Kevin Leuthardt from threek advisory on Being a Web3 Fractional CFO & Foundation Director

[00:00:00] Kevin: If you have like this 1 billion token supply networks, right? I would say something between 20 to 30 million tokens for market makers on the loan call option agreement.

[00:00:12] Kevin: And now also maybe to just give you a comparison here, right? Retainer based models are quite expensive if they're really rolled out across all venues.

[00:00:21] Kevin: I've seen proposals quoting anything between $30k-50k dollars per month. 

[00:00:27] Umar: Kevin Leuthardt started his career at KPMG providing tax advisory services for web3 startups. He then became the CFO at Arweave, a decentralized storage protocol, and was Head of Finance at Safe, the leading multisig wallet solution, and later on at WalletConnect, the open protocol powering wallet to dapp connections.

[00:00:50] Umar: He went on to launch his Fractional CFO Practice threek advisory advising web3 protocols, foundations, and asset managers on strategic finance and offering directorship services.

[00:01:04] Umar: Kevin, how do tokens complicate M&A deals? 

[00:01:08] Kevin: Most tokens out there don't really have a clear utility, right? They also don't have really a clear attachment to revenue whatsoever.

[00:01:17] Kevin: So if then of course, somebody comes by and just buys, let's say the IP or just also just the shares of the devco, right? They can just essentially walk away, hence the token holders are left with what? Hot Air 

[00:01:32] Umar: Welcome to The Accountant Quits podcast, where we help accounting and finance professionals learn how to manage a business using crypto.

[00:01:41] Umar: In this episode with Kevin, he shares token launch playbook for founders, working with market makers, duties of a director for web3 foundations, onchain treasury management, Crypto M&A with tokens and much more.

[00:01:59] Umar: And before we dive in, a quick note about The Accountant Quits community platform for web3 accounting and finance professionals.

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[00:02:25] Umar: The link is also in the show notes.

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[00:02:37] Umar: Now, let's get into my conversation with Kevin. 

[00:02:45] Umar: Kevin, welcome to the show and thanks for making the time to be here. 

[00:02:50] Kevin: Thanks a lot Umar for being actually invited to this pod. I'm looking forward to it. 

[00:02:56] Umar: To start this episode. Kevin, can you share your story of how you got into web3 and your web3 career so far, beginning with what I mentioned earlier. You were CFO at Arweave back in 2020, then you were Head of Finance at Safe and WalletConnect, and basically how those experiences led you to launching your Fractional CFO practice called threek advisory.

[00:03:19] Kevin: Yeah, sure. And actually, interestingly, my Web3 career started as a corporate tax lawyer. So essentially I, corporate tax lawyer turned crypto finance operator. So in, back in 2017, 18, I was working at KPMG in Switzerland and we were actively advising at that time ICO projects, which were structured out of Switzerland and at the end right, I got infected.

[00:03:43] Kevin: And as there was then an opportunity to join basically a project that case Arweave, I was maybe much ready for it, and I just jumped into the opportunity and that's basically how I bridged, for the first time, basically, from being an advisor to an operator. And yeah, so I think, this two and a half years roughly were probably like the most intense and most insightful years in my profession career so far.

[00:04:08] Kevin: Really learning crypto finance from scratch coming in. Though after actually the token launch and the ICO, but basically building out as a first member of the finance team the complete entire finance function. This was super insightful, super challenging, and taught me a heck lot and basically also equipped me then with what was then required to do later at Safe, KYVE and also WalletConnect, right?

[00:04:33] Kevin: And after roughly, let's say three, four years in full-time positions. I also came then really to the conclusion, what I enjoy the most is actually really working basically in this zero to one phase for finance, really closely with founders in this still very early phase of our crypto venture, right?

[00:04:52] Kevin: Where maybe it's less structured every day looks a bit quite different, because you don't really know what, what pops up and what's priority and you don't have people for everything, right? So you need to be very hands-on. And that was then basically also post Safe essentially, where I kind of got, came to the conclusion, look, let's set up this fractional advisory practice around basically now for the last roughly two years.

[00:05:18] Kevin: Spent also last year, for quite some months, like as an Interim Head of Finance with WalletConnect Foundation, but essentially this was, I have been building for the last two years this Fractional Advisory Practice hands-on working with founders, teams to launch a token.

[00:05:33] Kevin: Also funny enough, that's actually not so a nice background, but often I also joined these projects when they have a transition in their finance function leadership or financial finance leadership.

[00:05:44] Kevin: And the reason why I opted for this advisory directorship approach is really in the end that I can build, let's say a portfolio of clients, of projects, which I'm excited about. And this gives me like a nice back of challenges every day. 

[00:05:58] Umar: Fantastic.

[00:06:00] Umar: Now for the listeners, a lot of this conversation that we are having today with Kevin is also based on some of the excellent Substack articles that you, Kevin, you've been writing for the past weeks, and I encourage the listeners to check it out at kevleuthardt.substack.com. I'm gonna share the link of course, in the show notes.

[00:06:21] Umar: But the first topic I wanted to go through is on this, TGE readiness playbook, right? So how to help founders with their token generation event or TGE readiness. So over the past six years, Kevin, you've been involved in different token launches across different cycles. So phase one, if can put it that way, would be about getting the entity structures in place, meaning having the legal separation between the devco or the labco.

[00:06:50] Umar: And the token issuer, which is usually the foundation in Cayman Islands, Panama, BVI or Switzerland, right? So we've discussed this extensively on this podcast before on episode 89, actually for Cayman Islands and episode 92 for Panama. So for the listeners, if you want to check those out.

[00:07:10] Umar: But the focus today is and with you, Kevin, is how do you tackle valuation at pre TGE?

[00:07:18] Umar: And maybe after that I'll have a follow up question. 

[00:07:21] Kevin: Yeah, of course. Like, it's a, an important question, right? And essentially it's a very iterative approach, which is required because like in the end, the valuation, you basically pick up for your token ahead of your launch, essentially, right? Is a very, is a key part of your narrative, right?

[00:07:39] Kevin: And how you basically also need to structure let's say your relationship with the exchanges and also the market makers and the situation you face often is that you're not really in a situation where you have clear indication. If you are lucky and have maybe recently closed a private round, you might have some data points.

[00:08:00] Kevin: Usually this is way back like maybe 8, 9, 10 months back in time. And I think where what in our industry knows this is quite a long period of time, right? And I think what you then basically need to do is like a sense check, right? Like, hey, what are your peers out there? What are the comparable life tokens so to say.

[00:08:19] Kevin: How did they do their listing? How do they perform in the current market? Vis-a-vis also, for example, like let's say majors like ETH or Solana, just to also get an understanding of what driving, what drives currently their evaluation or pricing. And just to kinda come up essentially with a range, right?

[00:08:38] Kevin: And take this range to, as a FDV benchmark, so to say, to run your simulations, right? Like, okay, what is the FDV market cap if I take this range and apply this kind of amount of circulating supply, right? So I think this is really the joyful part. Nobody can give you like a hundred percent clear and final answer to this.

[00:08:59] Kevin: What you actually need to do as a team is really run scenario analysis, like to be ready for basically race for impact, right? That you can also, because all also, if somebody tells you that the first week of trading will look like exact, like this. This is a lie. I think it's very dynamic. It also depends, as we know these days, very much on the macro conditioning.

