Coinbase Buys Deribit, Stripe’s Stablecoin Launch, and Ethereum’s Pectra Upgrade | Weekly Roundup

Transcript

Can we just zoom out for a second and just think about what we're talking about in one week on a roundup? You've got ramp issuing stable coinbacked cards. You've got Stripe offering stable coin accounts in over 100 comp in over 100 countries. You've got Superstate launching tokenized equities. You've got Coinbase acquiring Darabit for almost three billion in the biggest crypto M&A deal in history. Like if you're not I know the prices are I mean Bitcoin just hit 100K so let's go. But like I know people are kind of like yeah this is a bull market bare market. Doesn't matter what market it is. You've got instant 247 financial infrastructure being built in real time in front of our eyes. It's pretty damn cool. This episode is brought to you by Scale, the next evolution in layer 1 blockchains.

Explore the gas-free ecosystem at scale.space/ecosystem and follow their journey on X atcale network. Thanks to Scale for making today's episode possible. Hey guys, Jason here. Just to let you know, we have Permissionless 4 coming up in June from the 24th to the 26th at Industry City in Brooklyn. This is a conference for the developers and builders where we'll be focusing on the DeFi Renaissance, applications, token design, and much more. Click the link in the show notes to grab your ticket today and use code Empire 10 for 10% off. What's up everybody? Welcome back to the Empire Roundup. You've got the man, the myth, me back in the seat, and

we've got our we've got the second we got the second co-host, Santi. You know, Yano, I was going to the second co-host. Notice that there is rank and priority, ladies and gentlemen. Um, I will point out, Yano, you're growing a little bit of a beard. Um, but as I was observing that, I did see what appears to be a u an injury there. What's going on? It's an injury. It's an injury. Yes. Got it. I think twice if you're if you're if there's violence at home. Well, first of all, my face is super swollen because of these cluster headaches that I get. I am loaded up on Prednazone.

So, my face is all puffy and then it doesn't help that I Will Will told me I need a better story for this. I dropped an iPad on my face and Oh, you're you know how many times this happened to me? that like I I think I'm surprised how I haven't broken my dad dropped an iPad on his face and he broke his nose and this was a couple years ago and I'm obviously laughing at the guy and now here I am with look at this. This thing packs a punch. It's like that's crazy. You you should have uh you know what I'm going to get you for for your birthday Christmas you know babies have the iPads and the with the foam around it.

You Yes. I don't make them indestructible. I don't think you need that. You know I guess clearly I do. you know, go pause, you know. Anyways, um well, what's going on? How's uh how's Post Dubai? Oh, very good. Catching up on a lot of work, but wow, what a week, huh? I mean, I mean, we should just jump right in it because let's jump Let's jump right in. Here's the first thing. Here's the first thing. This is so Teddy Fusaro from Bitwise aptly pointed this out. So, you would think, so Bitcoin's Bitcoin hit 100K. Let's go. Things are quiet around here. Look at this. This is uh this is the Bitcoin at 100K. Look at Google Trends. No interest in Bitcoin.

This is an incredibly bullish chart of Google Trends um and Google interest over time of Bitcoin. It feels I mean has it ever felt this quiet with Bitcoin at 100K? No. Yeah. I mean it's it's fairly quiet and also it's like one of this is the classic you're seeing it in real time. What do you believe in that others don't or are overlooking? Like if if I think Google trends is interest maybe maybe all this interest is now going to like chat GBT and Plexity and some of these the new search engine so to speak because Google took a massive hit this week. It was down like 9%. Uh basically investors are pretty worried that their core business is

being chipped away by basically people are not searching anymore. This is why the the the only reason the only reason this chart would not be as bullish as I want it to be is if people are no longer using Google search and this is no longer an interesting barometer but to be fair I think it's still pretty accurate. What do you make of the I mean what do you make of the markets right now? Because there are some things like um you know I've been I've been very publicly bullish on Robin Hood on the pod and we had a nice beating of earnings. Robin Hood's up 9% um today 16% in the last five days. I think Coinbase reports after hour. Coinbase is up 6% today. I'm pretty sure there I think they report just bought Darbit after hours. Yeah, obviously we'll talk

we'll talk about the Derbit deal and talk about M&A in general. Any like any thoughts on markets right now? Um or should we get into the news? Generally speaking, nothing to comment on other than I've I've read a bunch of the like reports, money reports that I get from banks and research reports and it's like, you know, there's excitement and reasons to be optimistic about trade deals. I think with the UK there's a meeting in Switzerland between the US and Chinese delegations and so it feels like the you know markets hate uncertainty and and the and they reacted you remember when we recorded that macro pod with Quinn um um and you know it was it was I think markets reacted to that but I think the market's feeling optimistic about some trade deals you know happening and you know a lot of

that going away but no let's get let's get into the news so big big big news week um things things I want cover Ethereum um had a Pectra went live on Ethereum mainet. There is a lot of M&A obviously being driven by the the big one is the biggest M&A deal in the history of crypto. Coinbase acquiring Darabit. I'd like to talk about that. Uh Stripe had Stripe sessions. We'll be talking about stable coins. I want to talk about um their their product release. I think it's the most important release in stable coins actually that I've seen and I think it's actually kind of being underplayed a little bit on crypto Twitter. Uh Robin Hood is exploring launching a chain. Uh the Dems have been turning on stables and uh the Empire listener section. Some folks were asking us about um Micro Strategy,

