The Continued Institutional Adoption of Crypto | Roundup

Transcript

I think just to like Hammer this point home you've now got Larry f talking about tokenization as the future of Finance you've got Visa you know the the largest payment Network in the world I'm talking about tokenization for payments like this stuff is it's it's kind of like uh you know the fraud boiling effect where you know so you're slowly slowly watching the the temperature rise and and you're getting closer and closer and at some point like you're you're in boiling water and I think we're starting to see a lot of these little green shoots that will ultimately you know prove out to be really really successful things hey everyone this episode is brought to you by Supra the vertically integrated L1 for super daps uh they have a very cool new product coming out called Supra container so head over to supra.com that's

supra.com containers so if you're building on an L1 and it feels a little bit crowded or the complexity of L2 and l3s are getting you down just head over to Supra they'll get you sorted thank me later all right everyone welcome back to another episode of bell curve before we jump in quick disclaimer the views expressed by my co-host today are their personal views and they do not represent the views of any organization with which the co-hosts are associated with uh nothing in the episode is construed or relied upon as Financial technical tax legal or other advice you know the deal now let's jump into the episode all right everyone welcome back to another Roundup edition of Bel curve you got Michael's one and two fans how

we doing Su we're uh we've actually had our team offsite this week so we've been shooting guns fly fishing whiskey tasting mountain biking I ate [ __ ] mountain biking so my whole left side completely toast um but it's been good to have the team together and yeah I mean we're small we're only 13 people so we can get everyone together in like a mediumsized conference room um but it's good to see people uh people out there doing things they don't usually do nice where'd you guys do it Park City we we always do our off S sites in Park City May maybe we do something different at some point but it's a good mix it's good vibe and the leads are changing so something for everyone and next week

it'll be nice uh Fall Foliage for uh an SLC permissionless exactly I was gonna say Utah that's where everyone was trying to go these days that's the hot spot hot hot spot destination for I actually saw jetos is moving they're making like a validator Hotpot they announce Salt Lake City as a destination so Mountain Dows out here too I think uh I don't know what it is about Utah but it's skiing it's the outdoors it's the the Mormon industriousness you know there's a good mixture yeah I agree the Mormons are great not a big not big fans of alcohol which uh could be a drawback depending on your perspective but uh yeah man I also just the West in general it's it's pretty dope I get it my my whole family's out of Montana now it

took me a little while to come around about it but it is it's pretty great out there like beautiful it's not a lot to dislike um all right well yeah looking forward to seeing you guys are permissionless it's been relatively pretty calm week uh here not too much going on um maybe we could start with some of the the more macro stuff before we get into the crypto stuff but as the two stories you know broader stories that I want to get your guys take on is there was the vice president uh vice presidential debate that happened this week um in between uh walls and JD Vance and then there was also a hot job report that just came in earlier today so blue blue past expectations and I think folks are less worried about a recession there's always been this hey are we heading into recession and that was

weighing on equities a little bit and everything's basically up so maybe we could actually start with the the vice president uh vice presidential debate I just you know be curious to get your guys I don't know how much you watched or just watched highlights or whatever but just would be curious to get your guys take on the whole thing I I watched it uh not live um but afterwards and um I mean look I think uh the debate Was Won by JD Vance I think uh 53 million people tuned in which is less than what you had in 2020 but still a massive number of people um it kind of put to bed this whole like he's a weirdo he doesn't really he's not likable person he's a terrible VP C it basically

put all of that to bed um and it you know showed that he's a highly intelligent um well spoken um and also just like a a i I actually think more of a normal person because there are so many instances where either the moderators or um wals tried to Goat him into like uh let's get let's go low and like talk about you know the whole you used to say Trump was uh whatever he said negatively about Trump in the past and he he kind of took all of those and just like brushed them off and just continued forward with his perspectives um which I thought was actually like a really positive thing for um for JD Vance but also just like the The

Narrative around the Republicans right now um you know they're not going to go low even if they're they're goated into trying to go low um so I I was really uh impressed with him um frankly I was pretty underwhelmed by by Tim wals um I I think he either underprepared or overprepared but like he was not ready to be on that debate stage um and uh I I don't know if you guys noticed this but there were many instances where JD would be talking about some perspective or some policy uh that he was um in favor of obviously and wal would be nodding along with him um and it it by the end of it felt like wal was a green with more of what he what JD was saying versus What walls was actually promoting

um so I just thought that was kind of a funny comment uh and I think some some brought that up recently um in the last couple of days um but it's it's definitely I think um as all VP debates are probably non-consequential in terms of the out of the election um but I I think if there was going to be anyone who was kind of on the fence or waiting in the wing to see how you know these two candidates represented themselves I I think they're definitely leaning towards JD after Tuesday night yeah I mean I thought overall I didn't watch the whole thing I watched the first half I also didn't catch it live I just watched it afterwards and I actually thought the quality uh was was higher than I expected I actually maybe

