Clarity Window Closing, Robinhood Eating Ethereum Value & Coinbase's Base Reset

Transcript

Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds, or projects discussed. >> All right, happy Friday. What's up, folks? Welcome back. Welcome back. Rob, Santi. Yeah, now we got the gang. >> Rob, looking dapper today.

>> Rob looks like he's in Broadway, you know, this is >> [laughter] >> I literally asked before you came on, Santi. I was like, is there too much light in this room? And they're like, no, you look great. But I'm >> You look great, Rob. You look great. >> My forehead is like, it's just like shining right now. >> You look great. Someone told me that the lighting on me was great last week. Unfortunately [clears throat] >> [laughter] >> Someone [snorts] By By that, you mean your own alt on the Empire Telegram? >> Oh my god. I'm still crying. I'm still crying from that Rob comment before we started recording. >> Oh god. Um How you doing? Rob, you're in DC. What's happening in DC?

>> Um >> Genius. Genius one-year anniversary. Did you go to the Circle event last night? >> So, I didn't end up going. I was going to go, but ended up having to do a dinner uh that was with some some people who I've actually been working directly on Clarity. And so, that was actually a a really good dinner. And so, listen, I think, you know, we're in crunch time right now. There's a lot of people who have been here for, you know, that Circle event last night. A lot of people were here to try to figure out ways that they can be helpful uh to continue to work on work on this bill. There's I I think um there's a number of senators and senators' teams that are working with or or meeting with the administration today, actually, to try to hammer out some ethics language. And

so, we're we're in crunch time. >> Uh more more information, please. How How's Clarity looking? I mean, let's pull up the uh >> I think Poly's 35% today. So, it came down. It's um I So, I would say I would say the general vibes are are this. >> You're going to let me share a You're going to let me share a Cal-shi chart on the screen? >> I don't I don't know why you're doing that. That's This is not allowed. Um yeah, 36%. There we go. Um Listen, so so I would say the general vibes are are not great.

And I would expect that there is most people would say, and we'll I'll have more information today too as I I have a lot of meetings, but more most people would say that we're unlikely to get clarity. So, under 50% is priced appropriately. Now, I am hearing that people are optimistic of a vote. And a vote before the August recess. And so, whether that happens, you know, late this month or the first week of August, but whether or not we can get to 60 is another story. And you know, a lot of that comes down to how those conversations go with the administration and today and with a number of of different you know, teams

that are working on this this bill. >> So, I you know, I will I will I will will actually share Cal-shi here because they do have like the by the month. So, August 1st is a 5% you know, what will crypto market structure become law by August 1st 5%? September 1st 15%? October 1st 25%? By the end of year 36%. So, before Jan 1, and then before, you know, kind of in sometime in 2027 is 62%. So, what's the conversation like Rob in terms of like will this ever happen? Or is it like a 20 or maybe this is just a 2027 20 27 thing?

Um is it more of a timeline thing or we're hung up on issues? >> We're hung up >> Those aren't mutually exclusive, but >> Yeah, it's we're we're hung up on issues. And you know, that that seems pretty mispriced to me, to be honest, because I don't know a single person who thinks that we are going to get clarity in a new Congress. The if depending on it it depends a little bit on what happens. >> thought too. Yeah, that's what I mean. >> Yeah. It it depends on obviously what happens in the election, but uh I don't know what poly is today, but the vast majority of people believe that the Democrats are going to take the house. And there's you know, I think there's a perspective that most likely Republicans keep the Senate, but you know, it's not a a done deal. It's probably something

like 55 58% uh Senate Republican uh Senate. And so if that happens, if one of those chambers uh you know, flips over to the Democrat side, I don't think anybody believes that we're likely to get, you know, anywhere a version of clarity that works for both industry and for both sides of the aisle in a new Congress. Which means that you know, it has to happen before the end of the year. And I think even people most people believe there's not going to be appetite for it during a lame duck. So meaning that has to happen before November. >> Yeah. >> you know, and we get this August recess. So August 7th everyone kind of goes out and for for recess and then you know, when we get into October a lot of people are campaigning.

>> I just assumed the August 7th like I mean, if you talked we talked on this podcast I think January, February, March about clarity. I was saying look, it it absolutely has to get done before August 7th. Last day of the Senate term, summer recess. Like that is the deadline. And um yeah, because you you've got the midterms. Once people reconvene like it's uh it just feels very unlikely that that happens. >> I think if we get a if we get a floor debate and a vote or you know, it doesn't even have to be a full vote, but like a lot of debate and we get an ag and banking text that comes together and there's a lot of people who are behind it. Especially if you have full Republican support behind it. And then it's just like okay, how do we get those

last um you know, how do we get to 60 with you know, that Democrat support. We had a number of Democrats voted in the banking committee two did to um to to bring that out of the out of computer through it was two or three did. And we expect that there'll be a few others that are on on the side, you know, of of this bill. And so it's like how do we get those last few people? So if we get the real debate by the 7th, I think it's possible it still happens in in September. But if if we don't make any progress there, specifically on ethics, I think we're we're we're in a really really tough spot. We have had a couple of of law enforcement agencies come out in favor of this now, too, which was what the other sticking point. And so,

you know, we'll see. I but I think we need to see a lot of movement over the next few weeks. >> And it's it's seven seven Dems, but really I think it was Rand Paul and Josh Hawley are both likely no. So there's really nine nine Dems that we need to cross over, it sounds like. >> Yeah, and there's a question around I think around the two Republicans, too, on on whether or not we can get them, you know, on board. And and so, but you know, there's there's different different math here. The politics as as one person said to me yesterday, uh and this is a person who's worked on the Hill for for a long time, he said, "Politics is wild."

And like and and it was and he said it in a way that was like, "This specific thing has been more wild than most things." Uh and so, >> Because of the amount of money going into this or because of the >> I think just the debate and the the the how tough the issues are and trying to, you know, bring so many different constituencies around the table to get, you know, to some sort of of agreement. And even on the money side, I don't actually think there's been that money spent yet. And that's actually one of the the factors that's interesting here, which is that Fair Shake has held a lot of their money back. So the Fair Shake is for people who don't know is the big crypto pack that that does a lot of the in um a lot of the giving to the different

campaigns. And they've had a lot of their money back, but if they're going to be a big part of the November elections, that has to start to be allocated in this November in this August recess. Uh and so you you kind of have to start making those decisions now. >> Yeah. >> And you think it's going to pass? Like are you are you buying or selling Polymarket right now? >> I think 35% is is roughly uh appropriately valued. So. >> And and you think it passes? I don't >> I I I I think there listen I hope it passes.

I I don't know how to price the likelihood of getting to agreement on ethics. And so because I think that there are um people I I think that the Senate is probably more a steadfast in the way they think about ethics than the administration will be or like we need the administration to be it it to probably give more than they've signaled so far. And so the I don't know how to price whether or not they will. >> And what what exactly is ethics for someone that is listening? Like what is being discussed? What is the um key issue there?

>> Yeah, so so the key issue is essentially uh how the uh uh President Trump and his family how they can continue to make money from the other the industry. So like what it's their business interests that they have so far, it's the ownership they have in different types of businesses, Bitcoin miners, World Liberty Financial, very specifically, you know, the Trump token uh and what has happened in terms of their ability to make money on you know, some of those LP pools. And and so there's you know, there's this headline that came out and I forget what the exact number was, but you know, it said the Trump family had made over a billion dollars and um and and kind of crypto-related uh business over the last year.

