DATs, Stablecoin Wars, and Corporate Chains | Roundup

Transcript

They put out an RFP for USDH which is a ticker in the hyperlquid ecosystem. Everybody who is a major financial institution, an existing uh stable coin issuer like Circle, PayPal, uh they all kind of like came to kiss the ring in a way um and put out their own version of like their answer to the RFP which is we will bend over backwards to be able to get this ticker. We will give all of the revenue to you, Hyperlit, uh, if we can be what was thought to be and and I think probably still will be the blessed stable coin variant within the Hyperlquid ecosystem.

>> Quick shout out to today's sponsor, Katana. We'll hear more about Katana's 1 billion CAT campaign later today, but for now, let's get into the episode. 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 forformational purposes only, and the views expressed by anyone on the show are solely our opinions, not financial advice. Our guests and I may hold positions in the companies, funds, or projects discussed. All right, everyone. Welcome back. Uh, long-awaited reunion here. Uh, we got Michael's one and two, Vance. Whole crew is back. How you doing, fellas?

>> Summer's over. >> We're back. >> It's great. It was good summer. >> Yeah. So, we haven't done one of these in what is it? >> Six weeks. >> Six weeks. >> Yeah. Long time. >> Yeah. >> Has there been regular bell curve content as well going out or has it just been totally ice? >> No ice. So, no pressure. But, uh, yeah, this is the first dose of content people are getting in six weeks. So, a game, you know, got >> live up to it. No problem. >> Lots going on. >> What were the highlights uh from the summer? like it was uh I mean I was on the move all over the place but yeah >> I I think one of the things we we were literally just talking about what are we going to talk about um but I I think one

of the things that happened kind of as um I guess the la kind of as the last conversation that we were having was um the Ethereum digital asset treasury companies and uh through August they kind of had a moment in the sun um the start of September they kind of cooled off a little bit. Seems like they're they're catching a bit of a little bit more sunshine right now. Um, but it's it's interesting, I think, in that everybody's kind of looking to them as the next wave of um digital asset treasury companies being able to launch, get an MNAV above one or 1.2 or 1.5 and and sustain that and then use the capital markets to their favor. Um, it's

always been this question. We've seen tens, maybe even honestly hundreds of pitches at this point. How do you reliably sustain something above a 1.0 MNAV? And the only answer that we've come to so far that's sustainable is debt. And it seems like debt becomes a combination of do you have enough um market cap? So basically, is your enterprise value large enough to be able to take on a debt offering like a billion dollar debt offering? Uh but number two is is your equity volatile enough such that the pricing of a convertible bond is attractive to convertible bond investors and I think we're kind of getting to the point where some of these DATs in particular Bitmine

BM BMNR um actually has the ability to go off and do like a full-fledged billion dollar plus convertible note raise. Um but I think that that's kind of what the market is sniffing out right now. Um, and so it's been this kind of DAT summer in a lot of ways. It started off everyone, it started off real hot. Everybody was looking at this like two to 5x quick flip. And you you kind of had a bunch of um I would say tourist capital coming in. Uh, a lot of hedge funds, a lot of family offices that are saying, "Hey, I want to make two to 5x in 90 days. That sounds great." Um, when the MNAV's compressed to 1.0, that tourist capital left. So the

interest um at least from what we've been hearing on boots on the ground is you know cut maybe like 40 50% because the tourists are gone but that's actually a good thing and we're starting to see the structuring and process um be what differentiates these different dats. Um and so yeah it's been you know crazy to say that in the last six weeks we've had a full basic cycle of something like DATs. Um, but I we kind of have. Um, so it's been uh it's been interesting. >> Well, I was also going to show some of the data here because I know that kind of the narrative is that these things have slowed down quite a bit. Um, but let me pull this up on my screen. But actually, uh, and I agree that Ethereum is still in the driver's seat here. Uh,

if you just look at the share of trading volume on these things, um, Ethereum is still exceeding, let me scroll back up here, >> right? Uh Ethereum is still in the majority here. So ETH is still just edging out Bitcoin, but if you just look at this chart over time, um it looks like that's pretty solidly, you know, that looks like a pretty solid trend here. Uh really interestingly as well as uh I mean there's also the Salana uh aspect here, but the if you look at trading volume, it's extremely low. Uh if you're following along by my screen here, you can see, you know, it's just about seven, you know, hovering between seven and like 3% of trading volumes.

But also if you look at the percentage of the asset that's held by DATs, yeah, for Bitcoin it's just over 3%, ETH is almost there as well. And Soul has really made like covered an enormous amount of ground since the beginning of September and is just at around 2%. So there's a huge discrepancy in between the percentage of the asset that these stats hold, right? um versus the trading volume which is >> maybe just to like tie all those things together. The trading volume means access to the at the market uh equity offerings. So basically more volume equals more cash raised. More cash raised equals more underlying asset purchased which is how you get that percentage increase. And I I think one

of the things that you know we've seen a bunch of other different types of DATs or different DATs launch for different assets. You know there's the hype one um which is the Sonnet I think SN um you've got a bunch of others at least that we have seen that are coming through their process. And I think what we're going to start to see is that's going after smaller and smaller ecosystems that have sustainable value. Um, and it it'll be I I think some of them will make some waves, but yes, I I think is was it this week or maybe it was last week where the main souls really started trading. Um, and and the reaction honestly has been

pretty lackluster from a volume perspective. Um, and so I I would expect maybe something changes on on some of that, but ETH definitely has taken the helm um for attention and mind share and um yeah, just means more volume, which means more cash rays, which means more ETH being bought. >> Yep. Um, I think uh it's also been a summer of people calling uh the top on the MNABs for the ETH ones and Tom just slowly walking them up doing interesting things like buying Octo, which is the world coin DAT. Uh, and his MNAV is now higher than uh Michael Sailor who also today uh told people that he would sell Bitcoin if necessary. He would write

