GRTiQ Podcast: 162 Red Sheehan

Today I am speaking with Red Sheehan, Protocol Research Analyst at Messari. If you’re a long-time listener of the podcast, then you know that I have featured several other members of the Messari team on the podcast, including CEO and Founder Ryan Selkis, Engineer Manager, Vincent Wen, and Director of Research, Mihai Grigore.

During our conversation, Red talks about his journey into web3 and how he got started in the industry. We then talk about his research on protocols and explore many interesting themes related to protocols, networks, and the future of web3. Along the way, Red shares some amazing insights on cryptography, what’s happening in the Bitcoin community, and his perspectives and experience on The Graph.

The GRTiQ Podcast owns the copyright in and to all content, including transcripts and images, of the GRTiQ Podcast, with all rights reserved, as well our right of publicity. You are free to share and/or reference the information contained herein, including show transcripts (500-word maximum) in any media articles, personal websites, in other non-commercial articles or blog posts, or on a on-commercial personal social media account, so long as you include proper attribution (i.e., “The GRTiQ Podcast”) and link back to the appropriate URL (i.e.,[episode]). We do not authorized anyone to copy any portion of the podcast content or to use the GRTiQ or GRTiQ Podcast name, image, or likeness, for any commercial purpose or use, including without limitation inclusion in any books, e-books or audiobooks, book summaries or synopses, or on any commercial websites or social media sites that either offers or promotes your products or services, or anyone else’s products or services. The content of GRTiQ Podcasts are for informational purposes only and do not constitute tax, legal, or investment advice.



We use software and some light editing to transcribe podcast episodes.  Any errors, typos, or other mistakes in the show transcripts are the responsibility of GRTiQ Podcast and not our guest(s). We review and update show notes regularly, and we appreciate suggested edits – email: iQ at GRTiQ dot COM. The GRTiQ Podcast owns the copyright in and to all content, including transcripts and images, of the GRTiQ Podcast, with all rights reserved, as well our right of publicity. You are free to share and/or reference the information contained herein, including show transcripts (500-word maximum) in any media articles, personal websites, in other non-commercial articles or blog posts, or on a on-commercial personal social media account, so long as you include proper attribution (i.e., “The GRTiQ Podcast”) and link back to the appropriate URL (i.e.,[episode]).

The following podcast is for informational purposes only. The contents of this podcast do not constitute tax, legal or investment advice. Take responsibility for your own decisions, consult with the proper professionals and do your own research.

Red Sheehan (00:18):

That’s not really the case. You have to go learn about something else and join some other industry and then make the conscious decision to leave that industry and join crypto. Everyone who’s here, actually wants to be here, which is not the case in almost every other industry where people just hate their jobs because they just fell into it. You don’t fall into crypto. You have to make a decision to come here.

Nick (00:38):

Welcome to the GRTiQ Podcast. Today, I’m speaking with Red Sheehan, Protocol Research Analyst at Messari. If you’ve been following the GRTiQ Podcast, you’re likely familiar with other members of the Messari team who have joined us before, including CEO and Founder Ryan Selkis, Engineer Manager Vincent Wen, and Director of Research Mihai Grigore. As I’m sure you already know, the Messari team is one of the core dev groups working on The Graph.

Nick (01:36):

As you’re about to hear, Red has some unique and valuable perspectives on web3. During our conversation, he talks about his journey into web3 and his introduction to the industry. We also explore his research on protocols, touching on various themes I haven’t explored on the podcast before. You’ll also hear Red share some valuable insights on cryptography, his perspective on the recent developments within the Bitcoin community, and his views on The Graph. We begin by talking about Red’s educational background.

Red Sheehan (02:05):

My educational background is in electrical and software engineering. It didn’t start that way. I did biomedical at first, I think, and then I did a switchover and programming was always pretty fun. I started doing that when I was like 14. I ran with it in college.

Nick (02:23):

Do you remember what got you started so early in programming? I’m always curious and it’s another familiar theme on the podcast of people like you who got a real early start. What got you started?

Red Sheehan (02:34):

I had a class at my high school and it just sounded fun, so I’d check it out like, sure, I’ll take a class in that. We started making games in Java and I’m like, “All right, this is sweet.” I never got super into it, but it’s something I always did a little bit of until I switched my major over to it, really made it a career choice.

Nick (02:54):

If we go back to this time in your life and maybe project forward, I mean, what were you thinking about, in terms of your career, what were you envisioning to do from a professional or career standpoint?

Red Sheehan (03:05):

The vision for my career is a little tough because I think the idea of a dream job is ephemeral. My dream job three years ago is something I so would not want to be doing right now, and I will probably have a different dream job. [inaudible 00:03:18] few more years or later in life, so that always evolves. There are some constants or overlaps, I’d say.

Red Sheehan (03:25):

I like math based things, so the algorithms part, it is puzzles basically. I always thought that was pretty fun. I’ll maybe rotate around if you core themes. I like working with people. I like the consumer-facing end of working with products. A few things all rotate between, but I’d say those are a couple of mainstays that I started with and I’ll probably keep going with.

Nick (03:49):

If you think back to the things you were studying then as you were pursuing software engineering, software programming, did you see or encounter any themes or topics related to web3, blockchain, crypto, I mean, distributed systems, things like that?

Red Sheehan (04:03):

Not necessarily. Although, it’s interesting because a lot of the stuff that I worked on in university that I totally did not care about and was not interested in, I’m really happy I did them now. That knowledge has become so useful to me. Things like very low-level programming, like coding and assembly, and working with logic design, the actual logic gates when you’re working on some hardware stuff, and I always thought that was such a drag because I just wanted to build games.

Red Sheehan (04:32):

Now, that I’m trying to play with low-level programming in the crypto world, like BitVM or some Bitcoin script, low-level languages or memory allocation and things like that, it’s actually really nice to have that background. At the time, I did not think about these things, but it’s become pretty useful.

Nick (04:50):

Red, I’m certainly non-technical and I think some of my audiences as well. Can you explain what you mean by low-level coding, low-level programming? What is meant by then? What’s different?

Red Sheehan (05:02):

Yeah, totally. Computers read ones and zeros. We don’t work with binary. We like words and things we can read and understand. You need to get from one end to the other. You can use a high level language where you’re basically just writing words and that compiles down into maybe just basic instructions that are add or subtract or simple things.

