Crypto’s Market Reset: What Comes Next? | Roundup

Transcript

I was also meeting with a Founder one of our portfolio Founders this morning and you know the sentiment is for the builders it's like great guess what the time Horizon has been extended as we have Market Mala as we're seeing it's just more time more time to build this episode has brought to you by Aries markets to learn more about Aries markets follow the link in the show notes below hey everyone quick disclaimer before we get into today's episode nothing said on bell curve is a recommendation to buy or sell Securities or tokens this podcast is for informational purposes only and the views expressed by anyone on the show are solely our opinions not Financial advice our guest and I may hold positions in the company's funds or projects discussed all right everyone welcome

back to another episode of B curve we're back we're back and we're live in person you can't see us but uh I'm I'm trying for the best to be trying figure out what volume to be speaking at is this is this the volume it's a new M yeah you're you're lovely I was telling Michael about this guy we're not not name many names but he randomly speaks at like 2x volume it's like yeah we're in a conference room together you're you're screaming you got to relax it yeah did you did you hear me yes everybody heard you you're screaming yeah um I was going to maybe overshare I had you ever had like a wax build up in your ear or something like that I had that for like a month in y was like dude you [ __ ] screaming at me all the time what is

happening sorry I just can't hear you yeah anyway that's probably a little bit too much information but we are recording live from the panta house um we're at eth Denver panta bread yes P Pantera bread it was right next to the McDonald's where we all put our applications for them for them hosting we could do it in the shitty Airbnb we're staying up that being pretty weird um can we get a sentiment check uh for folks who are not on the ground at e them what are The Vibes like I mean be bar palu was pretty popping um people were like you know drinking and smoking cigarettes and like listening to talks I thought that was pretty good I've uh I think the the drop pre-conference is just like a nice kick in the stomach

that a lot of people are just like God [ __ ] down down bad bad down uh I think I think it's like every every single trade of every single industry is having a bad time like we discussed this it's like Nvidia blows out earnings you know it's like fastest sales ramp in history you know all this stuff stocks down 4% day after it's like Bud buds can't catch a break right now across kind of any even in the energy complex like I I told this story before we went on but like I checked my phone the other day to see what was up in the stock market it was like Walgreens it's like half a perc The only green name on my stocks list like we got a green [Laughter] one yeah it's it's tough out there I mean I think there's broad uncertainty

leading to Contagion leading to risk off um it's just a lot of unknowns right now and I think on the crypto side the other thing we were talking about is uh it's easy to forget but there were three 30% Plus pullbacks in 2021 some even bigger ones there's like a 40% well right exactly but but there were three of them and and one of them was I think in May uh post Elon going on SNL that was the biggest one that was like a 40 50% you know the stuff happens I think it whips all around um I was also meeting with a Founder one of our portfolio Founders this morning and you know the sentiment is for the builders it's like great guess what the time Horizon has been extended and everybody

I think went into 2025 expecting all right we got to get to you know test net we got to get to Main net before you know the cyle pops and like it's over s50k they'll go on vacation at 200 it's like okay yeah you made all those plans but I I think the the base case now is like as we have Market Mala as we're seeing it's just more time more time to build and the worst thing that could possibly happen for a lot of these companies who are you know at the precipice of getting out launching their token launching their platform the worst thing that could possibly happen is you try to launch you try to time it at the end of the year and then we go into another you know 2022 equivalent in 2026 I I don't think that that's the case I

think you know we were like we we were discussing you know November 2025 where do you see Bitcoin November 2026 where do you see Bitcoin I don't know exactly what the numbers are but my base case right now is that wherever we are in 2025 November 2025 I think we're probably about 50 to 75% higher November 2026 and and so you know adjust your timelines accordingly yeah the builder stuff resonates for you know one of the challenges of actually company building in crypto has been it's so short-term oriented and there are so many projects that aren't necessarily good but they raise at a huge valuation they give massive token grants and then they fold a couple years later but that's the amount of time that it takes to suck

Talent out of your company so there's actually kind of this funny Goldilocks moment right now where there's still some amount of attention and money and everything going into the space there's positive momentum but it's not so like honestly a lot of these you know not super high quality token projects are kind of falling so it makes it easier to I me look there's only going to be probably 10 to 20 winners right yeah that are you know between 10 and 100 billion scale and like I think that's what you got to play for yeah there was a similar amount of startups that have died every year for the past 20 years just not in crypto it's not like we're having like you know big funerals for them I totally agree one thing I'd be curious to get your guys perspective on is this is around the time when there's all

these Hallmarks of bare Market sentiment coming out there are people condemning you know the short-term speculative sort of stuff there's like these call for real use cases and return to fundamentals um but one thing I I'd be I've been thinking recently is people like to apply kind of more traditional Public Market valuation metrics to a lot of these things like priced earnings things like that but these are mostly for the most part still very early stage startups um so it seems like there's a little bit of a mismatch sometimes when people are looking at like PE ratios for like a 2-year-old company you know that just doesn't really seem that relevant I mean you guys from a VC standpoint like that isn't something you look at right when you're early stage technology meets Public Market liquidity what could

possibly go wrong well it's interesting I do think there's like I don't know like the the point that you made I think on Twitter which was about like you know fundamentals or future looking and and things like that like there's like maker still trades at 3x price to sales maybe a little bit lower than that I mean like you can start to wireframe a case of like okay price to sales you're probably undervalued price to earnings you're trading at like maybe 12 and the stock market's at 26 and Nvidia is at like 30 to 40 so like there's things that you can start to price in but I think the the problem is like what is the moat what is the long-term stickiness of the protocol or the product and like I think stable coins are very sticky in the sense that

