The Bull Case For Hyperliquid | Ryan Watkins

Transcript

Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is forformational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Block Works. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds, or projects discussed. All right, everyone. Welcome back to Empire. Very excited about this one. We've got Ryan Watkins, co-founder of Syncrasy on the pod. Long short, I think mostly long actually. Long biased I think is what the professionals would call it. Uh liquid fund in crypto. So Ryan, welcome in.

>> Yeah, thanks for having me on. >> Long biased hedge fund. Is that >> long biased hedge fund? >> Okay. Only crypto assets. >> Only crypto. >> All right. All right. Um well, I I want to talk about a bunch of stuff. I mean, the the biggest trade that I've seen you guys be public about is Hyperlid. Um, and when I think about people who have put on the hyperlquid trade in size and done quite well, you you know, you guys are top of mind for that. But maybe before getting into the hyperlquid trade, we could talk about just this market environment in general. I think you're one of the first, >> one of the only people I've seen on Twitter who is positive and saying that we're entering a healthy market environment right now. Maybe you could just expand on >> Yeah. what that means to you.

Yeah, I think when I say healthy, I mean that there's opportunities that are available, but it's not necessarily rising tide lifts all boats. And I remember heading into this year, one of the biggest uh uh almost like like cognitive dissonance that I had was that I'm bullish, but at the same time, I'm like so cynical about all these assets in the asset class >> and all the behavior that we've seen over the past year, two years, even past four years since the 2021 peak. And I think when you zoom out like one helpful lens that I think we've we've kind of developed and and I think it's also helpful just to even just personally invest in many different asset classes to help you get to this conclusion is if

you actually have like the the kind of global capital allocator hat on and you're thinking about and you don't have a mandate to invest in crypto like what within crypto would you actually buy? And I think heading into this year, the answer was like almost nothing. Like almost nothing. You could buy like AI equities. You can go into private crap. I mean, there's so many different things you can do. >> Global capital allocator who could buy anything in the world. >> Would you actually buy anything in crypto? And maybe there's one or two things. >> There was like a handful. There's like a handful. And it and it was I think it was uh it was just being brutally honest with ourselves about like what is the actual state of the industry or the state of like the token market. And I think when we put on that hat we're like

all right well there's only so many things uh hyperlid was was one of them as as you mentioned before. And what is that reason? Well it's like if the bar is I can invest in let's just say AI equities because that's like the the hottest thing that everyone wants to talk about. Well, then you need to actually offer something in token markets that's interesting to the person that can just go invest in like Micron for example or or Sandis or SKH Highix. And I think for that you need a story of real fundamental acceleration and disruption. And there's just not many things that do that. And there's so many things I think in crypto that are interesting to us, but they're like hairy. it's like they have token unlocks or yeah maybe it's like interesting if you're a venture capitalist and you're

thinking five 10 years out but what is essentially urgency to get along uh and I think that was like one of the biggest challenges that I saw in the market while at the same time being so bullish on like a handful of products that we built like perpetual swaps and prediction markets and stable coins and digital gold and the fact that this year we're going to get like landmark legislation hopefully the clarity act where at that point heading into 6 months after they're genius and starting to see like the stable coins stuff like so be implemented at a lot of these enterprise institutions but again there wasn't that many ways to play these themes say for just a handful.

>> Yeah. Yeah. >> So you you guys launched Syncre four I think I'm trying to four years ago. >> Yeah. 2022. >> Yeah. Okay. Um what has changed from the uh seat of a crypto fund? What do you think has changed from then to now? >> Yeah. I remember so in 2022 obviously was not a great year for the asset class and I remember for us we were sitting in casher for quite a bit of time and one of the things that I think has changed the most is that even though we were in a bare market I think the common psyche that everyone shared is that eventually we'd be back >> and we'd be back and it'd be just like it was every other time we went up 2021 2017 it's going to be all season we're

going to make 10x X 20x that that was mentality and uh what also was true is that you know when the market came back there would be an abundance of opportunities and you didn't really need things to actually be real like you just invested in narratives and it worked and I get the reason why like in in 2017 we were going from a point in time where the alcoin market didn't really exist before 2017 and all a sudden you had the ICO boom and it's like wow look at all these ideas like it's not just Bitcoin we have a million things we're going to decentralize Uber and all this other stuff we And then in 2021 uh we went from okay we're not these are not just ideas these are actual like working experiments. These are like real things and we and there was also real growth

growth to show for I mean in hindsight it was super speculative. A lot of like liquidity mining and all these incentive games like Axi Infinity and all that stuff but there was there was growth and because there was growth you had to question yourself but like okay is this a big mega trend that I'm going to miss? Is this actually the next big computing platform? Which at the time it seemed like it was the only game in town that was claiming to be that. It was like you had blockchain and then you had maybe like virtual reality or augmented reality and you know Meta ended up betting on both with with the name change and all that. And then you think about, you know, where we where we are today, like since since 2022, and it's like, well, it's kind of clear that crypto blockchain is not the next big

computing paradigm, or at least it's sharing that title with AI in the most generous take of it, right? And then two, uh, well, you can't just go from experiments or or ideas to experiments anymore. you actually need to have like real working products because at the same time when you have another frontier technology that has product market fit is scaling and is actually delivering value to society at large then it kind of makes the stuff that we're doing here just kind of look like child's play or a little bit of like amateur hour >> and I think that's one of the reasons why this industry has struggled to grow into the valuations that were set in 2021 and 2022 >> and why like only so few things have seemingly crossed the chasm and I even

think to different assets that have done well this cycle like say Salana. Salana you can argue like didn't really even make new highs since 2021. It peaked at 260 in 2021 and for a brief moment in time in January when Trump watches memecoin got 300, but it just hasn't really broke out. >> Yeah. >> Like you can argue that like Hyperlid might have been the only thing that has broken out over the past four years. It's actually why um I don't know if you know Patrick Oanaughy or the Invest Like the Best podcast, but um you know he has a media brand called Colossus and they I'm sure you read this. They had a a piece on Jeff and Hyperlid and >> that piece actually was this like real turning point for me with Hyperlid because I was like oh the institutions care about this too. This is the first

breakout that so actually that Colossus piece was the thing in my head that kind of broke out. But we'll talk about Hyperlid a bit. Do you think um going back to just like this um theory and theme of of the industry and where it stands today? Do you think we So you used to be able to just buy beta, right? Right. >> It was just like industry is going to go up, let's get long. The industry is going to go down, let's you know, maybe get to cash. Um do you think we've moved from being uh from buying beta to underwriting businesses? Is that the biggest shift that's happened? >> Yes. I mean, it's always going to be a moment in time thing. like we could be in a different world in three years where you can just ride beta and there's an abundance opportunities and it could

be like AI right now where you just throw darts at the board and and anyone can do it. >> But yeah, right now it's it's a it's a market where it just pays to be an asset picker like you can't just blindly allocate. I mean even just if you were to blindly allocate it to the top three like BTC soul this coming to this year you know BTC is down what like over 30% on the year soul down over 50 E probably similar uh just hasn't worked so >> uh yeah and I think it's just it's because of what I what I said where you know what is actually the the reason for example you know I think oftent times I listen to podcasts or I'll go on a podcast and you know you get asked to talk about what is the latest thing happening in the market and you know for

example if it was this week you'd be talking about sailor you be talking about the war and oh what is the impact on Bitcoin does it go up or down and sometimes I just stop myself and be like do these events actually matter or is it the fact that people lack so much conviction here that is why these things matter like when people lack conviction they always come up with there's a million reasons why they would sell for example if Bitcoin was at like 30k right now And it's fallen enough and uh people just were interested in bidding that level. I think you can ask like most people that hey Bitcoin is 30K what what are you doing? They'd be buying like hand over fist. No, no one would care about what Sailor is doing. Like no one would care about Sailor's doing.