Red Sheehan (05:24):

You have these kind of tiers where what we like to use are high level languages where you can actually, like I said, use words, and then you have in between things like straight up instructions, which would be something like assembly or Bitcoin script is just a bunch of opcodes and instructions that aren’t really intuitive to read and then, at the bottom, it’s really just ones and zeros.

Nick (05:47):

If we try to unpack a little bit of why you might be passionate about programming and software, and you mentioned there, it was a little bit puzzles for you, but how would you explain what drew your interest or passion in this?

Red Sheehan (06:01):

I think a lot of people would agree with me if they’ve done some programming, but I find it to be artistic, which sounds a little silly at first, if you’re thinking of it as some utilitarian, I need to get some task done kind of things, but there are infinite ways to write an algorithm to do any one thing. Your personal tendencies and flare kind of comes out.

Red Sheehan (06:25):

You do have a writer’s voice with writing code, so even just a simple algorithm, there’s usually not a best way to do it. There’s just a lot of good ways to do it and no two ways are the same. That artistic aspect is pretty fun.

Nick (06:39):

Red, what did you do after university then?

Red Sheehan (06:42):

After university, I started working for Bacardi, the liquor company. They’re based out of Miami, and that was super fun. It was exactly what it sounds like. It’s a family-owned company by the Bacardi’s and they rock and I was doing websites and mobile apps and stuff for them, and I did that for about two years.

Nick (07:01):

That sounds like a super fun job. Then, let’s talk about when you become aware of crypto. Take us back in time. Do you remember when that was?

Red Sheehan (07:09):

I became truly aware of crypto maybe November, December 2021, which I knew what crypto was. I’d heard of it, or in maybe 2015 in college, and I think I used it once or twice, but I never kept any of it and I didn’t pay close enough attention. I really thought it was just money, which was cool, and I liked the privacy aspects of that.

Red Sheehan (07:33):

I didn’t really see the big picture until a friend hit me up and he’s like, “Yo, Red, can you make me an NFT?” I’m like, “I don’t know. What’s an NFT?” He starts explaining and he’s like, “Hey dude, in solidity.” I’m like, “Well, what’s Solidity?” He is like, “It’s JavaScript.” I’m like, “Okay, I can do it.”

Red Sheehan (07:50):

Maybe six weeks after that, I quit my job and was freelancing in smart contract development because I realized, “Whoa, there’s this whole other side of it and you can program stuff. It’s not just money. It’s a whole credibly neutral platform, but you put whatever you want on it.” I’m like, “All right, this is what I want to be doing.” I jumped in really fast.

Nick (08:11):

It totally sounds like that. If we then think about similar to how we were talking about what your passion or draw was to software engineering, if you zoom out and think about what drew your interest or your passion towards crypto, how would you explain that?

Red Sheehan (08:27):

I mean, software I thought was cool, but I don’t know if it was something I was passionate about in general. That’s incredibly vague. Even just saying you’re a software engineer is incredibly vague without mentioning the industry, but crypto caught me because of that decentralization ethos, I think, and the censorship resistance.

Red Sheehan (08:50):

I think I was always a bit of a privacy maxi in terms of, I still don’t use face ID. I didn’t use face ID on my phone for so long until I took time to look into a secure enclave and realize, “I’m going to actually handing out my biometrics to whoever makes my phone,” but things like that. I always thought that was weird and I was always a little hesitant to get on board with some of the new tech just because it felt a little invasive.

Red Sheehan (09:20):

When I found this whole category of technology and things people were building with it, I said, “This is perfect,” and sell the demand for developers. I said, “That’s perfect for me. I can just kind of jump in.”

Nick (09:34):

Talk to us about that transition. You mentioned a friend asked you to do a couple things, you figured out how to do it, learned a couple things along the way, what was that transition like going from your web2 experience and moving and getting started into web3?

Red Sheehan (09:47):

The cool part is that everything is OpenSource, which means it’s really easy to learn how to build something. I find something that’s cool, “I need something like that. Let me go look at the code. How did they make it.” That OpenSource ethos, it’s not really an ethos, it’s kind of enforced to some degree. Not everything is OpenSourced. You can have unverified contracts on your front end, can be closed down if you have centralized batteries or whatever, but the smart contract itself, if you want to verify it and put it on chain, well, I can go look at it.

Red Sheehan (10:16):

I would go look at things and I started in Ethereum, which has a ton of documentation and resources and YouTube videos. That part actually wasn’t too hard and a lot of people were looking for devs to build simple stuff. They said, “Hey, I just want an ERC-721 contract.” I got a standard NFT contract.

Red Sheehan (10:38):

We have some better tools today where you can kind of do that with no code, but a few years ago it was a little harder. People were just looking for really simple stuff and I said, “I can get my feet that wet that way and increment up.”

Nick (10:50):

If we accept decentralization as being one of the core themes or one of the things that kind of draws people to this space, how would you explain to somebody that’s non-technical or just trying to learn why something like decentralization is important?

Red Sheehan (11:04):

That is the really tough part because when you explain the value of these decentralized and distributed systems, people are like, “All right, and?” I’m like, “No, but you own it. It’s actually yours,” and because that is what everyone thinks the current system is, you think if you own a share of Google stock that you own it. You don’t. Fidelity owns it and you own an IOU. It’s a little bit different, but we all think the current financial system works the way crypto does.

Nick (11:38):

If we apply the same question to privacy, explaining why privacy might be an important component, how would you describe or explain why privacy is important or how it factors into web3?

Red Sheehan (11:51):

Privacy is a tough one. I feel like I played a losing battle just by liking privacy. People are very reactive. Privacy is very proactive. If you wait until you need privacy, it is too late. You almost have to build these things in at the base layer and sneak them into people and say, “Use it that way,” but privacy is different in crypto than it is in web2 because privacy in web2 is usually the job of some centralized custodian. If you look at a VPN, everyone’s traffic is routing through maybe a centralized server that runs the VPN, but if not that, definitely the company. You have a honeypot of credit cards and billing information.