Bitcoin's buying uh corporates buying Bitcoin. So we'll get to that if we have time. But maybe the first thing is I do want to just give a big shout out to everyone involved in PCRA. So um Pekra went live um uh PCRA went live uh what day was it? May 7th. So that would be yesterday. uh on on Wednesday Thursday. Yeah, we're recording Thursday at 4 PM here. Um Ethereum Pra went live. So So that that's that's big massive upgrade. Um I'll talk about it maybe from more technical point of view, but I'll then I'll talk about it really from the users point of view and why this is interesting. Um so first the upgrade allows the max ETH stake to a node in to increase from 32 to 248 ETH. The goal of

red is reducing the need for redundant nodes. That's one. two, the blob transaction capacity doubles the target blob count from three to six. Um, and then in addition to this, the upgrade enables a new transaction type that allows batch transactions and gas sponsorship. So, what does that actually mean? There's actually there's a great thread by Benji um from shared from the Ethereum handle. Um, so for for folks who missed it, I'll kind of walk through some of the highlights. Basically, if you think about the merge, uh the merge was for the protocol. Pectra is for the people and Pectra uh as Ben as Benji explains it. Pectra is kind of Ethereum's glow up. Uh this is where Ethereum starts to feel like more of a userfriendly chain. Fewer clicks,

smarter wallets, cheaper transactions, cleaner staking. So on the fewer click side, what this means is no more approve and confirm loop. You know those kind of loops that you get with approve and confirm, there's no more double signing for every single action. And so one of the things that PCRA does is it reduces how many clicks it takes to get to the action that you want. So that's that's cool. Second is smarter wallets. Um right now wallets are used to uh that I think what PRA does I need to dig into this a little more. I think what Pekra does, it allows normal wallets to start to act like smart contracts where you can start to batch transactions, uh, skip approval popups, pay gas in any token, just a lot less, uh, friction. I would imagine folks like

dynamic.xyz, um, privy will start to will start to really benefit from this. And then all the wallet the wallet experience should just get much better. Uh, and then the third is cheaper transactions. So more blobs, better scaling for the L2s, lower cost especially during high traffic periods. Um and then staking. Yeah, staking is more flexible, more efficient. So you raise the validator cap from 32 to 2048. Uh faster deposit recognition and then smart contract enabled withdrawals. So yeah, just a just I mean like I'm not working on the code of Ethereum obviously, but I think you just have to give a massive recognition that um a these upgrades are like it's very very very tough to do these upgrades. Um it

is hard for even a company like Blockwork sometimes to upgrade our code. It is orders of magnitude harder for this decentralized network to pull it off. Um you know it's kind it's I I saw Saigar who's uh building abstract was like it's like upgrading an engines an airplane engine uh in mid-flight. So just very very big hats off. I don't know if you have any other thoughts on on Perra, but no. Uh just that I mean very impressive that Ethereum has pulled it off yet again with first its transition from proof of work and proof of stake and this network operate.

Pectra is just really impressive and I think one of the core things about the Ethereum community honestly is this ability to coordinate and and do these upgrades. And I mean it just tells you a lot about how impressive I I don't want to underestimate how difficult this is and it's the crypto is really good at coordination but there are networks that have struggled with that. You know the Bitcoin community particularly is like but this I think is one of the u brighter things that Ethereum has which is this ability to coordinate and do upgrades which is pretty herculean task.

So yeah, congrats to everyone that was involved in it and um yeah, pretty so pretty stuff. So ETH ETH a month ago was 1500. ETH today 2073 at the time of recording. Does this make you think so you've got the kind of ETH pivot, ETH whatever whatever we're calling it, ETH Pivot or ETH upgrade. We've got Pectra. Um does this start to make you reconsider the ETH investment case? Um well yes in the sense that um I think the Ethereum community has really kind of galvanized and like rallied to it's kind of gotten its mojo back together because it feels a sense of urgency. Um so you know how much of that's priced in is the network worth uh you know $250

billion. Uh, I still have concerns and um around the L1 L2 dynamics and whatnot but um I don't read too much like I wouldn't I'm not updating my thesis just yet for other reasons. I do think that this is very impressive, but I do still have concerns um around value occurring to the L1. Okay. So, so we're not buying ETH yet? No, not buying ETH. not not me personally, but again, none of this is investment advice, so everyone should do their own research and uh come to their own conclusions, but I um we'll talk about in other news segments, but I

think it's pretty interesting. You have Meta, Robin Hoods, and other corporates exploring um tokenizing stocks, launching their own stable coin, you know, functionalities. And there in in these reports, they reference a couple of networks. Uh Salana is one of them. Uh, arbitum is another. Um, and I think it's just interesting to to maybe focus on that because I think that to me that's like probably more exciting where a lot of these players are deciding to build on. For instance, I believe Robin Hood um was meant Yeah, exactly. This this is something that you know in this particular instance they the comment is that they're um evaluating Salana and Arbitum. Of course, none of them confirmed this, but uh if it were to be

true, I mean, I think you would argue who acrews more value here. Say that Robin Hood launches a blockchain um and they deployed on Arbitum. Obviously bullish from a overall Ethereum ecosystem perspective, but from that standpoint, I mean, Arbitum stands more to gain as a as a network than ETH as a you know, substrate for the overall ecosystem. mode are you? This episode is brought to you by Scale, the next evolution in layer 1 blockchains. With a gas-free, invisible user experience, instant finality, and robust security, Scale allows for limitless scalability, and has already saved its $50 million users over 11 billion in gas fees. scale's high

throughput, zero transaction costs, and powerful web 3 infrastructure make it the ideal platform for gaming, AI, and other high-put apps. To explore the gas-free ecosystem, visit scale.space/ecosystem and follow their journey on X at scale network. That's scale spelled with a K. Thanks to Scale for making today's episode possible. I wanted to take a moment to tell you about Marinade, the platform connecting Salana holders with the best staking rates on Salana. Marinade unlocks a high-performance staking delegation platform that brings billions in liquidity and security to the Salana market with solutions for both individual traders and global

institutions from both DeFi and traditional finance. Use Marinade to earn rewards on your Salana treasuries and holdings. Optimize your Salana staking with Marinade's bestin-market features, including user downside protection through protected staking rewards and optimize delegation via Marinad's automated auction marketplace. To learn more about Marinade, visit marinade.inance or click the link in the show notes. Yeah, so for yeah, folks who missed it, it's interesting. Uh I think I think this was Bloomberg who reported this. Robin Hood is developing a blockchainbased platform that will allow retail investors in Europe to trade US securities such as stocks. Um the

venture will likely be launched their partnership with a digital asset firm. Arbitum and Salana have both been under consideration for the partnership. Um yeah, very interesting. Um what what route if you were a betting man, what route do you think they go? Mert, if you're listening, would love for you to comment on this because you might um have perspective, but yeah, I I think uh from a launching your own blockchain, you've seen a lot of other folks deploy their own chain as an L2. Uh you know, Kraken and a few others or Avalanche L1. Obviously we're doing that that as inversion but to me it feels like from a launching your own chain probably arbitum from a technical