[00:09:21] Kevin: So essentially what you do is really you pick a couple of projects which have maybe some overlap, maybe some are comparable, you maybe also your competitors, right? And you try to sense check what's possible and you take this as a baseline case for your further structuring of the market maker, exchange deals, et cetera.

[00:09:41] Kevin: And also constructing the circulating supply essentially. 

[00:09:44] Umar: Will you have an example or projects that come to mind? Let's say this is a new DeFi protocol that is launching a token like which projects like could they use as benchmarks? 

[00:09:57] Kevin: Yeah, I think like DeFi of course, like should be then not something completely off, I think exactly another DeFi Perp, whatever protocol. Like, and then kinda like maybe also segregating this by let's say, adoption. So of course you have like a, Aave, you have a Uniswap, but then maybe also you have Morpho, you have also like of course then like really, a lower market cap projects, right.

[00:10:21] Kevin: Plenty of them actually. And that you really also probably run this analysis by the cohort. You kinda blue chip, like established emerging protocols. And then really kind of the ones who just maybe raised, not raised, sorry, launched in the last three to four months. I think if you do this exercise, this is what you need.

[00:10:42] Kevin: I think of course, I know they are also professional services, service providers in the space. They certainly do also a great job. But what I have seen, what, where they basically then really provide value is exactly entertaining this discussion, right? So if you as a team for example, feel, hey, yeah, this is maybe helpful if an outsider comes in and gives us a proper sanity check, right?

[00:11:05] Kevin: It is also very well justified to work like with I think the established, service providers in the space. Don't expect a final clear answer because nobody can really literally give you this unless maybe you just have but I haven't seen actually this case. Maybe, I don't know, two weeks ago or a month ago, there was maybe an OTC, but like, yeah, if the token is not yet around, it's rather unlikely actually that this will ever happen, right?

[00:11:34] Umar: Yeah. Now as a fractional CFO, you are also helping these projects post TGE, so after the token launch how would you then design the use of proceeds and basically create a runway plan during the first, let's say, 12 to 18 months? And what are the common mistakes that you see those founders doing there once, like they've done their token launch, they have the proceeds.

[00:11:59] Umar: What mistakes do they usually do? 

[00:12:01] Kevin: What I have, I think, often I've seen is that probably the budgeting activity starts too late. So I think, ideally you should really also, before you even incorporate your token issuance slash foundation, you should have already, I think a certain clear planning, a budget planning for the foundation, but also the devco.

[00:12:22] Kevin: I think often what I've see is like that there's a confusion, right? That basically that's just like a global budget and then it's unclear what is basically allocated for the foundation, what's for the devco. But then might, for example, if you then later on need to operate both the devco and the foundation, there's unclarity, which entity actually bears now what costs, which then kind of is also op because it doesn't give you the clear information how, for example, yeah, like what are the treasury liquidation targets for the foundation, right?

[00:12:52] Kevin: To kinda fill up the budget. So I'm a big fan of really having kind of entity separated or ringfenced budgeting available as soon as possible in the process, right? So, latest basically, when you start operating the foundation, which is still ahead of the token launch, the TGE in most of most cases, and then basically really have a clear visibility what you need, that you also, for example, then define for the devco clear milestones, what they need to basically deliver.

[00:13:21] Kevin: Because yeah, if there's own clarity, I think especially these days, often you also have different people in the foundation and the devco. This can also cause a lot of back and forth, which might become also political, so that's why plan ahead, establish clear relationships, plan well, and also always be more conservative, right?

[00:13:41] Kevin: Especially on the hiring front, what you need. It's always better to have money left than actually the opposite, and importantly, don't look at this budgeting exercise as just a mere admin task. It's actually really, if it's done the right way, it gives you also the right amount of information on, for example, what you need to do in terms of token liquidations, token option strategies from basic launch date onwards. Because yeah, if you then just do this like six months into the live token state, you might come to the realization, oh, well if you only, if you knew this would have been a great opportunity. And this is also, I think a bit like what I see, right?

[00:14:25] Kevin: Like if you do this anti separation, that's often a good case to bring in this Fractional CFO to really have somebody dedicated looking after the foundations finances because it's not like the people or this teams do not think about it. And it just, it's bandwidth, right? And that's why yeah.

[00:14:43] Kevin: This is helpful. 

[00:14:44] Umar: I agree. Now, staying on the topic of token management, but moving on to market makers. So leading up to TGE, the team, they also need to ensure that their token is, it has sufficient liquidity across exchanges, centralized exchanges, decentralized exchanges, and at this point they are exploring, they're negotiating with market makers.

[00:15:07] Umar: So these market makers, they have different fee structures, liquidity profiles, arbitrage dynamics. But if there's a founder listening who is maybe they already have a draft market maker term sheet on the table, what are maybe the first two, three things you tell him or her to check before signing? And how many market makers you actually advise projects who are listing on both centralized and decentralized venues?

[00:15:36] Kevin: Yeah, I think this is a very important question or like it's a very important phase, right? Because at first sight it might look straightforward. Okay, look, I found my market maker, I got my term sheet ready to go. In the end, always look at this as a long-term relationship. Mark makers are not evil, but they also probably not somebody who should trust a hundred percent just given their business model.

[00:16:00] Kevin: That's a neutral statement here. I think when it comes to the term sheet, right? I think it's just you should really approach it in a sense that when you can, as you go through this term sheet, you should ask yourself whether everything is really clearly defined to you, and what do I mean by that, right? For example, like KPI definitions, like do you really share the same understanding?

[00:16:24] Kevin: For example, something I came across in my role in the past often is market depth. Sounds simple, but like do we talk about a consolidated market depth KPI like basically covering both bid ask side or is it just actually per side.

[00:16:42] Kevin: Makes quite a difference obviously, right. Also like the way uptime is defined, right?

[00:16:48] Kevin: What about weekends, right? That you really kinda look at it and also I really invite you to also jam this review with AI tools because I think you have now really this tooling at your fingertips to really actually ask clever questions and kind of like really war game this relationship. Also something you really need to understand properly is reporting because in the end yeah.

[00:17:13] Kevin: It's one thing to get lined up with your market maker to deliver the tokens or whatever you need and get going, but then you also want to understand what they do, understand how they report, not just like we share reporting. 

[00:17:25] Kevin: Is it a dashboard? Is it a report which is sent daily or weekly? In what format?

[00:17:31] Kevin: Is it also a shared in machine readable in a machine readable data form, like a CSV file. Do they even share read only API Keys? Are they integrated with analytic platforms like CoinWatch or any other, right? Forge whatsoever, right? Or do they also make, actually this API read only API keys available to you.

[00:17:51] Kevin: So for example, you can build yourself with Claude as an example. Your market maker analytics tool. Huh? I think these are really important questions. Also, I think understanding how determination logic would work because here the ambiguity is often that for regulatory legal reasons, you can't hard code KPI parameters as a hard breach factor, but then also understand how it would work.

[00:18:18] Kevin: Understand also whether there are any other costs, right? Like how do they hedge the position? Because you need to understand if you give them just a loan of your native token, in the end because they use their balance sheet. Yeah. They need to also hedge themselves. So they will also sell your token.