Red Sheehan (12:36):

Yes, it’s private but only through one lens. If you look at a mix net, which is something a little bit more similar to Tor, the Onion router, with maybe some better encryption standards and entropy, you are private against everyone in the system, not just people on the other end, you’re also private against the people in the system, which it’s a peer-to-peer system. Usually, your users are also providers, things like that, but that kind of idea really carries over to a lot of the different things we can build with peer-to-peer networks like money, crypto.

Nick (14:12):

Well, I want to ask you this follow-up question about VPNs. Are VPNs a little bit of a false flag in terms of security in web2?

Red Sheehan (14:26):

A VPN maybe fits a different used case. If I wanted to protect my identity from the person on the other end or deceive them, if I wanted to tell Netflix, I’m in France, so let me watch the show that’s listed for people in France because it’s not listed in the states, that’s a great used case and that is full privacy in that sense.

Red Sheehan (14:50):

In the case, a peer-to-peer mix net, you would be private not only from the person at the other end, but from the people in the middle, which is the people running the mix nodes. You’re not private from the people in the middle in the case of the VPN. It’s a little bit of that, “Trust me, bro, we’re not going to share if we get subpoenaed or anything like that.”

Nick (15:09):

Okay, red, so you got started full-time in web3 in 2022. Talk to us about how you got started and what you were doing.

Red Sheehan (15:17):

I jumped on Upwork and found any gigs I could because I used to do a little freelance work on Upwork for web2 stuff like robotic process automation, just forms in automating menial tasks for people’s businesses. I said, “I’m on Upwork. Let me find some jobs.” It was really difficult because everyone wanted to pay in crypto, which meant you either had to figure something else out or violate the terms of service.

Red Sheehan (15:45):

That was tough in its own right, but I was finding Upwork gigs and after a few of those, just word of mouth because [inaudible 00:15:51] a small world and that brought me to ETHDenver in February or March of 2022, where I found a team, worked on the hackathon and was completely sold. Just the culture at that conference, I was so in. If I had any doubts before that, they were gone.

Nick (16:09):

You mentioned that ETHDenver and the culture there sort of sparked your interest and was a hook to getting you more interested. Obviously, ETHDenver just concluded and I know you were there, when you think back to that first event and the most recent one, how have things changed and evolved at ETHDenver?

Red Sheehan (16:27):

I think I loved ETHDenver in 2022, but when I talked to some of the stewards, they were like, “No, that was a bad year. We were so unorganized.” I loved every year the last three years, but if you talk to some other people, that organizations’ pretty bad in the start and it was pretty great this past year, a month ago. I guess it has developed in that sense, but it’s been going on for a while. I think culture wise, it’s still the same kind of festival that it was back then.

Nick (16:55):

Did you get a sense at this year’s ETHDenver that things are back? I mean, the market’s doing interesting things and there’s a lot of talk about coming out of the bear. Are we back?

Red Sheehan (17:05):

Oh, I got that feeling. Yeah, the vibes there were, we are so back. It was a little euphoric. Everyone was having a little too much fun with it, not too much fun, but I thought it was a blast. The energy was so there.

Nick (17:18):

Soon after getting started in web3, you co-founded and acted as CTO at MoonLab, was this your first entrepreneurial venture and talk to us a little bit about what that experience was like and what you did there.

Red Sheehan (17:30):

Absolutely. You don’t count being at NFT, Mercenary dev and making tokens. This was my first entrepreneurial venture and I met some people through a friend of a friend, and we just basically cooked up a design agency where you bring us an idea, we give you a smart contract, then adapt and marketing, and a brand kit, and we will help you run your podcasts, whatever you want to do marketing wise. We’ll just get you from zero to one. I had a ton of fun building out other people’s projects like that. We didn’t do it for too long, but I thought it was a pretty valuable learning experience for all of us involved.

Nick (18:10):

What was that experience like of becoming an entrepreneur? Part of the reason I want to know is clearly, you left an established industry for a new industry, and then within that new industry, you decided to do a new thing and become an entrepreneur. There’s a lot going on here. Talk to us about that. What was that experience like going to be an entrepreneur in an emerging industry?

Red Sheehan (18:29):

Oh yeah, I mean, grass is always greener. When I was working for someone else, I’m like, “I want to work for myself.” When I was working for myself, I’m like, “I don’t even have time to write code. I’m busy trying to run this thing and that’s what I wanted to do.” You realize it’s a cool idea on paper, but then, there’s a lot more to it. Doing it for that first time kind of made me realize in which directions I might want to be part of a team or lead a team or be on my own.

Nick (18:58):

Then, what did you learn about the nature of entrepreneurship by virtue of this experience? What are the one or two lessons you’d like to pass on to listeners that might be interested in the same thing?

Red Sheehan (19:06):

I think the team you are working with is more important than the product you are working on because good ideas are kind of a dime a dozen, but getting a team together is a little bit tougher.

Nick (19:19):

What’d you do Red, after MoonLab?

Red Sheehan (19:21):

After MoonLab, I was spending a lot more time writing. To get into this space, I’m like, I got all these things to learn about and I don’t even know what I want to work on yet because I don’t understand the whole space. I was spending so much time trying to learn about stuff. Prior to being in crypto, I was very interested in personal finance and I was always trying to teach my friends how to make an IRA and do this and that, and I was making budgets for them and all that stuff.

Red Sheehan (19:50):

I ended up just turning that into a blog because I was sending the same information to different friends over and over. I made this finance blog and it slowly turned into, here’s a tutorial on how to make an NST and how to make a minting dapp, and this is where I stored the data, this gateway works for IPFS and all these different things.

Red Sheehan (20:09):

That turned into, well, today I’m learning about Monero, so I’m going to write a report about it and put it on my blog where maybe one person will read it. If you can’t teach something, you don’t understand it. I filled in a lot of those knowledge gaps when I tried to write it down because I was writing, I’m like, “Maybe I don’t understand it as well as I thought.” That kept happening as I kept learning and pretty quickly, I was spending a lot more time teaching, than I was writing code or doing anything else. That is where this sort of evolution happened between my profession being a developer and my profession being a research analyst.

Nick (20:46):

If we think back your passion and interest in personal finance and we bolt on the things that might be possible or how that might change in a environment like web3 with crypto and different things like that, how do you think web3 and crypto impact things like personal finance?