standpoint but uh I would actually like to bring someone from the Salana community to understand how it would um how this would work with uh with Salana uh like like there's like eclipses of the world and neons and like sort of like these um other networks that are in the periphery but yeah I would I would kind of really be curious to understand how that would work. All right, let's talk about the bigger news of the week. Uh, Coinbase is acquiring Darabit. It's the largest deal in crypto history. So, uh, this, um, I think folks have known for a while that, uh, Darabit has been in market. Um, I it's been rumored that some other crypto exchanges were looking at them. Uh, for context, Darabit controls roughly 80% of the, uh, crypto derivatives uh, cryp and uh, the options

market in um, so Darit is a derivatives venue. They control roughly 80% of the market. Um I think back in March Bloomberg leaked that they were selling. Uh they've been selling for quite a while before that I think. Um pretty relatively small team. They've done an amazing job. Uh this is a really interesting deal. So I I heard that I heard that Tencent was looking at the deal. I heard that some of the other big crypto exchanges were looking at it. Um but yeah, it's a $2.9 billion deal. 700 million in cash. Uh, and then another 11 million 11 million in shares. Coinbase stock is at 200 bucks. That's 2.2 billion. So 2.22 billion of stock, 700 million of cash.

Um, so the la the last numbers that I saw from Darabit from a fundraising deck was from 2023 where they were doing roughly like 85 million in profit and 120 million in in revenue. Um, so really like really high margin company. But the thing the the the thing that's happening here is the exchange there's a broader trend of M&A right now happening in crypto. The exchanges are the big buyers in crypto right now and they want two they want two things. They want funded accounts and they want the ability to offer more products to their um to their traders. So, PERS, options, um I think the next wave of acquisitions

that you'll see uh crypto exchanges make will be in the tokenization and RWA space. So, the ability to offer, you know, maybe Coinbase can offer tokenized stocks, uh credit funds on chain, thing like things like that. So, really really interesting acquisition. The the industry needs M&A to thrive. You need the venture investors to do well from their private from their equity investments. You need the companies to be able to go public. You need companies to be able to sell. So, this is a really healthy dynamic and I don't know, I love to see it. I think it's great. Yeah, absolutely. I mean, the what's interesting, too, is Coinbase is up on the announcement. Um, you know, 6% the entire market's rallying, but um we'll see after earnings uh what the

commentary is. Uh if I believe they report after close today, right? Um Coinbase does. So, that that's going to be interesting. um what the commentary is from the team uh Brian and the team. So yeah, that should be really interesting. Look at this. So we we uh actually Block Works Research just launched uh M&A and fundraising data on the platform. Look at this. So it only goes back to it goes back to Q2 of 2018. This is this big green chart bar right here on the right. This is Q1. So here, wait, let me actually Ripple. Yeah, this is this one is um Ninja Tra the Kraken Ninja deal. This is Ripple Hidden Road, right? Or or vice

versa. Um but yeah, I mean look at this. Look at this M&A data by sector just growing. This doesn't even include the Darabit Coinbase deal. Well, this will be, you know, up added overnight. So, wow. Yeah. Yeah. So I guess zooming out from this deal, I mean I the thing that maybe a lot some folks are not privy to that's just really interesting is I've never seen so many crypto companies in market right now. Yeah. Every especially the kind of class of 2017 um a lot of the custodians a lot of the data companies a lot of the staking folks like you know these are like the founders have been building for seven

eight years. A lot of the companies are doing somewhere between like five to 30 million in revenue and a lot of them are selling. Why why would Derbit sell? Um because they've Why would do they want like access to the distribution that Coinbase has built? Seems like look they command most of the market share. Is your point saying like they they have so much market share that it can only go down from here and if it goes down from here it starts like they've sold at the right time and and and it's a um I mean it's a slightly messy cap table but it's a heavily founderowned company so I think this might just be the founders saying look we've been building for like a decade in crypto um it's a multi-billion

dollar acquisition and you know this is gener generational wealth for the founders I would guess also maybe if you take out if you take that out of out of the picture probably um you know that you argue the space is getting much more regulated and is moving more onshore. Dar is more of like an offshore venue. Um yeah. Yeah. The I think uh I was on another podcast earlier today and you got to think like I think and you let me know if this makes sense. There's a lot of signaling Coinbase buying this because they feel that they can integrate Darbit into their core offering which they've been missing for a while. like what's made Coinbase um product offering is really lacked is is this right options and per and you know and so offering this uh I mean it's it's probably really

interesting from their standpoint justifying the acquisition like and how they think about layering it in it probably tells you everything you need to know about the how the reg how they believe the regulatory environment is going to unfold particularly in the US you also see I think it was last week you you've seen a lot of the offshore exchanges now start to build a presence in the US which is really encouraging. Uh I think it I think it was like OKX that is now launching an office in in California I think in San Monteo near SF. Um, so yeah, all all this to say is like really really encouraging developments on the regulatory like so I moderated this thing with um with the head with the head of Coinbase's derivatives business in in Dubai and they are I mean it is an allout push for

them with per like I think Robin Hood and Coinbase are I mean they're they're rolling out per deriv like derivatives options it's all it's all coming to the US. So I want to talk about Stripe because I think people missed how important this thing is. So Stripe had their their annual event called Stripe Sessions. If you there's a 40minute presentation from the Collison brothers from Patrick and John. I would highly highly highly recommend going to watch that video. Um they talk about two things in that video. They talk about AI and stable coins. Um and there's actually this amazing image here. I'll share this right here.