this is bad I've never really tuned in I don't have any memories of tuning in for VP debates in the past and yeah maybe you guys didn't either yeah but I was like the fly is the only thing that matters it is yeah so but I tuned in it was like pretty high quality overall was better than I think in a lot of Senses than the presidential debate not as memeable but uh yeah I thought it was pretty high quality in general so I tuned into the comma uh Mike Pence VP debate you know like four or five years ago yeah I mean those people are just literally from different planets but it's interesting with JD and and Tim it's like they're both Midwestern guys like they both kind of try to appeal to the same rough audience but man like JD is just the full package I think he

presented himself as the probably rightful heir of the the Maga movement and like I mean JD's staff on crypto they own crypto they know what crypto is they understand what they should do on the legislative side having him on our side is huge and I don't know if you've seen the polls recently but like it seems like K's fading fast so it'll be it'll be interesting to see but we're what 30 days out exactly I think everyone is also ready to be done with this election it's been a lot of of uh a lot of Pomp and Circumstance and vitel I think everyone is ready for that to come to a close now that we're officially in October any predictions on October

surprises other than the hurricane depleting FEMA from all of its resources or potential you know Middle East conflict I I mean Trump there is no surprise he is who he is and if they dig up anything worse than has already been found I just I can't even imagine what that would be kamla I think the odds are that something comes out like you've seen the Doug emhof slapping his old girlfriend uh you know takes that have gone up on the internet and it's you know on one hand he's redefining masculinity on the other hand you know yes he did slap a woman um and so it's like a little bit in congruent what exactly um that of the uh the campaign is going for and I would

expect that to get probably worse not better yeah I'm I'm wondering too if people are just so entrenched in their own views at this point that it's highly unlikely that any story is going to change anyone's perspective at this point but I I would be curious just on the like because JD Vans probably in terms of crypto sophistication is probably the highest of all four uh you know presidential and vice presidential candidates i' be curious what you know we've talked about this in the past like it's going to take a lot to push any me meaningful legislation through in the next four years like I would again just be happy with people not getting indicted and worried about getting arrested on us soil that would be enough for me but if you guys could yeah huge ask huge ask uh if you guys could wave a

magic W though when you guys were unilaterally in charge you know what would you be like pushing what do you think the biggest if you could only solve a couple of things what would be at the top of your guys lists I mean so um there's a laundry list but um I I think some of the things that matter are basically what the fit 21 Bill uh incorporates which is how does something uh how is something defined as decentralized and how does something move from a digital asset security to a digital asset commodity like that that Playbook is fundamental from a market structure perspective um there's the digital commodity act uh or digital Commodities act which is uh Lumis and

Jill brand and that's sort of like the Senate version of the the market structure what we have heard at least is that that one has potentially more legs than fit 21 um in terms of the moment momentum behind it um and and I actually don't think you might that it's going to be that hard for us to get something done in the next actually in the next Congress in the next two years I think something will happen um it's probably not going to happen well it's definitely not going to happen before the election and you know a lame deck uh lame duck um passing is is probably also unlikely just given you know the the magnitude and the technicality that's required to get this done um but I think the chances that something happens in this next

Congress is actually like very very high um and what that would mean um you know some of the other things that I would also love to throw in there is um it like having disclosures around you know token ownership and and unlock schedules and having those be like you know actual filings that either the you have to file with the cftc or the SEC like whenever a c or a board member or or any executive of a publicly traded company wants to you know buy or sell shares like that has to be a filing that gets filed with the SEC like having that level of transparency I think legitimizes this industry uh in a lot of ways obviously there's you know cost that's associated with it there's

you disclosure requirements all that stuff is is burdensome um but you know it may sound mundane but I think that that would actually go a really long way to you know making this asset class uh much more legitimate yeah I I think the same thing I mean that is uh I agree with you on if if honestly like if I could have one thing it would just be yeah we just need um a very transparent framework that makes sense for token projects to graduate into like start as a non-security and whatever I I just think that's that's I would also say also um just regulation we haven't really had credit markets in crypto for a while like all of the centralized lending desks sort of blew up and yeah okay they were probably not

super well-run businesses and they didn't have access to a lot of infrastructure like banking infrastructure but like we'll talk about Visa in a little bit but there the trafi world has moved closer to crypto than it has in the past and credit is a huge part of uh you know Capital formation and and it's really good for markets in general so I would love for credit to come back to crypto albeit in a in a safer way this time um a more regulated way but and so I think that's one of the ramifications of having Clarity around what these assets are whether they're or Commodities the reason why we don't have credit is because you can't have Banks or financial institutions lend against these assets because they don't know what they are and if you clarity as to what these assets actually are maybe they're Securities maybe they're