Red Sheehan (21:04):

I think crypto is more so just adding another dimension to personal finance. The root of it doesn’t change too much because the root of the personal finance things that I were interested in is that at a basic level, you can invest your money and you can be doing something with it rather than letting inflation eat it away in bank account.

Red Sheehan (21:27):

Investing is this black hole [inaudible 00:21:29], if you come from a family that doesn’t talk about investing and your friends don’t talk about it or people just don’t know about it, kind of this black box, a lot of people will have a 401(k) and they’ll say, “Yeah, my money’s invested.”

Red Sheehan (21:43):

A 401(k) is an investment vehicle. It’s not a specific investment, but a lot of people surprisingly don’t know that. You kind of need to bridge that gap. I don’t know if crypto revolutionizes that aspect of it, but it is another dimension of once you open your eyes to what you can be doing, this is one of the add ons.

Nick (22:04):

One thing I think about when it comes to personal finance and crypto is this idea of staking and earning rewards. I think that could, over time, become a passive income play for a lot of people who haven’t become exposed to crypto yet, but how do you think about that? I mean, when you think about personal finance, you think about staking, do you see it impacting or playing a role in personal finance?

Red Sheehan (22:27):

I think staking is a reason that ETH is very attractive to traditional finance, and BTC is obviously, the favorite of TradFi. Before the ETFs, we knew that, but I’m of the opinion that ETH is the clear second favorite and yield is what everyone wants in the TradFi world. I mean, that’s the end state. That’s the golden thing that we want at the end.

Red Sheehan (22:54):

People want yield. They won’t stop at stock also. I think we’re going past these ETFs, but with Ether you get yield. That is something you don’t natively get through staking or some other mechanism like that ETC. I think staking, like you said, a dividend almost, is something that TradFi finds as familiar and they will want.

Nick (23:15):

Red, you’re doing writing and research on personal finance, you’re working in web3, learning all the things along the way, what’s then the backstory for how you ended up going to work at Messari?

Red Sheehan (23:29):

As I mentioned before, I realize, hold on, I’m writing research and education way more than I’m writing code. Maybe I should just do this. I’m spending all of my time on it. I kind of looked around at who would be hiring for this, who are the companies. I followed Messari’s newsletter and they were the only team I decided to apply for.

Red Sheehan (23:52):

Actually, if I did not get a job there, I was going to keep being independent working on my own, but they got back to me and within a week, I was working there. It happened really quick. We were doing interviews on back-to-back days, and the pitch was kind of, “Hey, I saw this job opening. I already do this on my own all day. Here’s 60 articles on base layer architectures and all these other things that I wrote in the past six or eight months. How about I do it for you?” It was a perfect fit.

Nick (24:28):

That decision of going to work at Messari, you were a freelancer, you were an entrepreneur, now you’re giving all of that freedom up you could argue and going to work for a big company like Messari, very well established, very well respected. What drove that decision and take us behind the scenes there of what you were thinking.

Red Sheehan (24:45):

I really wanted to work with a team rather than to keep working alone. In the beginning, when I was working alone, the knowledge was going parabolic. It was awesome. I was working 12 hours a day, 7 days a week. The weeks were disappearing. I was having so much fun learning about all this, but you get diminishing returns at some point. That learning curve toes a little and there’s a quote I like that’s, if you want to go fast, go alone. If you want to go far, go together.

Red Sheehan (25:12):

I decided, I think I’ve gotten what I can out of just ripping through this stuff solo and I really want to join up with a team because you really do feed off that energy from other people and you learn a lot from others. I wanted to get hooked up with [inaudible 00:25:26].

Nick (25:27):

Most listeners of this podcast will know who and what Messari is and members of The Graph ecosystem recognize that Messari is one of the core dev teams working on The Graph making a lot of contributions as it relates to subgraphs and subgraph development, but for those that don’t know, do you mind just explaining who and what Messari is?

Red Sheehan (25:45):

The short answer is Messari is the Bloomberg of crypto. A slightly longer answer is Messari does research and some news aggregation and a little bit of data work to try to take this industry of crypto and make it a little bit more transparent because all data is on chain anyway. Everything’s out there. We’re not dealing with black boxes or opaque centralized entities. Everything exists in accessible fashion. Let’s create some standards and add a little more clarity to this mess of heterogeneous architecture out there.

Nick (26:20):

What’s your role at Messari and talk to us about the research you’re doing.

Red Sheehan (26:23):

I’m a research analyst that covers primarily base layer protocols. That would be like a Bitcoin or a Cardano or Layer 2, like zkSync or Stacks. I will cover technical updates, try to take some of the things that come from the developers, make them digestible to an everyday reader who is busy or has other interests and doesn’t want to spend all their time learning about what a data availability layer is and does it matter.

Red Sheehan (26:52):

I’ll cover those qualitative aspects and then I’ll pull in the data as well and say, “Here’s what’s happening. Here’s how to make sense of some of these numbers. Here’s what you can compare one to one. Here’s what you can’t, stuff like that.

Nick (27:03):

Well, Red, I think some of the vocabulary terms and concepts in web3 are shifting and evolving with the industry and sometimes it gets confusing. Help us understand a little bit here what is meant by base layer. You’re doing research on base layer and give us some context for how we should think about that.

Red Sheehan (27:20):

Sure. I use the word base layer there just to describe a network itself in terms of its own blockchain, whether it’s a Layer 1 or Layer 2 and that would be differentiating from a Uniswap, which is a DeFi protocol that’s built on top of the layer or maybe some middleware, like Chainlink is something you would use in addition to a DeFi protocol like Uniswap and that could be on a base layer, whether it be an Ethereum or an Arbitrum.

Nick (27:45):

The right way to think about a base layer then is that it’s kind of the transaction layer? I mean, if I got that right, it’s still, I guess, a little confusing to even make.

Red Sheehan (27:56):

Yeah, a base layer is just its own network, I suppose. Uniswap is a protocol. It’s not its own network. Chainlink is a protocol. It is sort of its own network, but not in the crypto blockchain sense.

Nick (28:10):

Tell us about the day-to-day work of a research analyst at Messari. I mean, is that work you’re enjoying? Is it everything you hoped it would be? Talk to us about what you do.