This is an image of uh payment volume growth in the first 24 months of Stripe verse bridge. And for those who are listening uh not watching on YouTube, uh it is just up and to the right for bridge. Uh Bridge just like vastly outnumbers the the first 24 months of volume from from Stripe. The thing to understand with Stripe here, I think, is that so they launched two products. One was stable coinbacked credit cards or stablecoin backed cards. But the other product was um was uh merchants can now store stable coins. And the reason this is so important is uh I think it was last year they they announced payins, right? So you could pay you could pay in

stable coins. Then they announced earlier this year payouts, right? So you could actually pay people you could play pay like freelancers and contractors and your employees in stable coins. Now, uh, they just rolled out the ability for merchants to store stable coins. So, another way to put this, sta strip Stripe would never say it like this because it's for regulatory reasons, but Stripe just launched a stable coin, a stable coin bank for merchants. Stripe is in 45 countries today because of stable coins. They're now in 101 countries. So, it just doubled the number of countries that they're able to be in. They completed the the payment circle, right? payins, payouts, and a way for merchants to store stable coins.

So, this is the like this is really the first complete circle of stable coin payments in the world by anybody, crypto company or non-crypto company. And I'm I'm just shocked that more PSPs like Audon and uh Checkout and folks like that are not just massively pushing into this space. Um because what Stripe just did with stable coins, there are they were in 45 countries, now they're in 101. this unlocks global access for them. So uh any any business in the world can now have a US US dollar bank account. It's just it's it's mass I think with this alone bridge just paid for itself. So well 100% like uh he uses a term that I really like which is borderless finance. Yeah just

phenomenal. He has a very good way of crystallizing concepts um like room uh temperature semiconductors and then borderless finance. But yeah, I mean abs the way I think about it is like just think about for a second. The financial system predates the internet and this is kind of the first time we've been able to kind of take a a kind of as you describe it a fully complete end to end like offering that kind of detaches from that. Um, and and the way that how how accreative this is to Stripe's business is and and the amount of activity that it unlocks, right, is is kind of crazy.

I was on a podcast with Kai from Visa. They also just announced an acquisition or a strategic investment. um and in a similar type of offering like like bridge um and I think now like every major financial institution is kind of looking at this and saying yeah like we need to get our act together on stable coins and um you know a whole topic for a se but I would like to do a podcast around with maybe Kai or Simon or other folks talking about like what does this actually mean for banks business model what are the things that are going to be truly disintermediated or does this totally unlock like just more flows right a lot of these countries like just to your point like just are not even digitized and are basically cashbased economies and with stable coins like

this really kind of unlocks a way to do business. Um and it just grows the pie. Um and so no it's it's it's really powerful. He goes into that present it starts in minute 24 and it goes for like four minutes. Um but again in there he talks about like big big companies using stable coins to pay vendors internationally like you know uh SpaceX and SpaceX and Tesla and these are not small companies that are using stable coins just to like you know level set the conversation. Yeah. Well and so that was that was the payout from a couple months ago. Now, so I talked to some folks who uh I don't know, I talked to some folks I talked to some folks who are familiar with the product and the early usage and um they said that they're seeing massive

uh basically massive usage B2B usage of stable coins because of what Stripe just rolled out already for the early beta users. And so like you now you've got someone in I don't know maybe Singapore who's able to pay for a SAS product in Berlin you know and they're paying entirely in stable coins right now. So uh again I think that like the aons and the checkout.coms of the world really have to move on this right now. I think like uh I'll just make a really quick comment on this which is like what has really changed over the last six months. So like Stripe acquired bridge uh under a year ago was it six uh seven nine months ago. Uh, we had Zach on the podcast. Um, and we I we described it as like the Instagram moment. Like they

bought it for a billion, Facebook bought Instagram for a billion. It was like hugely transformation for their business. Um, and October. Yeah. Yeah. Like six months ago or so. Um, and so I think um the difference like I think the difference between like stable coins have been around for a while, right? My point is stable coins in your MetaMask or Phantom or exchange don't feel like money whereas stable coins integrated in stripes uh flow with merchants or with pay or like PayPal or it feels like money. And so it's just like it it may feel like a subtle thing but I think like the whole point of fintech the name of the game is distribution and being embedded in in kind of there's a great um example of a demo of how this looks

like. um like stable coins are just part of like transferring to your bank account and it's that that flow that just makes it super intuitive for the user to be like conditioning them to use stable coins. Um and it's just so so powerful. So yeah. Yeah, it's amazing. The other thing that this comes on the he the the heels of is the the Fed's 20page report on stable coins. I don't know. I think we didn't talk about this cuz, you know, we were at we were at token, but uh there's an amazing 20page report. This is from the the Federal Reserve. This isn't from, you know, Blockworks Research or anything. This is literally the Fed saying that stable coins, right, with a market cap of 234 billion are ubiquitous. I'm this I'm

quoting from the Treasury's report. Uh is it the Treasury? The who is it? Yeah, it's the Treasury, excuse me, it's from the Treasury. Uh I'm going to quote from this report. Stable coins are ubiquitously utilized as cash on chain, effectively serving as a new payment mechanism. An emergence in tokenized money market funds has recently created an alternative option to stable coins, primarily given their yield bearing feature, evolving market dynamics. And this is the kicker right here. Has the potential to accelerate stable coin trajectory to reach a $2 trillion market cap by 2028. A $2 trillion market cap.

That's not coming from some, you know, moonboy pan crypto panda on on Twitter. This is this is the US Treasury saying that stable coins could reach two trillion in market cap by 2028. So, pretty amazing. 100%. There's another uh perhaps development. I mean, there's so many like we I want to talk about uh Superstate um the Salana paper that came out like tokenizing stocks is really heating up faster than I anticipated. Before we go there, Coinbase just announced the X42 standard for native payments, which really dovetailes really nicely into what was central to the Stripe conversation, which is like stable coins and AI. And it's funny, they put them as the two most important things because I think X 402 comes in

and really enables that, particularly for AI agents. Um, what is what is X42? It's it's a new standard. Um, so the TLDDR, I'm going to read this. Coinbase is launching X42, a payment protocol that enables instant stable coin payments directly over HTT HTTP. It allows APIs, apps, and AI agents to transact seamlessly, unlocking a faster automated internet economy. Um, oh, this is cool. You can add us. Okay, so you can basically ah this is this is nifty. Okay. So, HTTP 4402 is the client error response status code when uh the status code was created to enable digital clash or micro payment systems. No standard convention exists.