Commodities then you can actually use them in traditional Financial in institutions and ecosystems and that's where you would get the credit and so I think that's where it's like if you can pinpoint one it's the clarity on what these assets are when um you know in their lifetimes um because that has just massive ramifications uh as to who can use it and how on on the crypto lending side maybe that's like we can talk about a little bit you know the advancements there um so in the last quarter of 2021 Genesis had 32 billion of loan originations and I mean outside of defi today no one will lend you a dollar maybe like you know if you have a Capital Partner as a bank in your Venture fund you can get a capital call letter which basically allows you to

borrow against future Capital coming into the door um but what we've seen is like Maple is really growing their tvl their fees they're stepping up and kind of starting to occupy that same landscape of of crypto denominated lending that you know has been dead for almost you know three years um so that that has been a notable positive and you know we're we're an investor there so we're definitely biased um but they're growing The Lending market and bringing it back I think they're almost at you know one billion of originations um so that's you know you know I saw a tweet that said like you know you you'd never guess what five billion of under collateralized lending could do for the space and I think that is true like that will come back and and serve as a conduit for more leverage the

other one is maker and I mean last night what did what did Athena put into maker like 400 million I mean like Sky farming has yet to turn on but like they're starting to transition people to usds and even on C coin where sky is the token that represents maker on cin but everyone's still trading maker probably in the west like sky was up like 50% a couple of days ago but like maker is is still like you know people are like kind of arbing the difference between the two so that's turning back on as well it's it's very interesting kind of the the path that crypto lending is taking it's it's mostly defin native which is extremely bullish for that space Maybe I'm Wrong I didn't realize

that Sky transition was on yet it it started but I mean the vast vast majority is still maker yeah right yeah yeah I and I also think that I mean like Athena is a pretty interesting link here as well where it's just opening up protocols like maker to a whole new source of yield right which is like this what has historically been really high per funding rates as well and you know now it as tra like trafi and defi are going to get closer and closer together we had run and Stan on the podcast a little bit this week and they were talking about that and you know there's obviously a little bit of comp like element of competition here but like hey like let's not you know it's defi versus trafi hero but also I think they're pretty complimentary at the same time and it's a huge opportunity for def5

protocols to on board you know some of this trafi Capital so if if a and maker can resolve their differences and you know vow to work together I would hope that many in the space could as well Sky a force baby yeah like no makes a ton of sense hey everyone this episode is brought to you by Supra the new blazing fast vertically integrated L1 which helps you scale your DB if you are a builder you're probably dealing with some combination of cost complexity and fragmentation of existing Solutions so if you're building over an eel 2 land everything's feeling a little bit fragmented at the moment and if you're building in salana everything is fast and on one layer but maybe you're limited in terms of what you can do with your app space so Supra is rolling out a new product called Supra containers you

can head over to Supras s.com containers um to learn more they offer dedicated customizable app spaces running on Supras 500,000 TPS layer one blockchain that gives you complete control over gas tokens and fees so some cool things you can do you get the freedom to you can use your own token create local fee markets or even go gasless whatever you want so this product isn't live yet but because you're a faithful listener of bell curve you get notified first so head over to supra.com Containers thank me later so I have a question for you guys because this is a big uh like talk everyone loves to talk about vesting schedules this debate crops up uh incrementally on on crypto Twitter every now and again but I saw a lot of takes this week about um just

doing 100% of token unlocks at the token generation event and you know I G to give credit to namada for trying just this and I think it was partially a reaction to the this kind of like low float High fdv type meta um and I think that I mean I would just I have some thoughts on it as well and I think there are pros and cons to to the approach but what do you guys think just in general about like vesting in crypto and this this idea of unlocking 100 100% of the tokens uh Supply it TG well I mean going back to what we were literally just talking about uh this is also one of the ramifications or one of the um uh situations that becomes more complicated than it probably needs

to be because we don't have Clarity on what these assets actually are and so one of the reasons why you've had at least a year of unlock and and kind of like a year Cliff it's common place that insiders so investors and team have a you know lockup schedule where they don't get everything or they don't get a portion of it immediately and that's typically you know for those that don't know that's typically a one-year cliff and then a you know one to threeyear additional uh unlocking schedule and so that's typically how these these token agreements work and if you're a founder of this protocol you also want to be on that same schedule or something similar because you are also held to the same standards as investors if these are declared to be you know digital asset

Securities or Securities in general there's a a rule with the SEC called Rule 144 which has to do with statutory underwriting status and so if you are an Insider for these assets and and they're declared to be Securities and you are um transacting in them and it's not 100% clear but typically a year is what is the industry Norm for um you know the statutory underwriter status to not be relevant but if you are deemed to be transacting in these assets ahead of that there's a real big risk um and so there there are regulatory reasons why you need to have some sort of unlock uh lock up schedule but also usually a cliff of a year and so that's just like

a a technical impossibility for why you you know if you wanted to go the route of having us investors or us persons involved um and not having a vesting Cliff um it's a dangerous proposition um but I think broadly you know the reason why people are upset with this is because of the high fdv low float uh phenomenon which means you've got this massive scale um opportunity you know investors are looking at it like they've got this massive winning opportunity and only 2% of the float is available but it's worth $50 billion doar and you know on paper your investment in this locked up token is worth you know whatever um and I think that that has caused a lot

of consternation from not only just like the people involved um you know retail who are buying these asset who looked at the unlock or the vesting schedules and they're you know preparing to get d on as uh you know maybe less um long-term oriented VCS are selling their assets as soon as they get unlocked um but but I also think it's kind of a perverse incentive from an investor standpoint as well because a lot of and and we hear this from our LPS uh you every once in a while but some investors value things differently when they're reporting to their LPS and you know there's a couple of funds who were in the same rounds of the same investment reported a massive increase when it went and then of course it dropped and went a massive decrease