And that has gotten certain members of Congress very focused on okay, well, we're willing to and we want to regulate this industry because we believe in the future of tokenization and stable coins and that this has a right to exist and that on-chain finance has reasons that it is better from a risk perspective, from a counterparty perspective, better for the consumer, but we need to believe that this bill is not just a giveaway towards, you know, a a group of people who are potentially profiting from it as well. And so we need them to recuse themselves from some of their business interests. Uh going forward. And the the debate seems to be right now very focused on what that actually means in

terms of, you know, continued ownership in things like World Liberty going forward. >> I see. Yeah, I mean I remember in in in your event in in in Tokyo. I won't go into specifics, but this this was a debate that was had, right? Is has the Trump administration hurt, been positive or negative for the industry? And I guess it is showing up right now. >> Yeah, it's it's it's interesting cuz I was having this discussion with somebody yesterday and we were talking a little bit about, you know, when 2024 election happened and how, you know, Bitcoin went from whatever it was, like 66 68 that day to, you know, over 80 the day the election happened and, you know, then we went we went over 100 into the into the new year. And how every the world kind of really changed the day that Trump token

launched. And so and how we were we were sort of like theorizing how different the industry might be right now had everything happened other than that token and maybe World Liberty. And, you know, if it would have changed a lot of the way the Clarity Act conversations have gone. And I think there's a a general perspective, even though a lot of people wouldn't say this publicly, that they would have, you know, we'd be much further along in terms of some of these things like like Clarity. Now that said, whether or not to your points on to we had that it was there we had a couple people debate at our at our conference, you know, whether, you know, net good or net bad they how good the administration has been for for

the space. I think, you know, we we under the prior regulatory regime under the prior administration, we probably wouldn't even have been having this conversation. We wouldn't be this far along. We wouldn't have gotten genius. And so, it you know, clearly we're at a precipice of something that, you know, could not have existed in a Gary Gensler era. >> Yeah. Um if it doesn't pass, I think we we I I go back to the episode we recorded with Rebecca, and I think Jake might have been there, too, and then she was like, "Look, if it doesn't pass now, it's like it's a really very detrimental like it it just never gets passed. Um now, I think she had an embedded view on the the the next presidential term and what color that like probably blue term.

Um Is that do Is that the sentiment in DC right now? Like this is like the the only shot that we have as an industry, so like compromise, and you know, obviously another good saying in politics is like a bill dies three times before it gets passed. And you know, I think we're like um but yeah, what's the sentiment out there? Like what's the read from lobbyists and what what are they telling you? >> So so the sentiment is definitely not, if it doesn't pass now, it never passes. But the sentiment is definitely, if it doesn't pass now, it probably doesn't pass in the next it's 2 years. Right? And so, maybe it comes back up again, and you know, definitely not at the beginning of the next Congress. Maybe the next Congress brings it up again, you know, sometime later, but it's not going to be uh the top of of mind for a

come, you know, February, right? I think AI policy is by far and away going to dominate Congress next year in this new Congress, and there's going to be a lot more fight on AI policy, especially in a divided Congress. And so, I I think this is the last bullet we have for a while, but I don't think it's, you know, done. I I I no matter what happens in 2028. >> I also don't think it's like an end-all, be-all like this is the worst thing in the world for crypto if clear we don't get clarity right now. Like we're still you know we still have Chairman Atkins who's going to push forward like reg crypto if we get clarity reg crypto just gets kind of folded in. If we don't like if clarity fails reg crypto is just going to come up come out as a

standalone SEC rule for token issues issuances, right? And token safe harbor. So I think there's still some good I mean you have Scott Bessent. I don't know if you guys uh read his speech or watched his speech. He's um I mean you've got the Treasury Secretary literally saying that the entire world is going to move on chain and tokenization is going to take over. Like >> Fair enough. Then let's not forget Chair Gensler who is well who has been you know encouraged >> Amazing. He's been fantastic. >> Let's Should we talk markets on that? So like if the view is that clarity doesn't pass as it is now. So 33% it doesn't pass in two weeks or like you know a month then let's just assume it doesn't get passed and that's sort of the view here and like let's entertain that scenario. Like roll it forward. What does that mean for

markets? What does that mean for institutional interest in beta and crypto? How does how do you re-underwrite your portfolio? >> Yeah, I mentioned your guys' perspectives as well. I Like I do think the market right now feels to me a little bit on edge. So both but then it feels like it could tip one way or the other, right? And I do think if we got an unexpected clarity pass in the next three weeks the market would rip and I think you know on the other side that like I think we're probably you know Bitcoin and ETH etc. like are probably somewhat appropriately priced at this 33%. And so I mean these are already commodity commodities anyway so kind of matters less for these than it does for the the application side of the house.

But I I So I I I'm not sure if markets will change that much to the downside because we've had you know a pretty bad market generally and I don't think I think the sentiment is pretty bad right now anyways. Um but listen I'm not a trader so not investment advice etc. Uh in terms of institutional adoption I I do think it's a bit of a struggle, right? And so, you know, we hear from a lot of companies that like we're heavily leaning in towards, you know, these proof of concepts, we're heavily leaning in towards infrastructure right now, but we do feel that we, to really take that next step, we need something like Clarity Act. Now, to Yano's point, we're going to get a lot of frameworks and a lot of ruling out of the regulatory

bodies regardless. And so, they will just say, "Okay, well, we're going to take this and we're going to run with it." And that means that for the more nimble organizations, they're going to still invest heavily because they know they've got like a couple of years at a minimum to you know, to to to really create business around this and hopefully it gets, you know, far enough along that it doesn't really matter what happens in in 2028. But for some of the older, bigger, slower-moving organizations, they're just going to continue to say, "Wait and see." Probably. And so, I think it's it continues to be a little bit of what we've seen with genius where people have started to, you know, enter the space to push forward on the uses usage of of stablecoins, but they haven't gone full port yet as they've cuz they've really still been

been doing a lot of like, you know, risk management and, you know, kind of understanding the space. >> You remember the view, what was it like 2017, like when the regulatory environment was much different? First very like unclear, like no one really cared and then it became a issue and it's like um you actually there was a view, prevailing view that was like you don't want regulatory clarity because that allows startups to really, you know, grow and and capture market share because if you had regulatory clarity, like the big guys would enter the space and just crush you. I don't know if that was cope or real, but certainly like gave way to like companies like Tether and like Yano and I talked about regulatory arbitrage last episode, seems like a couple of people were like um either triggered or like acknowledging that that was like a big

part of like value creation in crypto, which I still think is true. But anyway. >> But it's not just crypto, that is startups. >> This was my This was my point. Yeah, yeah. This was my point. Um guys, there's there's some news of the week that I I do want to cover. Um Santi, cuz Rob kind of you know, this was Rob Rob got the clarity section. So, I'm going to hand this over to you. >> Rob Rob's show the Rob 16 minutes of clarity. That that was a lot. I thought it was going to be 3 minutes, but somehow Rob has a uncanny ability to drag us into 16 minutes of of of politics, ladies and gentlemen. Really apologize. >> Well, you know, that's how you know I could be a politician, you know.

>> If you're still here, we appreciate you. >> Yeah. Yeah. >> Our fingers are low. Santi, I'm we're a little game show here. I'm going to give you a couple options. >> Okay. >> Option A, Stripe bids for PayPal. Option B, DTCC tokenized assets go live. Option C, Circle becomes federally regulated trust bank. D, Optium hack. And maybe a debate around instant settlement or E, Robinhood value accrual to E. >> [sighs] >> God, it's so tempting. Um you it's like a kid walking into a candy store, man. You know, there's so many flavors I want to go out. Okay.

Okay. Definitely Robinhood. I tweeted about this. And um for context, if you want to pull up that tweet, it's very good. This guy Lorenzo, who's at Arc, shout out to him, put out some good analysis. Um Basically, everyone's pulled up on um I was talking to one of my advisors here, super smart guy. And he was like, "What do I do with my ETH?" And I said, "Well, look at this tweet." And and you know, if you want to express So, why are people excited about Ethereum? Institutional adoption. Okay. And and and you could the narrative is, "Well, you know, you have Robinhood deploying on Ethereum." But there's nuance, right? They're deploying on Arbitrum, which is an L2 on Ethereum.

And Lorenzo here, uh if you look at the income flow, basically, for folks not viewing this, um Robinhood is capturing 90% of the fees. Arbitrum is capturing 9%, and Ethereum is capturing less than 1% of the fees. >> So, the numbers that he lays out. So, so Robinhood chain has grossed 816K in revenue. This is this is a little a couple days outdated. 816K in revenue. Arbitrum takes 10%. So, Arbitrum makes 80K off the 800K. And then Arbitrum pays ETH for settlement, right? 15 bips. So, Robinhood 800K, Arbitrum 80K, ETH $1,500.