Red Sheehan (28:18):

It’s so fun, man. I just learn about stuff and then teach about it, pretty much over and over and over. It’s awesome. There are a few other things in terms of, I got to get my hands dirty with some data, play with some other aspects, but it’s really mostly, I learn about things. I teach about said things, which is why I see my role more so as education.

Nick (28:41):

Well, maybe going back a little bit here, we’ve got protocols, we’ve got networks, we’ve got base layer, we’ve got blockchains, this can get super confusing. How should we think through all these different terms and how they relate to each other? I mean, how do you think through that?

Red Sheehan (28:56):

This is valid because there’s so much overlap. A protocol really is anything. Protocol could be a set of instructions, it can be a smart contract, it can be a set of nodes agreeing with each other while a network in the crypto sense is, what I refer to as a base layer, in terms of this is where you launch things, this is where you build things. This is the underlying piece of infrastructure that lets you send currencies or ad functionality on top.

Nick (29:30):

I understand why it might make sense that someone like myself who’s not technical, and then again, maybe some of the listeners don’t understand and distinguish between all these different terms. Again, they’re evolving it seems, but maybe in your own research, I mean, are you coming across protocols, networks, whatever it is representing themselves as one way and it’s another or I mean, do you have to pay close attention to these types of factors given some of these complications and overlaps?

Red Sheehan (29:57):

Marketing terminology is never what you want to use, and that’s not to bash all the marketers out there. There is totally value in brevity over nuance. This is a fair trade in many circumstances, but when you’re learning about something, you’ll quickly see is this the bottom layer of infrastructure that you’re using or is this built on top of some other infrastructure? That becomes quickly apparent when you actually get into something rather than just reading maybe the headline.

Nick (30:28):

Red, if you think about the nature of protocols since the time you got started at Messari doing your research to present, is there a story there or something interesting about the evolution or the changes or the future of protocols?

Red Sheehan (30:41):

The space of protocols is ever evolving. I think what we’ve seen lately that has been topping up all over, is the growth of DPN and modularity. I’ll get into what both of those are. DPN is an acronym for decentralized physical infrastructure networks and that sounds confusing.

Red Sheehan (31:04):

Think of it as instead of having a minor or validator that is only relevant to this crypto network, you have a piece of hardware in your house, something physical that is providing the service, whether it’s, I’m not using my gaming computer right now, so I’m going to rent out GPU. People can use it for what they want or I have a 5G internet hotspot in my living room and other people can use that internet, or I have an exit node for a decentralized VPN. Instead of that one in the middle, we’ve got a bunch of them all over. Physical infrastructure in that sense.

Red Sheehan (31:41):

These are classic peer-to-peer protocols. People have tried to build many of these things before. The secret sauce was the financial incentive layer, which is crypto. It makes a lot of these possible. Then, modularity would be, well, why am I building my whole set of infrastructure in one piece?

Red Sheehan (31:59):

If I separated it and I did my execution over here, but then I handled my consensus over there, couldn’t I specialize each of those for that one function, because if I use one piece of software to do everything, it can be a pretty good generalist, but if you want it to be a specialist, well now you’re closing the scope of what it can do.

Red Sheehan (32:19):

Modularity is this idea of how do we separate these functions. This is pretty popular in standard software development as well where people want to break out different modules and plug and play with them and things like that.

Nick (32:32):

Red, it seems to me that people always want to latch onto themes that are happening right now within the industry. You could argue that modularity, maybe restaking, certainly Bitcoin, ETFs, these things are big themes right now that people are talking a lot about. When you think about the research you’re doing and you sort of try to understand what’s going on in the industry as a whole, how do you think through the themes and what’s going on?

Red Sheehan (32:57):

To answer this question, I’m going to zoom out a little and just point out how silly it is that we all care about infrastructure, because you almost shouldn’t care about infrastructure. If I’m using my phone and I’m on the Twitter app, if at any point, I ever have to think about, is this built with React Native or is this built with Swift? If I ever have to think about that, the app sucks and it failed.

Red Sheehan (33:25):

Infrastructure is not supposed to be noticed. You’re never supposed to think about it unless you’re actually using it to build something. Crypto, it’s all we talk about. That’s maybe because we don’t actually have any used cases built on top other than the money tokenized on chain, which is ironic and points programs maybe. Other than those, we don’t have a ton going on, but that’s one angle of should we even care about this infrastructure in the first place or how it’s structured or how it’s built.

Red Sheehan (33:53):

I, as an end user, just want to know, does this work for its purpose? Does this app work? With that said, I agree, modularity has kind of faded a bit, part of me thinks that’s because it’s realized. The Ethereum space is completely modularized. It has realized that roadmap. You have a ton of other modular networks. Avalanche has subnets and Polkadots [inaudible 00:34:14] parachains and bitcoin layers have exploded in the last three to six months with new ones popping up left and right.

Red Sheehan (34:22):

There are still some integrated or monolithic chains like a Solana or an Aptos that are taking a different approach to building, but I think modularity is kind of faded because it’s realized and now people are looking to the exciting things that we are kind of just knocking on the door of.

Nick (34:40):

If we talk about themes, it would be interesting to kind of group in what’s going on in Bitcoin right now outside of the ETFs. I’m thinking about this storyline about Bitcoin L-2s. This is something I’m still learning about. Something like Stacks comes up a lot. I looked in your research. I know that you’re doing research on Stacks, and I’ll put a link in the show notes for anyone that wants to go look at that, but how are you thinking through some of the storylines emerging in the Bitcoin community?

Red Sheehan (35:06):

The Bitcoin space feels super exciting, not that I’ve been around for 10 years, but it feels a lot more alive than it’s been in a long time. I’d say the attention came through two tech breakthroughs. Historically, for people that maybe hang out in other areas of crypto, Bitcoin is rather ossified and not changing very much.

Red Sheehan (35:30):

On the opposite side of things, I think Ethereum’s greatest asset is its willingness to change because you had all these other networks come up with great ideas like Cosmos and Solana, they’re saying, “We’re going to be proof of stake.” Then, you have appchains and then you have C burning and Ethereum said, “Those are good ideas, I’m going to do that.”

