already 👇

The OC team told us @integral_xyz_ unlocked several things for them:

- ~$50k saved annually in finance and eng time
- 2x faster month-ends
- 99% of revenue txs automatically reconciled
- Real-time, granular visibility into their NFT business

And we got kind words from the CFO <3

“Working with your team has been great for helping us create efficiency and scale. I see Integral as a key piece of the financial technology stack for web3/blockchain companies”
– @eeenak, CFO @OrangeCometNFT

Really proud to be working with you @OrangeCometNFT team!

Can’t wait to see what you have in store for us in 2023.

Will post a full case study on this ^. Stay tuned.

Getting from idea to user impact

Here's the "pencil and notepad" slide deck process that got my company $8.5M in a bear market.

START WITH PEN AND PAPER to craft a V1 story without getting side-tracked.

1 — Write headlines on paper
2 — Make headlines flow like a paragraph
3 — Edit, cut, and repeat until the story is obvious

I mostly use Things 3 from @culturedcode to write with no distractions.

ONLY WORK ON HEADLINES until they are *instantly* understandable. Great headlines spoon-feed quantitative information.

"Market Size" is bad. "The fragmented $15B lemonade market in India is growing 75% YoY" is great.

ADOPT THE FORMAT shared by @sequoia. Not because VCs like it — it's just a great structure to think about your business.

Stick to a max of 15 slides per deck + an appendix.

Put everything beyond these topics in the appendix.

TEACH 1 THING ON EVERY SLIDE — Investors look for frontier learnings. Every slide should teach 1 insight.

Test insight quality. Ask yourself "will investors walk away feeling like they now know something others don't?"

PRIORITIZE NON-OBVIOUS PROBLEMS.

"NFTs are a $50B market" is obvious. "Companies like X and Y are replacing Adwords with NFTs to reduce CAC by 80%" is less obvious + more precise.

VISUALIZE YOUR AUDIENCE of VCs in SF who see dozens of pitches per week. You should assume they'll spend 90-120 seconds on your deck.

Put yourself in their shoes. Then review your headlines again.

GRAPHICS ARE 20% OF THE WORK —  only once you've *nailed* headlines, move to graphics. Graphics only exist to support what headlines say.

For graphics, not all data is equal: Causal > Quantitative Correlated > Qualitative > Annectdotal.

SLIDES ARE FOR THE PROBLEM, not the solution.

Most great decks are 90% market and problem, and only 10% solution. By the end of the deck, the solution (your project) should be obvious.

POLISH IN FIGMA OR KEYNOTE — PowerPoint and Google Slides don't cut it. Many people feel the difference right away.

For pre-seeds, a simple @NotionHQ page can work if your headlines are really great.

TRACK DECK METRICS — you can learn in real time how well your deck is doing by tracking views and time spent on key slides.

I *always* use @DocSend to learn if my audience cares most about market size, revenue model, other investors, etc.

CUT, EDIT, AND ADD early on and throughout the process.

Pitching is like teaching a course. If your students don't get it, you need to adapt to keep them interested.

The pitch deck mindset:

You have about 60s to teach something. Your students have a 6s attention span and see 20 pitches per day. They'll only remember 1) unique insights, 2) the problem, and 3) whether they felt FOMO or not.

I've helped friends raise >$200M with this process. Hope it helps you beat the bear market.

Huge h/t to @ericbahn & @dunkhippo33 from @HustleFundVC and @avichal from @ElectricCapital who taught me a lot on the topic.

The slide deck process that got my company $8.5M in a bear market

The Fed's real-time payments network (FedNow RTP) is launching in 2023.

185 million+ people (including you) could be using FedNow by 2025.

What will this mean for fintech in the US?

👇🏼🧵

The Fed has experimented with RTP for 10+ years.

More than 120 financial institutions have tried the pilot program.

FedNow is planned to launch in May/June 2023.

FedNow has several advantages over other payment rails:

ACH can take several days.

Wires only operate during business hours.

Zelle, Venmo, etc. are instant, but have low limits.

Credit cards have a few day settlement period.

What about FedNow?

FedNow is:

- 24/7 instant settlement for merchants and employees
- Account-to-account transfers (as opposed to batch ACH)
- B2B, B2C, and P2P
- Limit of up to $500K (@a16z predicts the initial limit will likely be up to $500k but the default will be $100k)

This already exists, sort of: a group of 26 banks built an RTP network in 2017 but adoption has been slow.

Under 1% of 2021 US transactions were settled in real-time.

What's different with FedNow?

Small banks don't want to work with big banks.

With FedNow, small banks will have access to RTP w/o working with the big banks.

What does this mean for fintech?

So some people think FedNow will be a failure.

But this perspective underestimates the network effects of real-time payment systems.

For example, India's UPI has seen exponential adoption since its launch in 2017.

Similarly, in Brazil, more than 56% of the population adopted Pix, Brazil's RTP system...

...in less than 2 years.

Pix RTP isn't just for Millenials and Gen Zs.

>35% of Pix users are over 40 years old.

If FedNow follows a similar path as Brazil's Pix, 185 million+ people will be using FedNow by 2025.

This is a massive opportunity because...

FedNow is only creating a rail.

Infrastructure, apps, and services still need to be built around it.

Rails like credit cards, ACH, and crypto were catalysts for several fintech unicorns.