[00:18:38] Kevin: So also on the ask them about how they, their hedging philosophy, right? Especially maybe smaller shops which don't have this massive balance sheet might be a bit more sensitive, right? And also these days, I think as we basically have almost weekly issues with OPSEC in, in DeFi protocols. Also ask him about the methodology, risk management approach, how they basically custody the funds on exchange sites, on in Uniswap pools.

[00:19:09] Kevin: Just to understand, make sure that you really feel comfortable what you sign, right? And I'm here particularly not necessarily focusing on legal language, it's really about the mechanism, right? That, and also I think as you go through this term sheet and discuss this with your market maker, this gives you also a good feeling whether this is somebody you can trust.

[00:19:32] Kevin: Because in the end, if something happens to your token, the market makers are the prime most only available or sole point of contact you can basically engage with to understand what's going on. So I think also this is a way to kind of vet whether this is also the right strong partner for this.

[00:19:50] Kevin: And yeah.

[00:19:51] Kevin: And I think you also ask about the number of market makers, if I'm not mistaken. There's not a clear answer to this. I think I would answer here with a range, right? Personally, kind of I figured out the number three market makers makes. It's also not a wrong one. I think, if I'm not mistaken, Monad launched with five if I'm not completely mistaken.

[00:20:12] Kevin: So I think probably anything in that range is not completely off. Kinda allows you for a broad coverage across the CEX venues, but also probably then having one of the market makers or two at least being also able to go on DeFi venues like Uniswap others right to kinda Hyperliquid to basically make the market for you.

[00:20:34] Kevin: You should always avoid that you have a single market maker on a given venue because I think it's good that there is some mutual checking in, let's say. Although of course market makers, and I think I'm here not stating something controversial, they know each other with quite well. It's a small space, but still, I think it's always good to have at least two players on this, on a given venue.

[00:20:56] Umar: Interesting. I'll come back to this in a bit, but I want to go through. I mean, I mentioned market makers, they can have different fee structures, right? Yeah. So either the loan plus call option that you mentioned and the retainer model. So for the listeners, can you just start by providing a summary of the differences between those two models and in your experience, what are the pros and cons?

[00:21:20] Kevin: Yeah, sure. So starting with the long call option model, essentially you as a project, you hand over a certain amount of your native token, only your native token to the market maker. They basically, and you grant these tokens as loan, huh? And they basically used in this token loan for doing the market making, the other side of the book.

[00:21:47] Kevin: So for example, like think of ETH, USDC also fiat on certain venues, right? The system provided by, from the balance sheet of the market maker. That also means any P&L effect from the market making operation is really with the market maker. Your books, you as a project, are not affected.

[00:22:07] Kevin: Now, how is the market maker compensated?

[00:22:09] Kevin: You basically grant the market maker a free option to buy the tokens or part of the token. So which form the token loan at the expiry date, at the end of the loan agreement. And basically that gives them also then let's say one end like the economic upside if the token moves up, right? But also, of course, given the fact that there is a contractual agreement, that's also not the means of, well, it's another source of hedging their position, right?

[00:22:41] Kevin: For example, they can then also partially sell this call option to other desks. That's why actually often market makers are not big friends of termination clauses, which are tied to KPI requirements because then it makes it hard for them to value actually the option, right under the loan agreement for example, hedging purposes.

[00:23:01] Kevin: So this is the loan call option agreement that essentially only requires you as a project to hand out, hand over tokens.

[00:23:12] Kevin: The alternative is more like a service model where you have then a market maker basically running for you, the market making, but actually they take funds for all the funds they use for this.

[00:23:25] Kevin: They come from your end. So the native token, the stables, the ETH, whatever you need, any P&L is also born by you. So if there's profit, it's great for you. If it's lost, by you. And of course, market making. Otherwise it will be I think way more popular. It's not necessarily a business which straightforwardly brings you money, right?

[00:23:47] Kevin: Because you always need to be in the market irrespective whether it's good or bad times. And obviously if you're then always present in the market, then you also can get hit, obviously, right?

[00:23:57] Kevin: And so how we then, the market maker compensated for this. It's usually a monthly charge, which is usually large to a large part paid in stables or fiat and maybe, let's say 20% of the monthly price and dollars is then maybe payable in the native token.

[00:24:15] Kevin: So it's a completely different approach. You can really, if you compare the two, you can say the loan call option agreement is of course, also from a market maker's point of view, a way more entrepreneurial model compared to just basically providing a liquidity service. Yeah, so I think this is probably like a good summary of the two and how they compare.

[00:24:37] Kevin: I said like the biggest difference is probably if you look at two aspects, what you need to provide as a project in the loan, it's only the native tokens. In the retainer model, it's both the native token and the other side and the P&L, right? Where in the retainer model, you basically got it.

[00:24:57] Kevin: In the loan call option model, it's with the market maker. 

[00:25:01] Umar: So if I'm a founder right now, and I'm still deciding on whether to choose that loan plus call option or retainer model, like we would you summarize by saying the retainer model is maybe best used when they want to avoid like sell pressure on their native token or that's just a too simplistic way to think about it or, yeah.

[00:25:24] Umar: When would you recommend the founder to use the loan plus call or the retainer model let's say? 

[00:25:30] Kevin: It's a good question. Of course. Like theoretically, I would say like of course if you kind of go for the retainer model, yeah, there's no need for the market maker to hedge themselves, right? Because they basically get paid for the service.

[00:25:41] Kevin: If you don't pay it full in your native token, I think then there's a quite a limited sell pressure. 

[00:25:47] Kevin: On the other hand, of course, right? It needs to be paid right straight away, right? And that kind of can then directly bite into your fiat stablecoin runway. That's why it's more common for projects the launch phase, to go actually with the loan call option model initially.

[00:26:04] Kevin: What I have seen that then, for example, over time as then also first tranches or loan agreements actually expire that maybe then projects opt for maybe a mix of maybe with one market maker you continue the loan agreement and with, without this, you switch over to a retainer or you bring in, for example, if you want to cover certain specific, let's say Latin American or Asian markets, right?

[00:26:29] Kevin: That it's just actually more economical to go then at the later stage as you expand basically exchange coverage with a retainer model there. So I think, you can say that maybe over time you gradually migrate then from a loan call option model to a retainer model. 

[00:26:44] Kevin: Under the assumption of course, that you then also may have used the, let's say the previous phases or phase to stack up your treasury, right? If you haven't done so or failed to do, you might be still maybe intrigued to continue with the loan model. Which then also becomes a bit more difficult if your token price goes down and down, right? Because then you need to kinda send higher and higher amounts of tokens to basically get a loan agreement deal closed.

[00:27:11] Kevin: So I think that's when it definitely becomes a bit more dynamic, I would say. Yeah. 

[00:27:16] Umar: And if you could give an approximate figure, let's say that token project, they're going with three market makers.

[00:27:23] Umar: In terms of like pricing, how much of a budget do they need to allocate to market makers? 

[00:27:28] Kevin: Yeah, so I think that's of course like essentially that's what the founders want to the answers they're looking for, right?

[00:27:34] Kevin: I have seen of course, it depends a bit on how aggressive you go with your launch. But I would say, let's say. Around if you have like this 1 billion token supply networks, right? I would say something between 20 to 30 million tokens for market makers on the loan call option agreements.