Red Sheehan (35:53):

Then, Ethereum ate those [inaudible 00:35:55] lunches and you had this happened because it was so willing to adapt, and that is how it kind of overcame a network effect, but Ethereum was only in that position in the first place because Bitcoin deferred programmability.

Red Sheehan (36:09):

Bitcoin chose to not have programmability. It’s not that it couldn’t, didn’t want it and the community didn’t want it. NFTs and all these other narratives and sectors, they were deferred. They had to go somewhere else, they went to eat. Now, what we’ve seen is with Ordinals, this is a Meta-Protocol.

Red Sheehan (36:26):

Meta-Protocol meaning, part of it’s on chain, part of it’s off chain, but people realize, “Hey, we can index SATS, which is the most atomic unit of a Bitcoin. We can index all the little bits and we can put them in order. When we do that, we can attach data to them and make NFTs and make BRC-20s, which are fungible tokens, and now we can do all our trading DJed stuff, but Bitcoin had this air of professionalism that was apparently faked from the very loud Maxi’s in the space that were saying, “We don’t want NFTs and those are all junk and we don’t want any of that stuff,” but then it became very apparent very fast once NFTs arrived, that everyone wanted them.

Red Sheehan (37:08):

The trading volumes were kind of nuts. If you count BRC-20s, which are treated as fungible, but they’re technically non-fungible, Bitcoin was blowing Ethereum and Solana combined out of the water in NFT trading volume at the end of 2023. That’s nuts.

Red Sheehan (37:24):

After all these years of the loud voices in the Bitcoin community screaming, “We don’t want that. That’s not for us. You guys can trade that junk on your chains.” That kind of woke people up to say, “Wow, there’s a lot going on here. We can do a lot maybe. Maybe we haven’t been paying attention.” That brought a lot of people back because BTC, the asset maybe hit a larger community that it coined the network, which are two separate things like the asset and the network.

Red Sheehan (37:51):

That playing field is getting leveled a little bit after Ordinals being won to Spike a lot of inspiration and [inaudible 00:37:57] being another very cool discovery, should I say, that was a paper written by Robin Linus of ZeroSync. It basically said, “Hey, we can make Bitcoin turn complete technically.” Turn complete means I can do whatever I want In terms of programming. If you’re turning incomplete, means you have limited functionality.

Red Sheehan (38:18):

With BitVM, people realized, “Wait a minute, maybe I can actually have a lot more programmability than I thought. Maybe I can do things like verify proofs and have roll-ups and these are ideas being explored that are totally not implemented yet and we’re maybe a year or more away from, but it got the excitement back and it brought a lot of builders back and there were some builders that were here basically the whole time.

Red Sheehan (38:44):

Stacks has been around for maybe seven years at this point the idea of Stacks and it also brought a lot of new people. It is kind of a homecoming for all the undercover BTC Maxi’s and other ecosystems, and they said, “Wait, I want to go build there.”

Red Sheehan (38:58):

Now, there’s all these layers popping up. I’m hesitant to say Layer-2, even though that’s the accepted marketing term, because if we want to use the strict definitions from ETH World, there are almost no Layer-2s. We have state channels like Lightning, some state chains, but largely we have side chains and in development, some sovereign roll-ups potentially, but not live yet, so we can’t count them, but that brought in a bunch of new builders and brought a lot of excitement into the incumbents that have been here building for a while.

Nick (39:30):

As part of your research, and I imagine you’re doing a lot of reading, you’re meeting with teams, different things like this, have you developed an understanding of a framework or a playbook, if you will, for what drives or makes a protocol successful? I got to imagine, there’s some best practices or some things that you’re picking up on.

Red Sheehan (39:50):

Yeah, that’s an interesting one. In terms of a playbook, one thing I’ll say off the bat is cults work. There are a lot of cults in this industry, and that devotion really works to keep projects going and keep people building in them. Aside from that, I think a lot of us are LARPing about the ethos of this industry. I like decentralization, so I’m here. It’s not really the case. It really comes down to the bottom line of is this affordable? Is there a good user experience?

Red Sheehan (40:26):

Crypto, at large, does not have a good user experience, and we all know that if we’ve gone through the fumbling act of writing down keys and all this other stuff and having to approve tokens before we send them and all these other weird things, but it really does come down to that bottom line, and this is kind of like what I said about privacy and that it’s very reactive.

Red Sheehan (40:50):

Many people are in here for the ethos, but many others want to use some of these protocols and they don’t really care if one’s a little more centralized than the other. These things will eventually show their head and become a problem, but people are reactive. They’re not going to totally subscribe to that ahead of time.

Red Sheehan (41:09):

The reality in a lot of this is that price leads narrative is one thing I’ve learned. When I first got in the industry and started learning about all this tech, I think I became a worse investor for a while and I have decided for myself that if you learn more about the underlying technology without commensurate knowledge about people and their behavior, you will be a worse investor. You need to understand people too, because a lot of it is so illogical and so silly, and price really does lead narratives.

Red Sheehan (41:42):

When the number go up, it gets people paying attention, it gets people wanting incentives, it gets people wanting to build in that ecosystem. At some point, you typically catch up to that number and are deserving of it, or at least relative to the rest of the industry, but it is very counterintuitive that way. Then, you start to realize, of course the best tech doesn’t win and if everything’s marketing, I live in the States, why are we using the Imperial system?

Red Sheehan (42:11):

If everyone decided, let’s use the metric system, it’s not going to change overnight. There’s a huge switching cost. If we were to do an analyses on languages and decide we should be speaking Esperanto not English. Right now, English is kind of the global language for math and business and science. Well, good luck overturning that. If you can factually prove that this other language is easier to learn and better suited for this industry. It’s just not going to happen. You’ll have these uphill battles and a lot of it really comes down to marketing and inertia and network effects.

Nick (42:47):

That makes a lot of sense to me and you mentioned it there, but tokenomics must be part of this discussion about protocol playbooks or frameworks. I’d like to just follow up on that and ask a question about how has your understanding of the role or the importance of tokenomics evolved as you’ve done your research at Messari and some of the projects that you’ve studied and published on?