>> I've been saying this since the end of time. Like this is the This is the the the value capture of Ethereum L1 is broken. I think that's like very well established. So, I won't go with too much into that, but you're seeing it in real time. And I guess for anyone that still holding ETH at like you know, 250 billion market cap, you ought to wonder, well, shouldn't you be buying Robinhood equity at like 40 billion or 50 billion? And I've always felt that the risk reward is just like really really really screwed in most of these L1 including Ethereum.

There was If you want to pull up the tweet that Joe Lubin had cuz there was a lot of debate around this. It got a lot of attention. Joe Lubin was He was like, well, Ethereum like this is a conscious choice that we're making. So, I'll kind of read it. So, Joe Lubin folks that have been under a rock like he's very influential. He's one of the I guess co-founders of Ethereum. ran ran ConsenSys or still runs it. And he said, "In my opinion, Ethereum L1 revenue fees should stay low to foster growth. Like 10 tens of thousands of companies will set up shop over the next 2 to 3 years in some sort of mix of Ethereum L1 or L2.

Yada yada yada yada. He says, "The monetary premium will grow very large. Fear revenue to L1s from so much activity will grow significant from staking and locking away ETH and all this stuff." Um I was having this debate as well to with this one of my advisors and he's like a super well-known tech investor. And I was like, "Doesn't this remind you a little bit of like tech companies that like have a freemium model and and then try to raise prices down the road and then they get you know, it never really kind of shows up.

Um And we both were laughing about it, but I think there's some truth into that. It's it's like I've always felt if you have a moat, whether it's developers or security or you know, die-hard community you know, religious community of swords. Like if you can't monetize the moat then it's not a moat. Like it doesn't matter. And I just don't And upgrading these systems is not like a push of a button kind of thing, right? So it different factions and I just I just find it um I don't think that that's the correct policy if you will of Ethereum as a system.

>> So if you were Ethereum so I had the I had a similar reaction Santi which is I I would disagree with Joe Lubin here and I think some other folks. I would to me it's like increase the prices. This is a pricing exercise, right? Like in increase >> Increase the prices see if Robinhood still deploys and maybe >> then you can start arguing that Ethereum has monetary premium. >> Go to your go to your customer which is Arbitrum here and say we're going to charge more money. Um and if you're not charging more than $1,500 worth of value, you have to improve your products, right? Maybe that means you have to um provide more valuable services to the L2s beyond just settlement and DA, right? You have to it's a it feels like a product value and a pricing question to me, but maybe I'm

oversimplifying. Would you So would you do that? Would you um >> Yes, yes, yes. >> Absolutely. I I think you have to always understand how much customers are willing to pay for your product. Yianni, you know this. Founders chronically underprice their product. Isn't there a private equity firm that buys businesses and like increases I mean again, Martin Shkreli did this in pharma. Don't do that there. But um nonetheless, yeah, it's it's It's like the By the way, how many more Robinhood customers does Ethereum going to have? Like Robinhood is probably one of the elephants that you want to get as a customer.

I would argue like retail driven, a ton of activity and they're you know, they're growing like bonkers, right? >> I mean there's there's tons of other like FinTechs like like I mean there's tons of but there are a lot of FinTechs. I mean we will maybe we'll talk about the PayPal stuff later but I mean PayPal has 440 million accounts, right? Like there are a lot of companies like that that could and that are theoretically and are already doing things in around Ethereum. >> Yeah. >> I I'm I'm totally with Yano though that this this feels to your points Santi you were kind of you and and and this person were laughing about the you know, the freemium model, right? There's tons of of companies that have like land and expanded with freemium models, right?

Like and and have had you know, very very good unit economics over time and been able to charge people a lot of money over time. Um I think there's a the question here is you know, if Ethereum were to increase their pricing, uh would you know, people continue to to deploy there? That's a question that I think is we don't know the answer to and because of the fact that there is a you know, this kind of glut of block space for regular for the type of usage we have today that like people think that they would just move and that might might might be true. But I also I I think this is also an incentive problem because you're in a traditional business that is landing and expanding like they need people to buy their equity and their

their equity is directly linked to that cash flow and that has never been true in >> Totally. Yeah. I'll give you an example. There's tax free jurisdictions. If Monaco were to all of a sudden start charging 30% a lot of people wouldn't live here. Like I think my my argument is probably more cynical. I think the reason why Robinhood's deploying on Ethereum is cuz they're getting a freebie. Like it's like a it's like the best scenario possible. The narrative is super clean. You're deploying on Ethereum. Ethereum alignment. All this jazz that L2s have also said because of course you have like a tenant that's like it's rent control building like you're [ __ ] killing it.

Um and you're of course you're going to go there. I just don't think it's going to hold. I don't know if >> There's also just there's a way more EVM engineers than there are of any anything else, right? And like it is significantly easier to to get talent >> is way overstated. Wait and by the way like building building building on solidity is kind of a pain in the ass. Like most developers will tell you that. >> They won't if they won't use the word kind of when they tell you that. >> What? >> They won't use the word kind of when they tell you that. >> Yes. >> just say it is a big pain in the ass. >> Pain in the ass.

>> But yet people still build on ETH. So that tells you there's something valuable there, right? There's there's some reason why Robinhood is building on Arbitrum which is built on Ethereum. So I think Ethereum by the way I the pricing is I think Lorenzo's pricing is actually wrong. I think it's >> It's marginally off. Yeah, I saw some >> It's marginally off. I think it's more like 60 >> Directionally Directionally correct. >> Directionally correct. Um But I think there's a um I'm not sure I think one of the problems here too it was a Gabriel Shapiro laid this out which I think he's right about this is he said I'm not sure ETH can charge more today. It's not sticky enough. One, most of the L2s aren't actually secured by Ethereum and two, there's there's no interop. We haven't

solved interop yet. So is it It like >> Well this is the point I just made, right? >> Exactly. And I think I I agree. I agree with you. >> Yeah, cuz cuz cuz base is sort of just like a a rent extractor in some ways, right? Uh and so like the the and the reality is is like that is what is happening to to Nancy's point and in a lot of these other cases. And especially in the cases of like Robinhood where you know, primarily they're getting paid to deploy on these L2s cuz there's all all I mean and this is not a Arbitrum specific point, but like all of these chains other than Ethereum cuz Ethereum doesn't run themselves this way, but all of the chains that run more like businesses from the Solanas to the, you know, Optimisms to the Arbitrums, etc., they

all, you know, pay people to deploy there, right? And so, it it is a the economics of the entire thing like like it breaks down in a bunch of different directions, right? And this is not an Ethereum specific point, either. This is a this is a token for blockchains point, if you're going to say that the economics should be linked to cash flow. Like it just I that is just a a a token point generally. >> Yeah, and for the folks saying that like Ethereum provides a lot of security, well, it's like you're deploying to your point, Arbitrum, like they control the validator and they're capturing the like it's like not that it's not like you're inheriting the security of these systems are not fully uh secure, in my opinion. Or or then

then then then cuz you have very centralized control. So, at the end of the day, it's like why is Robinhood deploying? They're deploying cuz they can monetize their users and they're cutting out Citadel on chain. Like that it's simple as that. And if at some point Ethereum closes them and wants to raise the prices, they're going to go elsewhere. Or they're they're going to build their own chain, like Circle. >> I'm not sure the that they're not secure is the right way to put it. They're they are secure they are secure, but they're not decentralized, maybe. They're sent >> Yeah, so like they're capturing a lot of the fees. You can I guess like um you can you can post to the L1. Yes, you can contest it and you can go back to it. So so yeah, I'll I'll I'll I'll give you that. Should we um should we use

this to get into Base? There's a I I didn't actually have this in the agenda, but I don't know if you guys saw Jesse came out with a statement about Base and Kobe's taking over. Um so, I don't know if you guys have any have any takes on this, but I can I will abbreviate Jesse's long message. Um Jesse basically So, Jesse runs Base. He's on the exact team at Coinbase. He said "Look um you know, first quarter of 2026, punch in the face. Spent a lot of the last 2 years, 2024, 2025, making this big bet that builders would unlock the next wave of crypto adoption, and adoption would be would be driven by new on-chain native social experiences.

