Interview with the Founder of Delphi Digital: The Journey from a Small Company to a Crypto Investment Research Giant
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Interview with the Founder of Delphi Digital: The Journey from a Small Company to a Crypto Investment Research Giant
Yan believes we are still in the early stages, and future trends will depend on several factors, including the upcoming elections.
Navigating Web3 tides with focused insightsCompiled & Translated: TechFlow
Guests: Anil Lulla, CEO of Delphi Digital; José Maria Macedo, Co-Founder of Delphi Digital; Yan Liberman, Co-Founder of Delphi Digital
Host: Santiago R Santos, Investor
Podcast Source: Empire
Original Title: The Untold Story of Delphi Digital's Rise | Jose, Yan, Anil
Air Date: August 24, 2024
Background
In this episode, Jason invites the founders of Delphi Digital to share their journey from a small research firm to a powerhouse in investment, research, and consulting. They delve into their unique "umbrella thinking" decision-making framework, discuss challenges in managing rapid organizational and portfolio growth, and offer deep insights into the current state of the crypto market. They also explore emerging trends in crypto—such as artificial intelligence and gaming—and how these might influence broader industry dynamics. Finally, they express optimism about crypto’s future and examine the infrastructure needed to support its continued expansion.
L1 Communities and Culture
Jason introduces the discussion onthe current state of the crypto industry and the story of Delphi Digital.
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Anil shares the origin of Delphi, recounting his experience with co-founders Yan, MJ, and Kevin. Having worked at Deutsche Bank, they developed a growing interest in crypto and decided to leave in 2018 to launch Delphi Digital—initially as a research company.
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Anil reflects that being able to work in such a dynamic and innovative industry while earning a living feels like an unexpected windfall—or “cheating” life in a good way.
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In the early days, Delphi focused on writing reports, but no one was willing to pay for them. Their reputation began to grow when their in-depth research gained attention, particularly after Yan used comparative analysis to help predict the bottom of Bitcoin’s price cycle.
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Anil adds that their controversial 2019 report on Ethereum attracted the attention of Vitalik Buterin, which led to collaborations with various protocols and helped catalyze Delphi’s consulting arm.
From Research to Consulting
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Anil continues detailing Delphi’s evolution, emphasizing the significance of working with Vitalik. After sharing their models with him, they gained more consulting opportunities. Through collaborations with multiple decentralized finance (DeFi) projects, Delphi gradually built substantial influence in the space.
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He recalls a conversation with Kane, who affirmed the value of the Delphi team and praised their unique perspective in the industry. Anil believes this cross-domain expertise gave Delphi a distinctive edge in the crypto market.
Delphi’s Diversified Growth
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Today, Delphi has evolved into a multifaceted organization encompassing research, investment, and project development. Anil emphasizes that when making major decisions, they always analyze from multiple angles to maintain a competitive advantage. This diversified perspective and accumulated experience have enabled Delphi to sustain growth and deliver valuable services in the crypto ecosystem.
Exclusivity in Ecosystems
Jason mentions MJ leaving to start a fund and asks about other team members joining.
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Anil recounts Tommy’s story, noting that there were few crypto research firms back then—Delphi Digital was founded in 2018. Tommy first met Anil and the other founders for what was supposed to be a 30-minute meeting, but they ended up talking for three hours. Eventually, Tommy joined Delphi, bringing his network with him.
Jose and Peirce Joining the Team
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Jose shares how he first connected with Delphi. At the time, he was conducting research on token economics and had written a report on Ethereum. Delphi cited his work, and Tommy later invited him onto a podcast for a debate. As collaboration deepened, Jose and Peirce gradually joined the team and began working on consulting projects together.
Transitioning from Research to Investment
Jason asks when the team realized investment would become the primary revenue driver.
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Jose and Yan explain that their original goal was to build credibility through research before moving into structured investing. With no prior investment background, they chose to focus on research first to establish reputation and connections. Despite difficulties raising funds in 2019, they ultimately decided to use their own capital to launch Alpha Ventures.
Initial Fund Structure and Challenges
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In the fund’s early phase, team members invested roughly equal amounts. Jose recalls putting nearly all their liquid assets into the fund—even using credit cards to finance it. Despite numerous challenges, they maintained a positive mindset, viewing the process of managing money together with friends as enjoyable. Throughout, their core mission remained advancing the crypto industry, ensuring every decision contributed meaningfully.
How Founders Build Brands
Jason notes that Delphi Digital has no external investors, giving them greater flexibility in decision-making.
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Anil highlights that this independence allows them to pursue bold ideas others might avoid. Despite lacking outside funding, they now manage hundreds of millions in assets.
Decision-Making and Team Collaboration
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On investment decisions, Anil explains that Delphi operates through a “collective intelligence” model. In-depth discussions ensure everyone can voice opinions. While early decisions were made by committee, today each department has leaders responsible for specific domains as the team has grown.
Challenges in Investment Decisions
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Discussing specific cases, Anil references their investment in Axi. While many funds sold before the price hit $10, Delphi chose to hold—driven by internal confidence and shared market views. Anil explains that strong collaboration and mutual trust allow the team to stay aligned during market volatility.