like you know we either use usdc usdt and we save in one of the other P's pretty sticky things like radium where like you see people shelling it you know for almost a year and like I think radium is a good protocol and has you know money flowing to it but like I feel like one of the biggest open Secrets in crypto was that pump F1 was developing their own decks yeah you know it's like you can just get bricked overnight by stuff like that and we don't trade radium but you know there's huge distribution risk when you're not the actual source of the flow so radium straight trading right now at $2.30 when news of the pump fund amm became official it went from like 420 yeah was like it dropped 30% in a matter

of hours I I think going back to it though I mean fundamentals I I do think is where we start to move um and I mean look snap went public in 2017 it didn't turn a profit until 2021 yeah and that that was a small profit and and that was a eating out a profit um but you knew I mean you just had more confidence that Bezos over Evan was going to be able to like turn on the money SP it whenever he wanted to and he talked about that too in his letters but the you know there there are fundamentals there are also like weird fundamental trading patterns in public

markets as well and so it's not just you know crypto is oh it's a two-year-old startup that's making $2 million ARR how do we value this thing like no you're valuating off of ultimately cash flows ultimately BuyBacks and the prognosis for the future potential growth of both of those numbers and that's what it comes down to it's like how do you get to cash flows well it's Revenue Minus cost if you reduce cost you have more cash flows and you know we just saw this to to the point you know with maker as well run puts out a governance post which which is entitled bring bring expenses down to zero yeah guess what Maker's up 70% in the last two weeks you know many people read that post you can see the views on the Forum 42 people and I'm like at least 15 of those just like

me manic reading it rereading it but like the way I like to describe the maker buyback is like you know you have to personify it so like let's say you had an autistic friend named Tony okay and Tony really likes pain a word picture here glad we're off camera today Tony really likes maker okay but the only way that Tony figured out how to buy maker is through this you just pool that is .5% of the supply and every 20 minutes Tony's very rich Tony buys $10,000 of maker Market Market buy Market buy every 10 minutes like that's going to happen for months and months and months and months

and like you're already starting to see it compound and I wonder if it's like does it really just not take that much money to move these things are people front running it is that all the buyback and just the narrative and the sentiment it's it's interesting to think about I don't have a good sense honestly of the liquidity on many of these I don't know if there's a metric that you guys look at or pay attention to toer there's there's hundreds of millions of dollars of trading volume of maker a day I think a lot of that is just like market makers hitting each other but like the real marginal bit is maybe 5% of that 10% of that and like if you're 50% of that 10% I think you're moving the price you materially change it I mean the it also depends on and and

this is where I think we're moving um BuyBacks are the the method of delivering value back to token holders um the venue with which you make those BuyBacks is really important um are you doing this on a sex are you doing this on a DEX what liquidity pool are you choosing what what trading pair are you choosing how often are you doing it how big are them how big are the buys um all of that stuff needs to kind of also I'd say get standardized or tested but we're just in the like experimentation phase and maker is frankly the first one to really do this at scale but anybody who's announcing it I think is getting front run right now with excitement yeah and yeah it's just a a shift back to fundamentals it's it's coinciding almost perfectly with the

drop and meme coins this episode is brought to you by Aries markets Aries markets deployed on app toss in 2022 and is now the largest lending protocol with $280 million in tvl to learn more about AR's markets follow the link in the show notes below this episode is brought to you by marinade marinade is a high performance staking Del ation platform that brings both liquidity and security to the salana network by connecting Soul holders with the best staking rates on salana follow the link in today's show notes to learn more yeah I mean one thing that I've noticed uh I mean going back to e Denver is like I was here last year the two things that people were really excited about were AI crypto and Bitcoin l2s um that was the thing that people were

really interested in talking about but uh this has always been more of a developer focused conference like most of the talks here are very technical and people yeah infrastructure Bas and it's all like people are have always been excited about ZK but there's a lot of hype around ZK TLS and stuff like that and I think one year later maybe people are a little um underwhelmed with the progress that has been made on some of that stuff y um and a lot of those very hypy narratives never really materialized and so I think there's this muscle memory in crypto of casting around for like what is the next meta or narrative and it just feels like there isn't really one at the moment but there isn't one in the sense that there's been some cool sexy new buzz word but two there were two news stories this week

that really I mean it's kind of crazy it didn't get more attention that Citadel is moving into crypto well exploring exploring right uh and Bank the Bank of America CEO Brian wian said that if regulation allows for it he will launch a stable coin or they'll look into a stable coin that is insane like if that had been if that had happened two years ago those would be number one news stories you'd be talking about that all week we had dinner with one of our core LPS last night and um the way we described it what we were talking about is basically there's crypto's in the Tail of Two Cities right now yeah you've got down down bad retail every single thing on the institutional like infrastructure regulatory I mean just today we we're looking at this right as we're recording this uh consensus it

looks like they're going to settle yep and every single day this week has been another major settlement with the SEC and Regulators like the most bullish possible backdrop of things are happening it's just it's not Landing because you have this overarching you know low liquidity no bid you know meane points dying the speculative fervor dying all of that stuff is overriding the market right now but but the fundamentals have never been better yeah so great great time to be investing on memes we the the Pumped out fund chart I'm sure zero coins bonded yesterday yeah zero points zero coins graduated it was a it was a that the guy that tweeted that he did it at the beginning of the day so it would have been yeah it would be like 200 though it's very amount it's dropping off precipitously is it the

open SE of the cycle uh too hard I mean it it's too soon half million fees a day but like too hard to tell I I I think the other thing that I that I was talking to somebody about um you know I was I was trying to Overlay meme meme coins with the nft craze MH um you know there's a lot of similarities 18 months basically from from start to finish of the nft craze coincided with the other side mint being kind of the the Pinnacle uh and then everything fell off um you could look at meme coins and say Trump Melania was the Pinnacle and then everything fell off um and what we were talking about was um basically how you know is