Basically says, "Look, I think that was maybe the right call on a long enough time horizon, the wrong call for base in the short term." And he said, "Look, the collateral damage was bad. This year has been an exercise in eating [ __ ] We realized how our focus on social meant that base fell behind in these key areas." And um And yeah, so so they're updating strategy. And uh Uh he's handing the base app over to Kobe. He's going to focus on base the chain. And um yeah, Kobe Kobe is taking over uh tr- all trading I mean not all trading products, but trading I think some trading products at Coinbase. Maybe all trading products. Coinbase >> all the I think it's all the base trading products, right?

>> All the base trading products. He does say right here, "I'm responsible for trading products at Coinbase. The Coinbase app, um the Coinbase app, Coinbase Pro, and the base app. So, maybe I'm wrong, but >> No, you're you're you're you're probably right. It It It You're right. It does say that. So, >> Yeah, so >> no better person in the world >> Yeah. >> to like do this, in my opinion. Like Kobe's just He's always been a trader. He really gets crypto users and uh yeah, he knows how to play the game. I think he super interesting to see what What do you think is the first order of business for him? Like what what is the first thing you're going to notice uh on base?

>> Make the Make Make the app better. Oh my god. Got to Got to make the app better. >> Can I say one thing before we go? >> Turn off the notifications. Turn off the prediction market notifications. I don't want to have a Coinbase >> You want the weather notifications? >> I actually I literally did get a weather notification today from Coinbase. I'm like, that's insane. That's >> I don't know >> I'm melting, dude. Crypto's down 50%. I don't I don't know. It's too hot my probability. >> I I do not understand how their notifications are so much worse than the other prediction markets too. Like I It's just like the you know, we can debate like whether or not anybody wants to be reminded of like what is happening on these prediction markets.

And yet somehow Coinbase made them the absolute worst of like all of the things that existed. And I don't understand. >> I mean, look, one one take out there was like Jesse there's some there's some like things that you would have said they're like very questionable. Like I think like some of the meme coins that were launched, some of the it just felt really like trying to king make certain coins or projects and one other person said like I actually surprisingly said around like longer. Some people are expecting this to happen much sooner.

I don't know if that's good or bad, but he's definitely built a lot of goodwill in the organization and and yes, it's just interesting because I I think you you could have made this >> [sighs] >> there's something to be said about like you could have done this probably earlier. Um it's never too late, but >> Can I say one thing about about Jesse, which is that he gets a lot of hate online. And like people tweet just like people tweet at him all the time. Clearly there's been to your point Santi, I think a lot of at least in like the public discourse a swell of people who wanted that something like this to happen earlier.

Um for him to come out and write that post, which was I think very open kimono. He really kind of bore like a lot of his soul and then he clearly is a sensitive guy and you know, he he he really put it all out there. I thought that was just I really appreciated that. And I think he he deserves a lot of credit for going out and just you know, talking very openly about you know what how he feels about the situation, what has happened, what he was right about or wrong about. You know, and you don't know often get that from you know, big public companies. And so I I I really appreciated that and I think we should applaud his his openness for that. For a guy who you know, clearly he was wrong about a lot of stuff and clearly people

had did not give him a lot of goodwill outside of the organization even though he clearly got a lot inside of the organization. >> Could not could not I agree I would agree with Rob's take. Like, imagine an exec Keep in mind like we we think of Coinbase as like, "Oh, this startup. We use their app. Like, we trade cryptos on the They're a publicly traded company." Imagine an executive at Adobe coming out and being like, "I bet the farm on this and I'm and I screwed up." Like, he'd be like they he would never do that cuz he's like, "I would get fired." And by the way, I do think it speaks to the culture of Coinbase, too. Like, I'm you know, I'm sure there's good and bad of about the culture of Coinbase, but like that an exec of a publicly traded company can go

out and say this, I think is I think it's a really points to the culture of Coinbase. And I said the same thing, Rob. I I tweeted. I said, "Look, strong opinions loosely held. Respect to this. Only way to win big is to make bold bets. Then you talk to customers, double down if they love it, or you pivot if they hate it." And I think Base is going to keep doing really well. If I had feedback here, it's like, you know, you I think they got a lot of customer feedback. Re- like, a lot of strong customer feedback early on that this was the wrong move. Um maybe >> that's what I'm saying. Like, I I do appreciate like mad respect for coming out like that and being very public. I My only point is, do we think that Coinbase as an organization is very connected with a

customer because that's been a like a I'm more translating like Coinbase versus Robinhood versus Kraken. Like, for me, it's felt that Robinhood I I mean, this is part of like the acquisition of Coinbase, I think cuz Coinbase is just very well I think he really understands the customer here. But, it just has felt that Coinbase has lost touch with customers over the years. You know what I mean? It started as like the best place in the US and it still has like the best the it's synonymous with buying crypto in the US. But, I think there's a lot of room to improve in terms of being really plugged into what customers want. And and I think that's just it took longer is what I'm saying. Like, to your point, Yano, I think this was like there was like strong strong feedback public that the we all saw on

the timeline. You're wondering like, "Why is it taking so long?" >> Yeah, I I I agree with that, Santiago. I think that's it's very clear they've lost touch with a certain type of consumer. Uh and that it but I'm not sure but I I I think part of the the internal tension, at least in my mind, is that like they have $15 billion of idle USDC that sits on on uh in their platform right now. They the amount of people and and those people could be earning 7% on their USDC just by putting it into a vault uh that an Athena vault right now, right? The the customer base that is their actual customer or is like the person that they've they've really seem to appeal to that is like seems to be there regularly are not like the active

trading crowd. It's the uh you know, the the people who want to buy Bitcoin and and set it there, right? Who are a little bit more crypto native. Um at least that's my my my perspective from the outside in. And then they've really focused on the institutional side, right? They you know, they're obviously you know, being the one of the biggest custodians or they are the biggest custodian and you know, having their their institutional desk, you know, etc. Um they do they have clearly lost touch with like the core crypto user who got them to where they are today. So, the the active trader, the person who's like, you know, in the timeline, the people who are, you know, really on chain. And that's the place where it seems like the you know, they they've lost that touch, which is also why so much of the timeline is

negative about them even though, you know, they still have all this like capital and Bitcoin and USDC that's sitting on chain. >> I would Is is Athena really 7%? Maybe I lost touch. I thought it was >> Oh, no, that's not the point. That's not the point. >> Um >> Uh I think it's a that's a there's a it's a different there's other things that are in that um that earn thing. So, I actually think it's >> have they do have a Morpho integration already. But the um okay, two two points. One is uh uh many of their Let me defend, I think, the the decision to go all in on this. Many of the biggest bets at Coinbase, Rob, you said they have 15 billion of idle USDC. USDC, so they have a next bet next I I it's called next bets program.

And Brian's talked about this. He He did a cheeky pints episode if you guys have heard that podcast with the John Collison. He originally vetoed USDC. He was like, USDC like no, we don't want to do it. But they have this next bets program where they just bet on up-and-coming talent if they want to go do something inside the company. And these are like venture style bets. And base came from this. Base was a next bet. USDC was a next bet that Balaji ran. So, I do think if you are It's like you want to say don't do that, but also that's how public companies become stale. So, there's a it I do think it's a challenging position if you're Brian.

Um The other thing is Rob, I actually don't think the user of Coinbase is a crypto native is a crypto native trader. I think the >> That's exactly what I'm saying. They've lost touch with that they've lost touch with that person. They're not with the crypto trader. >> sure their customer was ever the crypto native trader. I think it was the crypto native buy and okay, Coinbase versus Robinhood. The difference? I actually think there's a lot of people who are going to go to Robinhood because they want to actively trade crypto assets. Coinbase, their unique advantage is they have tens of millions of people on that platform who are sitting on crazy long-term capital gains on their Bitcoin. They That is a thing. I wouldn't call them traders. They're like buy and hold BTC, ETH SOL.