Red Sheehan (43:11):

That’s a good one. Tokenomics is something I’m still learning about. I come at this from a comp sci background. A lot of my colleagues come at this from a traditional finance background, which means, I’ll talk about consensus algorithms and data structures all day and have fun with that, but I don’t understand a lot of the core financial stuff as well. I’m trying to learn more about that. Tokenomics is one thing where can’t I just bet on the best tech? No, you can’t. It also needs to have tokenomics that match it.

Red Sheehan (43:44):

I think people are learning from the mistakes of others where maybe things get diluted to all hell or you just don’t have the proper growth bottle to let new people in to build in that sense. I won’t dive into specific protocols, but I’ll talk about a DAO that is in my city and the token is just totally destroyed because it had a horrible inflationary mechanism and now it’s worthless. It wasn’t some huge DAO or project anyway. It was a lot of guys that like to write code and brew beer. It was just a little thing, but the token is just abysmal.

Red Sheehan (44:25):

You can’t save it, and it’s not on as large of a scale as a protocol that people use and put money into, but that’s a good example of how you can kind of get wrecked if you don’t think about your token, because you can’t take it back once you put it out.

Nick (44:40):

How are you thinking about the future of protocols? Obviously, there is a lot of discussion about L-2s. We talked a little bit about “L-2s” in the Bitcoin community and there’s a proliferation of L-2s in the Ethereum community. How should we think about the future of protocols?

Red Sheehan (44:58):

In the future of crypto, I’d say is MultiChain, but this question’s a bit more about protocols specifically. I don’t see protocols as financial tools at their core or anything like that. I know DeFi is our biggest used case and a lot of people see crypto and they think this is money or they think this is [inaudible 00:45:17] and I don’t really see it as either. I see it as a substrate for social coordination, and at its core, that’s what this tech is.

Red Sheehan (45:28):

Sure, money was the first used case to come out of it, which was Bitcoin, and then we had a lot of other financial applications come out of it, but it’s really just social coordination. There’s an idea I like in psychology that’s called the Dunbar number I believe, and it’s how many relations people can really have before you hit your bandwidth, and it’s maybe 150 or 200. If you think about your life, do you really know or keep up with more than that many people? Probably not.

Red Sheehan (45:57):

If you do, you have incredible bandwidth in your brain, but for our actual relationships that we’re maintaining, that’s about it. That probably relates to sizes of tribes or just how we used to live before we were so globalized and we had the internet, but we don’t really do well with those numbers. If you have ever been in DAO, the first thing I learned is, wow, democracy doesn’t work at scale. The participation sucked and people weren’t cooperating. It’s a mess.

Red Sheehan (46:27):

Then, we moved towards these systems where you have representatives just like our government, we’re speed running government and DAOs figuring out what works and what doesn’t, but the point is, you can speed run it because you can just whip up a brand new system, and that was so much harder to do before because you didn’t have the reach.

Red Sheehan (46:43):

It’s actually super cheap to just spin up a new environment. You don’t need to go do all this work in the physical world and spend all this time when you can kind of just copy, paste and iterate and try things, which gives you this super quick turnaround, which we don’t have in the real world. It also gives us a sandbox that, let alone the speed, we just have a new environment to try it.

Red Sheehan (47:04):

If I wanted to try partially common ownership or some different form of taxes and real estate, how am I going to do that? Am I going to go overthrow a government and implement it? No, me as an individual, this is combined to academia. You can make Monopoly. That was made for Harvard or taxes, but no one uses it that way. It’s like, how do I get all these people to participate?

Red Sheehan (47:25):

With crypto, you could do that. You can get, as we’ve seen, millions of dollars on the line and thousands of people using these things in dates. The speed at which we can iterate and try new forms of coordination, is so much faster than it’s ever been for people because we have access to the internet, all these people, and we have credibly neutral platforms to do it on.

Red Sheehan (47:48):

The future of protocols will be a lot more experimentation with social coordination. It’s really just a substrate for that. That kind of comes from it being based on cryptography, which tangent on cryptography and why it’s so cool is that it is one of the very rare things in our universe that is inherently defensive. You think about everything that people build or just most things in universe, they’re a lot easier to break than they are to build.

Red Sheehan (48:17):

A life very fragile, a human body, takes a long time to build that up and then very fragile. You want to build a castle, it’s going to take a lot of time and effort, but it might just fall over on its own from gravity or some other forces. Really, everything is kind of easier to break even our organization systems, but cryptography is so unique in that it is really hard to break cryptography and it is super easy to build it.

Red Sheehan (48:41):

It’s kind of got this inverse, inherently defensive property, which, in my opinion, really favors the individual over a large organization and that was kind of imperative in crypto, which is why you could do all these different types of social coordination and actually try things out and get real results there.

Nick (49:00):

Longtime listeners of the podcast know that I’ve had other members of the Messari team on the podcast before. For example, had the opportunity to have Ryan Selkis, CEO, and Founder at Messari on, Vincent Wynn, Engineering Manager, and Mihai Grigore over at the research team, so a really cool group, and I appreciate that you had come on and join. When you think about that core dev relationship between The Graph and Messari, how do you think about it?

Red Sheehan (49:27):

I think the Messari and graph partnership is pretty obvious in terms of how I explained Messari before, we are all for standards and adding transparency, and that totally lines up with The Graph. I mean, if you want to be accessing data from all these different places, you need standards, right?

Red Sheehan (49:50):

The Graph is providing the infrastructure and Messari is providing some of the methodology, which is why Messari is a core contributor to a lot of subgraphs, and the team is doing a lot of work to use that infrastructure and make it a little bit more accessible to other people who want to jump in. It seems like a really obvious symbiotic relationship of here is the infrastructure and here is the aggregation.

Nick (50:15):

Red, one thing that we sort of uncovered during our pre-interview and getting to know each other, is there was a point where you connected directly with The Graph community, and it happened at UC Boulder there in Denver, right around the time of ETHDenver last year, I believe, but that’s an interesting story. Talk to us about what you did and how you partnered with The Graph for a special event with students at UC Boulder.

Red Sheehan (50:38):

Yeah, totally. The Graph was hosting a Hackathon at UC Boulder and I came over to the college and I gave a little presentation to all the students that were jamming on it and everyone else who was there to jam on the Hackathon. I just taught a little about, “Hey, we, at Messari, are a core contributor to The Graph. This is how we use it. This is why we think it’s worth using, and these are all the cool things you can do with it.” Then, I hung around, helped some students out with Hackathon projects and all that good stuff.