>> He'd come he'd come out with some news on Monday and it just wouldn't matter. People just be buying handover fist because it's at a level where they finally have that conviction. >> And who knows, maybe 60K is that level where people have that conviction. But again, like I think the problem is that people just don't have a reason to bid so many of these assets right now and they're looking for that reason. >> Yeah. >> Yeah. Before going too deep into the specific assets, this is almost an obnoxious question at this point, but this idea of a four-year cycle and are we in a bull or a bear? >> Yeah.

>> Either very end of a bear or either very beginning of a bull. Do you have thoughts on how how you would answer this? >> Yeah. Uh, I mean, I think we're clearly in a bare market for for for most assets in crypto. I mean, for Bitcoin, you can argue that it started since October or September of last year. I think for a lot of altcoins, you can argue it started since 2021. Things have been down only. It's been a youth in Asia roller coaster, but we're not in a bare market across risk assets at all. It's been a mega bull market for all these. And and again like >> I mean crypto was doing well until >> we were until 1010 >> until 1010.

>> Well kind of well kind of well like >> maybe not Yeah. Yeah. Yeah. >> I think we were we were correlated and we were going up but we're still getting smoked like even and outside of the the majors. So I remember in second half of >> the majors were doing well. The majors were correlated with the broader risk on market. >> Agreed. But then I think one thing I always think about in that second half of the year uh of 2025 is you know what actually did well I mean sure you had outliers like say like hype but the things that did well were mainly the things that had dats. It's like whatever was what whatever were like the the people that could convince other people on Wall Street to give them money to buy these assets those assets did well. So it was obviously the majors was things

like Athena and I remember IP had a dad and anything with the dad did well and the stuff that didn't have dads they didn't do well at all. >> Yeah. I mean the the only other thing I'd say is that the private markets did quite well like there were >> you know if you were in you know the themes of last year were probably stable coins per and prediction markets. So if you were in poly market or couch I mean couch is not really crypto like if you were in poly market you did quite well. If you were in circle hit the IPO you did quite well. If you're in Tether, you did quite quite well. And if you were in I mean per would be probably Hyperl, you did you did quite well as well.

>> Yeah. Yeah. Uh so yeah. So what I what I would say is, you know, I think there's like these these four product categories that are doing well and they're doing well irrespective of what the price of Bitcoin is. So this almost like ties back to the original question of bull market or bare market. It's a bull market if you're in prediction markets. >> It's a bull market if you're in per. It's a bull market if you're in stable coins, but if you're not in those categories, then it's just not. And and I think many of these categories that I talked about, they actually do have like >> real compounding and secular growth.

Like every single year, you can almost expect that the numbers will be higher. Yeah. >> And that's what you want to see of like a re for a real secular theme. And you know the the challenge with with token markets is is there a way to play prediction markets in public markets right now? Uh there isn't. I mean, I think Hyperliquid might be the only one right now, but before they launch Hip 4, there's no there's no you couldn't buy Poly Market, you can't buy Koshi. That's it. Same thing with stable coins. Stable coins, there's like maybe like many adjacent ways you can play it. Like, oh, well, stable coins touch all the different parts of the onchain economy, as more stable coins come on the blockchain, you can develop a thesis on how lending protocols might benefit or trading protocols, whatever might have you. But there's not really a direct way

to play it next to like like in the same way how owning Circle or Tether is like direct exposure to it or owning Stripe equity is direct exposure to it. Uh the closest thing you can probably get to is is just like Athena which is and in Maker D which are the only like issuers of stable coins that actually have tokens that you can buy. >> Yeah. But even those did >> even those as well for different reasons. >> Yeah. Yeah. Um do you have Okay. So four-year cycle, you know, bare markets would be 2014, 2018, 2022, and 2026.

>> Yeah. >> So, you know, if you just follow the four-year cycle, we're actually tracking kind of perfectly where we should be. Do you have a thought on if >> the market starts will the four-year cycle basically hold, right? Which would say that, you know, ear think back to early 2023, Soul's trading at 8 n 10 bucks, starts to move. I remember soul did a 5x to 50 before anyone on the timeline was talking about it. Yeah. >> Right. Will we and I think you guys had, you know, good size in that trade, too. Um, is that what we're going to see? Do you think it's possible?

>> Yeah, it's possible. I mean, it's also possible that this lasts shorter or lasts longer. >> Yeah. >> Uh, I'm really not sure. It's one of those like big questions where like in theory, the four-ear cycle is silly. It's like this, you know, voodoo magic that we do in crypto. So trend lines on charts, but because so many people do the trend lines on charts, >> like like resistance is a is a silly thing. >> I I agree. At least from my personal experience, it seems like the TA doesn't work as well on like real businesses, but it works much better on worthless assets because it's just all sentiment.

>> Yeah. >> Right. So I I can see why like for crypto like super immature participants, worthless assets, like Yeah. you just trade >> like Fibonacci numbers should not be a a thing but the 61.8 line >> there's always a bounce >> because so many people trade the Fibonacci numbers like there's going to be a bounce. >> Yeah, >> but then an equity is like yeah you know what if Nvidia comes out and they just say you know earnings are up by a thousand% like your lines >> on maybe crypto stops trading. Maybe I mean, you know, this is talking our book here, but like, you know, we're kind of pushing this investor relations thing and maybe the more people are actually talking about their businesses, the more that Fibonacci numbers, the less Fibonacci numbers matter.

>> Yeah. And I think that would that would be ideal. I mean, to be honest, it's like a a waste of time if we're all this talking about like >> sentiment and TA and >> also like I mean, if you believe in this this industry, then uh you know, eventually we will go to the point where there are real businesses that we'd want to own. Yeah. >> And uh I think there will be uh easy ways to get the data that you need to understand these businesses. All right. Hopefully it's standardized. >> Uh and then there will probably be over time a decoupling.