>> So, maybe I was unclear. You and I are agreeing. >> We're agreeing. Okay. >> Yeah, which is that >> Focus on your customer. Focus on your customer. Yeah. >> But you and I are agreeing and I maybe what we're disagreeing on is that I'm saying is that the I think everyone was at Coinbase before, including the active traders, right? And so you know, in you know, in in '18, '19, '20, '21, right? Like the active traders and non-active traders, everybody was there. And then they've lost touch with the active trading, the more crypto native crowd over time as they've built the other parts of their business. And now it feels like it is the buy and hold crowd that is primarily there. And so that's the that was the point I was trying to make.

>> They lost the act Yeah, I agree. I agree. Anyways, I'm excited to see what Kobe does with that. I wouldn't underestimate what one senior person can do inside of an organization when they're given power and money. And it seems like Kobe's just been given this. Um I talk about Kraken a lot, right? Because I saw what Kraken did when Arjun took the reins. And the the platform is significantly better in the last year. And so I I just wouldn't I know it's hard to move a bloated or big organization, but like one person with power and money can do a lot. So I'm look you know. And maybe an interesting thing to look at the stock, too. Like Robinhood stock versus Coinbase.

Um Robinhood is like drastically outperform Coinbase. And maybe this is a interesting buy. This is something that that Wall Street is definitely not looking at. Is this guy named Kobe on Twitter just took the reins. That's definitely not priced into Coinbase stock, so. I'm also upset, candidly. I have a lot of Coinbase stock that is not performing well so. >> [laughter] >> Let me just make that disclosure >> very very very clearly before something >> Should we uh do you own Robinhood? You do own Robinhood, right? >> Yeah, yeah. Yeah. >> Yeah. >> What is your take on Austium? >> Yeah, we should talk about Austium. >> Or if you want >> talk to >> Yeah, so Austium was um so Austium What is Austium is not a perp decks or they are a perp decks?

>> Uh I mean they are for like the easy way to think about it. They have a little bit of a different way they think about like the the model. But like they're essentially an RWA perp decks. >> RWA perp decks. Um great founders, great team. Very good at executing. They got exploited for 18 million. I haven't looked into the hack at all or the exploit. Um Robert Sante, I don't know if you guys have. But I think I I think that the interesting conversation to be had here is not like oh there's another DeFi hack or another crypto hack. It's are we at the stage where instant settlement we can finally say instant settlement, the pros of instant settlement do not outweigh the cons of instant settlement. I think that's the There was a Armani from Backpack Uh

mess tweeted this today and or yesterday and I'll read it. He said, "You want to stop getting hacked? Kill instant settlement. It's just not worth it. Every exchange and protocol should add mandatory withdrawal relays. People will hate it. People will dunk on me for saying this, but these people don't care about you or the safety of your funds. At what point is enough enough? Sending nothing but love to the awesome team." So, yeah, I think this is a decent debate to be had. Rob, Santi, I'm not sure if you have thoughts here. >> Well, just to lend a little bit more color. I think it was an oracle manipulation attack, uh which is is one of if not the most common way that DeFi protocols have historically been compromised.

Um I can get into a little bit more specifics, but I think that was sort of the gist of it. Uh like that if you manipulate the oracle, then you kind of I think they change the price and then they were able to um um you know, compromise these vaults. Um They They Austin team kind of responded fairly quickly. They halted um activity and whatnot, but yeah, I'll pause there. I mean, I I have views on instant settlement. I think Armani I I'm aligned with Armani's position.

Um it's You remember Yano that episode? I think we talked about it here on Best Like the Best with Column founder. Um And he talks a little bit about this. Like uh it's like crypto's trying to go faster in financial rails and that's sort of this ability in traditional finance to go faster, but there's a very like it's a it's an intentional design product choice not to go faster because we prioritize and value security. Like like if if a scammer's calling your grandma, like you want to go slow. Uh there's like a whole part of the population that you shouldn't be going as fast. And I thought that was a very interesting refreshing take from someone that I think is a very well like super in the weeds of finance and what is capable what is possible or not

on I mean this is just another reason to be in in in that camp, you know. >> Yeah. Yeah, the the what's his name? William Hockey? >> William Hockey, yeah. >> Hockey Hockey Hockey or Hockey, yeah, something like that. So, Rob Rob any take Are you guys an investor in Austin? >> We're not an investor. You know know the team well, spent time with them in the past. I have a lot of respect for them. You know, it's sad to see this happen. I think the it you know uh they're to to the point around okay, well, the the oracle attack would have happened whether or not there you know, there was delayed withdrawals. So, the delayed withdrawals like wouldn't have stopped this attack and from this essentially the P&L from updating and from this malicious

kind of these false prices that were written to to be there. And and so I'm not sure that that that solves some of the problem because you know, this like oracle issues just are going to continue to to to exist and we're just have to get better oracles. And this is not a crypto specific thing. Any reference asset that references an oracle has potentials for oracle attacks. We're seeing this outside of on-chain markets as well right now, okay? Now, the point that Armani's making which is the same point people essentially made in the in in the hack the layer zero hack was that if you require

a cooling off period or to actually pull capital out, then the systems we have in place today are actually very good at understanding that these hacks happen and then you can figure out what to do next and you can and you can react appropriately. And and and blockade, I mean, it's they're almost like the source of truth now on these hacks cuz they tweet out these things like so quickly. They're they're so good at at seeing these at seeing these things happening. But often times I do wonder like the reason that that these things and this this might not be true. I haven't looked into this, but I think what happened here, which is often the way that these things are are noticed is that the withdrawals are the things that look off. And so then blockade and other detection

systems notice the withdrawals. So it's actually unclear to me that if you were to put a essentially a bump in the you know, this ability to to withdraw, whether or not people would actually find the issue during that period of time. Maybe in this case they would have, but maybe in other cases they wouldn't. So it's not an end-all, be-all solution anyways, but I I think it is something that people should be thinking about. >> Here look, I'm not an engineer. Here's how I would architect it, right? Because what happened was they they posted a price that was totally off. And so and that allowed them to be like, so you walk into the casino and convince the dealer that you have a royal flush, you don't have a royal flush. The dealer automatically assumes it's true and they pay you out, you walk out of the casino,

no questions asked. And I think like similar to what happened in Ave, it's like you know, Korea, there's a lot of volatility in the Korean market and memory and all that other stuff. There's circuit breakers. They've had more circuit breakers this year than >> [laughter] >> in its entire history. Markets are really volatile, I get it. But I think sometimes you don't we should just study markets and understand like, hey, what would happen if we introduce circuit breakers? Would that really be the worst of of times and or delay withdrawals? So like If you don't want to have a circuit breaker because there's a lot of volatility in crypto, then a workaround to that would be escrow the withdrawal.

Like like you know, >> Yeah. Like oh, two days. That's Armani's point, I think. Yeah. >> Exactly right. Two days or or or have an approval to open the gate. You know, so you have an internal system and we're getting really good at the detection. Okay, wow, someone posted an Oracle that by the way, if you're referencing another market that has the Say it was a I forget which market it was. Uh it was price of gold. If they If they're using one Oracle, maybe for like latency reasons, fine. Okay, you should never use one Oracle. You should use like a weighted average or whatever of three or what have you. But, say all Oracles in a worst-case scenario get compromised.