Different systems use it in different context. 402 payment required. You've maybe seen this on the website. So, what they just rolled out uh that's that's smart is um you can now add a single line of code into your app require USDC payment for each incoming request. Um that's interesting. A request arrives without payment. The server responds with HTTP 402, prompting the client to pay and retry. X42 allows any web developer to accept crypto payments without the complexity of having to interact with the blockchain. Very cool. Yeah. Yeah. It allows developers, AI agents to pay for API services and software directly with the stable coins over HTTP. Yeah. With a few lines of code. So again, it's just so transformational. Kai from Visa in the podcast that we just recorded was like,

you know, how does how do like is is the AI agent like using stable coin narrative overblown? Which I thought was like an interesting push back because his whole point was you could just give your AI agent your credit card and I like and micro payments have really taken off. But I'm just sort of like um you know introducing like a push back that I thought was worthy of more conversation. But um yeah, nonetheless like this is a pretty cool standard and you know credit to Coinbase because they've been really pushing and have been very good contributors to you know code bases across ecosystems and particularly standards like this one which is um you know really great to see from from uh from Coinbase. This episode is brought to you

by scale the next evolution in layer 1 blockchains with a gas-free invisible user experience instant finality and robust security. Scale allows for limitless scalability and has already saved its 50 million users over 11 billion in gas fees. Scale's high throughput, zero transaction costs, and powerful web3 infrastructure make it the ideal platform for gaming AI and other high throughput apps. To explore the gas-free ecosystem, visit scale.space/ecosystem and follow their journey on X at scale network. That's Scale spelled with a K. Thanks to Scale for making today's episode possible. I

wanted to take a moment to tell you about Marinade, the platform connecting Salana holders with the best staking rates on Salana. Marinade unlocks a high-performance staking delegation platform that brings billions in liquidity and security to the Salana market with solutions for both individual traders and global institutions from both DeFi and traditional finance. Use Marinade to earn rewards on your Salana treasuries and holdings. Optimize your Salana staking with Marinade's bestin-market features, including user downside protection through protected staking rewards and optimized delegation via Marinades automated auction marketplace.

To learn more about Marinade, visit marinade.inance or click the link in the show notes. All right, big other shout out, Mr. Lesner. Um uh Lesner and uh his his new company Superstate uh recently just launched opening bell. They launched this today actually. Um so opening bell is a product no it's a platform from superstate where uh companies can issue SEC registered shares directly on chain. Uh the first issuer is soul strategies.

Soul strategies is basically micro strategy but for Salana. Um and uh they are this allows someone like Soul Strategies to issue their stock their stock their SEC registered stock directly on chain. Um they're starting with Salana. I think they'll expand to other chains. Um so I I don't I actually don't fully get it. I'm reading it right now. The I'm going to read I'm going to try to understand this in real time. Our first announced issuer, Soul Strategies, because Soul Strategies is public, right? They're a Canadian public company. They've begun the process to list on NASDAQ. They're now exploring the opportunity to bring their shares onchain via opening bell. Okay. So, this would mean this platform opening bell, you could trade on you could trade those

shares on Salana. So, I think I think it's cool. I'm not fully following actually. Lesser, if you're listening, you should come on next. Okay. So the shares okay then you can take those shares move the move them around in DeFi. Uh okay on onchain share issuance private companies can register and list their shares directly on chain. Uh and then those shares can actually trade in DeFi markets 247. Uh interesting. Yeah I was with superstate superstate is an SEC registered blockchain enabled transfer agent. You know this is similar to what on I was uh okay a lot of folks are working on this.

So secured, we had um great podcast actually with Terrun uh uh Christine Moy who's the head of crypto at Apollo and Carlos who's the founder of Securitize that drops on Monday. Securityize I think working on something similar. Ono uh I was with the Onondo folks at a dinner last night. They're working on something similar. So it does feel like this next wave um of tokenization will come via uh public equities moving on chain. Yeah. Yeah. And ba basically for context like there's a great article about superstate talks about like what exactly is a transfer agent. Transfer agents um act on behalf of the issuer to track basically just tracking ownership issuing redeeming shares distributing dividends like they're kind of like the infrastructure between the issuer and

security markets capital markets. And so um you know um the you you're right in pointing out like securitize on of the world like basically RWS really fit into this right because if you're issuer and you're recording this like in a blockchain then then you know if you're migrating all of that functionality to a blockchain that's basically like superstate and some of these other players are trying to do this announcement if I'm reading correctly is just for u you know issuers of um uh financial products. Yeah. So, can we I mean, can we just zoom out for a second and just think about what we're talking about in one week on a roundup?

You've got RAMP, right? One of the biggest like Blockworks uses RAM. You've got RAM issuing stable coinbacked cards. You've got Stripe offering especially in Latin America, which is really exciting. Yeah. You've got Stripe offering stable coin accounts in over 100 comp in over 100 countries. You've got Superstate launching tokenized equities. You've got Coinbase acquiring Darabit for almost three billion in the biggest crypto M&A deal in history. Like if you're not I know the prices are I mean Bitcoin just hit 100K so let's go but like I know people are kind of like yeah this is a bull market bare market doesn't matter what market it is you've got instant 247 financial infrastructure being built in real time in front of our eyes it's pretty damn cool yeah you extend this further so like I'm really now

interesting like the superstate case like soul strategies does this that's like the first proof point and then you know I'm I guess when do we see the first um you know decently sized public company go through this. Uh is it Galaxy? Is it someone else? Like who who does it? Like I guess what is the So here's what I've been Yeah. Here's what I've been thinking about. So originally crypto companies wanted to IPO, right? Like let's say you're let's say you're the class of 2017 and you raised it several billion dollars in 2021 or 2022. Um who are some companies? Ledger, Kraken, Circle Block Damon uh BitGo Anchor

right? That cohort. The natural evolution was let's go public. Then it became, oh [ __ ] going public, that's actually pretty tough, right? That maybe maybe that's too tough. So, um, all right, the next the next wave, if you were a founder, was like, I'm just going to go direct to the users and issue a token. And a lot of those people made a lot of money. Now we're in the wave where actually, hey, issuing a token might not be the best play. Like, that seems pretty tough. maybe you want to wait a little longer than you originally thought to issue a token. So now we're back in the IPO. Now it's now we're back to like, hey, if you're maybe maybe IPOing is the best move. There's a lot of spaxs being raised right now. A lot of people talking about IPOs. That's a