>> Yeah. >> Of the assets. >> Yeah. >> And I think we're already in the early stages of that as well. And I've always had this thesis that we would end up decoupling, but uh between like Bitcoin and everything else, it's just going to happen slow. It's just going to happen slow. Bitcoin and all other assets or you're saying the quality assets from the sub subpar assets? >> I think quality assets from subpar assets. Uh >> but just in general maybe the better word is just dispersion because I don't want to like single out Bitcoin as a thing to decouple from. I think that's like not really the point. But yeah, >> robots and machines will outnumber humans onchain and peak is how they get there. Peak OS enables any machine to do business on any chain. It turns machines into autonomous actors and liquid assets

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So, you know, I want to be um if I if I asked you, do you have a framework for how you put on a trade, how you do your research, how you size it, how you you know, what other investors you talk to, what filters you use? Do you do you have a do you have an answer there or is it more of a gut feel? Uh I think it'll be this combination of of gut feel, but then we also do I mean I think gut feel is more of like the sizing stuff uh and timing but we do very deep research for any of the positions that we build and if we're going to build a big position in a name then for sure we've done extensive research in many cases you know for example whether it be uh let's say Salana or for example like when we built

a position in in 2023 we've been following uh you know at least myself and then Wilson who's on our team that leads research we've been following Salana for as long as it's been a thing I mean since mainet came out and the token launched in in 2020 we followed it throughout the entire cycle uh so you can argue that okay maybe we've been following research on this thing for for years before we even build the position in in the fund uh and I think it's important because we only want to invest in quality we only want to invest in quality and I think you have to actually put your use your brain. Yeah.

>> If you want to do that and >> uh I think it's also an important point too because >> I I find that over the past year year and a half really since 2023 I think people have been conditioned through memecoins and and perpetrating to just think very short term. >> Yeah. And when you think very short term, I think building that conviction just doesn't long-term conviction, long-term funnel conviction just doesn't really matter as much. >> And then what I also say too, uh, is that I think in the age of of AI, in the age of abundance of information, hypers speed information, people can learn the

thesis for these assets very quickly. Like I think at this I remember even earlier this year it would almost feel like a waste of time for me to go on a podcast on top of Hyperlquid because like everyone knew the thesis. Everyone knew the points. They had the same talking points. Oh 9% revenue go back to buybacks. Oh stealing market share from Binance. All these different things. >> What actually made the difference is is actually just the conviction. >> Mhm. >> And the conviction I think only comes from just sitting with an idea until you really really understand it. >> Yeah. Do you think there's something? So your team is made up of a lot of ex you you're a Misari research analyst. Um >> you Monk and Wilson, right? All all exmisari guys.

>> Yeah. >> Um >> do you think there's something about being a research analyst that leads to being able to get strong conviction or being a good investor in crypto or what do you think? I think the the conviction for sure because there's not really uh again I think you know hopefully this changes with like things like you know block works transparency trim brick all that stuff but there's not really good places to go learn about these assets there really isn't I mean even if you ask your LLM like hey I want you to put together a report on on on hyperlquid or or morpho or whatever your favorite asset is it can probably give you like good highle details >> but oftent times I find like there's data inconsistencies or like the data is

just not presented well or there's also not established frameworks for even understanding these assets. >> Yeah. Yeah. It's crazy. If you look at the revenue of a protocol Yeah. on Block Works, >> DeFi Llama, Dune, and Artemis, you're going to get four different numbers, >> which is insane. >> Which is insane. And you're going to get different numbers by like 30%. >> Right. But it's like, wait, isn't this stuff supposed to be on like transp? It's supposed to be like you're reading it from the blockchain. Like, how does this even make sense? because then there's there's almost accounting work to be done >> to be like, oh, they're clearly I mean I'm not going to name names, but they're, you know, folks that are clearly >> miscounting what revenue the almost the definition of what revenue is. So, >> yeah. Yeah. Yeah.

>> So, um maybe speaking of revenue, like do you how much do you think fundamentals actually matter here? >> I think they matter a lot more than they did in the past. 100%. And uh yeah, again I just think when the uh the the average investor has an abundance of alternatives to get their exposure to frontier tech and asymmetric upside, >> you really need to have something that's that's real and tangible. And one one way to test this out even just look at this is anytime we go up even like the past three months before the past week when you know Bitcoin sold off because the seller uh there was a there was a good amount of things that started to go

up right you had some like random stuff in crypto AI some GFI stuff and anything can go up when people feel some level of uh of risk appetite but what matters is actually are you making higher lows over time and the only things that do that are the ones that have some compounding fundamentals. >> Yeah. >> And that's almost like the the the better test of what is actually like a quality asset to own and what you'd actually want to own long term. Otherwise, it's just a euthanation of I can think of so many assets where every single time there's people are bidding, they just start bidding this thing and it's like, "Oh, wow. This is actually the way to play AI now. This is the way to play quantum now." And it'll go up 100%. And what happens is, you know,

lower high and then it lows make lower lows and people abandoned it. It happens all the time. >> Yeah. Yeah. >> Happens all the time. >> Yeah. You need deep conviction. I even see I mean I even see this with like my portfolio right now in stocks. >> Yeah. >> Right. Like I basically blindly followed Santiago into Micron and SanDisk. >> Good trade. >> Yeah. I mean Yeah. Did did well there. Um I've got no comp I mean me I'm like oh memory buy these things they go up like 200%. I'm like, "Oh, genius." Uh, so, you know, shout out Santiago. Thank you. Um, and then they go down like 20% and I'm like, >> "Oh, god. I got to get out of this thing." As opposed to something like, I don't know, what's the stock at like um you know, Robin Hood, like I'm not

selling Robin Hood for 10 years. Eli Liy, like I'm not selling Eli Liy for 10 years. So, yeah. Maybe maybe speaking of conviction, I mean, you guys you guys got conviction around Hyperlid. Can you um >> I don't know what you're allowed to share, what you're not allowed to share, but what what are the assets? You said there's only a couple assets that a global capital allocator could actually buy. What are the assets that you guys own right now and maybe what percentage of your book is hyperlquid? >> Yeah. So I can't share the details on you know number of assets we own and and waitings but yeah I think with that framework uh it's really tough outside of Bitcoin and and Hyperlquid.

>> Yeah. and you're you're really, you know, you either can put on certain positions, but you have to like limit your sizing, uh, or you might just have to forego doing that at all. And it could just be a point in time thing. You know, what I what I always tell people is like, listen, >> in some ways, like this sounds hyper cynical of like there's like nothing you want to own except for a small number of things. And then maybe like the optimistic part is that well, the small number of things are working. they're like really working and you know I'm not like one to use analogies but maybe this is like chat GPT of crypto like that would be sick that that's exactly what we what I think this industry needs.

>> Um now if we think about this over time and we're not being impatient anymore like we're thinking 6 months out 12 months out 24 months out there will be more hyperlids like not necessarily like the same exact opportunity. This could be like a once in a a cycle thing, >> but yeah, there's going to be more assets that actually do break beyond this crypto merrygoround and they do and they're going to be in these categories that we talk about make prediction market, stable coins. I think lending is one that we're we're quite excited about. Um, I do think that a certain point we will get something real in crypto AI, but I think I just have to be

you have to be patient. And you know, I think that at least for me, every single 6 to 12 months, there's usually about one to two new assets that come out come out and they're like, "Wow, you know what? This is real. I think this is worth a shot." >> Yeah. >> Yeah. Want to talk hype? >> Sure. >> You guys, so you guys did the work. I don't know when you guys put the trade on, but um I do remember Monk came out with a post. I think it was called The Great Purpification. This was maybe early March. >> Yeah. >> And um you know, I've been reading a lot of Flood stuff and you know, we got this guy on our team, Shondaanda Devons, who puts out great stuff and you know, I do remember Monk's post. I read that. I was like, I think they might be on to

something here. Um, tell me maybe we can just start with your like your your hype your hyperlquid thesis and then we can Yeah, I've got a bunch of questions to drill down from there. >> Yeah. Yeah. So, we we we've owned this since since day one. Uh, and >> were you trading on it before or did you just did you get the airdrop or you just saw the excitement? >> No. So, no. No. So, we No. So, we don't trade per as a as as a fund. And to be honest, I actually had personally had never traded on Hyperlid until that day when we actually bridged Go >> until you until the airrop.