[00:27:54] Kevin: That's the stuff I have seen over the last couple of years and now also maybe to just give you a comparison here, right?

[00:28:01] Kevin: Retainer based models are quite expensive if they really rolled out across all venues. So I think I've seen, proposals quoting anything between 30 to 50K dollars per month.

[00:28:15] Kevin: So yeah, that's why. Then also aware, of course, obviously founders rather tend to go with the loan deal because basically for 30, 50k you can buy a couple of engineers, right? So I think, that's why. It changes then of course beyond the hot trading phase and everything has maybe also like stabilized a bit.

[00:28:35] Kevin: So I guess, if you look at the top protocols, right? They also have of course a lot of organic trading volume. That's when, of course the role of a market maker is different to in this really early phase where somebody literally, as it states in the name, needs to make the market because like you're a new asset right in town. So you can't expect that everybody wants to come in and all the prop shops trade your asset, right? But yeah. 

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[00:30:40] Umar: Now I wanna switch gears and go to our next topic, which is on directorship. So we won't be discussing entity structuring today extensively, but I wanted to discuss directorship services because you also sit as foundation board member for web3 projects.

[00:30:57] Umar: I briefly mentioned it earlier. So as director, you're not involved in the day-to-day running and onchain voting decisions. Correct me if I'm wrong there, but could you provide us with an overview of the fiduciary duties of a web3 director or board member, namely across governance and how you ensure that all these onchain decisions are implemented off chain.

[00:31:22] Umar: Yeah. 

[00:31:23] Kevin: I think where I have a lot of excitement for or share a lot of excitement in the end, right? As a foundation, you are an entity which is subject to certain regulations, certain laws, and you need to kind, obey and play along side them and this is essentially your role, right?

[00:31:41] Kevin: You need to make sure that whatever is imposed, let's say, by the community the DAO on the foundation is basically executed and conducted in line with the applicable laws, also done in the best interest basically of the community, of the tokens holders, because as a foundation, you don't have shareholders or members, right?

[00:32:00] Kevin: It's basically you serve a certain purpose and you basically, your task as a director, as the most senior body of this organization. So it says that you achieve your goal, right? And materialize this purpose. And this is basically, it's really a lot of supervision. And that was also basically the rationale behind me moving into such a role.

[00:32:21] Kevin: Historically, I would not call it say, I would say I moved into my first director role a bit by accident. That was with KYVE, where I used to serve as a CFO with the devco. And then basically ahead of the token launch, we need to set up a Swiss foundation. I happen to be a swiss resident, so basically I moved naturally, so to say, in that role and basically was, always and still until today very much involved basically driving the activities of foundation.

[00:32:49] Kevin: And this is in the end, right, making sure that a governance decision by the community are implemented. 

[00:32:55] Kevin: That treasury management is done the right way, that no conflict of interest can emerge, right? That, for example, also the invoices sent by the devco are in line with contracts at arms length. So there's no rug pull, right?

[00:33:08] Kevin: Like, and just like emptying off of the treasury at the foundation level. So there's a lot of governance work. I would not say I would, maybe for many people it's also boring work because it's not super hectic or crazy. Okay, if you have your token is on fire, then life also looks different.

[00:33:25] Kevin: But it's really about checking the keep a certain balance. And that's why I also. As I then saw that often this foundation we're working with, let's say, professional directors, which maybe not, did not have this in-depth background in web3, I thought, hey, there might be actually a certain niche and certain demand for this professional web3 savvy or experienced guys to join basically the ranks of a director to make sure when then a foundation needs to sign or its subsidiary market maker deal, or an exchange listing or engage in, in DeFi treasury management, that you have also the right level of knowledge in this body to make the right judgment calls, essentially to protect eventually the mission and the community.

[00:34:13] Umar: I've got a few follow up questions on directorship Kevin. The first one is on personal risks. So on a personal level, how does your own risk actually start if a DAO vote is basically pushing in a direction you are not comfortable signing off. What happens then? 

[00:34:30] Kevin: Yeah, that's a maybe important point. And I think here, for example, the Swiss Foundation is probably like a more extreme example because you basically, you're liable with your personal wealth point.

[00:34:42] Kevin: Because so jointly as a board, not as an individual, but like yeah, there is, so if for example, whatever the foundation does is triggering unforeseen tax consequences or social security contribution, you're basically, if there is no money left in the foundation, ultimate they could come off to you, right?

[00:35:00] Kevin: That's I'm not a lawyer, but what I understand it's a bit less present in the Cayman Foundation because it's a Common Law construct. I think it works a bit differently. I think there are also a certain means available to, to, to basically protect the directors. But yeah, it's essentially right. Whether is Cayman or on Switzerland or elsewhere?

[00:35:21] Kevin: I think there's a personal nexus and that's why like basic, whatever you sign, you can't just like walk away and get the discharge from your shareholders because there's literally no shareholders.

[00:35:32] Kevin: And the case of a Swiss foundation, you can say it's even worse because it's a regulated entity. So you also need to actually file every year an annual report to the supervisory authority which basically needs, then you also approve it.

[00:35:46] Kevin: So you also actually standing there as a director and you basically need to defend your work, so to say. And that's why I think there's definitely a personal attachment there. And that's why it's also important that I think communication is clear and that I think if you look back in time there was a lot, there were a few cases where maybe the DAO was not happy with the execution of the foundation.

[00:36:08] Kevin: And I would say often, maybe not in all cases, it was also that it was not properly communicated what the foundation can do and what they can't do, right?

[00:36:17] Kevin: And of course now it also, maybe it's also a bit more clear, like in a world where there's a lot of uncertainty, especially in the regulatory arena, that maybe then certain foundations were not feeling comfortable to move forward maybe with a listing, which is kind of then makes the token accessible to you as citizen or you as a person, right. 

[00:36:39] Kevin: In also as a consequence, I would also say that was also then maybe my takeaway, hey. If that's the case, if you have this personal liability topic, then you also want to make sure that whoever sits in this board feels comfortable taking certain risk. Because as we know still today, we still live in a gray zone, right? A lot of things still read require a lot of clarification, and until then that's reached. We are startups, right? We need to do stuff, and that those are results often in decisions which might trigger controversies and that's why you need those people kind can stomach this kind of risks, I'm not talking about unnecessary idiotic risks, but just like industry risks, so to say. 

[00:37:24] Umar: I dunno if in your role you are also advocating for Switzerland as a jurisdiction for web3 Foundation. But I wanted to just go through like how a Swiss foundation maybe compares to a Cayman Foundation.

[00:37:39] Umar: So a lot of the early project Ethereum, Solana, Cardano, Tezos, they chose Swiss foundations whereas the more recent projects, they seem to actually default to Cayman Foundation companies. So from your vantage point as a director, because I believe you've also worked with Cayman Foundation, so how do you compare Swiss versus Cayman Foundation for web3 project?

[00:38:03] Umar: Are there any tradeoffs that founders should really understand when they are choosing between these two? 

[00:38:10] Kevin: Yeah, I think, absolutely right. I think I personally, I'm neutral in that sense, of course. I'm based in Switzerland. I work for Swiss foundations. But in the end, I think it's certainly, as I said, like historically, yes, there was, in the early phase, I think this big layer one foundation they got established in Switzerland. I think that was certainly also due to the fact that at that time, Switzerland had a very competitive early regulatory framework, right? With the publication of the ICO guidelines in 2018. That certainly helped paving the path. The Swiss Foundation is of course also an excellent match, especially for large treasuries, right?