down the next quarter and that you know back and forth is ultimately not good uh for the industry but also from just like a a fund management perspective um and so you've got these like weird incentive structures um and so I think the best path forward is to have a higher level of float initially um you don't necessarily need to have this like seven or eighty year vesting schedule or unlock schedule but but ultimately what it comes down to is can you prove out value for the asset and the protocol in the time that you're Unlocking The Tokens where where this gets to be an issue is you've got basically a mismatch of value acral or valuable you know servicing that that the protocol is is

creating while the tokens are unlocking um and and so if you can figure out a way to make your you know product service protocol whatever um successful over the period of time I think most people won't care about an unlocking process um because people will want it and it'll be worth something um and so that's that's kind of the backdrop that we think about with it yeah I mean great unlock our tokens we still can't sell for a year under rule 144 and like rule 144 is not a guideline like they will put you in jail if you break that rule and you're to be a statutory underwriter you need to be a statutory underwriter I think a a simpler fix is you know two things number one understanding that the

the float the fdv the whatever if you're building something that's truly novel and is going to have a big place in the future of crypto your token will do well there will probably be some turbulence during unlocks but guess what all IPOs have six-month lock periods as well minimum number two we need to fix the block explorers of new chains because like there's been some sleuthing on the Twitter verse recently of like oh [ __ ] we didn't understand how this chains block Explorer worked or that chains block Explorer worked and you can see people you know selling you know staking Rewards or selling you know token and like if people can't tell like that's a that's that's like the worst of all worlds like there's no disclosure

there's also no transparency and for an industry that's supposed to be based on transparency we need that so you know having some sort of standardized canonical block Explorer for everything where you can understand who's selling and who's buying and if it's staking rewards if it's non- staking rewards like that that is the first thing is that everyone needs to be on an even playing field with information yeah yeah it's uh it's one of the challenges as well of like frankly all these different layer ones like the way that they handle like their constructions and the way that they handle data is super different um and so it's just very like just the infrastructure of extracting data is just very tough um especially when there's not a huge not a really large like subscription market for data or something like that it's a it's

definitely a big Market structure difference in between crypto and something like trafi so totally agree Vance it's a it's a thorny weird problem that there's not a great solution to because yeah like crypto's in theory very transparent in practice less so a lot of the time you also this this gets solved once again and I know going back to like the things that we could wave our magic wand with it's like if you had disclosure requirements yeah had to had to tell you when insiders were offloading or you know there's this thing in in traditional Finance um where if you're you know a knowledgeable employee and you have like proprietary information at the company you have to file What's called the 10 b51 plan with the and it's basically like for

executives or people who are close to the product or the revenue who have Who would know and it's like here's my plan to sell all of my shares and basically like the the prime like the TDM trades or the Charles Schwabs sell on your behalf it'll be like a Time based process or or a a price based process and imagine if we were to have those for tokens it's like I'm not able to sell I'm not able to like I'm a Founder I'm an invest whatever like I can't even hit the sell button it's like it's handled by coinbase for me and like I have filed this thing with you know whatever regulator and like it's totally offload like that also solves such a problem as well um because it's not just the investors who are you know potentially

unlocked and potentially dumping on retail it's also sometimes the the people who work there La last thing I'd say on this is like so rule 44 applies in a variety of circumstances where it's kind of unclear is like staking rewards and if you're not buying it from someone you know you're just getting it for participating in the network there is an argument that you're not subject to rule 144 we personally don't take that stance but a lot of people do um and I think like if you want to get really into the Crux of some of the issues here is like what are we doing with staking rewards like if if investors own 5% and they're earning 20% in that first or second year and they're able to sell that like we need just more clarity and and just more of like a like

a social consensus on on how we're treating that and a lot of it comes down to like understanding how the block explorers work yeah well said you know and this the the other like just to address the other side of this point that you sometimes hear as well is we actually need longer lockups right to solve this issue and some people advocate for like eight-year lockups and like dude you if your working life eight years eight years I mean it's it's if you work from 20 to 65 you know that's like 20% of your working life right that's way too long um and I just it's kind of a lot of thing like really what we should just be doing is you know growing into these valuations by creating products that people want and then these lockups aren't a problem because there you know to your point

there have been big unlocks um and sometimes there's a little bit of you know price turbulence around that but protocols that are actually worthwhile and that people want like power through those right like there are tons of examples maybe not a really basic way to think about this is the unlocked schedule should match your expectations of finding product Market fit that's wow it's yeah yeah totally agree um and like the lockup schedule is not the defining feature of your product and like we we we've taken a couple pitches and one will soon be be announced um but like you know we've got Founders pitching us like yeah this could be worth a trillion dollars and like they they kind of like build up to it and like okay BL and it's