Team Growth and Structural Evolution
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With around 100 employees today, Delphi is divided into three main divisions. Anil believes this structure enables efficient operations while maintaining overall coordination. They hold regular broad discussions so all members stay informed about market developments and investment strategies. This flexible decision-making and teamwork allow Delphi to adapt quickly and make sound judgments in a fast-changing environment.
Advice for Application Developers
Teamwork and Optimization
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Jose notes that many initially doubted their team model, yet it proved highly effective for their committee-style approach. With limited capital, they had to deeply discuss every issue, thoroughly assessing potential failures to prepare adequately. Over time, they identified individual strengths and optimized roles accordingly, allowing each person to focus on their area of expertise.
Team Division of Responsibilities
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Anil explains that he and Kevin lead research, Jose and Luke run the lab, while Yan and Tommy handle venture investments. This division ensures balance across functions, with near-daily communication to maintain alignment.
Employee Participation in Investments
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Yan discusses their third fund. They remain focused on early-stage investments, which they see as offering the best returns. As the company grows, they want high-performing employees to participate in fund investments. To achieve this, they’ve created a smaller fund allowing staff to invest according to personal preference. This maintains investment flexibility while giving employees greater liquidity and stake in the company’s success.
Discussion on Selling Businesses
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Jason asks if they’ve considered selling their research or consulting arms. Anil admits they’ve received surprising offers, reflecting market cycle signals. Though some bids were highly attractive, the team had differing views internally. Ultimately, they concluded they have more conviction in Delphi’s equity than in most public stocks, making them prefer retaining existing businesses.
The Importance of Research
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Anil stresses that research is crucial for identifying investment opportunities. Their research team is tasked with going beyond surface-level information to uncover trends likely to emerge in the next six to twelve months. They are also required to conduct deep dives into each topic to ensure analytical depth and accuracy.
Differentiation Strategies for L1s
Deep Research and Team Synergy
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Anil emphasizes that their research team’s ability to conduct deep analysis stems from comprehensive understanding and rigorous methodology. They are happy to share specific reports,
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To demonstrate research depth on projects like Athena and Celestia. Jose adds that synergies across business lines create a whole that exceeds the sum of its parts. Research outputs are not only actionable but also help identify investment opportunities and trends through a venture capital lens—ensuring research remains practical rather than purely academic.
Token Sales in Consulting and Venture Capital
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Jason raises the question of handling token sales during consulting engagements, referencing relationships with founders like Axe.
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Anil says they typically hold most investments long-term, but timely exits are reasonable when token prices surge significantly. They communicate proactively with teams to ensure sales are gradual and cautious. Complete divestment is rare—they maintain ongoing engagement with early investments.
Maintaining Trust and Transparency
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Anil believes maintaining trust with founding teams is critical. They are not just investors but active partners involved in project development.
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Yan adds that timing and market conditions for token sales are essential to avoid negative price impacts.
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Jose further notes that token sales are only considered when the original investment thesis fundamentally changes—usually an opportunity cost decision.
Separation and Coordination Across Businesses
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Jason expresses concern about potential conflicts between venture capital and consulting activities. Anil and Yan believe their investment and consulting arms operate relatively independently, effectively avoiding conflicts.
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Yan emphasizes that despite a lean team, they leverage additional resources to deliver value across both investing and consulting, ensuring no overlap or conflict arises.
Current Developments in Crypto Business
Long-Term Vision and Adaptability
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Anil states that creating five- to ten-year plans in crypto is unrealistic. Their success lies in adaptability and resilience. Their mission is to accelerate the development of crypto so it evolves faster and better than it would without them.
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Anil also mentions that the research team is exploring community features like inline comments and Alpha Feed, enabling researchers and members to co-create value for the community.
Project Incubation and Resource Integration
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Anil describes their work at Labs—generating ideas, assembling teams, and providing resources including token design and legal compliance to incubate new projects. Currently, they’re focused on advancing existing initiatives rather than launching new ones, making this year pivotal.
Investment Strategy and Market Dynamics
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Yan says they will continue investing, adjusting strategies flexibly based on market conditions. Their investments span liquidity venture capital, early-stage, and late-stage opportunities, with strategy evolving alongside market shifts.
Synergy Among Research, Investing, and Incubation
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Jose summarizes that research uncovers alpha in the industry, venture capital allocates capital toward those discoveries, and Labs uses intellectual capital to fill market gaps. They’re currently incubating new ventures—for example, Legion, aiming to revive the ICO model to enable fairer participation for retail investors. They’re also backing Gabe Shapira’s new project Metalx, designed to enhance the flexibility and efficiency of decentralized governance. Jose hopes that over the next decade, Delphi will continue identifying opportunities and driving the growth of such projects.
Future Outlook for Ecosystem Applications
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Yan observes that unlike previous cycles, not all assets are rising in tandem now. With increasing numbers of tokens and declining retail participation, investors must be more selective. He notes that past strategies no longer work—many have learned this through painful experiences with price volatility and survivorship bias.