FedNow opens a new door, one with potentially 185 million+ behind it.

If you want to dive deeper, check out @a16z's article

@SANTIAGO__RDZ, @ALEXIMM, and @SEEMA_AMBLE did an excellent job explaining FedNow.

https://a16z.com/2022/09/22/paradise-fednow-how-the-2023-payments-network-will-improve-real-time-payments-september-fintech-newsletter/

FedNow: a door to 185 million+ users

DAOs vs Corporations: who's the most efficient decision-maker?

It tends to be corporations, but it's not always the case.

Vitalik's article suggests 3 situations where DAOs will outperform corporations:

🧵👇

There are 3 situations where decentralization > centralization:

• In "concave" environments

• When censorship resistance is required

• When credible fairness is needed

Let's go through each 1 by 1:

A) "Concavity"

Decisions are classified 2 ways: concave and convex.

Concave decisions are those where compromise is desirable.

e.g. Judicial decisions

Convex decisions yield better outcomes at the extremes.

e.g. Military strategy and pandemics

Decentralization is suited for concave decisions. The more voices, the better the compromise.

Centralization is better suited for convex decisions. You want fast, decisive decisions.

At scale, DAOs are a better solution than corporations to reach  optimal compromises.

B) Censorship Resistance

DAOs like Maker and Reflexer must be censorship-resistant to be investable and reliable long-term.

Decentralization supports these goals.

Vitalik uses The Pirate Bay and BitTorrent as an example:

The Pirate Bay is a centralized search engine for BitTorrent.

When TPB gets shut down, it simply springs up under a new name. Users aren't impacted.

BitTorrent doesn't have this luxury. Constant shutdowns would ruin user trust and degrade network quality.

Many DAOs are like BitTorrent.

If they can't resist attacks or be long-term stable, few long-term stakeholders will come on board.

In many cases, decentralization enables stability.

C) Credible Fairness

Some DAOs take on nation-states functions like currency and arbitration, but without a sovereign ruler.

Paraphrasing @vitalikbuterin, "DAOs need to learn how to do this from political science, not corporate governance."

Hence "credible fairness" 👇

"Sovereign services" like stablecoin pricing, court rulings, and retroactive funding require governance that people are convinced is fair.

The best way to do this? Decentralization.

The more people involved, the less biased the process seems.

Another way to think DAOs vs corporations here:

For sovereign services, capitalist democracies > monarchies.

This isn't to say that centralization has no place in DAOs.

Many DAOs use centralized "sub-DAOs" to complete specific tasks efficiently.

However, there are compelling arguments for DAOs yielding the best results in specific situations.

DAOs vs Corporations: who's the most efficient decision-maker?

The first recorded ledgers were found in Mesopotamia, dating from 5000 BC.

Now we use ledgers to buy monkey JPEGs and stake beans.

How did we get here?

🧵👇🏼

In ~5000 BC, Mesopotamians used clay tablets as ledgers.

These were simple single-entry income/expense ledgers.

“The first writers weren’t poets; they were accountants.

For a long time, that’s all writing was.

No love notes. No stories. Just IOU six sheep.”

- @jacobgoldstein

It would take 6,000+ years for someone to improve the system.

In 1494, Luca Pacioli, an Italian mathematician and collaborator of Leonardo da Vinci, "rocked the accounting world" by inventing the double-entry system.

The double-entry system is nothing short of a revolution for businesses.

The key insight looks simple in hindsight: record every transaction in 2 accounts instead of 1:

1. a debit to one account
2. a credit to another

These accounts must always add up.

Double-entry is to accounting what Newton's 3rd law is to physics:

Newton's 3rd law: "For every action in nature there is an equal and opposite reaction."

Accounting: "Any transaction in a business has two equal and opposite effects on business finances"

Double-entry ledgers solve two problems:

1. Data validation
2. Error identification

They're also far more scalable than single-entry — large companies today could hardly handle complexity without double-entries.

But double-ledger entries have issues ->

Bad actors can "cook the books". There's no way to verify what happened with a transaction *outside* a company's internal ledger.

In 1982, CMU Prof. Yuji Ijiri proposed a solution, but it took another 26 years for a key technology to make his idea possible: blockchain.

Blockchain unlocks "triple-entry accounting", or what I think of as "network accounting".

Network accounting is "the linking of two parties' ledgers".

Linking ledgers allows anyone to prove that what the books say is what actually happened.

To do this, transactions need 3 entries:
- Creditor (party A)
- Debtor (party B)
- Link (smart contract)

This may seem like a trivial improvement, but consider what's possible with network accounting:

✅ Real-time audits
✅ Reliable, trustless books
✅ Millions saved on auditor fees :)

All of which leads to more efficient, higher trust organizations.

People view money as an asset. But, money is just a ledger of debt.

Debt ledgers create openings for bad actors.

Network accounting could bring trust, scalability, and cheaper accounting.

As @balajis says, we go from "don't be evil" to "can't be evil".

I'm looking into network accounting while building real-time financial tools at @integral_xyz_.

We just announced an $8.5M raise. If like us you're a crypto/accounting nerd, we'd love to connect!

https://twitter.com/laliberteg/status/1572231075946168321?s=20&t=oNKx8a71-R2NOBRmQUBgjg