like the last thing we're thinking about is it's great when are we unlocking can we shorten the cliff it's like no like we have a 10e Venture funds we're not like selling tokens in the first year um so it's just about being ambitious and you have to believe that new things are coming on chain they're going to be really exciting and and we definitely do yeah um completely agree all right I want to get your guys take on there's an announcement this week from Visa um so Visa is launching a new platform which is actually built for banks uh to make it much easier to um tokenize so they're they're calling it their VAP their visa tokenize asset platform um and yeah it's just it's a new platform that allows Banks to more

easily issue uh you know tokenize I guess in theory dollars is what this is most likely in in a be although in theory it's a generic platform that you can do basically anything with um there are three value propositions that they that they kind of LED with here it's easy integration um so it provides a platform for banks to Mint burn and transfer fiat-based tokens such as tokenized deposits and stable coins and experiment with use case you know this kind of plugs into their massive customer Network and in theory makes it really easy for banks to do this if they want um it's programmability so VAP is designed to enable Banks to use Fiat back tokens within smart contracts so you have some of the functionality that people in crypto are used to um and interop so there's a growing ecosystem where tokenized real world assets are

being issued across multiple permissioned public and uh and public blockchain networks Visa's vision is to enable interop across different blockchains for banks utilizing the Visa platform So in theory this could lead to many more Banks you know being issuers and and moving I guess stable coins um in general um on crypto rails so it's just cool to see Visa leaning in and doing this like we always want to celebrate the companies like Visa that are actually like deep in the Weeds on the crypto space but what's your guys take on this whole kind of announcement in general I mean when you meet with any of these large investment Banks or Asset Management firms like one of the first thing you realize is like they may be in they might be into crypto but they have

no idea how to transact and like it's like tokenization is interesting cool we're going to Kickstart like a three-year study on how we might bring this on chain like Visa just shortcuts this and and accelerates the velocity of assets being issued on Chain by probably years for each of these institutions um I mean you see bidd like they're you know close to a billion you see all these other asset issuers but like those are partner I think Biddle is securitize um but like even securitized has a hard time going to like the larger Banks and getting them on board but the name like Visa like that is how you make this happen and our view on tokenization is like this is going to be the next couple decades of Finance bringing things on chain and you start with

stable coins you transition a fixed income but we've even talked to large uh private credit firms can't name any names at the moment but you know they're they're rationale for putting their assets on chain which are pretty bespoke as like man if we can get a percent more liquidity on these things like that makes a world of difference to our fund structure and performance but also the costs drop so dramatically that like like for us I mean not getting into too much detail but like even our audit and admin costs are probably half a million bucks a year per fun wow if you can drop that down man like you just you widen the aperture for anybody that asset have assets issued on chain in the next six

months yeah I think I think just to like Hammer this point home you now got Larry f talking about tokenization as the future of Finance um you've got Visa you know the largest payment Network in the world um talking about tokenization for payments like this stuff is it's it's kind of like uh you know the fraud boiling effect where you know so you're slowly slowly watching the the temperature rise and and you're getting closer and closer and at some point like you're you're in boiling water and I think we're starting to see a lot of these little green shoots that will ultimately you know prove out to be really really successful things um and I I just saw this morning as well uh Swift who you know for anyone who's been following the link ecosystem um has

been allegedly working on a proof of concept for like the last seven years finally announced that in 2025 they will be moving tokenized assets of value through the Swift Network let's go this stuff happens uh you know slowly and then suddenly um and you know years of uh o overnight successes ultimately take years of development um but I I think you're you're we're going to start to see some of the largest institutions in finance start to move in this direction um for fear that in the same way that the internet basically like decided the victors in you know the new age of media and content and in so many other categories as well I think uh financial institutions have gotten smart to the innovator's dilemma and they have seen you know what can happen if you get

displaced by not following the tech Trends and not being at the Forefront um and I think that that same effect is going to happen but you know to the to the point earlier it's going to take you know a long time before we look back and we say wow that was a crazy decade um but it's it's it is all happening all at once um you know this year and next yeah huge shout out to chain link uh there like Sergey has been laser focused on this for so long um he's come on the show before we've had CLG chain link got on the show before as well and uh those link bre they've just been like laser focused on this mission for for as long as I've been interacting with that community and yeah huge huge credit and props to them um what do you guys think I I wonder if

just trying to think through some of the second order implications here are probably means more stable coins are coming on chain I would guess um maybe some maybe from some big household Brands like I don't know if you do you guys remember like this was probably three or four years ago that JPM launched like JPM coin and it was like this interbank transfer mechanism digital dollar that I think only worked for it's like hey you could get a JP Morgan back stable coin I mean you know if you look at this like one-way you know chart of tether market cap it's like I don't know man I mean you start to get like JPM coin dollars JPM back dollars floating around that's got eaten to that market share a little bit you know one of the other things that would

be on my wish list of magic wand waving um and I think this will also happen and we we kind of we didn't touch on this but having understanding of what stable coins are and how they will function within the financial infrastructure is going to be a seminal moment because what that will do and it'll probably be a separate bill there's a couple of drafts that have been floated around at least from a us uh Geographic perspective it's not like we're waiting it's not like the banks are waiting for the technology to be able to build this stuff right they're waiting for regulatory Clarity so that they know how to interact with this stuff and you know the second that there's understanding JPM coin which is maybe interbank and for settlement purposes across whatever