it is is this closer to nfts or is this closer to icos like the Ico craze and he had a great point which was the difference is when you were in the Ico cze a lot of people made a lot of money on icos yeah I don't think that many people made a lot of money on Meme coins I agree and it's kind of similar to the nfts where there's some people who definitely made money on nfts the people who made the most amount of money on nfts were the issuers Y the people who made the most amount of money on Meme points were the issuers and they were just getting they were fleecing retail and and that I think is part of why the sentiment is so bad right now A lot of people are making so much money off meme toins but they're making it off of the

backs of people losing on the retail side yeah like like this one guy on Twitter this the guy who created T remember TR yeah oh yeah and and Billy he was like like CT's really changed like this [ __ ] sucks now it's like well you were cing vaporware from zero to like 100 Mil and like you extracted and now you're pissed that you can't do it anymore but think about the Ico cze and and granted icos I mean that was even shorter that was like May for basic attention token until you know end of July when the SEC put out their letter basically everything stopped but there's a ton of people who made a ton of money investing in icos yeah and flipping them and you know doing all of that but it it

it was a totally different Market because of that it feels to me kind of like the end of the beginning when you have uh I mean there was this whole framework that people have about how crypto works and you had all of these weird quirks of like the four-year cycle and the hot ball of money and these like very specific market dynamics and we every everyone all money yeah everyone's just been waiting waiting for the institutions to come in and it feels like this is the time that that's happening but I think people didn't really have a great set people would just say oh the institutions coming must mean my bag goes up and that's not what it necessarily means right it looks like a huge winner here is going to be stable points or institutions coming means my bag goes up but it doesn't go up

tomorrow or next week or next month it goes up over the next three years yeah but people are just not willing to wait yeah yeah the the PVP daily Runner Dynamic has killed anybody attention span or willingness to engage but I think on the institutional side it's like you know even for retail they don't have the patience to learn about this protocol that protocol ZK TLS you know [ __ ] bridging or whatever really the only like how people select stocks is like you know if you're a value investor you go to Bloomberg you type in an industry you filter you know low to high PE ratio and then you're like hm is this undervalued how much cash flow is it generating like today hper liquid and maker are the two things that are

actually buying back their tokens in size and it's like it's the most important experiment in crypto today because it's like if BuyBacks work that's the Playbook like you want to go get noticed you want to like you can think of it also it's like you ever heard of like laslo's hierarchy of needs you need shelter you need food you need you know emotional companionship it's like if you think about like the bidding Dynamics as well it's like you need a buyback the buyback gets the liquid funds comfortable the liquid funds bid it and the momentum Traders bid it which gets retail interested retail finally notices the price going up then they decide to learn about it like if your token is tripled in a week you better believe the retail will go and do research if it is flat or down they're going to be like why the [ __ ] like

everything's flattered down why would I learn about this one yeah the famous George Soros line invest and then investigate exactly yeah yeah yeah do you do you guys think like just looking at I mean 15 years of History here now of crypto I mean one thing this cycle that 15 is is not exactly true I I would say there's five years of app five years of apps okay but in that time I mean one of the thing like the Hallmarks of I mean just from 2022 until now Bitcoin has basically outperformed everything which is pretty tricky like salana was running ahead for a little bit but yeah it's been you know from my understanding like pretty tough especially for the liquid fund side of things like if you're benchmarked to something like

Bitcoin basically no one's beting that um it's also like the best asset on the planet it's a yeah it is a great asset um but the other thing too is you know I just noticed there's very rampant like short-termism it's like why would you hold like this idea of why would you hold any alt across Cycles is why would you hold any all yeah I mean that's that feels like a consensus I was going to say I there are there are a lot of assets that have outperformed Bitcoin yeah in crypto and I I random small well it it's because they start from a really small base y uh you know chain link did an Ico at $32 million yep it has far surpassed Bitcoin over that period of time yeah I I think that if you are

willing to search and do the research and actually spend the time understanding these assets you absolutely like can beat Bitcoin by a multiple yep it's just nobody has the patience nobody has or or they don't really have the care because they're so short-term oriented and I think that's the other part about meme coins that just eviscerated kind of the section of the market that ultimately we want and that we play in which is long-term value yeah and it it's like the Tik Tok effect uh everybody just wants to flip it and make a ton of money and be done and like go chill on an island for the rest of their lives and think that that's going to be the mode but it just doesn't happen and it's my last cycle it's like

I need to make it here otherwise I'm done otherwise I missed it otherwise I lost my go who will have you yeah s where did you get this money yeah I I do think though like even two months ago three months ago it was like you know dog with hat is the best performing asset all it's like holy [ __ ] it went down 90% like it's so day-to-day week to week depending on just like you know when we film the podcast how everybody feels what's outperforming I just I don't know if if these BuyBacks work like I'm literally going to make that llo hierarchy of needs just forbidding and be like you want retail to bid your token start with a buyback then do a non-deal start start with a platform that makes money start

with the platform that makes money and business that makes sense and like I don't know you got to break it to a lot of people where it's like the market for the winning technology product will be like a 100 billion of market cap for a single project the market for everything else could be pretty much zero yeah I do think as well and I mean if we're talking about long-term orientation here institutions coming in I mean we we talked about this a little bit before the Pod but um before the recording but uh stripe just came out with their uh yeah their letter um with some Financial matrics which are astounding um but the big thing that I think is notable from a crypto perspective is and they were the callson brothers were were just on the all-in podcast talking about this as

well is like they are so focused on stable coins yeah uh also just another massive institutional win in any other Market that be major news but I think just in the same way that the traditional technology I mean what was the the advantage that you know Venture firms kind of understood in the early 2000s um and frankly a lot of the people who were in the early 90s understood about the internet is that the markets for these companies are just way way bigger than people actually expect M and the ability to wait it out I mean this is the problem with public market liquidity uh or or something similar to it it's just people are not