Nick (51:05):

You made the move into crypto, you started freelancing, you did entrepreneur, now, you’re at Messari, but you still make this move from one industry to the other. If you zoom out, what do you think makes the crypto industry different from other industries?

Red Sheehan (51:20):

Crypto is so special right now because it’s so young and because it’s so young, everyone who’s here is here on purpose. You can’t accidentally stumble into this industry. You can’t go to college and say, “I don’t know what I’ll major in. I’ll major in crypto,” because the curriculum doesn’t exist yet except for maybe a couple of schools. Then, “I don’t know what I’ll do. I got a degree in crypto. I’ll go work in crypto.”

Red Sheehan (51:44):

That’s not really the case. You have to go learn about something else and join some other industry and then make the conscious decision to leave that industry and join crypto. Everyone who’s here, actually wants to be here, which is not the case in almost every other industry or people just hate their jobs because they just fell into it. You don’t fall into crypto. You have to make a decision to come here.

Nick (52:04):

Red, I only have one final question for you before I ask you the GRTiQ 10, and it’s a common question, I ask it all the time, but the different perspectives are super informative, and I’d like to ask you this question about web3, do you see it as an evolution, like a step of progress away from web2, or you see it like a revolution, a revolt against what happened with web2 or something else?

Red Sheehan (52:29):

I will equate web3 to decentralization in this answer in terms of what do I see it becoming? I don’t know if it’s exactly an evolution, because I don’t think we should be getting rid of our traditional centralized systems. In many cases, centralization is good. It’s agile and it’s fast and it has many used cases where it’s way better than decentralization, but it provides an alternative. If you have no competition, why would you try to improve or get better with the dollar per se? I’m American, can’t opt out of the dollar, just use another country’s currency for all my stuff. I can’t opt out. There’s no competition.

Red Sheehan (53:13):

Crypto introduces competition. Now that there’s something to compete with adopter guy like, you better give me a good deal. You better not inflate my money away at 25% in the last however many years, whatever has happened with the money printing there, it’s, “Hey, you better be honest with this because now you have competition,” which means people can opt out of your system. Just having that alternative, I think, is enough to make centralized incumbents play fair. If they don’t, well, they get replaced. Pretty obvious there.

Red Sheehan (53:46):

The other side of it is, if you have a centralized system, it’s really hard to decentralize it. If you have a decentralized system, you can totally centralize it later. Look at Farcaster, that is a decentralized protocol for social media, but Warpcast is a centralized client built on top. There could be 40 different Warpcasts with their own different flavor. Farcaster, which is social media.

Red Sheehan (54:10):

You can easily become more and more centralized as you want on top, as long as the base layer is decentralized. You can always build up. You really can’t go down the gradient the other way. I just see it as an alternative to keep current systems honest and to give us a little more flexibility in what we build.

Nick (54:27):

Red, now, we’ve reached a point in the podcast where I’m going to ask you the GRTiQ 10. Ten questions I ask each guest of the podcast every week, and I hope it gives listeners the opportunity to learn more about you, but to also try new things, learn something different, or achieve more in their own life. Red, are ready for the GRTiQ 10?

Red Sheehan (54:44):

Oh, I’m so ready.

Nick (54:56):

What book or article has had the most impact on your life?

Red Sheehan (55:01):

Thinking Fast and Slow by Daniel Kahneman was probably the book that had the most impact. I read that a very long time ago, but it got me going down a rabbit hole about cognitive bias and the difference between your subconscious brain and conscious brain, and I just think all that looks so cool.

Nick (55:16):

Is there a movie or a TV show that you would recommend everybody should watch?

Red Sheehan (55:20):

Not particularly, but if you are in the crypto industry, I do and it is The Big Short.

Nick (55:26):

If you could only listen to one music album for the rest of your life, which one would you choose?

Red Sheehan (55:31):

Discovery, Daft Punk, easy.

Nick (55:33):

What’s the best advice someone’s ever given to you?

Red Sheehan (55:37):

The best advice I was ever given was good things do not come to those who wait. Good things come to those who go and get them. I think the alternative version of that is sometimes you got to be an asshole.

Nick (55:50):

What’s one thing you’ve learned in your life that you don’t think most other people have learned or know yet?

Red Sheehan (55:56):

One thing I’ve learned that it feels most people have not learned is that you can be right or you can win, but you can’t always have both. It’s like that saying, do you want to be right or do you want to make money? It kind of falls into that category of this is the way it should be done. Well, do you want to achieve your end goal? You can be right or be happy.

Nick (56:19):

What’s the best life hack you’ve discovered for yourself?

Red Sheehan (56:22):

My personal life hack that I try very diligently to live by is create more than you consume. I think when you create, whether that be teaching or writing code, or just working in industry at all, organizing a meetup, whether it’s crypto or you like to go hiking or anything, contributing, creating will make you go so much further than if you are just a participant in the things you like to do.

Nick (56:51):

Then, the final three questions are complete the sentence type questions. The first one is, the thing that most excites me about web3 is?

Red Sheehan (56:58):

Social coordination. We talked about it.

Nick (57:01):

The second one is, if you’re on X, formerly known as Twitter, you should be following?

Red Sheehan (57:06):

Yeah, I thought about this one and I didn’t come up with any group or person to follow. I see a difference between being a fan of an idea and being a fan of a person, and I try very deliberately to never be a fan of a person or company. You’re kind of subscribing yourself to any future idea they might come out with. I find it much safer to just get behind ideas and not people.

Nick (57:29):

The last one, I’m happiest when?

Red Sheehan (57:33):

I’m happiest when I’m busy, like a Border Collie, those herding dogs, I just love to have a lot going on.

Nick (57:47):

Red Sheehan, thank you so much for joining the GRTiQ Podcast and for sharing your story into web3, the work you’re doing at Messari, and a lot of other really interesting insights about protocols and the future of the industry. If listeners want to stay in touch with you, keep up on the work you’re doing, what’s the best way for them to stay in touch?

Red Sheehan (58:05):

Thanks so much, Nick. The best way to stay in touch is to find me on Twitter/X @RedVelvetZip.


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