>> Until the air drop >> and then you saw the excitement around the airrop. >> So I've been tracking Hyperlid. >> Yeah. >> Uh but I hadn't I just wasn't using it. >> Yeah. Yeah. >> Now I think Monk on our team was using it and that's a different story, but that this is like before he he he joined us. Yeah. I I actually did not use Hyperlquin until the first day and but what I think what we what we did know is that uh the second that this thing launched we were we were going to buy. >> Interesting. >> Yeah. >> How come? So to be honest back then I think the thesis was less was more simple than it is today and it was just that there were only so many uh so I think derivatives was always if you think just zooming out like the three

biggest categories uh by revenue in this industry have always been uh exchange specifically like perpetual swaps, stable coins and you can argue maybe smart contract platforms like >> Ethereum back in 2021 it peaked at doing maybe like $10 billion run by annual fees. It was just huge. And even Salana earlier in 2025 was maybe like 2.5 to to three billion in annual fees. Like the these are these like big businesses, right? >> And we're like, okay, look, I've always wanted to own a derivative exchange uh at at Syncrasy and there has wasn't really good options. I mean, for a long time, the only was options were like GMX.

>> Mhm. >> And there was uh DYDX >> and I remember when this one came out, it's like, you know what, this actually makes sense. It doesn't have the crazy token unlocks like say like a Dux did a ton of revenue. I remember at the time that we bought it, it was still it was doing like $200 million a year in in revenue. And I remember actually on the first day, no one even knew that they were buying back the token, right? >> It was like kind of this like secret thing. and you could track it on chain. I was like, "Yo, who who the hell is like the assistance fund?" I'm like, "Oh, wow. This might be the this is this is the team like buying back the token."

Like, "This is crazy." >> And I looked across the landscape like, "How many projects are even like the tokens that you can own are generating that much in revenue and passing it back to token holders?" At the time, there's only three that were higher and it was just uh it was Salana, Ethereum, and then I think might have been like one more which I'm forgetting maybe BNB. >> I was like, "Oh, wow. Well, these are all worth multiples of what hype is and it was just that. It was simple. As we kind of continued to do our research, it became much bigger than that. And that's when we started develop like this everything exchange thesis. And we end up putting that one out in like Q1 of 2025. That was like the first type of thesis we put out. And I think the thesis has more or less been the same

since then and I think it's just started to become more clear is unified margin to trade any asset like that. That is a hyperlquid thesis. Like you can put uh a dollar in that dollar can be a stable coin or in the future it could be a portfolio of assets and you can use as margin to trade anything. It could be perpetual swaps on crypto equities, commodities, it could be prediction market positions. It could be options. I think there's only so many businesses even outside of crypto that even competing for this everything exchange or like financial super app opportunity.

I think Hyperlid is one of maybe like three to five that are doing this and it has like the most unique approach to doing it uh being built on like a permissionless blockchain. Yeah. >> Like it is it to me is like the the realization of this this thesis we've had with blockchain for the longest time which is that you're going to have a single substrate where all the finance takes place. Like that that is an amazing thing. It's like and I think so many people like early on they trip themselves up on the centralization of it. And I remember even myself I was thinking like wait hold up this is they told me it's like four was it four validators and oh like there's this bridge risk right and what I started to think about is this this almost like

concept of like path dependence and this is actually what I thought about with the Salana thesis at first as well because I remember back in 2022 2023 >> there was a lot of push back from the theorem community of like they're just beefing up the validator requirements and that's how they get all this more this like increased throughput and like oh we can't build this global financial system there needs to be like end users that run the validator and it's like this philosophical argument and I remember like we did our work and we're like you know what I don't think that's true I think what make makes sense is this compromise on the interimm of like you know what fine let's just have the validators in the data center >> and we can work towards getting enduser verification in the long run and the

good part about it is that well now we can actually have usable applications which is most important and I almost think the same thing happens with Hyperlid as well where it's like yeah you know what maybe the end state isn't just having four validators that are collocating Tokyo but this is going to change over time and it has changed over time like we've gone from four to 8 to 10 to 20 to whatever right around 20 27 right now and we're going to keep on growing that validator set and what's most important is that we actually built a product that is killer and that people choose and we may be right like the theorem people may be right or the Islam may be right that the end state is actually to have globally distributed validator set and that's what you need

as a foundation for global substrate for all the finance and commerce but how do we get there is it you start on the extreme end like Ethereum where it's like all these individuals running nodes and then you can't have a working system for like 10 years or is it like hyperlquid where you have actually a working product and it scales and you just slowly decentralize it over time as it's needed because I think the the core users of hyperlquid they just don't care about that right now and they never they didn't at first and I think this is something that matters as it scales more and that's a question it will have to answer over the coming years >> but you have time to do that.

>> Yeah. Why did you think that Hyperlid would become this massive thing when you know I do know a lot of people who missed the trade who said look BitMX came and when DYDX came and when synthetics came and went GMX came and when right there there's a there's a the graveyard is uh >> getting pretty big of uh purpose exchanges that did become I remember like yeah >> you know all the blockworks analysts like 2022 they're like all in on like GMX >> you know the guy then the next guys were like all in on the next thing And then and then there's just it's the graveyard right?

>> Littered with per deck's. So why were why was Hyperl going to make it and not become one of those guys? >> Yeah, that's a good question. I mean, so at first I actually wasn't sure and it was more so, okay, this is just like a great great trade. I think as we did our work, there were a couple things that stood out. Uh one was actually just experience of trading on it and the experience of onboarding onto it. uh that was like unique and I remember even using the using like a product like like GMX or using a product like DYDX it isn't didn't compare in terms of like the the latency of doing a swap or just the process of getting your assets. I was like oh this is this is like a centralized >> oh this feels like using Binance.

>> Yeah. Yeah. Yeah. So, that was one. Um, which I think is always important to kind of do like to actually use the product because someone could write it out for you, but to actually just use it and feel for yourself, I'm like, "Oh, yeah. This is like a big aha moment for me." >> Um, the other thing is I think the the founder in the team. >> Uh, and I think it's helpful, you know, to have the conversations with people in the ecosystem, have conversations with the team themselves to help build a conviction. At least for me, I I always need to talk to the the founders and just get to get a sense of whose people are, what their motivations are, are the killers or not. Uh and then I think the other thing was the the the the kind of go to market strategy was unique in that

while yes like the infrastructure itself is uh was relatively centralized, the approach to scaling the ecosystem was this communitydriven fashion. So you get the benefits. So it's almost like you get the benefits of uh of like you know Ethereum or Salana where permissionless for anyone to use, permissions for anyone to build, deeply composable, you get to tap into the swarm to launch new markets or new frontends and that's just something we just hadn't seen before uh at all. Mhm.