willing to wait because they're emotional this is this is the psychology of investing or the psychology of markets and you have to be willing to put that emotion aside but if you're willing to wait the markets for these are actually way way bigger I I do think that there will be you know tens of 10 billion plus opportunities but there will also be tens of hundred billion dollar plus you know protocols that are you know venture-backed are around in the publish they're probably even open trading and liquid right now that are just going to be these massive scale outcomes that we don't expect to be you know as big as they are and and everybody's conditioned or anchored to some price right now that is just going to look like you know the ethereum chart

from 2017 compared to you know where the chart is now it's like a l that massive there's a massive you know dip runup whatever and like you can't even see that price action on the chart now yeah also like people [ __ ] dunking on chrisper gay like you see that mean where it's like Chris catching Strays this week but like I mean we did the seat of of Celestia so we're biased but they turned on I think pretty meaningful monetization basically like today yeah I saw actually literally on my way here Mustafa was like this is the path yeah and then people dunking on beruk it's like you tried to dunk on him when Sal was at $8 that didn't work now you're going to try with Tia quick shout

out to today's sponsor Aries markets Aries markets deployed on apts in 2022 and is now among the top 10 lending protocols across all blockchains with $280 million of tvl Aries markets has expanded its product Suite to become a fully integrated dii Hub combining lending borrowing and More in 2024 alone Aries introduced several new features to better meet the needs of its users including native usdt support an incentive program and more click the link at the bottom of the show notes head over to Aries markets and tell them that I sent you hey everyone quick shout out to today's sponsor marinade since launching in 2021 marinade has expanded their Suite of products to provide solutions for both defi users and trafi including liquid and Native staking as

well as direct Enterprise Integrations marinade platform is optimized for institutions to securely expand their exposure to salana whether through the provisioning of custodial or non-custodial yield integrating staking rewards into salana Financial products or leveraging marinades best and Market rewards rate for revenue and Treasury management whether you're in defi trafi or somewhere in between marinade has something for you to learn more about marinade follow the link in today's show notes yeah so I'm just reading here uh so Celestia feeds this is a tweet from Mustafa the founder uh Celestia feeds are currently 1,000x lower than EIP 4844 just enough to prevent spam rather than trying to make any Revenue starting a discussion about when if we should increase Celestia d/ testing uh da price

Discovery um and so yeah I'm a little I mean I I'd be curious what you guys think about this as a proposal I am of two minds about it I could see you know they're in like a land grab right now for da um and I could see I could make the argument okay it doesn't necessarily make sense to raise prices now just try to become basically a I don't know just grow as fast as you can and then raise prices later or you can raise prices down just prove to the market give them a line of sight into you know higher revenues in the future it's the exact same evaluation as we were discussing earlier that Bezos was going through with Amazon yep do you want to deliver this value back to shareholders with profit or do you want to reinvest that profit into growing your market share y

it's a it's a really tough question I we don't we obviously don't have the answer but I think that is fundamentally what these company what these Protocols are going to have to go through in the same way that companies have to go through it as they're growing as well you know what there's some element too for both uh Jeff basos did a really good job in describing his rationale to investors um and he got everyone comfortable with the rein investment over a really long period of Time Netflix also did a really good job with this readed Hastings um I I Netflix was like one of the first stocks I ever bought when I first moved to New York um and they you know the stock used to move on two things which was they were just expanding internationally so was the international Subs number but also every once in a

while they would raise prices like 10% uh because the fees were so low was like $10 a month and they'd raise it by a dollar that's a 10% six bucks or seven and every single time they did that the stock jumped like 10% because no one ched so yeah it's like you're testing the elasticity of the price and and turns out turns out is yeah so very inelastic yeah so maybe a similar analogy here actually I do think um the risk of starting BuyBacks too early it's just like the market will get addicted to it and then if you don't have that like continued up and to the right like buyback chart that's you know when you turn that off it's like oh [ __ ] is this over yeah this is the dividend too if you become a dividend stock you can

never stop the dividend right this is the GE dividend there's also the the kind of famous uh well alleged but I think it's been confirmed um Carl icon uh Tim cook dinner in in 2011 or 2012 yeah where buy back your stock Carl was basically like Tim you have more money than God more cash uh and you know Apple also has uh I think they still operate it it's it's basically a cash only hedge fund uh based in Henderson nada oh yeah this is such a cool I didn't know this it's huge right it's massive uh and it I spent a summer working in the finance department there so I got a a quick view you know where the bodies are buried it's just a lot of cash there

just just Donald Duck uh who whoever was yeah you one the the but uh but the uh he's like you got to do something with this other than like trading around zero interest rate T bills like which is so crazy that they just like there's no interest so they're just like speculating Mass Cash while there was no interest no interest rate and and then they decided to do a buyback and the day that that buyback started to now I I would love to know the actual number but it it is one of the most incredible price charts yeah just like up and to the right and I would also argue that you know since 2011 Apple hasn't really innovated they've only they've only done

iterations of iPhone Apple vision is interesting um potentially as a new platform but I it it hasn't really done well in the last year like they haven't had it's been iterative changes that have built the business and you don't have to have like world changing you new Innovations every decade if you have a strong business strong fundamentals and you have value Ral the rest will take care of itself yeah they've done little things too I mean even the airpods actually if you've seen the revenue chart of airpods matched up against other tech companies it's it's booming it's booming yeah but I mean Tim Cook was more of an operator uh and Steve Jobs was the innovator so it was probably a good Baton Pass from really product Focus innovator Vision Pro

didn't hit though Vision Pro did not slap scuba goggles at the top um you guys want to talk a little bit about stable coins in general like this was an interesting so obviously the the cison brothers at Stripe have been talking about this quite a bit they released that letter uh which maybe we can talk a little bit about and then also they were on the all-in podcast uh both John and Patrick talking about how excited they were about the bridge acquisition and stable coins in general and yeah this signaling from the Bank of America CEO um little footy there like what's going on over there in Denver not used to these live recordings um but he said something interesting too which was uh he he followed up that statement with yeah