[00:38:46] Kevin: Because it's supervised, it's audited, but that also makes it a bit more a expensive and slow, right? Because if you like, then maybe a small project Swiss Foundation might be also not the right fit and that's why then I think also the Cayman model is more attractive because it's more flexible.

[00:39:05] Kevin: And also, for example, when it comes to DAO implementation, a Swiss foundation cannot really be bound by decision, explicitly bound by decision of a DAO. It's more that the DAO basically issuers signaling effects, and then the board of the foundation implements because by law that's not possible.

[00:39:23] Kevin: But then, as far as I understand in the case of Cayman Foundations, you can actually define DAO resolutions as actually binding resolutions for the foundation board. So it gives you definitely more flexibility. It's probably also quicker set up from a timeline point of view. For example, you don't have to supervise the authority.

[00:39:41] Kevin: You can appoint individuals. Maybe you also know, or investor representatives, a supervisor. So I think it's just a bit more a familiar setup, I would say, right? But still, I would say. Also with their, for example, the recent case of Aztec, right? Where they incorporated their foundation in Switzerland.

[00:40:00] Kevin: It still shows probably like for bigger projects, maybe projects also which care about privacy. Switzerland is still a place. It's also a fact that probably the number of projects relocating Switzerland, is on the decline. And yeah, indeed, as you said, it's more Cayman, BVI, Panama which took the lead particularly I think for also like flexibility and legal management reasons I would say.

[00:40:28] Umar: Before we again, switch gears to a different topic, there's a last question on directorship that I wanted to go through is what is the difference between you are a Swiss resident, but what's, what would be the difference between your fiduciary responsibilities as a Swiss resident director and non-resident director, let's say for a foundation in the Cayman Islands?

[00:40:49] Kevin: That's a very relevant question, right? Whether it's Cayman, a Swiss foundation, they always require a local person sitting in at least a local person basically sitting in the board, right? And of course, right? That's what you often fulfill with being a resident director. Because usually, for example, I think whether it's Cayman or in Switzerland, teams are not really based there, right?

[00:41:12] Kevin: Obviously, right? And that means essentially if you kind serve as a resident director, I think. You probably do the same as a role, you fulfill the same tasks, same duties as in case of a non-resident director. So you take care of what I just mentioned before, you bring in the finance lenses, the experience from having been a finance operator, but then on top of that you basically also work a bit more on, on corporate admin stuff.

[00:41:39] Kevin: So basically engage with the local service providers, making sure that mail is collected. So that's then of course, something you can basically add on. And also, for example, it's then very helpful to, to also engage, for example, with local banks that they have a face to the name. So I think that's probably, like you could say is the difference in the end, what I do, I can do it for Swiss and offshore structures.

[00:42:04] Kevin: But of course, right? If it's a Swiss structure, it's then also like helpful to be actually present on site that you can talk to the local service providers, lawyers, make sure that everything is properly run and operated. And that's also, of course, also appreciated by these service providers because it makes also their job easier.

[00:42:22] Kevin: Because in the end, as digital stuff is, as remote work is established, whatever, we still, humans, we like to interact with other human beings, right?

[00:42:31] Umar: Now, your excellent article title, the Zero Bs Guide onto Crypto Treasury Execution inspired my next question. Excellent article title, by the way.

[00:42:41] Umar: So in this article title, you point out that there's a huge gap between knowing and actually doing.

[00:42:48] Umar: The easy part is setting up the infrastructure. I mean, I'm saying easy between inverted commas here because it can be time consuming. But you know, having a multisig setup, setting up corporate exchange accounts like on Coinbase, Kraken, et cetera.

[00:43:03] Umar: Other off ramping venues, I'm saying this is the easy part.

[00:43:07] Umar: So for this conversation, I want to focus on the execution part. Let's say a project, they've got a chunk of idle stablecoins that can be put to work. Could you walk us through the, some of the onchain deployment strategies that you like to see from low risk yield strategies to a bit more aggressive approaches?

[00:43:26] Kevin: Yeah, absolutely. And I think that's exactly also what kind of holds back a lot of projects because yeah, they might have then I think the infra, but then okay, what follows next? And in the end. As often also relevant for other topics, right? I think simplicity is actually what you should go for, right?

[00:43:44] Kevin: Unless you really have a clear vision for something a bit more complicated.

[00:43:50] Kevin: In the end, right? It can be as simple as it, it depends like, look, you have your budget, you kinda know what you can deploy. Make sure that you have done this because otherwise it's not so fun. If you think I don't need to circle back and I can deploy basically funds.

[00:44:05] Kevin: But I think like it's really probably if you really look for zero risk exposure or low risk exposure is probably like really going with some tokenized RWA, like money market funds. You can for example, that's no an investment advice here. Big disclaimer, right? Like if you can look at product Benji or SuperState governance, bond product.

[00:44:27] Kevin: You can also go for example, on centralized exchanges. They usually also have this USDC accounts also here, mind of, be mindful about counterparty risk in this regard, right? I think this already probably gets you quite quickly these days. I would say around 3.5%, right? Annualized, right? But just like kind of deploying this.

[00:44:51] Kevin: You can of course also like go into so-called blue chip DeFi, but also I think be mindful these days that actually the, for example, and what do I mean by blue chip DeFi, right? It is a bit of conversion take here, but probably what people understand by this term is kinda looking at Aave, looking at Morpho as examples.

[00:45:12] Kevin: But the hard fact is also that if you really look for zero risk or low risk profile, what you get, for example, your USDC these days on Aave or in one of the prime USDC vault Morpho is actually often less than what you get from T-bills.

[00:45:31] Kevin: So that's also a bit a structural issue we right now have actually these days in that sense, if you can link it, there's this excellent piece by Luca Prosperi on actually the reward or risk reward profile changes of onchain lending markets, right? In the case of Morpho, which has got published yesterday, so 6th April. So really, I really highly recommend you to read this and that's why like if you kind of really look into just generating some baseline yield, probably stick with basic tokenized RWAs. If you kind of need to deploy stablecoins or maybe look into centralized exchange accounts.

[00:46:09] Kevin: If you want to kind of then make it a bit more funkier and enriching, right?

[00:46:13] Kevin: Then of course you can look into different lending protocols, right? Like, which kinda give the fact that maybe then we don't talk anymore about over collateralized lending markets, but maybe uncollateralized lending markets. Like for example, think of wildcat finance. You can look into active trading strategies, you can look into LPing

[00:46:37] Kevin: your token, for example. But that all requires, of course, one thing. You need to be then really on the watch outlook for market trends, how also things move that kind of requires a different investment monitoring. So I think that's why I say, look, if you kind of really want to essentially just earn a risk-free rate of yield, let's probably keep it relatively simple.

[00:47:04] Kevin: If you want to really chase the opportunity, you can do that, even though, and Aave and Morpho, there's now a big discussion around that, whether they really provide risk adjusted attractive returns. But if you kind of do the, your research you have under collateralized lending markets, you have basically, you can look also into option strategies for your native token, right?