When did you start to put on the this you know it start it sounds like it started as a trade and then it quickly turned into like your big you know maybe the investment of the cycle for the fund. >> Yeah. >> What what changes there? >> Uh is what do you mean like what changes? >> Sounds like when you initially found it you said look there's Salana there's Ethereum there's BNB. They're all at the top of the charts and then there's liquid and maybe you know there's some arbitrage to be done here. um not arbitrage but you know there's a big >> big gap between the valuations of these things um >> and then it sounds like now I mean I just I just know what I read publicly right like you know we're not talking about hyperlquid all the time in in in

DMs but it seems like >> you guys have a pretty big hyperlquid position so it seems like it's gone from a a trade >> to a large investment whatever you could define as the differences there how did how does that I'm uh it's it's really a question about like sizing getting conviction and um how you move from, you know, I was listening this Andrew Kang talk about his robotics thesis. I don't know if you've gone down this rabbit hole of Kang and his whole robotics thing. Yeah. >> Like, look, we put a million bucks into Figure, then, you know, this happened. I put five million bucks in and then, you know, this happened and then I put 20 million bucks in. Was there something that happened for you with Hyperlid?

>> Uh, yeah. Well, listen, I think we we bought a we bought a lot on the the first day. Uh I think really what changed is is is like I said we just sat with the idea. So I remember during that time this was you know basically December until this basically December to January uh and February because that that was a time where it ran up from 3 to 35 and then back down to nine at the Teraf flows which is in April of 2025. And during that time there wasn't really that many new things that I was spending time on in crypto. There was the AI agent stuff which was like hilarious.

That was fun. Yeah. >> But it wasn't real. >> Uh so the only thing that was real that I was focusing on was really just hyperlquid. And we spent a lot of time. I'm saying this this researching we're putting together this thesis that we end up sharing publicly. >> And I think it's just through that process that we were able to build that that conviction. There wasn't really like any single aha moment. Yeah. >> Uh that that we had. It's just that as we started to understand uh as the thesis became more lucid to us uh then I was like then I think it got to the point where I was like all right you know what I think we're going to let this one ride. >> Yeah. So I I remember it launched um I weirdly really specifically remember this day. It was like Thanksgiving of

2024 and um >> that was at uh I'm trying to remember the exact price three or$4 dollars and and now it's at um now I'm looking at $64. >> Yeah. >> Right. So, if you got it at three, it's said 60, you're you're up 20x. >> Yeah. >> What? And I don't know what you guys got it at, but um how do you have you have you sold? Are you just riding it? How do you think about trimming positions? >> Yeah. Well, I guess before I answer that, I I actually do remember there there actually was maybe one aha moment that I had and this was in in January. I'm having a conversation with uh you know, another I guess founder in the hyperlquid ecosystem. It runs one of the largest projects. And I think what reframed it for me was

uh for a long time, this is the case with any DeFi protocol is the mentality when you're investing in it is we're gonna like I'm investing in this project because I think it can dominate DeFi, right? I think that this thing has 10% market share. I think it could beat like 60% market share of onchain lending or onchain trading, onchain meme coin trading, whatever. And it was actually this conversation where you this person's like, you know, I think people need to think bigger. We're taking on Binance. All right. Binance is a massive business. Like centillion dollar business and this business line for them is worth like tens of billions of dollars. I don't care about DeFi

anymore. Like we we are winning DeFi. Like we already have at that point like 70 75% market share of onchain perpetuals. The big target is Binance and Bybit and Coinbase. That's where we're going after. And what you want to track is you want to track the market share versus these exchanges. And that's when I think the thesis started to become more clear of like well what actually matters in competing with these centralized exchanges. And then it's some of the things I talked about where um and these are things that would help hyperlquid in the long run. And you know, once I kind of got to that point of view, I was like, "Oh, wow. You know what? This is actually like a real business."

>> Yeah. Yeah. >> And I'm just gonna let this thing ride. >> Let it ride. >> I'm gonna let it ride. Yeah. >> Yeah. Do you um do you have like I mean Yeah. I'm I'm not an investor. Do you have like price targets? How does this work? >> No. No. No. No price targets. >> No price targets. You're just letting a ride. >> Yeah. >> Is there something that would get you to sell? >> Uh I think whenever I lack conviction >> Yeah. Yeah. >> Yeah. >> Okay. Cuz like another thing that uh this actually a good jumping off point because like also like this kind of ties back to original question of like you know uh trimming or whatever >> and you know we we have trimmed around the edges here and here and there >> but >> uh what's interesting about hyperl and this

new like you know revenue meta as people call it >> is that for the first time many people are like pulling out their calculators to go and do a DCF on something and it's like >> dude what are you what are you even talking out like this. The thing about hyperlquid is there's there's been so many business like generational businesses throughout history >> and the entire time that they were in public markets they looked expensive. They're trading at 30x 40x 50x earnings >> or or in private markets too. businesses >> always look expensive, >> right?

>> They always look expensive. And you know, I think maybe what we fail to under estimate as as human beings is like the exponential curve of how earnings or revenue can go from 100 million to a billion to 10 billion. This can happen very very fast. It's really hard to actually to price that in. It's really hard to to understand that. And I think that's the same thing that I think at least that I'm understanding with Hyperlid where it's like once again if we actually believe that this technology that we've built called blockchains over the past almost one and a half decades is going to produce any value for society. Well, there are going to be really big businesses get built. And right now, you know, as pessimistic as

we may sound about the city of associas before, we're still at like day one of this stuff taking over the financial system. Like, do the math if you want to use a calculator on what some of these projects look like when you have 20% of all trading volume across all assets on these blockchains. Like, I'm not saying it's going to happen in a year, but could happen in 10 years for sure. Yeah, >> do the math on that and you're going to get to some pretty insane numbers >> on this stuff. >> And I think that's actually like the thing that people forgotten to do >> is >> dream.

>> Dream. >> Dream. >> But dream. >> Yeah. >> I mean, at the end of the day, like this is early stage tech. Like a you have to be willing to dream if you're going to be here. Otherwise, you should go do something else. >> I agree. I forget you're I I'm going to totally botch your tweet, but you basically said like if you're logging into Twitter every day and just bare posting, like what are you even doing here? >> Yeah. Yeah, it's not a good way to live life. >> Yeah. Yeah, I tend to agree. Do you um do you also buy things around in the hyperlquid ecosystem? I just met with like um founder building a um one of the big lend borrow protocols in the hyperlquid ecosystem. They've got a token like are you buying that token too or you buy or you're just long

hyperlquid? >> Yeah, we haven't we haven't b bought anything in in the hyperlquid ecosystem to date. Yeah. >> Yeah. because historically the chains just end up performing so much better. >> Oh, >> or the the I should say the ecosystem performs better than trying to pick the app. >> So, so there there is some element there where it's like, you know, even think about this now with some of the other L1 ones where it's like let's say you're bullish on Salana. I mean, does it even make sense to go and bet on anything in the ecosystem if you're unsure about Salana? Like probably not. And I think the riskreward is probably already like really good. But if you believe in salon, just go buy soul.