stable coins are basically just a bank account and that was interesting at least for me to think about i' I've sort of started to think about stable coins as are you guys familiar with the concept of narrow banking this was this was something that um people tried to push in the US which is basically being able to have a bank account directly with the Federal Reserve and so it's the most riskless form of banking and there's always been push back to it I think um you know there's a there's a very strict um regulation around who can Bank directly with the FED right um and generally the idea has been that the FED is not doesn't love that idea one because they're not really set up to have a lot of Direct Banking

relationships and two it undermines the commercial banking system right if you can Bank directly with the FED why would you take any risk with the commercial banking system but stable coins are maybe like one to the right of banking directly with the FED you're taking extremely limited risk in just t- bills right that's essentially as close as you can get to risk list as opposed to having a bank deposit at a Commercial Bank where they have a larger portfolio of different types of loans um and then the way that you make that profitable is use way way way less overhead than a bank so that's sort of the lens at which I've been looking at um that's I mean how would you compare that to like an FDIC insured bank account where like as long as you're under 250k like you

basically do have an account with the FED there's no risk that you're taking on because it's fully backed by the US government etc etc I I I do think I mean frankly I think staple coins I mean part of the conversation last night was like what's working and it's like guys look at stable coins yeah it is the thing that is consumer crypto in My Mind by way it is consumer crypto it has consumer adoption um it's happening beneath the surface but it's also kind of starting to permeate into above the surface like stripe bought a billion dollar company just to do stable coins tether is the most profitable Financial Services business on the face of the planet like stable coins are absolutely working and I think exporting stable

coins to other countries and using stable coins as a tool to build businesses around them is the next iteration whether this means um you know Insurance products that are exporting you know US dollar stable coin to reduce currency risk whether this means you know building platforms that enable real world assets in other countries that you wouldn't have access to like that is the future of crypto in my mind yeah stable coins is the enabler it's also historically been extremely difficult to invest in stable coins so like how do you do it is kind of the question um you could have the thesis right but like the implementation is is the hard part yeah um but what will be interesting and um you know maybe something to talk about

too is like what happens with regulation yeah uh and you know there's rumors of a stable coin Bill kind of working its way through Chambers and uh we can talk about Vance's perspective but um generally like how will stable coins work how will they operate who regulates them um those are the big questions that I think will Define the market and one of the things we were talking about with our LPS uh last night is like what changes like the broader sentiment from the allocator perspective um you know CU it's like big fish eats smaller fish eats each small fish like the the allocators and like whether this is endowments or Pension funds whatever they need to get on board with the industry to start allocating more Capital to the Venture funds who can

then invest in the companies who are building and doing real [ __ ] and and one of the things one of the catalysts that they thought could be close to the Horizon is like actually understanding what the stable coin bill is and actually having it go through yeah and that being like okay great like stable coins is working it's a massive industry it's the most widely adopted product Market fit right now in crypto and it's just been blessed by the US government yeah Boom game on yeah okay I Vance maybe this is a good time to talk about this tweet for yours I'm just going to read this um I don't it's too long to read all right let me give you the tldr I don't us comment directly on regulation but ass soon to be revealed stable coin markup apparently has requirements to shut have access to the

treasury market to centralized International stable coin isur which is straight up bit crazy and basically talk about an incumbent that is trying to shape regulatory interest in their way I think this was actually reported on so we can just use like right Circle right is uh is is attempting to influence uh regulation here and shut off International issuers and obviously that's probably tether right it's the most impacted stable coin there so just talk a little bit about your perspective and what you see happening behind the scenes so the first thing I would say is like the stable coin Market as a whole like tether is large it's organically driven how can you tell it's organically driven they're spitting off tons of profits yeah you know I think they did 14 billion last year which means like there's very little incentives being

paid for people to hold stable coins on chain so like they are the stable coin Market we don't know as much about Circle but like the last secondaries that we're clearing on the circle IPO were like three or four billion and so like how are those for the value of the company for the value of the company and what that means to me and and what we've heard from exchanges market makers there's heavy incentive programs to get the supply of usdc up so like you know Mike I give you uh a dollar of usdc to put on chain and I'll pay you 20 cents a year yeah you know and uh just keep it on there make sure the supply doesn't well and this happens on coinbase too coinbase offers uh you know whatever the rate is I don't a while ago it was 4% to

have usdc between 4 and 5% yeah on theform that's not like a stable coin that's like something else that's like being incentivized and it's tokenized treasury right it's important to understand like the stable coin Market as we understand it is tether y it's not usdc usdc is like kind of incentivized it's kind of hard to tell and so like when there's things happening behind the scenes where it's like circles throwing their weight around to you know push tether out of the secondary treasury uh market for treasuries or have them subject to extra territoriality where even if you're issuing or you know provisioning stable coins overseas you need to fall into the US regulatory framework it just completely kills the stable coin Market in the sense that like it's not like usdc is just going to

take over the usdt business just like the USD business is going to go down which is bad for everyone and so we'll see what happens with the sa coin Bill markup but my tweet was just in response to hearing that um there was people thinking about putting these markups into the bill yeah and brushing them back from the plate a little bit just saying like look like if the regulations are going to happen and we've been waiting for regulations for 15 years it's not just going to be this thing where it's like behind closed doors and we'll you know get a senator to slip something in there and something in here like we actually have to make our voices heard and have a discussion about it Traders AI enthusiasts and deons listen up the game is changing and desk is leading the charge to celebrate their