side note, by the way. It does feel like spaxs are back, weirdly. Um, but IPO is also really difficult. I do wonder if like let's say you're um let's say you're a company like Phan uh Phantom Phantom Wallet, right? Phantom raised what was Phantom's last round at did I don't know if you invested couple billion Phantom F I think it was three billion maybe so yeah January in January Phantom raises 150 at a three billion valuation let's do a hypothetical here would you if if you're Phantom would you go public try to go public would you issue a token or would you go public but do do it

natively on Salana where your where your customers are the last right yeah absolutely like um I think the this comes at a really interesting time of public markets which is there is a whole slew of privately backed companies that are not going not IPOing and there's always concerns around capital markets and you know markets being soft and whatnot but what may be really interesting is I don't know if it's too farfetched to say but if you're a ventureback company hasn't exited but you know do you actually credibly say hey maybe if this starts working you know maybe soul strategies is no one pays much attention to even though it's interesting but as more companies do

this can this like basically tapping into crypto capital markets as you've already seen it with RWAs um you know tokenizing treasuries has been interesting um you know this starts working basically what do you get in in the menu of options going through investment banks and listing on NASDAQ or you know um listing via this process um you know you're tapping into what more liquidity programmability maybe you're lowering costs to do the actual process end to end but like the capital formation piece might be actually really interesting the composability of it right you're existing within this DeFi network which you know you can use very natively and

composability is a great thing right we're finally going to start seeing how like DeFi performs in integrating these um assets that have vastly more demand, right? Like, you know, you have, you know, extending into capital markets. So, you know, we've always talked about DeFi like being this infrastructure that has a lot of lindy. It's existed for quite a bit of time. It's like very resilient in in many ways now. Um but you know you know to said differently imagine that you have like tokenized equity for Phantom and then you can deposit that in a money market protocol like Camino borrow against that or or earn more um of right Phantom equity the more you use the platform so say that

you're a power user of Phantom they go through this process they are able to instead of airdropping you the token they give you this kind of like you know tokenized doc. Yeah. And then you get more of that based on your usage. And I've always felt that this reminds me, you know what? There is an episode that Marco Santory who is I don't even I think he just took a job as like at uh no. No, Panta. Yeah. But but he was a he was chief legal officer of uh of Kraken. He did an episode with Laura Shinn in I want to say 2016 maybe 2017 where he talks about this idea between that um the users of stock the buyers of stocks

and the users of the product of stocks are two totally different people but they actually should theoretically in a perfect world be the same like the the the consumer of Nike stock the the consumer of Nike products should also be the is probably the best potential buyer of Nike stock um and uh I don't know 8 years later it's coming true. I mean it makes it almost makes too much sense, right? Which is there is your users should also be your investors and there reward your users and there's just stronger alignment.

um for a variety of reasons. Like there are companies that have tried to do this, but um yeah, you know, it's it's uh I think we're going to look back and say, "Yeah, that was pretty obvious." Like, "Oh, I wonder what took us so long to do this." But yeah, I mean, it even makes me think like we were block we've been getting pitched by some bankers to like go do some like, "Oh, Blockwork should go public or something or do you know what? Do a spack or some [ __ ] like that." But um and I was just like, "We're not going to, you know, doesn't doesn't really make sense for us." Um, but it has me thinking like, oh, if we were like would block would I rather go public or would I rather go public on chain where all of the people who

consume block works content are? Yeah. The the argument historically has been look there's vastly more money and in traditional capital markets, NASDAQ, you know, um, you know, NYC, all these different capital markets are really really robust. We should u double click. Maybe not now, but like you remember there's like attempts to build other exchanges. There's one in Texas for like smaller companies. I want to like I think it was David S. I think it was like David Sax or Chim Bology. There was a couple of folks that like try to like get that off the ground. I want to I want to like go back and research that for a later episode because I think it'll be interesting to see like where did that go? Like why didn't that take off? Um because that's um I don't know could be

an interesting uh comp to look at. Earlier in today's episode, I mentioned Ledger's latest products, the Stacks and Flex, and I wanted to take a few seconds to tell you more about them. These wallets feature the world's first secure touchcreens, which don't just simplify your digital transactions, but also keep them extremely safe. These wallets are virtually impenetrable to online attacks because they store your private key in a secure offline chip. You can manage more than 5,500 tokens and install up to 100 apps. Choose the most trusted name in hardware wallets and take control of your digital security today at ledger.com or hit the link in the description of today's episode to check

out their latest wallets. This episode is brought to you by Wallet Connect, the connectivity network shaping the future of onchain UX. From DeFi to NFTts, swaps to staking, wallet connect is the backbone of connectivity in the onchain economy. Seamlessly bridging wallets, apps, and blockchains. With over 220 million connections and 35 million users worldwide, Wallet Connect is the place to power your web 3 experience. With the launch of the Wallet Connect token, the network is taking the next step, paving the way for a fully decentralized, permissionless, and community-owned future of connectivity. To learn more, follow Wallet Connect on X and Telegram

or visit walletconnect.network to stay ahead of what's next. Hey everyone, Jason here. Earlier in today's episode, you heard me mention the weekly CIO memo from Bitwise. In an industry as hectic, fast, and complex as ours, it's incredibly hard to get an easy nononsense stream of what's actually moving crypto. The memo comes from Matt Hogan, Bitwise's chief investment officer. He's been on the show before, and he has this amazing ability to take the most complex topics and break them down with clarity. Trust me on this one.

The Bitwise weekly CIO memo is really worth the 5 minutes of your time. Check it out at bitweisinvestments.com/ciio memo/mpire or just hit the link in the description of today's episode to get started. Carefully consider the extreme risks associated with crypto before investing. One more interesting thing from this week is um the stablecoin bill which I think people thought was just a lock is no longer a lock. Um, you've got you had to be a Debbie Downer after this fantastic episode of all this positive.