>> Yeah. >> Uh the the other thing which I think is more important is that uh I think it's been hard to find quality exposure and I have been worried about like losing hype >> as I rotate into those >> if I were to do that. >> And I even think about it like let's just say you can actually own anything in the hyperlquid ecosystem like whether it's private or public like what I want to own. I probably just want to own like trade XYZ, right? I wouldn't want to own like some of the >> Do you own trade XYZ? >> No.

>> Do you guys do venture investments? >> We we have done a couple. >> Yeah. >> But that is not really like the bread and butter of the fund. >> Yeah. >> Yeah. >> Can you explain Trade XYZ? >> Yeah. I mean, I think the way to think about them right now is they're just the they're the largest market deployer on Hyperlquid. So any uh and at this point they have well over 90% market share of of tip three deployments equities commodities uh what what's it might be. So that's really the the thesis is really that simple. If you almost thought about like Hyperlid as this decentralized organization you have the core team that handles the hyperlquid chain and they're in charge of like the core functionality but all the new like market creation and management of those

markets is now thirdparty teams. So you have teams like Trade XYZ that are doing all like the Trafy stuff and they probably have a new team that will do prediction market stuff and they're almost like units in a giant hive h highine like right >> swarm organization which is hyperlquid. >> Yeah. And obvious and you know there's I feel like Shoku is basically an extension of >> Jeff and team at this point. >> Yeah. I think they're they're they're integral to Hyperlid thesis. >> Yeah. Yeah. I agree. Um, what do you think the comp is for Hyperlquid? Is it CME Group? Is it Binance and Coinbase?

Is it uh, you know, Salana or Ethereum? >> It's a combination of many of those things. I think what makes the most sense right now is is is just uh is probably like I think the the crypto exchanges like Coinbase, Binance. Uh, now granted those are more diversified businesses than than Hyperlid, but I think Hyperlid is all starting to diversify more as well. For a long time it was just like the crypto trading and now it's Trafy stuff and now they get the stable coin revenue from USDC and then they have the prediction market stuff that'll come out. So it is like slowly diversifying o over time.

>> Uh I also think like CME uh I think Robin Hood like some of like the the the NEO brokerages as well are decent comps and yeah I honestly do think Ethereum and Salana. Now you know I don't think that like Ethereum and Hyperlid are remotely the same product today. >> Yeah. uh for a number of reasons, but if the endgame is, you know, Hyper calls it the house of all finance, Ethereum calls it something like Sana calls it internet capital, it's all the same thing. Like we're all saying we're going to do all finance >> on blockchains >> and they're all going toward the same thing. So I think it's it's hard to actually be long >> any of these things and not think about

them competitively. Yeah, I saw this with um you know if you you take out the blockchains you saw this with in CFI right remember in like 2018 2019 2020 you had people who launched as custodians people who launched as lend borrow like the block by and Celsius's which you know RIP but >> you know back then is fine uh you know you had the exchanges you had the prime brokerage platforms and eventually you realize they're all building the same business they just started with >> you know one started with a custodian one started with an exchange one started lend and borrow but they're all building the same thing Yeah.

>> Um, do you also buy lighter or any of the other perks platforms as a hedge in case you're wrong? >> No, we don't hedge our hyperlquid exposure in that way. Uh, >> do you use leverage with Hyperlid? >> No. So, listen, I' I've entertained some of the other uh like per exchanges like I think like many people have and >> there's just none that stand out. I mean, I think there's redeeming qualities in many of them, but you know, one of the I remember like actually going to this year or throughout this year, >> there's so many people were trying to convince me to own >> uh whether whatever I don't want to pick

out any names, but say like Litz or AA or whatever relative to Hyperlid >> and they're like, "Oh, well, if Hyperlid does well, then these should do well, too. this is this is a big secular theme and it's going to be more than one winner >> and there's all these different reasons you can think of and I'm like okay cool >> I buy the fact that Hyperloop is not going to own 100% of the market right and even if there only 80 or 70% there's still like a large percent for available for one or two other players okay I I understand where you're coming from the problem is that the reason why people are excited about Hyperlid right now is because of like in the early parts of the years the silver and gold uh per it was oil in February and March and then

more recently it's been like AI equities >> pre preipo stock >> and preo stocks right >> uh which at this point is like damn the RP category said like equities commodities pre IPO stuff >> is that stuff taking off on any of these other exchanges >> the answer is no so it's just not the same thesis it looks like the same thesis but it's just not that and I think it's one of the reasons why those have not really done as well and they haven't been dragged up along with Hyperlid, but I'm open-minded that someone else can do it. And >> at the same time, like the Hyperlquid piece is evolving, too.

>> Yeah. >> So, one thing I always harp on with people >> is going back to the the comp between say like Hyperlquid and Salana or Ethereum. Jeff has been telling you for a long time exactly what he thinks Hyperlid is. It's not the greatest per exchange. It's not even everything exchange. It's the house of all finance. >> Yeah. And to be honest, I'm I'm going to take him for his word cuz he's just been executing on it and like he's proving that he's actually like that is the end goal. If that is the end goal, then you have to be if you're like an Ethereum holder, Salana holder, you have to kind of be like looking out behind your back of like, yo, is this guy going to come after me?

>> Yeah, let me take the other side of this argument. um which is almost more of a market dynamics thing. But if you look back at uh 2023 to to four to five, so many of the crypto uh crypto investors missed the Salana trade. >> Yeah. >> And so what I saw and what I've seen over the last year or two with hyperlquid is people are so scared and then that you have to go to your LPs and tell them yes we knew Anatoli and Raj. Yes, we were looking at Salana. No, we didn't put on a trade. No, we didn't capture you know the 20x. So now when Hyperlid comes out and you know it's really taken over most people's feeds, you buy it because because you have PTSD from the Salana trade.

>> Yeah. >> That's what that's what I've seen. Yeah. >> And so even these funds that don't have the conviction that you have are in the trade. Um >> who's the is is the trade too crowded? Uh so I'd say no. And I think the the reasons why, you know, for one, I think it's kind of hard for anything in crypto to be really crowded right now because there's just not a lot of capital coming into the asset class. In fact, there's been a lot of capital leaving the asset class. So if your point of view is that there's going to be more capital coming in over the coming years, which at least is my view, Yeah.

>> then yeah, like even ideas that have a lot of, you know, fund ownership >> can probably do well. >> Yeah. So that's that's one. The other thing is again like even if every fund owned it, which it which is not true because I talked to many funds that don't own it. Um and every fund owned it in size, which is not true. >> Uh even if that was true, you still have the rest of the world that does not have exposure. And that's where I think uh things like the hyperlquid strategies treasury company and the hyperlquid ETFs are really important. Yeah.