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fintech or institution Moro is for you follow the link in today's show notes to try Moro today so actually there was uh this this is an interesting topic to me in general about um how you position yourself within the scope of Regulation I remember do you guys ever read Matt LaVine the blueberg guy uh he wrote about this actually with coinbase and blockfi um it was kind of a pro crypto take back in must have been like 2022 or something like that well actually before yeah yeah yeah um but he basically said look block was getting sued at the time and his commentary was a a strategy right when you have a new market is you can either kind of go outside of the rules or you can try to be regulated and the advantage of being like the strategy

of trying to get regulated is you have to spend a lot more money and go more slowly but then you can kind of try to write or influence the rule book in your favor um and he just kind of described them as different strategies and you know there's obviously been an enormous amount of indictments and lawsuits and you know the combo of like coinbase and ripple right have spent hundreds of million or tens of millions of dollars hundreds hundreds of millions of dollars basically fighting these entities and advocating on behalf of the industry and it's been sort of a group win so how do you guys think about that strategy in general when I think about coinbase it's kind of like I don't really want them to be able to shape regulation but at the same time they're probably pretty good actors and they've put up a ton of money

for the industry so how do you guys kind of think about it's it's the bill Gurley you know regulation favors the incumbents yeah um I I think that I mean this is also just like the fine balance right this is like the do you go full Travis kinic and say we're not Uber cab anymore we're just Uber like we're not a we're not a cab company we're a ride sharing company um you know do you do you kind of operate within the gray area for a period of time knowing that you'll be on the right side of regulatory history yeah um I I think that that's kind of the that's the calculus and that's that is what these Founders need to do I think they've kind of chosen their sides and you know there there's

there's the tether path and there's a circle path they're just totally different paths but I I think ultimately what this comes down to is what gets put into that bill yeah and is it is it 100% favoring you know the incumbent uh on Shor us entity yeah or is it something that's a little bit more open and something that allows for new entrance and competition yeah and ultimately that's what we want do you guys get the sense that um the government is starting to think of stablecoin issuers as buyers of uh US Government debt and that being a massive Boon absolutely there because there are all these games that have been

played um recently around like Janet Yellen has been very interesting in how she's decided to issue like where she's decided to issue duration wise like to like Bills versus bonds ratio and things like that and um I I wonder if St coins and you see this as well with like Banks adjusting the SLR sort of requirements stuff like and it's all tweaking you know to get at where they want the yield curve to be basically and it feels like stable coins are just a new tool for that it's a it's a new market yeah tether would be between it would be the 36 largest holder of treasuries if it was a country between Germany and Taiwan that's insane I I I don't even think that this is like a do we need this do we not like we absolutely we absolutely

need this we need to refinance 9 trillion of debt this year if we can if we can look like you know tether is probably doubling year-over year you know if they can subsume half a trillion of that that's a big Boon for the entire us complex but like like circle like Circle doesn't have access to the consumers that would buy the stable coins that would buy the treasuries it's not like we can just swap like hot swap you know one for the other let me get this chart is the craziest thing um oh yeah we're not on video put it on screen had to be there but it's nuts it's crazy this is I mean on October of 2022 the tether market cap

was 69 billion today it's just under it's like yeah just under 150 140 maybe maybe the quote from the uh from the stripe letter as well improvements to the basic usability of money make economies more prosperous consider the transition from coin to bank notes from the gold standard to Fat currency and from paper instruments to electronic payments stable coins are a new such branch of the money tree such transitions happen with some regulatory regular over the centuries and the effects tend to be large this is clearly like their next big thing right you know what you know who else so I know we've talked about this before but I can't really remember what your guys take was on this I'm just going to ask you again but I saw Vlad tenv also of Robin Hood y uh talking about leaning in I love his

like like NBA basketball press conference earning streams it's so funny with the logos it's not just stripe is the point it's it's Hood it's all the major financial institutions are looking at stable coins and frankly they're waiting for regulation and and Brian Monahan from uh Bank of America said the same thing and they're the largest credit card I maybe second largest credit card uh purveyor in the US like his quote and I'm I'm paraphrasing here is stable coins look a lot like tokenized uh deposits yep and we've got a lot of those yeah it's like that's exactly what they should be doing who do you guys think wins with these new

issuers like if you had to try to take a guess at Bank of America versus Robin Hood uh you know we've talked about the importance of exchanges and being distribution hubs for stable coins in the past um and then also how do you think like whose market share gets eaten here like if you kind of looked at the major buckets of stable coin market share is tether is kind of In A League of Their Own but it's sort of usdt and usdc and then I actually don't think that it's as zero sum as that I think what you're going to have is probably a tokenized representation of you know whatever account deposit you have at these Banks yeah uh a Chase stable coin a Bank of America stable coin a Wells coin and it the the stable coin regulation will dictate whether or not you know those things can be moved to

off platform y maybe there's an on platform instance uh like a wild garden approach of oh you want to uh you know have a lending product a mortgage product you want have a a CD you want to have a money market account all of that happens with your wells USD yeah and it's in this ecosystem yeah if you want to swap it out you got to go through a wire transfer you got to do through some some swap um I mean that BS the question as to like what's the swapping mechanism is that Citadel for instance who's enabling those markets and Market making you know that liquidity um I think the crypto native approach um increases you know the total stable coin Supply in a world where you've got every single

major Bank issuing their own coin and tokenizing it only increases it doesn't it doesn't necessarily you know it's not like a balloon where you squeeze one end and the other end pops bigger it's like the balloon gets bigger yeah um maybe there's a relative shift and and the implementation details kind of dictate this maybe there's a relative shift um towards one of the more regulated approaches because you know maybe that's going to be the onboarding mechanism to these Banks yeah um but I think the pie just gets way way bigger yeah tether tether to a trillion I think in the next couple of years and um they will probably continue to win dollariz you know Asian and Latin American and Western and Eastern Europe economies

like I think that's the prognosis for tether like what I'm what I would be excited about with like Bank of America is like more of kind of like a lending use case for stable coins where it's like okay go tokenize Black Rock private credit okay then you can borrow against that and like if the nav of the Black Rock private credit go Bel goes below the the lick threshold you you Auto sell it like there's a lot of efficiencies to be gained from that type of stuff I have a question about so I was speaking with Luca Prosper uh the founder of mzero or M stable and he was descri his vision of the future is that basically all of these Banks and fintex will launch their own stable coin and you know at that the way that that gets abstracted from the user if you kind of right now there are