You still can use a reference price of another market like Uniswap or Hyperliquid or, you know, TradingView. And if there's a massive deviation, it flags this withdrawal needs to enter the like cooling down. And you can't withdraw. You know what I mean? And And it's like I don't know, maybe I'm like as a non-technical person, maybe the team would say, "Well, yeah, and then that defeats the whole purpose of like, you know, predict you know, like a perps and like you're you're introducing latency." But it's just like that logic needs to be introduced because I think you work backwards from like, no matter how good This was a private key like

management. It It was like a social engineering attack. They They haven't put a postmortem, but I'm pretty sure the key got leaked somehow, social engineering. There wasn't a multi-sig, most likely. Um even if there was, well, you know, got to wonder like what the flow was. But like, the attacker got access to the key, private key, that they were able to manipulate the Oracle. There was likely one Oracle. Like, there's a couple things in here that I guess in hindsight, it looks like, okay, you probably should have architected this differently. And And the Austin team is like pretty I've met both of them. They're very smart, very capable.

I'm just wondering like how much of this was like a design choice to like compete against like an you know, try to push it to the limit and make it like as fast as possible. And I think um yeah, like you got to slow down to go fast, ladies and gentlemen. >> Yeah, I think I would I think it would be pretty hard for people to compete if they were to start, you know, putting in um like circuit breakers on the exchanges themselves. Like traders really do not like the circuit breakers. And And I And I actually do expect we'll see circuit breakers change in traditional markets over time here, too.

Even with, you know, the We We have a trillion-dollar equities that are are, you know, 100 vol right now. Uh but like I actually >> You're having fun, Rob. I have 10 days. >> [laughter] >> I think this is like the the worst the worst day for IBM in the history of IBM. >> Yeah. >> It was like it's a while. >> I I actually think these I actually think circuit breakers over time are going to um uh are going to get eased up. Uh so I actually think I actually think this is an equity >> An entire degen population, like 5% of Korea's population that was trading meme coins now traded memory. And [laughter] they got blown out. Like >> [gasps] >> It was like double whammy, anyways.

>> Well, the same thing's happening I actually I actually think this is a good thing, you know, because now the the market makers are getting blown out, too, right, you know? Susquehanna just like, you know, getting blown out in these next games. >> You thought that >> IBM was bad. >> [laughter] >> IBM lost like 60 billion of, you know, value in one day. They lost a Coinbase. >> Yeah. Maybe we should have I mean markets are just Yeah, anyways. >> Yeah, but but I do I think the delayed withdrawals do is very clearly a something that for the big platforms, for people who have a lot to use, like like I think Hyperliquid could put delayed withdrawals in there and people would still still use it.

I think for the startups though, it's like it's it becomes it becomes tougher and stuff. You know, this is there's like an incentive problem, right? Which is that, you know, there's there's basically two perp DEXes that have the vast vast majority of volume, which is Hyperliquid and Lighter. And then, you know, between after you get beyond that, you know, there's there's there's another there's dozens and dozens and dozens of others, and they're trying to figure out how to how to compete, right? And like that's the incentive problem. >> So much in crypto is just surviving. >> Yeah. >> I mean like and and now you've I mean Yeah. I I I know. Maybe we should have the the the Austium team come on and once they kind of sort their clean up the house, they can come in and just give us their take because I would

personally love to understand what the product choices what the decision choices were as much as they be willing to share. For the benefit of other founders to be honest, you know, hey like um but yeah. >> Yeah. >> Hopefully they're okay. Hopefully they clean it up and I heard some seem like they were on the right track and getting some good traction on on some more commodity like markets before hit three like oil and gold and stuff like that. So wish them well. Sucks to see a hack, but you know, onwards I guess. >> Onwards. All right. Markets or Brian Chesky tweeting about tokenization?

>> Was it him or his ghost writer? I don't I don't know, man. >> [laughter] >> His ghost writer grock. >> Horrendous tweet. Horrendous. Um I'll spend a minute there spend a minute there and then stripe and then and then we just >> Rob, I do want your take on PayPal. Stripe Stripe and this private equity firm called Advent made a joint offer to acquire PayPal. Not necessarily directly tied to crypto, but obviously you know, very strong overlap. So I think it was like 60 bucks a share valuation was 53 billion, which was a 28% premium over where the stock was trading. Um give me your take, sir.

>> Yeah, so this one this one's super interesting to me because so Stripe is Stripe and and PayPal do about the same amount of volume actually. So the yeah, so so so it's it's interesting. They've done you know, approximately call it like 500 billion or so of like you know, trailing 12 month processing volume or payment volume little less than that. Um they if if you or sorry, that's Q1 volume. Like I think it's approximately like 1.7 1.8 trillion of like annual volume right now for for each of them. And so but interestingly you know, Stripe is worth uh, you know, call it you know, you know, four times as much as they are, despite the fact that, you know,

they Stripe revenue is about the same as the PayPal cash flow, right? And so, you kind of have this like this interesting thing where, um, you know, when you talk about M&A generally, like you always want to buy something else when you have a more valuable currency. So, when your stock is out of trading at a much higher multiple than someone else's stock, you want to buy that other company. >> AOL Time Warner, baby. >> Yeah. And so, we're so we're sort of in this interesting interesting moment here where, you know, people believe, you know, everyone there's a lot of people who tell you Stripe will be the the first trillion-dollar fintech, uh, and, you know, they're you know, it's a and it's essentially, you know, it's monetizing at 25% the rate that PayPal is monetizing doing the same amount of volume, you know, they're burning I

think they're now they're not cash flow positive, but I I think that's unclear. Maybe but the maybe the last year was the first year they were. Um, I and and so, it's it's an interesting thing I think in M&A, um, dynamics and and to think through like, you know, call it, uh, growth rates and and and and multiples, etc. But, I I think maybe the more interesting point here, though, is that from, um, a Stripe perspective, they're on the merchant processing side. And merchant processing is probably getting more commoditized quicker than the consumer side. And so, the consumer side it yes, it's it's a nice fight, uh, but it when you have a sticky customer base, you can monetize them in a bunch

of different ways. They don't tend to, you know, go off platform as as easy as like a merchant might. They're, um, there's a lot of ways to think through like also what their data looks like and how do you, um, cross-sell, you know, financial products, non-financial products, etc. And so, you you've got PayPal on one side who has, I think it's it's like over 400 million like 460 million, uh, uh, basically consumer customer accounts right now. And then you've got, um, a bunch of data, you've got a bunch of different under monetized assets like Venmo, and the ability for Stripe to potentially create even a network out of that that has not that is able to be monetized in ways that, you know, don't really see

other than through like a Visa or a MasterCard today. I actually think it's probably some of what they're thinking, especially as you can think back through, you know, all of the investment they've made into crypto and stable coins. And so, I think it's super interesting from a story perspective. I think it's obviously very interesting from a M&A math perspective. I do wonder if the behemoth that is PayPal could be integrated into Stripe and it wouldn't just be a huge distraction that would drag them down for years. That there's a long history of payments M&A and with legacy systems being unable to be integrated in meaningful ways. I think Worldpay

famously has been bought and sold four times in the last decade, right? And like people just cannot figure that out. And so, it's very unclear to me how this how they could make this work for a company that yes has been acquisitive, but has been acquisitive on a very small small fraction of a scale of what we're talking about here. >> Would you buy or Stripe at 150 billion or >> 180? >> 180 180. >> I I uh Listen, Stripe they're growing very quickly, great company, don't want to bet against John and Patrick.