Speculation and Market Sentiment
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Yan adds that the rise of meme tokens has drawn capital away from other projects. As more people engage in meme speculation, it becomes increasingly attractive, pulling funds from potentially valuable ventures. He believes the current environment favors short-term trading over long-term holding, leading many investors to adopt more transactional strategies.
Market Anger and Culture
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Jose points out that many long-term holders have suffered significant losses during market swings, and survivorship bias has fueled anger within the crypto community. Still, he emphasizes that decentralization and censorship resistance remain core values of the industry.
Market Cycle Analysis
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On market cycles, Yan believes we're still in the early stages. Future trajectories will depend on several factors, including upcoming elections. He suggests that whether Harris or Trump wins, the outcome could affect markets differently—but Bitcoin still holds substantial upside potential.
Optimistic Outlook for the Future
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Anil expresses optimism about crypto’s future, suggesting governments may play a constructive role in advancing the sector. He cites progress on ETFs and shifting political landscapes as potential catalysts.
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Anil notes that current catalysts—such as Trump’s interest in Bitcoin—could bring positive change to the industry.
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Anil advises investors to reduce excessive trading, focus on core assets, and prioritize mental well-being. He encourages people to step outside the digital world, engage with real life, and maintain a healthy mindset to navigate market volatility.
The Importance of Interoperability
Global Multipolarity
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Jason and Jose discuss the current economic landscape and its impact on crypto.
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Jose observes that as the U.S. turns inward, the world is becoming multipolar—a condition conducive to crypto’s long-term success. He argues that traditional financial systems may break down, especially in how assets and goods are traded, with more transactions moving on-chain.
The Future of On-Chain Trading
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Jose envisions a future where all assets and goods are traded on-chain. As global markets fragment, on-chain trading could become the only permissionless global marketplace. While current activity centers on memes, he expects many other asset classes to eventually move on-chain—requiring robust infrastructure to support this transition.
Potential in Gaming
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Looking ahead to the next cycle, Jose identifies gaming as a key sector for user acquisition. Games can attract large numbers of new users, especially since many in the crypto community are already gamers. He highlights their recent investment in a game called Godzilla, which he believes demonstrates the immense potential of combining crypto with gaming.
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Yan adds that game development cycles are long, and although markets demand quick feedback, exceptional games can retain users over time. He mentions Hi Topia, a Minecraft-like game aimed at improving user experience and offering better monetization for content creators. They believe it could serve as a major gateway for bringing mass users into crypto.
What Defines Success for Applications?
Two Paths in AI
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Jose notes two distinct trends in artificial intelligence (AI). One is dominated by big tech companies that control models and computing power, monetizing through products like WhatsApp and Office. While these players dominate now, he anticipates a rise in smaller, specialized models—often fine-tuned versions of larger ones—tailored to specific use cases.
Demand for Decentralized Intelligence
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Jose stresses that as intelligence and computation become the world’s most vital resources, demand for decentralized intelligence will grow. Today, AI resources are concentrated in a few hands, so there’s a need for a decentralized, censorship-resistant form of intelligence—mirroring Bitcoin’s vision of decentralized money, aimed at resisting centralized control.
Trends Among Retail Investors
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Jason notes that AI as a narrative will continue attracting retail interest. He predicts retail investors will seek exposure to AI, with Nvidia currently being the most obvious public market option. As AI interest grows, investors may shift toward crypto tokens like Akash and Render for indirect AI exposure.
Deep Research and Market Insight
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Jose recommends reading Delphi Digital’s reports for deeper understanding of AI in crypto. These provide theoretical and practical rationale for decentralized intelligence and highlight the most promising sub-sectors. He emphasizes that such resources help investors build genuine confidence and grasp AI’s true potential beyond surface-level buzzwords.
Competitors to Monad and Berachain
Fragmentation in the Crypto Ecosystem
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Jason observes that the crypto market is undergoing fragmentation. Previously, different crypto assets moved in sync, but that’s changing. He asks which blockchains might stand out in the next bull run in terms of activity and returns.
Selecting Major Chains
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Yan sees Ethereum and Solana as consensus picks. Considering Layer 2 solutions, Base stands out due to its access to a large user base and additional incentives via Coinbase’s ecosystem. While Layer 2s may slightly dilute Ethereum’s dominance, they also open more avenues for successful applications.
Execution Environments for Successful Apps
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Jose adds that Layer 1s and Layer 2s essentially serve as testing grounds for successful applications. Ultimately, every successful app will want its own execution environment to gain finer control over consensus and execution. Projects like dydx and USDC are already running on their own chains, signaling a trend toward greater autonomy.
Solana’s Diversification
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Jose notes that Solana already hosts multiple specialized Layer 2s, each operating independently to avoid inheriting the design trade-offs of the base layer. He acknowledges that interoperability between Layer 2s is currently poor, but questions how much demand truly exists for synchronous atomic composability.
Building Stablecoin-Centric Ecosystems
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Jose believes stablecoins are crypto’s “killer app,” and building entire chains around them is a logical direction. He cites the launch of Athena Chain as a prime example, showcasing the potential of ecosystems centered on stablecoins.
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