kind of enough Stables that you can keep track of like usdc usdt usds whatever but in a world where there 100 of these things right that just becomes completely untenable for the there just not enough mind share right for 100 different brands of stable coins so it feels like where we're going is that it's just USD right like you just see USD on the platform so how is the end State different I'm just trying to imagine if because that's basically what the end state that we're describing there is each issuer you just see USD they are the issuer of their own stable coin and then it's the public rails on the back end that looks a lot like what it actually looks like today right which is every there all these usds are like JPM USD boa USD they're all issued from their liabilities of a specific bank um

and then there's a rails on the back end where you actually can send things cross border and stuff like that we've just you know through regulation made that more difficult than costly so is the idea that the endstate here is we're just building Global rails with less regulation or what is how's the endstate different if I think I think where this gets interesting is you have a wall Garden approach within you know Bank of America let's say yep let's say you've got um you know your mortgage which is an asset maybe it's an nft that's on chain that represents your house and the deed to your house um you're borrowing and you can see literally the interest are crewing you can see the payments that you're making all of that exists within the JP within the Bank of America instance I think where this gets really

interesting is um well twofold one maybe you've got a tokenized representation of B bo b OFA USD yeah and on you know the front end bankofamerica.com everything looks the exact same it's the same user experience it looks like USD you don't understand that there's tokens behind you know the the the UI but for people that care about it there are and um maybe you want to uh get a deeper look at the financial services and the underpinning of what's actually going on you want to see you know the assets on chain Etc um maybe if you're not a individual maybe you're uh an institution or something that has to have audits they need to see these

things on chain they they don't just get a screenshot of your like bank account and you send that to the auditor every year it's like no here's literally our wallet with all the Assets in it and they're represented in tokenized form that I think is valuable the other thing that I think is valuable especially for us crypto natives what if you're able to say I want to transfer you know this dollar uh or or this these these dollars I want to send them to my ethereum address yeah and that automatically swaps from BFA coin to usdt or usdc how do you want to receive it where do you want to receive it that wallet is whisted so that b OFA knows that that's one of yours that you've signed a message you verified it it's yours they can KY they can understand that there's full kyc once it moves out of the wallet

it's not you know anything that they have per perview into but like that wallet itself is yours so it's like transferring to a new account but it's in tokenized form and you can literally see that show up in your wallet and where this really gets interesting I think is once you are able to actually take some of the assets that are in your Bank of America instance and bring them into crypto and maybe you want maybe you paid off yourgage you got your house maybe a private credit instance and that's where you can actually have interesting financial services within crypto from a JP from a bank Bank of America issued asset you know it's oh sorry we it's you know what this reminds me of a little bit so first of all I completely agree that's really interesting way to describe it and I do

think over time maybe a lot of these ideas cuz we used to talk about this back in like 2017 too right there was there was sort of this initial Co of like the blockchain not Bitcoin people I think I remember maybe a year and a half ago on this show actually showing you a snippet of something that Goldman Sachs said was going to be on the Block like money market funds are going to be on the blockchain this is going to be on the blockchain they were right it just kind of like took a different like it took a different yeah it took a different kind of route of getting there um you know what made me think about this this week too is like kaido just looking at what they've done with yaps and everything um it's super interesting they basically have built the equivalent

of an onchain influencer marketing business yep like and this is something that what crazy that all the influencers sold their drop on pretty pretty dumb ah I mean it's just so interesting I mean this is one of those things I heard bandied around like rewards influencer marketing things people used to talk about this in 2017 totally but they just kind of slapped on what it looked like historically and obviously now the successful version of that just looks different in crypto right um like there's success stories happening it just feels like people don't want to hear them I agree also it's you know the game and also if everything isn't succeeding then like somehow nothing is succeeding or if everything isn't succeeding on the timeline that I stipulated in my head then it's not

working also we were like gambling on trat like six years ago like that was like we were like this is this is I guess this is the industry and it's like now it's like there's like 10 times as many stable coins 10 times as many users and we just can't take the dub because various reasons but I think mostly it's like people come into crypto sometimes because they just think it's easy wins totally and there's no more easy wins in crypto you know what might be a little different too is even in uh in the past you everyone was kind of up or down at the same time right like you might be you know yeah and you would you maybe you weren't in like the stupidest you know hypest thing who was up 100% but You' be like all right at least I'm up

you know my eth bags are up like a two or 5x from last year or whatever but now goes up 2x this will go up 200x right but now it's it's possible that you could be flat to down when other people are up that's a kind a new thing uh and I wonder if that's part of partially why it's part of it's a part of the market structure maturing when all the SAS companies were up in 2021 in unison do you remember when all the SAS companies in also the F Virgin Galactic chart is so facts yeah 2018 there was like the SAS Armageddon remember that one day where like L went down they like beat what do they call that it's like something Quake or the SAS Quake SAS Quake something something like that I I was at drop at the time or no I I yeah I

was there um 2014 I think and like LinkedIn beat earnings but dropped 40% and it was like wait what happened and everyone's like sass sucks as a business model really yes every four or five years that happens but like now even the dispersions within SAS are like so large and it's not The Usual Suspects that's the one like the App 11 like which was the biggest Runner of last year in the SAS industry like what did it go up last year like 4X or something 5x like they just proved that their business model was kind of this company they've been left for dead but they had the actual Traction in fun I mean it was a $25 billion company but then and now it's 100 12 another another example is Robin Hood yeah totally you know went to