you know books and Records they're using it for that internal coin on you know Day Zero of this implementation of this stable coin bill becomes an external stable coin um and you're starting to see this with like PayPal with their pay Pi pay USD whatever it is and and circle is allegedly you know in the works to go public in 2025 as well um stable coins one of the questions we've gotten recently in in talking with uh our investors is like what are the benchmarks of success that you use to track you know progress in crypto one of them is stable coins on chain um and if we can build um you know more institutional adoption and tens of

billions or hundreds of billions more of stable coins come on chain that's just like the the life blood of this industry especially from a D5 perspective yeah you know what's a a funny might be a funny consequence of this the first thing that I thought when I was reading this announcement is man there are going to be a lot of new stable coins you're like well how many different stable coin brands do we need right there's going to be tether there's going to be usdc there's going to be JPM USD you know Bank of America USD whatever but that's actually the way that dollars really work in general you just don't think about it like that right every single dollar that's issued through a bank you know your counterparty is that bank um and they just become like too big to fail in general but it's going to be funny to

watch that play out on chain because you haven't normed everything to just call it a dollar yet and the US doesn't necessarily back certain institutions like probably isn't going to back doll up well if it it's big enough it probably will but yeah it'll be funny to watch that whole dynamic play out also um but I I think this cycle you know call it next two to three years there's a trillion of stable coins on chain pretty easily which you know there're 300 right now so it's like a more than tripling 200 so like a 5x a trillion you know it's real money right yeah how do you guys think if at all this impacts um like L1 tokens like just from that invest investment perspective like I can

imagine for like I think part of the value proposition of chains like ethereum or salana or whatever is that they're kind of like this nice you know historically been nice like Supply syncs right like you get applications on there and it kind of creates demand in roundabout ways for the native token and I think this is working right now with l2s on ethereum creates a lot of demand for uh eth the asset on salana everything's on one layer now it's probably not going to be on one layer forever but you know you start to see a lot of people there's a really strong preference for transacting in dollars uh in general like do you think it's on the margin less demand for something like salana or eth like do you think it's irrelevant uh the reason I asked you know we're talking about chain link and

some of the chain link folks that I talked to have had this perspective for a while they're like look uh it's hard to be bullish on this stuff when you know you think that you know a lot of real world assets are coming onchain and people are going to want to use that so how if at all do you think that impacts I mean look I I I think even going back to bitcoin and the white paper I I think um using a an asset that doesn't have the canonical unit of account that people are used to transacting in is a really really hard way to build a payments Network and you know not only from the perspective of like well I sent you 0.01 Bitcoin how much is that worth i' got to do the math and like think about it and it's like

what how much is that worth is always the question that people get back to because they dollarize it eventually you know how much is it worth oh well it was like 5050 bucks at the time now it's worth 500 bucks there's also the effect which is kind of like an unfortunate fact but it is the case in that if it's over $600 and you have a gain on that you know non-d dollarized asset you have to report that from a attach perspective and and so I think that there's just like completely separate you know ecosystems that we're talking about here one of them is is ultimately going to be the dollarized payments ecosystem where people are using stable coins maybe it's JPM coin maybe it's PayPal coin maybe it's you know usdc as it already is to pay for things um and that's like the

payment side of it and then I think there's sort of the the token side of it and those are you know assets uh and and that's kind of how we think about them they could be used as collateral and many people use eth as collateral Soul as collateral etc etc um but they represent something completely different and I I I kind of don't see them as interrelating as much anymore um but I I do think you know it doesn't I don't think that having more stable on chain will reduce demand in fact I think what that does is it has more value equaled ultimately to that token if you have the right token economic structure like that's why I say stable coins are the lifeblood of blockchain networks it's because they're going to be the biggest fee drivers uh for these ecosystems especially as payments grow and uh you

know especially this is one area where I do think Crypton native stable coins have a bit of an edge because the trend is going to be uh returning a lot of those fees to Holders of the stable coin and I mean I don't know everyone's been looking at tether's business and being like greatest business model of all time well everyone sees those profits right and it's all all it takes is a matter of time for someone to come in and say hey we should be like giving some of this back to users and I know Run's perspective on this is like all of it all of it needs to go back to the users and that's just the starting point and I think he is totally right on that like just completely right on that I can't remember if we talked about this here if

it was another conversation but um the the the Venture capitalists in paloalto right now are noticing tether and they're they're paying attention and they're saying how the hell did we miss that and and they're going it I mean I would argue the reason that tether is so dominant is because it's so dominant it started first it got the network effects and like stable coins are are as pure of a network effects business as you can think of like even more so than social media um I I personally think the like the the real money is going to be made in the race for like okay if tether gets to 200 billion of stable coins on chain what are the number two and number three providers worth um and I I think like