It it it doesn't make a lot of sense to me despite all of that and despite all of their investment in the space and how great they are that they're worth 180 billion and Adyen is worth 30. And so, there there's you know, we can talk a little bit about public versus private multiples and like how you know, what's real and what's not and how things what what would be born in in the in the in the public market. I think in some sense also the public market is more of a mimetic at least in the beginning at least in in short bursts. Over time I mean obviously it's also space x up to like you know 190 almost or over 200 bucks a share now it's back down to 135 bucks a share. And so I but I would think you would be hard

pressed in my mind to have Stripe go public today completely open the kimono and have them trade at 100 billion dollars. >> Affirm Affirm I mean obviously different like BNPL and quality there but yeah I mean there's isn't that the feature of not going public you know you just sort of um I love when you start word listen you know he's not going to answer the question so we never really told we wanted to buy this god damn thing or not. I'll read between the lines ladies and gentlemen he's not. So are you buying Adyen Adyen? Adyen Adyen the payment processor I guess is that a better is that a buy? Are you I think generally payment processing today is not a place where especially like merchant processing

and acquiring are not places where I'm probably you know I think these places are going to get disrupted by stable coins and so I'm a buyer of things like we announced a deal with a company called Velocity earlier this week who's actively working to try to to modernize acquiring and as part of their and merchant settlement as part of their >> What are they doing? I saw you guys I saw you just join the or you led this round 38 into Velocity. What are they doing Rob? >> So they do a couple of different things but one of the things that they are doing is trying to so if we think about Rain and which I've talked about a bunch which does essentially allows for you know stable coin back cards and then is settling with Visa

on the issuer side of the transaction with stable coins. Well in the four traditional four party payment model on the other side of the issuer or is the acquirer and the merchant bank. And so they're One of the things that they're working with the card Several of the card networks on, and you might have seen that Capital One came into this round. That they're trying to trying to modernize settlement on the merchant side and on the acquiring side. And what what you What needs to happen there is that you need to get merchants to accept stablecoins, but there's a this world and we talked about this before going all the way back to like the Corona USD conversation about I think a lot of these fintechs and Stripe might be one of those fintechs will work to abstract away

you know, things like what it means to settle to take settlement in stablecoins because you can just now spend that that that US dollar. And so when those merchants start getting comfortable with these US dollar accounts that are are backed by stablecoins, you're going to need the legacy acquirers and the legacy acquiring banks to be able to settle in stablecoins as well. And so Velocity, that's one of the things that they're doing. And so to go take that all the way back to the question about about what's happening here or whether or not I'm a buyer of Adyen and these other companies, I am not sure I am a buyer of merchant processing or acquiring in generally because I think it is broadly being disrupted, but I am probably on a probably would be long Adyen short Stripe at these current valuations if that was a a pair trade that I would

would do. So. >> Um so my my my quant is telling me Stripe derives higher revenue per dollar of volume compared to pure processors. But you're then you're simultaneously also saying Stripe is not is not cash flow positive. >> I think they are cash flow positive as of as of last year, but they're they're just recently cash flow positive, yeah. >> Is is that true though? Like they're they're like when you compare it against Adyen and some others, like they're just this this idea of their their if you like not all volume is created equal, like if they're doing a hundred billion of volume, they're just their take rate or their the total fees on that volume is much much higher. I don't know what that figure is, but that's what um

>> Yeah, I I mean I I haven't spent a ton of time like looking at like Adyen's financials recently and and others. And so, um and and so, I'm sure somebody who's spent more time on that will will tweet at me, but the what they've done a very, very good job of is they've taken what is like the core merchant processing side of of the of of what they do, and they've monetized their customers across a bunch of different sectors. So, they you know, they have the software stack, they have the capital stack, they have the lending stack. And so, that's allowed them to put to create a a higher, you know, LTV per customer. And so, they do definitely monetize better than like the traditional scale to acquirers. But, the Listen, like these markets are are

humongous, but it's not clear to me that like these markets are going to grow at, you know, Like for for Stripe to go from 180 billion to a trillion dollars, they're taking a ton of market share, not just like the market just grow. And so, and they're not that taking that market share is not going to be like, "Oh, we're just able to go and you know, monetize like more appropriately across a bunch of different sectors." Because like they're just going to have to take more processing share. And those processors are going to go and and those acquirers are are they're getting credit from elsewhere, right? Like They have a specific customer stack where they are better at giving credit than like a bank is.

>> Yeah, yeah. >> That's going to be true of the next phase of customers. >> Yeah. We we looked at a that inversion a lot of ISOs, these acquire like I and kind of dude spend so much time in blogs and talking to all these folks and going to conferences. And and they were like, obviously, the elephant in the room was like Stripe and Stripe credit, and they're just bundling like they're just capturing more economics there. Whereas like historically, it was like disaggregated. Um and I think that's part of why Stripe commands a higher valuation. But, yeah, it feels Maybe the answer is just don't touch any of this and just >> [laughter] >> I I think Stripe's a great company, and I think it'll be bigger than 180 billion in the future. I I just don't you know I think there's a there has to be multiple

compression. So. >> I'll take the other side of it by the way. I think I think the calls I think I mean it's just like what do you what do you pay for the brand of Stripe? Like imagine you're the fort a Fortune 500 executive in America and uh like you're re you're redoing your whole payments processor system. Like what are you going to do? Buy Adyen or Stripe? You're going to buy Stripe. >> They No, they do not care. They Nobody cares about the brand name when they're Like these are like you know like treasurers uh >> Yes, they do. But the bundling the bundling is right like the We we did talk to for for in fairness we did talk to a lot of >> Me the Fortune 500 exec does know Rob. I know what he's buying [laughter] or

selling. >> But you know this to be true. Bundling has worked very well in cable is very in in TV and it it it it's working here with Stripe and they have really good visibility into the health of the businesses and so their credit piece. I think they've underwritten now a billion dollars in loans. That that I think is real. Like you're solving a real pain point and I'm just with stable coins you know working capital again I think like the credit piece is much larger. I was at your event Rob actually in Tokyo Tarun you remember that dinner he's like payments are deeply uninteresting and I'm like I agree but the way to credit is through payments. Like Stripe is doing it and and Toast has done it and um Parfin I think is a company that powered a lot of So so I think credit is the the

real like golden goose here and Stripe's in a better position to extend credit to all all >> Yeah, well if we think about Stripe and I not to keep going down this path but like or your Toast you brought up right? What is happening in these these these companies as they're they're getting payments revenue but they're buy they're selling software, right? And so like what did Toast do? Toast gave hardware away for free. They sold you software. Eventually they then monetize the payments. Eventually they then monetize credit, right? And this kind of goes back to I think the broader thesis of and I've said this a bunch recently to a bunch of people but it there was this story around how, you know, every company would try to monetize financially and every company would try to become their own fintech and there

was things like Synapse that blew up and, you know, there was um, the credit cycle that really, you know, I think killed a few of these this kind of this this certain um, segment of of fintechs, but like that is true. Like in in a world where we have stable coins, in a world where we have um, agents and AI or able to more easily manage compliance and customer relationship uh, in the customer journey. Uh, there are going to be more and more companies that are going to monetize payments and there is going to be more and more kind of like full stack software platforms that are doing all of this if they can figure out the compliance side, but I think that will will happen. And so I I am I I I firmly firmly believe that legacy payments infrastructure is outdated and

that it is getting uh, upended by stable coins, by more digitally native platforms like Stripe, but let's not forget Stripe is a 15-year-old company, too, right? And so there is uh, you know, they're not they're they're no longer the startup. They are an incumbent. Um, now they've done an incredible job of convincing the market that they're still the startup, but, you know, when I talk to people in and around that organization, it is clear there is also a the like the people who go in there being like, oh, this is a great new startup I'm going to work at uh, and then they come out being like, oh, this uh, is too big of an organization, right? Like that is happening.