>> So for example there was like the latest 13F that um like D1 like this like trifi discretionary legendary fund >> they disclose that they own some purr. >> And what ends up happening is the people end up copy trading each other. They're like wait what is this purr thing you own? And they're all boys. They they talk to just like how all the fund managers >> what is it Daniel Suntime or something like top top 10 manager right now. >> Yeah. >> Yeah. These people all know each other and they end up talking too. >> Exactly. Just just like in crypto like we all talk to each other. >> In Catrini I don't know if you saw >> you mentioned it today just posted today saying you know this is one of our big ideas for June.

>> Exactly. Exactly. So I I do think there's a lot more and again like this this actually ties back to the original thing in the conversation about like the global capital allocator. Yeah. >> Well, they're like, "Okay, I've been hearing about this crypto thing since Trump got elected. Is this supposed to be this big thing, >> right? >> I've sat out of it and there's probably a good decision. There's been nothing to own, >> but then now there's actually like a real like disruptor here." And I haven't seen that before. That's that's interesting. Like that's really really interesting. And I think the Colossus article was important too because >> you know, everyone on the HyperQ team is audiomous, >> right? other than than Jeff, it's probably important for these people to just have some person that they can look at. Okay. Okay. I know who's running

this. This isn't going to be another FTX. >> Yeah. >> So, I think that that's that's a large pool of capital that is still available to buy this. Uh, and that's just the discretionary hedge funds. Now, if we're talking about more institutional investors pensions endowments we're talking about just global retail, like there's there's still way more people that that that could buy this. Um, not that that's like the the basis of the thesis is that we're just gonna have a bunch more people buy this, >> but I'm not worried that there's a lack of capital available to push this thing higher.

>> Yeah. Yeah. >> Um, anything else on Hyperlid that we Well, I guess at the beginning, I mean, you said there are only a couple assets that big capital allocators who can invest in anything. >> Yeah. >> Right. Maybe a generalist fund we could call them. Um, there's only a couple things in crypto they could buy. You said hyperlquid Bitcoin. >> Yeah. Is there anything else that you think is interesting right now? Anything else that And like you don't have to say what the fund owns. I'd be curious if you are able to say it, but if you had to pick maybe two or three assets that you think are interesting. Yeah. Uh listen, I think there's there's probably another like 10 to 15 things that I find interesting. And I think the difference is that let's just say Hyperliquid is at point B along its

adoption curve. Many of these are at like point A which is 6 to 12 months behind where Hyperlid is. If you think that like perpetual swaps is a category inflected within the past year. And what are those categories for me? I think it's uh it's spot trading for tokenized assets. And I think the inflection point will be clarity. Now that could take time for that to actually materialize into exploding volumes. But that is one where I'm for sure paying attention to. And then the other category is is lending. And you know obviously you know big fan of the work that that morph has done. Uh and I think that's another way of playing like the the the the merging

of traditional finance and yeah in blockchain. So >> what's the thesis for I think you know onchain lending and borrowing in general for you right now? >> Yeah. Yeah. So, so listen, I think like one under underestimated second order effect of the Clarity Act is that if you can't actually pass back stable coin yield to the end users anymore uh at least passively, then I think that creates an incentive for all these exchanges and all these brokerage platforms to funnel these users into uh more active strategies and that could be like the exchange itself taking the stable coins and lending it out uh to like whatever what the people lend it

out to. But it could also mean like integrations with different uh DeFi protocols >> and that's one thing that I'm like really really excited about and this could be like a monsoon of liquidity that comes on chain. Now it only solves like one half of the equation which is the supply side. >> Yeah. >> Not the demand side of who wants loans but that is something that I'm I'm really looking forward to uh after a clarity. >> Yeah. Yeah. I agree. We had an we did an episode with um John Zetler who's at Kraken. He runs like a lot of their vaults products and their earned product and then um uh Sun who's the founder of Veta. Really good episode back in I think it was January talking about how how big vaults are going to be. So if you're looking for like a bull case for

you know a Veta or Morpho or a Spark or even an A or something like that would be for like that's probably the thesis. >> Exactly. Exactly. So definitely definitely a sector to to to look out for and this is again like one of those things where I think it's easy to be bullish long term but then in the interm you just have to deal with like and this this is somewhat true somewhat not true but like mythos hack overhang. >> Yeah. Yeah. We'll have that for a year or two but it's going to harden the protocols. So >> exactly exactly. >> Do you guys own Morpho? >> Uh we do not.

>> What? So wh why if you like something why not buy it? Uh I think what would get you to change your mind and you know buy put on a position of morpho? >> Yeah. So this is not specifically morpho but again like if we're going to be in this it's it's been a challenging environment to navigate and for for crypto the past the past six months or even the past year right and what has actually worked well it's only the things that don't have any hair on them. If there's just a little bit of hair >> Yeah. like it's not growing fast enough or like there's token unlocks or maybe this founder is not great or >> the hair on >> a million things. Uh well for morpho specifically I think it's just the the token unlocks and then the questions around value curl.

>> Yeah. >> Yeah. So if you were sitting in Paul, you know, if you were sitting their shoes, what would you how would you fix that >> around the unlocks? >> If you're Paul, you say, "Look, I'll buy your token if you can fix this and this or or you're saying he can't fix it because it's about the unlocks." >> I just think I mean I just think all these projects should just >> you just have to get through the >> get get rid of the like what are we doing? Get get rid of this vest. We don't need it. Like I just don't think we need the vest. But let's say he's already he's already got the vests, right? They've already >> Or you would say just accelerate all your vests.

>> Accelerate it >> and just have one big nuke >> and just eat it. >> Yeah. >> Just find the clearing price. We're we're just delaying the market finding a clearing price for all these assets. >> Yeah. >> And it also it's like it doesn't make sense for these projects either. Like why do you want this overhang? >> And I think more people I think they're in a better position than than almost everyone. Yeah. With this. I mean the unlocks don't even last that long. Uh, and obviously it's like one of the highest quality projects in the category, but I can think of so many other like decent assets that are just I mean they have unlocks for years into the future.

>> Yeah. Yeah. >> And and it's it's really really tough. >> So if you were them, you would just clear all the unlocks. >> Clear all the unlocks. >> Nuke the price and just >> Well, I don't know if the price would nuke. >> You don't think the price would nuke if you >> It's It's an open question. Like I don't know if like all those people would actually sell that are in the investors. It's possible they don't. >> Interesting. Like may maybe maybe it happens. They're like in the markets just like you know what this was like a big overhang. It's cleared. This actually makes it in. >> Let it unlock just unlock every single person and >> unlock every single person. I think you know I think Salana did a a good job at this back in was it like 20 I think it

was like 2021. I remember uh end of 2020 there was this huge huge cliff like a lot of supply was to inflate by a crazy amount and everyone especially Ethereum people they had all these charts showing like oh Salana's going to nuke because all these tokens coming online >> well we all know what happened from January 1st 2021 to end of year this thing went up like 200x it was nuts >> it's actually nuts >> and the people who got unlocks they didn't sell because if this if this is something you like at the end of the day it's just about is this like a quality quality project and it's just something that the investors want to own.