the the circles of the world like I think there was some recent secondary that happened at like three or four billion I was very surprised to see it clear that low but I think that's reflective of the fact that it's a big organization that looks like black rock it has a ton of headcount it has an office in the World Trade Center like there's just a ton of expenses behind that tether has like like five people including Paulo maker has like you know a very very small amount of people and and it's Distributing kind of the the ownership and the the employment throughout the network of subd dows um but we continue to believe like the real money is going to be made if you can pick the number three stable coin that has enduring value that's going to grow you know 100% year-over-year for the

next three years yeah and you know one of maybe another thing about te uh usdc as a business is there's a pretty decent Revenue split with coinbase um and like coinbase is coinbase is great for usdc in general but if you view the crypto exchanges is the distribution platform for stable coins which historically they have been it maybe for some of the other exchanges it feels a little bit less neutral it's like you're funding you're a competitor in a sense with usdc so I think something like this is you know guy from Athena's perspective I just recorded with him and Kane earlier today but he's like big believer that it has to be neutral so that's also something I think that um Sky by the way not a you know I'm sure usdc is is going to be great a

huge fan of circle that entire team and coinbase for what it's worth uh but I think there is some this is a lot of stuff that the bitcoiners talk about and a lot of um ethereum talk about just money as being neutral and just like all that stuff is very true and I also think that's probably another area that you know usds uh you know can totally differentiate itself on basically um so there's I think the takeaway from this is it's it's abundantly clear there's going to be so many different flavors of stable coins totally and you know decentralized centralized jurisdiction as well like we've seen a number of pitches of um uh you know protocols that are building uh stable coins that are going after specific G Geographic areas

because there's a regulatory loophole to be able to do Western Europe and you can pass back you know Revenue back to the user like there's just G be so many shots on R yeah um last like big story I guess for the week it's not even a huge story but um you know some people got very excited about the fact that Ripple was filing for a for an xrp uh sorry sorry bitwise was filing for an xrp ETF and they set up like a trust um institution based set a Delaware Etc um the other thing that bitwise did that went a little bit under the radar but I at least thought was sort of cool is they have these uh trend-wise strategies so there are three of them there's it's a rotation strategy from Bitcoin into

treasuries e into treasuries and then a mix of Bitcoin and eth equal weighted into treasuries and it's you know obviously it has to be a more actively managed fund but the idea is you know when you want to ride up the exposure when Bitcoin or eth is doing well but you know it's pretty obvious when it's not doing well it's this this like fouryear cycle thing and so maybe you don't time the top and bottom perfectly but if you catch the meat on both directions then it probably beats just holding flat so I thought that was kind of cool as well and it's just indicative of the different flavors of ETFs that will get filed now that we've got the Bitcoin and the eth and we'll probably get some other weird assets like xrp and Litecoin and Doge and whatever but um I thought it was an interesting example

new uh I mean like yeah it's it's uh you do the math and like yeah if you sold the top and then you bought the bottom you outperform just holding it flat but like it's hard to do that I find that most of the game for us is like keeping yourself calm not panicking not making any rash decisions and um like once you put an asset out of your you know Cold Storage in a security deposit box I'm never selling this like and once you put it mentally in that trading bucket you know it's like I think Bernese has the best line it's like it's like soap you know the more you touch it the less you have and the amount of things where I've been like man that was a really good trade uh you

know the average you know hold period was like I look at like my net worth and like the things that have driven changes are like that I've held for six years and just forgotten about or just had like some psychotic perspective of like I am not going to sell this come hell or high water I'm just going to Diamond hand it and then I look at the things that I did sell and it's like well [ __ ] it rallied 4X from there and I should have just just stayed put so you know you gota you kind of gota you can't be both a Trader and an investor maybe you maybe some people can I personally don't think I can and maybe maybe Michael has a different opinion but like you got to kind of decide who you are as an investor and if you're trading against these alos

you're going to lose but one way you can beat them is just not participating until you've deemed it's time and like you know six years sounds like a long time but it's I look back and those are the things that have mattered to me at least I mean yeah the the principle here is concentration is how you build wealth diversification is how you maintain it and the the it's it is okay I think especially earlier in life to have insane amounts of asset or industry concentration um if it's something that you believe in and something that you know um that's basically how Vance and I live our lives uh but I I think you know when it comes to new trading strategies

or new asset strategies like bit bitwise is the gold standard um and they're going to be I I think you know like the the differentiated asset perspectives uh whether it be single asset ETFs uh you know different trading strategies baskets of categories like there's a D5 fund that I know that they track as well like that that type of creativity I think is going to go a long ways and they're also the ones that are you know pounding the pavement going out and meeting with tens of thousands of registered investment advisors who are you know managing wealth uh for average Americans um and I think that that will go also along way once you have the products and the distribution then you

get the industry nor like everything's going to kind of Turn on I think at a certain point once again it's like the overnight success um it there I wouldn't say I I don't think that they would say that they're there yet but this is the years of of toiling away to get them in the position to be at that overnight success moment whenever that may happen I'm sure it'll happen soon um but I think that there's going to be a lot more of these different types of products um frankly as we get more regulatory Clarity and you know a month away from the election I think there's an outcome uh you know with Trump where these products um you know and and xrp just as an example there's still there is an appeal this this week uh by the SEC in the case uh with judge Torres um and so