[00:47:29] Kevin: By, for example, selling certain option or structured products on your native token. With now going into details here, you can look into basically so-called base trade strategies where you kind of do some arbitrage between perps and spot markets, for example, right? Or you can look into, yeah, like I said, like opening up LP position on Uniswap, or other venues, right?

[00:47:56] Kevin: But that all requires like, just like some quite steady management of the positions. And if you don't have somebody in-house who is really, and I'm not talking here, like it's sufficient to have then a director who understands finance, it really kind of requires steady and and constant oversight, right?

[00:48:13] Kevin: Of these positions. It might be not the right fit here, right? And because the risk profile is then a completely different one. And then to be fair, right just earning then a few percentages more annualized potentially is probably not justifying the risk loss risk here, right? 

[00:48:30] Umar: I wanted to go through a practical example and if for the listeners, the practical example feels a bit heavy, like just listening to, I mean, the transcript of this conversation with Kevin is also available on our website and you can always like use an LLM to summarize it, but I want to go through this practical example and let's imagine a project, they've got this Investment Policy Statement in house and that IPS says that it caps any single source of yield at 20% of deployed stablecoins.

[00:49:03] Umar: So let's say that project they decide to spread across different blue chip projects like Compound USDC, Aave USDe, Ethena stablecoin, Morpho USDC and Spark USDS, right? Sky's stablecoin.

[00:49:18] Umar: Now, on the surface that looks nicely diversified, but most of the yield is still coming from similar collateralized lending markets, right? With different overlapping borrowers and collateral.

[00:49:29] Umar: How do you want that team to think about first counterparty and correlation risk in a setup like this, and what you, what would you look for before deciding whether deploying into another stablecoin product like Aave USDC, does it, would it even make sense to add another very similar product to the list?

[00:49:50] Kevin: Yeah. No, I think it's the right question, and I think also probably providing this 20% threshold is probably quite a practical guide here, because I think that's, in my experience a good benchmark to avoid constant over concentrations and I think is exactly the right perspective. I think you really, if you, that's also what I meant by kinda, okay, look, it's one thing deploying into tokenized RWAs, like money market funds, right?

[00:50:13] Kevin: Or just putting money on Coinbase account, right, for generating some saving yield there. You really need to understand basically what's under the roof essentially of the product. And if in the end you have just different platforms and protocols, but basically the underlying positions are the same.

[00:50:31] Kevin: You need to really kinda stack that up. And basically, if that goes and beyond the 20%, then it's not manageable or it requires a change of the IPS, which is, I think, not a recommended action here. I think definitely it's the right perspective. Also, apart from positions, also think about the protocol layer.

[00:50:48] Kevin: So yeah, whether it's on the Sky, Morpho, Aave, et cetera, right? You don't want to have, then also on that level, a too strong concentration. You also do not as, now also the vault model becomes an emergent form of asset management in DeFi, you don't want to have then let's say 33% of the vaults you have deployed, managed by a single curator.

[00:51:10] Kevin: We also have seen right that it is helpful to have diversification across curators because curators also tend to kinda rebuild let's say certain model portfolios across, let's say platforms. So I think this is, I think really the right perspective here. And really there is no way around basically do your proper pre-investment dd (due diligence), define also like clear exit triggers proposition, right?

[00:51:36] Kevin: Be it, TVL, be it a APY, be it concentration, right. As just discussed. So I think this is super important and also more importantly is, and that's all that adding up. Why I mentioned before, like if you do that, you kind of need somebody full-time looking at this positions basically. Is that you?

[00:51:54] Kevin: It's not sufficient to do it once and forget about and basically fire and forget. It's actually that you need to regularly check in and control whether there is no concentration risk, right? Because you never know how yeah all of a sudden, like also for example given the past tax, right? Then certain lending markets for example, became more public, became basically a certain escape route or a safe harbor and yeah, all of a sudden you, you kinda get into then a more concentrated situation. So I think that's super important that to have a close eye on this and there is no way around to really regular check in. Maybe not daily, but like at least if you run such a more active portfolio, so to say, do at least weekly check in on a portfolio concentration.

[00:52:41] Kevin: Thanks to AI tools, you can also automate via a clever prompt these reviews quite quickly, but just make sure that you have a really, a clear control because yeah, it's a bad excuse to say I didn't know that there was such a concentration because that's your job to really do proper pre and post-investment due diligence and monitoring, right? 

[00:53:02] Umar: Fantastic. Kevin, we are actually very fortunate to have you on the podcast today that I wanted to go through a plethora of very different topics because we went through token readiness with the TGE, we went through directorship services. We just went through treasury management and there's the last topic that I wanna go through, which is M&A.

[00:53:23] Kevin: Yeah. 

[00:53:24] Umar: So, and focus on like how tokens affect M&A. So, I'm saying they make acquisitions a bit messier than in web3. So in a typical like crypto project, you've got this dual capital structure. You've got the equity layer that basically owns the devco, the IP, and the revenue flows, and you've got that token layer where a lot of the market value and network governance actually sits, right?

[00:53:52] Umar: So I'd like to take a case study that happened recently. So Circle acquired Interop Labs. Interop Labs is the Devco behind Axelar Network, which is a cross chain interoperability network on Cosmos. Now Circle they only acquired Interop Labs and its IP. But not the Axelar protocol and its token, AXL.

[00:54:14] Umar: So the token, it did experience like a 50% drop since the announcement happened as probably token holders felt they were being sidelined from this deal that was happening with Circle. Now, from your experience, how do tokens complicate M&A deals in terms of governance risk and valuation and the fact that you can buy a hundred percent of the company's equity without really controlling the network, which kind of happen in the case of Axelar?

[00:54:42] Kevin: Yeah, I think like it's definitely something which is very trendy these days, and I think I'm also sure that we will see a couple of other situations emerging in the next couple of weeks and months, I think essentially, right, the fundamental problem is to be honest, that most tokens out there don't really have a clear utility, right?

[00:55:01] Kevin: They also don't have really a clear attachment to revenue whatsoever. So, then of course somebody comes by and just buys, let's say the IP or just also just the shares of the devco, right, they can just essentially walk away and the token holders are left with what, hot air. And that's of course, right? If then it's executed as, and I'm not familiar with the details of this case, right?

[00:55:28] Kevin: But like it looks like that in the end there was this press announcement that this transaction happens or happened. And there was no separate communication for the token holders, right? There was no roadmap provided to the token holders, how this will basically shape their future, what they can expect out of this.

[00:55:45] Kevin: And I think this is and obviously what do people they leave the positions and walk out because they don't, essentially, it's also a matter of trust, especially in crypto where many tokens don't have in hard coded rights attached, right? So if trust is gone, why should you keep the asset?

[00:56:02] Kevin: And I think I would say a recent counter example is Across Protocol where basically they also still have or had before this dual structure and the token was out, but there was no fee switch implemented. There were no, let's say anything else besides governance, right in the DAO. There was nothing present, right? And what they did basically said, look, we are facing some constraints.

[00:56:28] Kevin: We need to, in order to monetize, it's better to be basically operating as a for-profit entity. But what we do is basically we do this transition to a basic, to a singular model focused on equity structures, but basic by doing so, we basically buy back the token at a predefined price or give the, not everybody, but if you have, basically if you hit a certain threshold, give the token holders a right to convert the tokens into equity of the newly formed entity.