I mean, it just blows my mind that the Dems are turning on this thing. So, like, okay, right now we've got like 240 or 250 billion of stable coins outstanding. 90% of those are fully collateralized. We've got stable coin transactions doing more than Visa and Mastercard combined. Stripe is rolling this thing out. And we've got this Genius Act, right? the the the guiding and establishing national innovation for US stable coins Act 2025, the Genius Act. It's on the finish line, right? It's the Senate's Stable Coin Authorization Regulation Bill and we're just trying to bring some clarity and certainty to this kind of gray area right now. It was introduced, I know a lot of people know this, but just re reminding people, it was introduced by

Hagerty. It's co-sponsored by uh both Republicans and Democrats, right? Tim Scott, who's Republican. um Kirsten Gilbrand Democrat Lumis Republican and Angela uh also Brooks, uh who's a Democrat. So, you've got this bipartisan bill, and what this is going to do is it establishes this oversight and regulatory regime for stable coins and issuers in the US, and it creates pathways for innovation. It creates pathways to enhance the dollar's distribution, uh grow the dollar's reserve status. Um and stable coins issued under this framework would be highly regulated, right? Highly regulated by federal standards. Um and uh the Senate Banking Committee voted

the bill out of out of the committee in March with an 18 to6 vote that included five Democrats, but actually uh the other day an updated draft was released and it included several substant uh substantive updates enhancing language on national security, financial system, uh financial system safety and regulatory accountability. And then just the other day, a couple days ago, nine Democrats published a statement saying they're opposing they're going to oppose if any additional if additional enhancements were not made relating to a bunch of different areas. So, right now, I think I don't want to say it's in crisis, but the stablecoin bill is um you've got some key Democrats backing

away and it's not I think I was like, "All right, the stable coin bill is locked. Let's move we're moving on to the market structure bill." Um it doesn't seem that way anymore. So, that would be that would be a setback. That would be that would be a big setback because I So, look, this thing's happening no matter what because look at what's happening in the world. But that that's sort of look of course it's important. Uh I think you know more about politics but maybe we should do another roundup of like uh you know having uh Rebecca or some of the folks that are you know Jake and Rebecca talk about this but you know one of the other stories that we haven't talked about in the pod is uh just came out today.

Fortune was covering it uh exclusive Meta in talks to deploy stable coins three years after giving up on a landmark crypto project called Libra. Um, you know, for people that are obviously familiar, like Meta explored this in 2019, built a Libra consortium, and then kind of like shut it down. Uh, but now it's looking at it again. Um, so, um, wait, what is Libra? Libra is coming back. Meta Meta is now exploring stable coins. Didn't I call I called that called that a couple weeks ago. Let's go. I mean, here's the thing, right? If you're Zach or any major executive, like you're seeing these companies like Visa and Stripe and uh Ramp and all of them like really just uh

adopt stable coins like embedding payments in your app if you're Facebook made all the sense in the world in 2019. It was just a very different regulatory environment. Yeah. Like would should Facebook have bought bridge? Do you think they looked at it? What what could Facebook go buy is probably a more interesting question. Like what is the next acquisition because probably Meta makes an acquisition here. Look, if Zuck is offering I' I'd take I'd take five billy. I'd take five billy. Maybe maybe even four. I'd help him launch a stable coin.

Um yeah, look, I mean I think um we'll see. Do I mean hypothetical, but does would Facebook buy a Circle? That's a good that's a good one. That's a good prediction. I don't I I'm I know you're not saying a prediction, but that's a that's an interesting hypothetical. Well, you remember when Coinbase was in the like Nadier like it was trading at like 20 bucks. It was trading at uh 1ifth of the valuation, right? It's 208 now. At the bottom, it was like a 26 bucks, right? I believe, right?

uh 30%. So it was like a basically you could have gone Coinbase at a 87 90% discount to what it trades today back and that was a year two years ago. Would that been an interesting acquisition if you're a large financial institution? I don't know. It's a $50 billion asset now. Um I I I maybe I think this is where Meta likely acquires something that I'm going to call it. I think in the next quarter or two, we're going to see far more M&A activity of the likes of Meta and potentially other players.

Coinbase earnings are in. There we go. Yeah. Should we take a peek? Yeah, let's take a peek and then we'll close the pod. Cool. Um, all right. Q1 consumer is down 300. Uh, consumer revenue is down from 1.3 billion to 1.1. institutional down by like 33%. Um, other transactional revenue flat. Stable coin revenue up bigly up what is that roughly 30%. Blockchain rewards that must be base down roughly 10%. Um, interest flat subscription revenue up let's call it 5%. Um, net revenue down that looks like what is

that? 20 10% 20%. Down 10%. Uh here here's Ben Strax's overview. Total revenue of 2 billion in Q1 down 10% from Q4. Transaction revenue of 1.3 billion down 19% quarter-over-arter. Subscription services revenue up 9% quarter-over-arter driven by USDC market cap hitting a new high. Yep. There we go. What's the old stock doing? Uh it's down aftermarket. Uh like it's actually down 1%. I mean it rallied a lot. It was is up 5% based on dare bit acquisition that was announced earlier today. Now it's like after hours it's just kind of like down 1%. But all right quick quick listener session which is uh the empire listener section is a new

section that I'm adding today which is uh someone in the empire telegram chat said micro I want to hear what you guys think of micro strategy bitcoin corporates micro strategy the biggest buyers of bitcoin. What do you think the overall trend of new companies adopting the sailor playbook? My take on it is um mediocre companies will adopt this playbook. I don't love the corporate Bitcoin treasury. I don't think like really amazing companies that have phenomenal IVIDA revenue growing products will adopt like will move a bunch of their treasury into Bitcoin. I don't actually think it makes sense to do that. Um I think if you are a subpar company with a shrinking business remember this is what Micro Strategy

was. they were they were the seventh best player in a crowded data and analytics space. Um you know they were losing to PowerBI, Looker, Cyense, Tableau, etc. Um if you're if you're if you're in that place, maybe going all in on Bitcoin could make sense, but you're I don't think like incredible companies should be like loading up on on Bitcoin. Well, you basically become a holding company and that's fine if you want to do there. There's two components here. One is taking an asset that is kind of not catching a bid and then taking advantage of the fact that we have continue to have this premium for exposure to crypto. Even though you have ETFs, people like to express like leverage long bets on the particular