there's still a question as to like what's the status of xrp itself um there's definitely a lot writing on you know that judge and and that appeal uh appeal process and and immediately Ripple came out and said that they're going to counter appeal and they're ready to fight again this was part of the expected um outcome but I think that's you know it's going to be this back and forth until we have Clarity um but once there's Clarity it's like game on um and first at the Starting Gate is going to get you know best position and and what will happen before Clarity you know in a trump or a CALA Administration is a new appointment to the head of the SEC and we've heard some pretty interesting names thrown around some are you know the usual character some are you know left field

let's call it but I think the the front Run for the SEC under a trump Administration are Christian Carlo crypto dad and Hester Pur crypto mom um and then under a democratic Administration I think you know I remember when we were all so excited that Gary Gensler was going to be the SEC chair because he understood crypto yeah but I think even in that Administration like he has pissed off so many people inside and outside of crypto that the next SEC chair it didn't used to be a politically contentious thing to just you know nominate someone and have them pass through but there's going to be a lot of thought time and put into who that is exactly in a Kamala Administration but you know our view we don't think that's going to happen what

what was Gary gendler's strategy here he's not an unintelligent person why did he go and ruffle so many feathers what was the strategy so um what we have heard at least is um that it wasn't Gary Gensler who was the one that was pushing all of this perspective um by himself and that there was a lot of uh frankly Elizabeth Warren perspective that he was acting as a conduit for and it was a choice of a certain number of Industries and and if if you remember back like crypto was not in the crosshairs immediately there was actually a lot that was done in terms of uh ESG and Dei efforts that ultimately got shot down um

but there there were a number of kind of initiatives I would say that he took on crypto being one of them and crypto became the most especially after 2022 and everything that happened there um but this is at least from our understanding and what we've heard is that um that he was basically acting as a mouthpiece for Elizabeth Warren um and it wasn't having to do with crypto itself it was all just a political game and that you know who knows what was promised or what was kind of insinuated um by you know acting in this way um there were rumors that he wanted to run um obviously he didn't but he wanted to run for the open seat in Maryland um when that came up uh this year um and didn't happen won't happen there were

rumors that he was in Vine for treasury secretary at one point um obviously didn't happen won't happen um but I think you know the takeaway was that this was largely just a political game um and him being very intelligent on crypto meant that he actually was well positioned to go after it in a way um that you know could actually you know bring down or or add a bunch of damage to the industry H man Elizabeth Warren man yeah I'm from Massachusetts and she's Massachusetts like bro what have you been doing down there just I don't know man I'm telling you I'm Mass a great state she didn't used to be like this I didn't think I mean I never really paid that much attention to politics but I don't get

where a lot of this is coming from I I it's just my dad says she looks like Elmer fud you know I just I don't know man I want to believe best intent uh like whenever you can but it's just this feels such like an attack I mean at this point V's that also has a line that if given the opportunity Gary genser would regulate baseball cards he's got he's got some unpopular opinions let's call him that he's a he's an old guy you know yeah yeah well um I guess last last big question for you guys is who do you think is gonna win this fight between Kane and David at uh at permissionless this year just they' both been training I don't know if you

see it like the the training has been real at least a little bit last month you know I don't know like you you may have to like break his arm off to get him to tap out David I I think I I don't know Kane is the angrier one for sure um but you know like we we saw karate combat in Singapore and what of the last fights was like the the main fight one of the guys dropped out and then like there was this this uh African-American guy who is just like living in Thailand and they gave him a call the night before they were like hey like you know will you fight this dude who's been training for months he was like apparently out partying the night before he like flies from Thailand to Singapore that morning

like you can tell he's like hung over a little bit I mean he was on the ropes the first round but like then he just started throwing Haymakers and that's the thing about karate combat there's no wrestling it's just like you know rock them sck them robots you know so it can go either way but I think my money's on Kane yeah just same perspective different reason uh Kane's got at least six inches of reach on David so I think that because it's just punching that is a huge Advantage I I'll back my boy David here and say the reason I'll give you is that just you know it's an endurance game more so than anything else uh so I you know I think David's been training and it'll be a

great fight either way um it is it is the I don't know if you guys have ever been in the ring or you know wrestling or anything like that but it is the longest two minutes of your entire life yeah I mean you know you see these fights on on TV and you're like I get in there and then you go to karate combat Nick Nick Carter I was hanging out with him he was like when when are you gonna get in there there's zero% of my body that needs to be in that ring no no you know what Nick is you know why I'm say an additional layer of Bravery to this especially guys who are very like visible on Twitter Etc is because if there was ever like a GI of you getting knocked out or something like that that that is following you around for forever

you know lot a lot of respect for both of them for getting in the ring and anybody else that that does it as well just H yeah yeah mether all right fellas this was a fun one I think we can call it and uh yeah I'll see you guys uh soon we'll be doing this I think live from permission list next week so should be fun looking forward to seeing everyone same later later