>> All right, let's uh, let's get into the content of the week, yeah? >> Yes, sir. Although we didn't talk markets, but it's okay, ladies and gentlemen. If you're in Korea, um, you know, uh, you know, be well. >> I have one markets question for you. >> Yes. >> Rapid fire. Are you still holding Micron and SanDisk? >> All of it, sir. I'm buying more right now. >> It's all I needed to know. >> I I'm I'm actually more >> I mean, blindly >> look at >> blindly follow you into for trade. >> I >> [laughter] >> I'll tell you so so there's a earnings are coming in really strong with TSMC. Um you have um a couple of like uh TSMC reported really good earnings and my conviction is stronger um cuz I think TSMC really has a good like the biggest

thing that I'm monitoring is CapEx and that has been like why markets are so jittery like oh face like there's like some analysis post like meta meta's cutting CapEx and it's like holy [ __ ] the ROI on this stuff. But if you look at like um some of the earnings that are coming in uh it's not it's very clear to me that CapEx is not going to slow down and the game theory is like if you're if you're a CEO of of a meta and Google and some of these places like the CapEx will continue. And so from that standpoint yeah I'm not uh I saw a really good um clip of the Norwegian pension fund the guy that oversees a Norwegian sovereign wealth fund and he was like the biggest mistakes we've made is when we go into the year we have a thesis and

then somehow along the way we change it and it's like if we had done nothing it would have been way better. Most like nine out of 10 times. >> Because you do all the work. >> You do all the work. >> You do all the work yeah and so and so I'm obviously paying attention to like like memory's down like Micron Sandisk is down like 30% from the peak 35% from the peak. It's super volatile. A lot of that's like you know look at what happened like you know Koreans were like taking out margin loans and just like it liquidated. And then the Korean central bank like raised rates in the first time in last like 10 years like it's a double whammy. And and and also like yeah just to your point I think you said earlier markets are just incredibly volatile. Just don't

use leverage. So no I'm I'm as they say I am unbothered moisturized in my lane. But you see some wrinkles. >> [laughter] >> You're just sitting in the hot tub. I love it. >> I'm just sitting in the hot a cold plunge. I'm in the cold plunge to cool down from this market. Uh it's really hot out here but uh yeah I know I'm not I'm not doing anything. I'm I'm uh I'm you're getting another bite at the apple. >> So so did think all of your best thinking in the cold plunge? Like I just feel like I hear a lot of stories about you in the cold plunge. >> So so yes. I I want to install a sauna cuz the the health like the health data on saunas is like amazing. I was at the retreat with the team in the offsite and

there was a sauna there. I think I prefer sauna. Cold plunge I can't be there for more than I got frostbite skiing once and so I can't really be there for longer. Otherwise my foot turns purple. So it's not really good. Do you do it? I hear I hear there's these places in New York Pranav he's been a repeat. He was like investing in some of these places in New York with >> Dude there's so many of them. I've now like I I think I've been pitched like three of these in the last month. They're like bathhouse. They're like we're going to you know dominate bathhouse. It's like there's like 17 bathhouse competitors now.

>> It's like yeah the new the new age club is going to your you know one of these like bathhouse type places and they're going to play padel. So that's it invest in padel health and the bathhouse. >> So I I love health care as you guys know and biohacking stuff topic for a later conversation. There was this round not crypto related that got I found interesting cuz I've done Prunevo and Function Health and all this stuff. Prunevo is really amazing. They really lowered their price if you get the chance to do it. Probably the best thing you can give to your parents. But and they have centers like all over the US. But there's this startup that started in Stockholm and London. It's coming to the US. They raised a massive $300 round I think from I forget who but apparently like I saw

people raving about this. Um >> What's it called? >> A neck it starts with an I'll get you the name at um but um Neko Health. Yeah there it is. >> Yeah they raised 700 million bucks. >> They they raised 700 from Lightspeed OG Venture Partners and like a bunch of people. Um I apparently there's they're opening in in New York. I'm I'm really interested um to try it out. I will say like for anyone that is like critical of AI dude I I like a repo like a a huge like unstructured data blood panels and lipid pretty much anything like I've done over the years. I really just pointed like a co-work instance. I have a health passport now. I just went to my doctor here like he was like how do you know

like honestly like the amount of stuff that I've been able to do just with my own data alone is is like groundbreaking. Like it truly is amazing like I I >> I have a I have a friend who's who's wife was pregnant and the doctor gave him a misdiagnosis on something that was wrong with the with the um with the not embryos like the three-month-old kid what I I forget what that's called. Um and they >> Yeah, and they were and they what? >> And no and he and he and he put the scan he put took the scan picture and put it into the chat GPT and it gave him the answer and then he took it back to the doctor was like I think you're wrong.

He's like this is what chat is telling me and the doctor was like oh my god I'm so sorry that is correct. >> Yeah, I heard now a couple of takes of doctors saying like the diagnosis that you get from Claude or chat is is is is is better than a normal doctor cuz like it's not fatigued, it's not like 20 minutes of your time and chronically it the relationships that it's been able to do across these different it is unlike any doctor out there like >> Yeah, yeah it's amazing. >> Highly recommend >> Come to the week. >> Rob, go.

>> I mean the Odyssey. How can you do I mean there's two things this weekend. The Odyssey and the World Cup final. >> Yeah, I'm I'm yeah, I'm IMAX ticket. >> Oh, yeah. >> Absolutely. I I also I already have my IMAX ticket for Dune 3 in December. Just to be clear. Like and by the way the new Dune 3 trailer came out this week and that movie is going to be incredible. So, I'm just saying go watch that. Go watch the Odyssey in IMAX this weekend. >> Can you even get an IMAX ticket for Odyssey I or am I just [ __ ] out of luck here? I'm so late. >> Uh you you know you're [ __ ] out of luck now, yeah. For for probably a few weeks.

So, I mean that thing think what things went on pre-sale I think 2 months ago and it was uh what like the first weekend sold out in like 10 minutes. >> Mhm. >> If for the true IMAX for which is they the only true IMAX in the city is the one at Lincoln Center. That you can go to like all those like fake ones and >> Is that the one you're going to? >> Yeah. >> Wow, Rob. Very good. Very good. >> You know how it is. The only thing crypto and movies. So. >> Yeah, that's it. That's it. World Cup Sunday 3:00 p.m. crazy Argentina game. Who Yeah.

>> Are you putting money on that? >> No. I don't I don't like sports bet. >> I'm all in on Spain. >> Argentina I'm I'm I'm Spanish Mexican. I think Argentina is going to win it. It's got Messi is just destabilizing player. Just sad to see England lose to be honest. I was rooting for them. >> [snorts] >> Argentina crushed Argentina crushed Mexico in the last World Cup I think and it was like overtime and then you just had one guy like like just like throw from way behind the goal post and just you know, that that's what Argentina has. I think it's just I think they're going to win it.

>> I I was shocked to see France play the way they did against Spain. Like I I really thought France was going to come in and play well. But. >> Yeah. Uh for me I'm going to cheat. I don't have a good one but I have this thing bookmarked that I want to read. This guy Dan Koe has been putting out some pretty good content on X and he has his latest article it says how to articulate yourself intelligently. I've heard your feedback ladies and gentlemen and so I'm trying to level up. I'm going to read that and I promise I'm going to come on Thursday super sharp super precise and as Rob says, you got to listen.

Listen. Listen. So I'm going to read that. I I don't know if it's good or not. >> a sucker for some personal development content. >> Personal development. >> Yeah. Yeah. >> Maybe he'll find his uh >> Insert all the insert all the comments on the on the What was that? >> I said maybe somebody will find your microphone for next week. >> That's right. Yeah. I'm still I'm still raw dogging this. >> [laughter] [gasps] >> All right, Rickson Gracie. You guys ever heard of the Gracie family? Negative. Thank you for responding. Gracie family basically created jujitsu.

I knew none of this until I just read this book. Um it was recommended by a friend. He said it changed his life. So, this guy Rickson Gracie family basically created jujitsu. Rickson Gracie's brother created the UFC. Um Brazil Brazilian jujitsu. They created the whole sport. So, Rickson Gracie was undefeated, best jujitsu fighter of all time. He un- instead of everyone else who like trained their ass off. I mean, he trained his ass off, but he did all these breathing techniques. So, it was it was like half like a amazing story of like, you know, his son dies, like gangs, drugs, creating the UFC. It's like half a story about that and then half a story about like he became the best fighter. Argu- People Some people say he's the best fighter in the history of like fighting, you know, since we've like gone to the mat. And uh it was all

like breathwork, meditation. Um it's a it's very very much a story of like mind over matter. So, good good book. Audible did 6 hours, ripped through on a walk. Good one. >> Sounds like you're cheating, but we'll take the recommendation. >> I'm cheating cuz I'm doing Audible? Dude, Audible's not cheating. >> I know. I know. I know. >> You have to When do you have time to sit down and Ain't nobody got time for that. >> Ain't nobody got time for that. >> All right, folks. Rob, enjoy the rest of your trip in DC. Santi, Godspeed to you. Memory longs.

>> Yes, sir. Thank you. >> Cheers, folks. >> Appreciate you guys. Have a good weekend.