sector. That's what micro strategy is, right? They're basically like levering up and have like a levered exposure to Bitcoin, right? Um and and I think like I believe like that that premium goes away as you have more ways to express uh exposure to the space. You know what I mean? like this is the whole premium of like GBTC, the Grayscale products when there was no ETFs and then that went away and now you have ETFs, but then you have Micro Strategy that does a like kind of like a levered Bitcoin exposure, but then you're going to have options and maybe you're going to have PERS and so like as as more of the products that we've seen as cryptonatives are embedded in traditional markets, I think that this

strategy kind of starts going away um and that premium kind of goes goes because people might it's probably cheaper for you to kind of express that view with options or other financial instruments. I don't know that's just my my my view. That's not to say that other companies are not going to do it. I I think you're going to continue to see these basically like this lag and regulatory ARB of sorts. Um but I guess the more interesting thing is are you going to see it would be actually really interesting. Um, are you going to start seeing more and more companies publicly disclose their holdings or even just like stable coin as a as a as a as a like a key word in financial earnings like uh you know if

they're holding stable coins or they're transacting in stable coins like as more and more of these financial players like start transacting in stable coins um are they going to disclose that and if they're going to disclose that is that going to be like hey we're able to reduce like couple basis points or working capital uh optimizations because we're starting to use this new thing called stable coins. Like imagine the commentary on that. Like um hey by the way um working capital like we've been able to move inventory faster or accounts receivable went down uh because we were able to you know optimize that with the thing called stable coins.

Like, yo, if you're a CFO or a finance department in a large multinational corporation and you see your competitor all of a sudden your their days receivable goes down because they're using stable coins. Yeah. Yeah. Yeah. That's that's like I'm sorry for all the corporate nerds out there that gets that CFO going. Optimizing working capital is the name of the game in the game of private equity. It's the name of the game for every finance department in a large company. Um, uh, corresponding banking accounts, like preunded accounts, like my god, there's just so much inefficiency in the financial system.

And so over the next year, pay attention. Control F. When you see a 10K, 10Q stable coins, let me let me gloat for a sec. Look at this. Uh, because I never get my predictions right. I'm always like 0 for 10. Obviously, you know that that's not true. I think you got way more predictions. Look at this. Look at this prediction at the beginning of the year. Dable coins become great for crypto's brand. Oh, wait. No, no. At least one major bank What is going on with this? At least one major bank, one major tech company, and one major fintech launches their own stable. Real businesses adopt payments. It's boring, but stable coin market share goes parabolic. Stable coins become great for crypto's brand.

Banks issue their own stable. Banks issuing their own stables increases consumer trust and accelerates global adoption of crypto. Normies and regulators understand stable coins. Crypto finally has a use case. This leads to stablecoin legislation. Wow. Yeah, you're you're finally got something right. Sure. You either become a delegate or a tra high frequency trader poly market or you're in the wrong business. You started a hedge fund. There you go. All right. We are ending it with this. You put the Harry Potter stuff up. I know. I know. I know. Well, these are this is not my collection. These are just the normal books, but I I actually shifted it. Most people see that. Oh, this is always going. By the way, always had it. Kobe Kobe and Jordan. Um just two I love athletes. I've learned a lot from Go

listen to the founders podcast on Kobe and Jordan. Tells you everything you need to know about um hard work and being lucky which which I will make a book recommendation. I've been reading a lot. Two books. Creative design by the guy who invented the keyboard for the iPhone and the iPad. Phenomenal. like just wow. Um the second one um what I wish I knew in my 20s I think phen like phenomenal book like and they it it talks about I tweeted about this a section about the difference between fortune luck and chance and it just helped me think because I you know like I've had another podcast thinking about like we talk about being

lucky um but but good but most people confuse those three terms and it was just like kind of eye opening really two very very good books that I would recommend people. I am uh I'm on the last chapter of Chipore. Oh, phenomenal. Great book. Yeah. You want to read the next one on that? Uh it's called commodities, I think. Wait, one sec. Oh, interesting. Uh wait, wait, one. I uh it's called sorry material world, the six raw materials that shape modern civilization by Ed Conway. There is a section in there, spoiler alert, that talks about, just Google this. Google, everyone should go Google right now. Uh um just Google uh what is this? Ah,

there's a mine in North Carolina. Bruce uh I don't want to butcher it. I have no clue what you're about to say. Spruce pine. Spruce pine mine. It's a high purity quartz mine in North Carolina. Chip wars says Taiwan is a choke point of the world because like 60% of all chips are made there. Over 90% of the super specialized chips are made in Taiwan. No, no, no, no. Spruce Pine is home to two mines that produce 90% of the world's high purity quartz. Damn, this thing must be dude. Dude, if if Spruce Pine goes down, the world comes to an halt. I'm just I'm just going to read a second, ladies and gentlemen. Just just listen to this. In

the material world, there are very few such cases where we are so utterly reliant on a single place. He's talking about uh this mine. There are uh a few micro producers in India and Siberia, but nothing to rival consistency and quality of the two mines in Spruce Pine. Which raises some unsettling questions. What if something happened to those mines? What if say the single road that winds down from them to the rest of the world was destroyed in a landslide? Short answer, it would not be pretty. Interesting. Yeah, I was like blown away by this.

Let's It's like more heavily fortified than rocks, by the way. You can't enter there. It's It's It's wild. All right, folks. Good. We We got We got momentum as an industry. We got momentum. Chin up, head on a swivel. We things are good. Not my chin. Don't look at my chin right now. Don't look at that chin. Nobody wants to see that chin. Thanks for listening, folks. We have a really, really, really good episode coming on Monday. It's with um uh it's with Terrun and Carlos Securitizing Gauntlet, who you know, you maybe have heard them on pods before, but it's I think the first podcast Christine Moy has ever done. She's a partner at Apollo. She's the head of Apollo's crypto business. She you might And AI, too. Yeah. And AI and a whole bunch of

other stuff. You might know her because she used to run blockchain and crypto JP Morgan starting back in 2016 after Amber Baldday left. So really amazing podcast about uh Apollo's new credit fund that has moved on chain. So listen to that and we'll see you next week. Thanks. All right. Thanks everyone for listening. [Music]