>> Yeah. >> Like >> that's all that matters. People sell things they think are overvalued and worthless. >> So if your project has a ton of unlocks >> and you know it's it's like overvalued. It's worth like you know whatever 1 2 3 4 5 billion and the people lack conviction on it, they're going to sell. >> Yeah. >> They're going to sell. Like it shouldn't be at that valuation in the first place. >> Yeah. ETH at ETH at 200 billion or Salana at 40 billion. Are you a buyer of either of those? ETH at >> ETH is trading at 200 billion $200 billion market cap today and Soul is at $40 billion market cap today. Soul's at 6 $67 and ETH is at $1,700 when we're recording this which is June 8th.

>> Yeah. Uh not a buyer of ETH. Uh yes, I'm a buyer as well. >> Buyer sold. Not a buyer of ETH. >> Yeah. >> Okay. >> Now, so then Yeah. Go ahead. >> Yeah. So the L1's are like the most evasive assets when it comes to valuation. >> Yeah. Like I mean cuz you could be the guy to be like, "All right, these are like businesses. You value them on revenue." And if that was your mentality for the past decade, you'd have been dead wrong on Ethereum >> every single step of the way. And and also Salana, right? And I keep coming back to like, well, how do you actually value these things in the first place?

And it probably is a mosaic of different frameworks. I definitely think there is like this equity like component where you do value the cash flows like they are there but then you do have to factor in this almost like utility like premium because these assets are used within their respective economies like that is how blockchains work. Blockchains cannot function if these assets do not exist. They play a critical role in the ecosystem. Now how much is that worth? Maybe that utility premium should actually be worth like almost nothing. Maybe it should be worth a lot. Maybe this is actually is money down the road or store of value. It should be worth an enormous amount. No one has any idea.

Sometimes like for me, I'm like less worried about the the the valuation. >> Yeah. >> Uh I'm also obviously aware of it and I'm more so thinking about because like again like ETH at like 400 billion, 500 billion when it was like end of 2025. I have no way of actually justifying in my head. I was like, unless you think this thing is going to be the next digital gold, like this doesn't make any sense. You could you could have bought Open AI for less than that >> at a time, >> right? >> Now, what I do think is true though is that uh like >> you want to find a reason to like an actual reason to bid these things. You want to you want to invest in growth.

Mhm. >> This this has always been my recurring thing with Ethereum over the past like year and a half is if I had any dose optimism any point, it's just it's just all about growth. >> Yeah. >> It's all about growth. Like growth will solve everything. There's a lot of there's a lot of I mean not to once again not to make an analogy to like a business because we don't know if these are businesses or whatever, but I just think of something like Tesla. Tesla for the longest time people are like, "Oh, this thing's over so overvalued. It's like burning money, right?" And what solves it? Growth solves it. Yeah, growth solves everything.

>> Yeah, I tend to agree. I mean, oftentimes in businesses and a lot of companies are going through this right now, you can either, you know, trim your way out of a problem or you can grow your way out of a problem. And often times, I mean, it's like a the first thing that I think people go to is like, let's lay people off, let's cut costs. And you'll actually be far I mean, you do need to oftentimes do that, but you'll be far better if you can just grow sales, >> right? >> Just grow your grow the revenue and your a lot of your problems take care of itself, >> right? Um the other hot trades right now near VVV Venice um Zcash. I mean obviously just got you know debacle but um still think it's probably a pretty hot trade.

>> Are you guys in any of those? >> No. No skipped all those. >> Yeah, skipped all those. Uh I think VBV is interesting. Uh the the the problem I've always had with NRA I actually have have never thought was interesting. just kind of feels like it's one of those assets that finds it well always is trying to attach itself to whatever is the hot narrative and classic youth in Asia roller coaster in the chart. >> Yeah, >> Zcash I've uh I've actually gone back and forth on this one a long time because I remember at Msari this was always one of the assets that like everyone there owned. This was like going back to you know 2019 when I first joined the SAR. So I'm very I'm very aware of the thesis. Um, there's a couple things that always made me

skeptical. One is I've never been I've always thought that privacy is a feature. And what people actually want to do is they want to protect their they want privacy for the assets they use. >> They want privacy for dollar transactions. Like when I'm going to buy a cup of coffee or I'm going to send money to an friend or I'm paying for a subscription or I'm like paying for a house. When someone's doing payroll, they want privacy for transactions in the dollars. What they don't want is privacy for a random proof of work asset that has no use outside of its own

ecosystem, which is literally just sending it back and forth. It doesn't make any sense to me. So then it's like, all right, well maybe what people want to do is they want a private store of value, right? right? They just want something where they they put the they put their wealth in this asset and it sits there and no one knows about it and it's protected from from governments and whoever else you think is going to take your money. Okay. Well, what is actually the the market for that opportunity? I don't think it's that big. And I think about, you know, after the 2016 election, there were so many people that were concerned about data privacy when it came to Facebook in Google. Like, oh my god, my data is being sold to these

these companies and they're using it to manipulate me into to voting for different candidates. And then what changed after then? Like literally nothing. No one uses duck.go. No one uses alternatives to Twitter or Facebook. They just use the same things, right? In fact, I think for duck duck though, it has like maybe 1% market share of like all global search. It's a really really really small. So revealed preference is that no one actually cares about privacy. >> I actually I actually have a way to quantify this. I think there's a 100 million users in the world >> that care about privacy, >> right?

>> Look at the number of users of the number of users of duck.go is the exact same number of users that signal has. >> Interesting. >> It's 100 million users for both and it's been you know tapped out at like 100 million a little while. So, I actually think there's I think Venice has probably three million users. I think the if I'm if I'm Eric and I'm doing the fund raise or whatever, you know, it's probably a there's a 33x growth story to be told here. >> Yeah. Yeah. >> Or or Zcash or what whatever privacy thing you're pitching, you So interest I think privacy is important as a societal value and I think we need to have private options and I do think privacy will be important in finance that we have on blockchains but again like the privacy is most important is not the

extreme cipher punk version which is like put all your money in Zcash and go walk away. It's like yeah just give me make sure that when I get paid from my employer no one can see what my salary is. >> Yeah. Yeah. Totally. >> That just seems reasonable to me. Uh and then also what another thing that I I thought about too with the Zcash thing is that what is the psychology of the people that are the many people that were buying it on these prior two run-ups and a lot of it was just derivatives le >> uh a lot of it was people buying because they had some sense of FOMO like oh my god this thing can go to 5% of Bitcoin's market cap or 10% of Bitcoin's market cap

>> and there were the the amount of people who actually had that like deep fundamental conviction was a very small fraction of the community. So, I'm not to say like this thing can never come back. Uh and maybe like that that that kind of like loud minority will continue to convert people over time, but uh I've just been I've been very very skeptical. >> Yeah. >> This entire time. >> Yeah. Um Ryan, man, this is great. Anything that we haven't talked about that we should? >> Uh no, I think we we covered a lot. anything that feels obvious to you that you think other people are missing >> that crypto is going to be a big thing.

I mean, I think that's maybe the only obvious thing that people lose sight of every single time we we go down. It's it's like classic classic story of crypto >> where anytime we go down, people start writing these long threads and long tweets about why it's all over and it just never happens. >> Yeah. Cool. Ryan, appreciate. >> Yeah, appreciate the time.