[00:57:01] Kevin: And I think this is a different story, and you also see it, I just checked earlier, the price of the Across token still trades more or less around basically the offered buyback price. And this is ultimately a statement of trust. People trust that the offer, which was basically placed by the team will hold.

[00:57:18] Kevin: I think then a more sound handling of the situation. To be honest, it's very delicate. I think even in, in the case of Across, if you go on Twitter/X or in the forum, there will be always people complaining and not be happy because for whatever reason, either they cannot convert into the equity instrument is of course not liquid.

[00:57:40] Kevin: They might reside in jurisdictions where it comes with tax disadvantages, et cetera, et cetera. But at least you have communicated, and I think this is probably most instrumental, if you do something, be clear in your communication, don't just execute and basically leave the market on its own. I would also say that's also a prime strategy to maybe trigger a couple of lawsuits, but that's just like a personal opinion here.

[00:58:08] Kevin: So I think as always in life, be clear on your narrative. Make it as much as possible a whole story, and yeah. 

[00:58:16] Umar: I mean, it's a great incentive to be able to convert your token position into e equity, but probably the drawback of this is you kind lose out on pseudonymity, right?

[00:58:27] Kevin: Yeah.

[00:58:27] Umar: You have to then reveal your identity and

[00:58:29] Kevin: Absolutely.

[00:58:29] Umar: That's kind of the beauty of Web3 as well, that you can remain pseudonymous.

[00:58:34] Umar: Alright, Kevin, I think it's time to speak about your work at threek advisory. Can you give the listeners an overview of the services that you provide at threek advisory, especially around those topics that we've discussed so far?

[00:58:47] Umar: TGE, treasury management, directorships, M&A. 

[00:58:51] Kevin: Yeah, sure. And I think we talked quite extensively about a wide variation of topics and I think that's really probably my strength. I have a very strong finance slash operation generalist approach to many topics, and that's why what I do is relatively broad, right?

[00:59:07] Kevin: I work, for example, as director with foundation companies ahead or post TGE and also now, for example, with Hecate Asset Managers. At the same time, I really worked in a bit more selectively because that's also something I cannot do, like simultaneously for several projects. I work as a Fractional CFO. The common two use cases I see and I really enjoy is joining ahead of a token launch.

[00:59:33] Kevin: That's maybe right now not the hottest area of action, or, you know, when there's like a transition into finance leadership of a project it might come handy to have just somebody for a few months onboarded, kind of who knows the drill. Who doesn't need to kinda be educated, what it takes and just to kinda stabilize operations before maybe then the permanent hire is onboarded.

[00:59:56] Kevin: So these are probably the areas of what I do right now. And really, I think from a topic point of view, it's a lot of treasury management. It's a lot of market maker oversight. It's less right now, token launches, but of course that's also where I certainly earned my marked experience over the last couple of years.

[01:00:15] Kevin: Yeah. And I think what I always enjoy is really working with the founders and teams directly hands on. So I'm kind of, when I do something, I'm also the guy that can kind of knock on, they can knock on my door anytime, right? Whether it's in the morning, evening, weekends, I'm here, like to kind of help out and I'm kind of best described as an extended slash embedded team member of course who is not there full-time, but I should not basically feel that I'm really like there just as an advisor. 

[01:00:47] Umar: When you say you are selective, what does selective actually mean? Or if I can rephrase that question, who would you rather not work with? 

[01:00:56] Kevin: Yeah, I used adjective for the term as selective and essential.

[01:01:00] Kevin: Just like to be realistic, right? I cannot run like three fractional token launch mandates simultaneously. But of course, right? It also means, I definitely learned the hard way what maybe what to avoid, what kind of projects. Like I always, if founders kinda, if I get the impression that they know what they're talking about, they have a certain thinking for a certain roadmap, they maybe also know that not everything is perfect, but they know basically where are the flaws, where are the gaps?

[01:01:28] Kevin: So that basically. You don't walk into a room where you realize that there's actually just a hidden door where like even more messes is hidden, right? I think kind of like, and in the end, right? As I said earlier, it's a people's business. I think it's also very important that we get along on a personal level quite well.

[01:01:50] Kevin: I think that, a lot of direct communications that collaboration is as productive as possible and I think that's why often now, before jumping in like with, on a, a longer with intention to stay for a certain longer period of time, a test collab is the right way forward, right? Just to kinda check in whether it's a match not only with the founder, but also the extended team and I also consider my mission as being fulfilled. If I then walk out of a project and I see the folks the next time at the conference we can hang out, have a coffee or beer and have just a great chat.

[01:02:25] Kevin: And I think because that's also what I look forward for is just great experiences and a feeling that I was able to help out and also personally I maybe learn the heck load from working with the team. 

[01:02:38] Umar: Fantastic. Kevin, I have a follow up question on what we were discussing earlier, is just to quickly have your opinion on this because you are in the thick of it, working with these early projects about to launch their own token.

[01:02:52] Umar: Do you feel like in general now as compared to a few years ago, like people have tend to lose faith in holding a token? Do you see maybe projects in the future will have it's gonna be just less and less tokens like in web3, or how do you see this landscape with token evolving?

[01:03:11] Kevin: Yeah, that's the lottery. That's the big question, right? I think, definitely. I think, to be honest, right? People, and also like just looking at recent conferences, I think there's less hype around launching new tokens. Also, I think recent, launches weren't, I would not say they were not super successful.

[01:03:27] Kevin: I think they just have a hard time because there seems to be a limited appetite to buy these assets, right? And I think, I definitely believe that there is a clear future forward for tokens. I think what we as an industry really need to become better is basically a narrative the communication of the narrative and essentially also we need to come up with something.

[01:03:50] Kevin: Maybe establishing web2, right? We need to have proper investor relations happening, right? And because it can't be that you just basically launch a token and you basically could go on CoinGecko and compare the supply information with what's shared and CoinMarketCap and you get basically two numbers.

[01:04:08] Kevin: I think I'm also like an avid supporter and I also shared my 2 cents, so to say, with the teams of what Blockworks does in the, in with regards to the token transparency framework and also like the, this investor relations platform, because I think that's the only way forward because we just discussed about crypto M&A, and we have seen that there is a trend, a clear trend towards singularity of incentives or instruments.

[01:04:33] Kevin: And I would say this does not exclude a future for tokens, but if you go for a token, you give it, you need to give it proper rights, you need to basically, clearly communicate about it. You need to be active there. This does not mean that when you launch your token that it needs to have all the features already in place and available, but then at least be active, communicate about it, share a roadmap, share basically what you want to achieve.

[01:05:03] Kevin: My worry right now, but again, I'm not a lawyer, is that the recent SEC guidance might complicate this because right there is a certain framework which was introduced, which basically binds the existence of an investment contract, essentially turning then your token into a security is bound to basically the fact that you have still unfulfilled promises out there, right?

[01:05:28] Kevin: So I think probably that's a challenge. We will see the next couple of months how team navigate this. And again, this comes back, right? We need to have risk takers in charge, right? Yes, it's important that everything is done the right way, but also, right? If you think about, if you launch a token with honest ambitions, if you are clear and transparent in your communications and you basically, you also act accordingly.