6 billion now it's at 45 billion yeah but like you know backed is zero right if people want to look I'm not I haven't checked it in the last couple weeks but Robin Hood's got one of the craziest charts out there today it's like has the Tony H halfpipe it does X gam chart um all right maybe we should you guys want to just end talking about this bybit hack um which is yeah largest the nosis hack the nosis actually yeah which is kind of scarier I think um so I I I actually understood what happened I had a smart developer tell me so they so Lazarus hacked a developer machine of safe yes of nosis right of of nosis so

the develop Vel ER that uploads the new software to the safe website his machine was attacked yes and so the software that was used to attacked bybit actually everyone who had safe had that software installed as well but they only had one shot to use the exploit and they chose bybit and so they were waiting for this huge transaction to happen it didn't necessarily need to be bybit it could have been anybody that was moving huge amounts of size but like wow you needed that big wallet to activate a transaction so that you could basically be like okay like I'm going to I'm going to this in uh computer virus terminology this is what you call a zero day attack oh that's terrifying man that and it's where you infect all of it and you wait

for your opportune moment yeah right that's crazy to me and you know so so similar similar thing fun little story um uh when uh what's the name of the team the Israeli Defense Force um oh unit something unit like 8200 or something like that anyways it's like the cyber security um Team the way that they did stet I love this I tell the story I love this story this is uh so what they did is they knew that they couldn't get software into the actual Center fuses uh into the uranium enriching um computers within Iran and so what they decided to do instead was

they just infected every computer that was running Microsoft Windows so every single computer in the world that was running Microsoft Windows had the same patch the same software and they just chose to Target the computers that were enriching the uranium in Iran and it lasted for years too like they they literally would would hypers spin they would go off like they blow up they would couldn't figure out why and they were just like twne with them for this entire time and then finally they were like yeah that was us I mean it's just so crazy that like they probably had a bunch of like probably not a billion and a half you know wallet transfers but like they probably saw a couple guys doing like 3 or 400 million you know transfers and

they're like not yet and so specifically what they did was they injected a new form of JavaScript into the front end that made it look and feel like it was the expected you know safe uh multi-state transaction and in reality it was altering that and and sending different you know call data on the back end yeah um and yeah it's just like pretty insane you know the capabilities that they have I I do fortunately you know byit is in a position where they they you they can cover it um the eth price helps yeah well they haven't covered at all yet I don't think I but youd assume that they got loans to they got a loan from binance right and a

number of others um stepped in I mean this is the industry stepping in I I did hear a couple of really terrible takes of like this is FTX equivalent it's like no FTX was fraud who said that I saw someone [ __ ] on those takes but I didn't see who there there were a couple of those takes I won't name names but this is this is like a hack this is the industry rally together Adam Cochran no comment the the the industry rally together immediately and uh you know quelled the storm I think that bit will be able to to fully back all of this with the revenue that they're generating or maybe the assets that they already have like I don't know exactly what they what their plan is but um not worried about them at all um and also like kudos to uh the bit

team like hopping on a live stream immediately I thought they did job Chinese super villain it was confidence inducing it it was it was just impressive just like all right let's talk about it here's what happened I mean they published the the con the guy seemed like he had like you know he's like God like yeah I'll hop on a stream but like I got better [ __ ] to do than this like I'm not worried at all I mean he posted okay so this was the coolest thing as an avid whoop user he posted his whoop do you see that yeah S no no sleep also just like in a point of high stress cuz it like tracks your heart rate heart rate ability it's like point of high stress for like 17 hours like poor dude dude tough time uh you

know made it made it through I think um it's also really interesting too now that Lazarus is like one of the largest owners of eth yeah well they're using thorchain to bridge to okay I saw that so I saw one of the founders I think of Thor chain look at all this adoption look at and it's like it's such a funny Flex because you're literally flexing about laundering like Lazarus group Stolen you know we're we're obviously bad biased also like the US government is going to [ __ ] you up right we're we're we're bad biased we're supporters of chain flip which is you know another kind of like cross asset swapping platform respect to them they literally immediately took down the front end the front end is now back up they bricked all the capabilities of using that uh eth to be able to swap within chain flip

like that's the approach that the industry needs to take we can't have this like ultimate decentralization uh at kod law like at the cost of potentially giving Lazarus $1.5 billion I it you know what it was made me think about was it's such a hard value proposition for True censorship resistance because the best you know commercial you could ever have for censorship resistance ironically is North Korea being able to send funds through your system and having and that's just such a tough commercial but that's like the iron test right if you want permanent censorship resistance get used markets like we're in right now yeah yeah yeah if you want to actually grow and build and have you know where

we expect things to be in the next years few years get used to a little bit of light sensorship resistant yeah who the [ __ ] is lping in Thor Jane for like well didn't they also freeze um I can't remember they froze Thor lending cuz that they brick that via stupid token design but yeah Thor swap still works yeah Thor swap still works they they've also had like massive outflows of LPS massive outflows of note operators like there there was potential there's like aund million doar of bad debt that they have to yeah like who's standing up for Thor chain being like this is the right thing to do they're an easy target right now but but I think generally like philosophically what we need to do is more of what we've I think seen which is we have to understand this is bad this

hurts our industry and we need to collectively work together to solve these issues when they come up there's no one that's really on the side especially in Washington like there's no one on the side of being able to like and that extends to a lot of different projects like if you're not us- based and complying with us laws and regulation there's no people who have an incentive to stand up and defend you and imagine I mean let's say election went the other way imagine how bad this would be for us right now like this this could have potentially been a death blow yeah and it it doesn't look good anyway I mean it feels like is a pretty big or midsize problem for the industry I mean massive indust I mean they're the biggest hack ever right that

surprised me I thought I thought that the bitfinex in hacking Bitcoin terms would have been larger but no this is the largest this the largest dollar value in dollar value yeah obviously the Dow hack was bigger in in total number of units but yeah wild I mean that was 10 million 11 million eth or something I don't think it was that much no I can't remember Wild all right fellas yeah let's wrap it this was a fun one get to do IRL yeah have to do it again uh sorry I didn't get to see our mods but uh probably for the best probably for the best probably the best hello all right guys goodbye all right [Music]