[01:05:53] Kevin: And if there's a deviation of plan, right? Which happens instead of you communicate again accordingly, proactively, I think in the end the effective risk remaining might be actually less concerning. They may be assumed or understood in the beginning. But again, like we, we are still in a very early phase.

[01:06:10] Kevin: We are, we should be all act like startups. And in the end, if you're a founder, if you're a key decision maker, you also need to be fine with basically navigating this era or this phase accordingly. And maybe, yeah, take certain controlled risks. Let's put it that way, because that's the only way forward, right?

[01:06:28] Kevin: If we keep continuing the playbook from the past days, I don't know, I think I personally would not buy any tokens anymore. But if I'm convinced there's a right team which is committed, which communicates clearly in a traditional way, which kind of matches a bit like, hey, what a list a company does, then I think I trust this team, right? And then I think we can start again talking about investing in digital assets. Yeah. Like tokens. 

[01:06:55] Umar: I agree, Kevin. Now I could not end the episode today, Kevin, without touching on the omnipresent topic in our lives today, which is of course AI. So on your website, I saw you've launched an AI agent that basically wraps a lot of the services you offer.

[01:07:14] Umar: I'd really recommend the listeners to check it out, and I'll of course share the link in the show notes. So I'd love to end with an AI question. So as a fractional CFO today, how are you using AI in your work? And yeah, what do you think will be possible in the near future that maybe isn't quite there yet?

[01:07:32] Kevin: Yeah, I think of course, like it's, that's an exciting area, right. And of course, right, I use AI, but to be honest, I think it's maybe less groundbreaking than some people might expect, it's a lot of assistant jobs, right? Making sure that from kind of like doing like the email stuff to kind of bank transaction reconciliation for the ledger stuff.

[01:07:54] Kevin: Also I think a lot of quality assurance, right, of reports you have generated. But then I think where it becomes really interesting and you really, I think with the current tooling you can really build cool, let's say monitoring risk management tools. For example, if you have live DeFi positions asset, if you do your weekly or once or twice per week, checking on your positions, right?

[01:08:16] Kevin: I think you can generate helpful insight reports how your portfolio is performing. I think also on the market maker side, if you get this read-only API keys, you can actually build yourself. Of course with certain level of sophistication, and that's not done in one or two hours, but there are great GitHub repositories out there, which allow you to build your own market maker analytics dashboard.

[01:08:37] Kevin: So I think that's quite cool, but it's maybe less groundbreaking than expected. Of course in the future. I personally think like a great area where I think, agents can be deployed is really accounting, right? If you think about you have Cryptio, which, or Breezing and other stuff, there's no endorsement here which already use a lot of automation rule-based logics.

[01:09:02] Kevin: But then I think you kinda stuck with Xero and then Xero, yeah. That's where then also of course, a lot of manual entry points join. Maybe looking into how you can really also automate this Xero booking logics, using agents could be interesting. A certain challenge there is also, I think privacy, right? Or confidentiality, right? You can of course use Claude the Cowork tools to use this. It will be likely quite slow and in the end you end up with the most expensive stack of their subscription. But if you then choose also carefully check their privacy settings, maybe that's also not the right place to share all your sensitive information.

[01:09:47] Kevin: Question mark. It's a risk appetite question ultimately, but that's where I, if I kind of had to look where I spend currently most time is either kind of accounting reviews, ensuring that it is actually properly done. I think that's where I think probably a lot of potential sits. Or also I think if we then talk about DeFi like portfolio rebalancing also like kind of execution workflows, okay, I would like to deploy X amount into this vault.

[01:10:18] Kevin: That maybe also it takes the work from your plate and execute via an agentic workflow. These are certain things, but I think it, it will probably take a bit more time than anticipated. I'm not talking here years, but let's see what's possible in one of your time, to be honest. 

[01:10:32] Umar: Yeah, I mean the, this topic about AI, I mean, we could do a whole episode on this Kevin, but I wanna be respectful of your time as well.

[01:10:41] Umar: I'm conscious of, we've actually hit the one hour mark and it's probably a good time to wrap up the episode Kevin. The title for the episode today, Kevin is, being a Fractional web3 CFO and Expert Director. We've touched on many different topics, but for the listeners, if you had to summarize the episode today or if there was like a last topic that we didn't go through.

[01:11:05] Umar: What would you like to share with the listeners? 

[01:11:08] Kevin: I think, we covered it quite well, I would say, I think, what I just feel also whenever I have such kind of conversation that it's the area where I get deployed is super wide, right? You have topics ranging from token launch, treasury management, market makers, to kinda in the end also like something we haven't touched, but for example, team token plans.

[01:11:29] Kevin: So I think it's, this is really what I enjoy. It's the broad width and that kind of, it really requires this generalist take to be actually successful. But also if you do a good job, you also need to be fine that you're not the one in the spotlight because actually doing a good job means also that nobody notice you get noticed, but like your work is maybe not that noticed.

[01:11:52] Kevin: If something goes wrong, obviously, right, you're fully exposed and that's I think, something probably also, you should look for, right. And when working with finance people. Sometimes I think the more silent personas are the benefits because they're just steadily and with a lot of dedication, do their work and in a very reliable way.

[01:12:13] Kevin: Maybe the big salesman maybe can leave a good impression, but like, yeah. It's a bit like a honest truth of our profession that yeah, you only get the attention when something goes went wrong or is about to go wrong. 

[01:12:29] Umar: Yeah. Yeah, you're right. I'm always more curious to learn about the quiet person in the room, actually.

[01:12:37] Umar: Yeah. Fantastic. Kevin, there's a last question, which I usually like to ask to my guests before they leave is, do you have a favorite quote or let's say like a maxim that you live by or you regularly repeat to yourself? 

[01:12:52] Kevin: Well, I think never be satisfied or I think, it's a Latin phrase, semper anticus, like always forward.

[01:12:59] Kevin: Not in a military sense, but like, it's more like, hey, look, always move forward. Just keep learning because I think if you stand still and relax, that's probably the best way to put yourself out of work. So I think that's probably really one of the maxims like I stick by and yeah, just stay curious.

[01:13:16] Kevin: I think it's really, I have always a bit, personally, I always feel that I still have so much to learn and catch up and I think that also is essentially what drives me forward and keeps me in the game, I guess. So, yeah. 

[01:13:30] Umar: Fantastic. Kevin. I really like it. Kevin, if people want to reach out to you, what's the best way to do so?

[01:13:36] Umar: Either on socials or on your website? I mean, I'll be sharing your website of course, but can they reach out to you somewhere else? 

[01:13:43] Kevin: Well, they definitely can reach me via my webpage, so the email, you can also find me on Twitter also X, I also have a LinkedIn, so certainly like I also have on my webpage, my Telegram.

[01:13:56] Kevin: So I think feel free, whatever is your preferred channel. I am reachable almost everywhere. 

[01:14:03] Umar: Thank you, Kevin. Thanks a lot for your time today. It was a very rich conversation. Thanks for your time and we'll be in touch. 

[01:14:12] Kevin: Thanks a lot for the opportunity Umer, keep on doing this. Your pod is really amazing.

[01:14:16] Kevin: And also for me, as an avid listener, every time I learn something, when listening to one of your episodes.