calls on Bitcoin if necessary. Um, and so I think the, uh, Bitcoin versus ETH, you know, dichotomy, I think right now ETH is in the driver's seat. And, um, yeah, the boomers really don't like these DATs. Um, that that's very clear on on CNBC. Um, they don't like crypto at all. They don't like these stats. They don't like the combination of the equity and the token. And I think there is some of these that have been doing it wrong. Um, and that could get delisted. And we're learning about this stuff as it happens. But I don't even think a d-listing of, you know, the smaller longtail world coin DAT, whatever you want to call it, is going to cause a bare market. Everyone is just so caught

up in uh calling the top. And it's been this way for years. I I just I've almost given up on CT. It just feels like there's so many formerly gifted children, I use that word intentionally, that built a gaming PC in their basement and were told that they were going to be Steve Jobs and now they have no coins. Uh, and they have no job and they just hate to see other people making money. So, all of these gifted children on CT are absolute losers in my opinion. >> You know what? It's been a really uh I don't have anything as eloquent as that, Vance, but yeah, CT is an unbelievable counter signal at this point. It's >> they suck. They are the worst. And I've I I don't even think trying to appeal to them as potential buyers of a token is

logic. I'm honestly about to go to LinkedIn and start beyond saving. >> Yeah. I mean just as additional data points on that um uh we have a number of portfolio companies who are launching a token in the next days to weeks to months. Um the average uh of them is having 0% air dropped to users. >> I'm so glad about that. Yeah, it's it's the most cancerous part other than the current CT commentary that's happening.

It's just people expecting free tokens and we just need to purge the space of those people. >> Hey, do you I Well, you guys would have more insight into this and I don't know if it's something you can talk about, but is anyone thinking about um you know the token structure thus far when you launch a token uh you know the amount of tokens that you have is that rigid until the heat death of the universe and it's never going to change. That's really different from startup financing where each subsequent round that you raise you issue a whole bunch of new equity, you top up the employee options pool, whatever it is. Do do you ever see any experimentation there in terms of changing the total supply of tokens or are we stuck in this, you know, x many tokens?

>> We're not stuck um there there definitely is experimentation on um well so there there's sort of like pre and postlaunch. pre-launch, I'd say the token structuring isn't like there's a hundred pieces of the pie and this is the max amount of pie we'll ever have. Like that structuring has changed to be more inigned with how startups are financed. Not directly, but but closer to that. Um, post launch, uh, I think everybody's gravitated towards we're not going to have x number of tokens forever into perpetuity until the world blows up, but we're we're going to have to go through governance to make those changes. And I think that that's kind of the new norm of oh great we want to add 20% for to go like we've had portfolio companies who have gone off and

increased their supply 1.3x because they want to go into the salana ecosystem they want to have an SPL token and like those things are obviously supported I think you you have to go through governance though and at the start governance is really controlled by generally insiders it's investors and team and people who who put money in and had large token allocations and yes there's still a lot that's being distributed to community, but it's it's sort of, you know, decentralization, but it's decentralization with a bunch of parties that, you know, um, but you do have to go through that process.

>> Yeah. I got one more question on the DAT side of things, uh, for you guys. So, um, in terms of a a huge percentage of a huge amount of the DAT game right now is just generating eyeballs and attention that leads to volatility that these DATs can monetize. And for more detail on that, I would highly recommend people go back and listen to the Jeff Park episode that the three of us did. Um, >> yeah. About five week I think Jeff Park is now at Pro Cap. So, makes sense. They >> just made moves. Like, it's been uh it's been >> it's it's been a moving couple of months.

>> Yeah. So, I I I understand that the vast majority of when people talk about yield, it's it's financial yield that's being generated here, right? You're kind of harvesting volatility as the major source of, you know, a creative dilution for these DATs. Do you ever see a world where one of the advantages of something like ETH or Soul is that you have not the inflation amount of yield that's being generated but actual like you know execution layer rewards as a source of operating cash flow right the ability to deploy you know eventually can this be a story of you can generate enough actual real income off of these assets either in DeFi or from staking rewards that you can pay down and you know finance yourself more is that real or >> so here here's Um I guess what is like officially out there in the public view

is probably like two two and a half months delayed from what's in conversation on putting you know structures and and dats and things together. So like the stuff that is being launched right now was talked about at the start of the summer and the stuff that's being talked about now will launch probably by the end of the year. where the narrative is right now is that digital asset treasury companies obviously um you know the super vanilla reverse takeover pipe ATM convertible debt offering that playbook uh with you know a Tom Lee or a Joe Luben or whoever at the helm to be able to you know drum up that attention go on CNBC twice a day um yeah that playbook has run and and

it's worked for some it hasn't worked for others but that's not where the playbook is right Now the new things that are going to be launching imminently are diff different structures um different types of foundation relationships different types of um preferred access deals um but it's not um like I would say where things are moving which is we're going to develop a uh there are people in the industry who who are coming and pitching who are saying we're going to develop an operating company. This isn't a digital asset treasure company. This is an operating company. Yeah. We're going to hold digital assets on our balance sheet, but we're going to use those productively to to generate GAP accounting profit.

>> Yeah. >> And that is a fundamentally different construct because when you are earning tokens and the tokens are the tokens that you're staking are earning you more tokens, that's not gap profit. Like you can't account for it. You don't have a price to earnings. But if you have tokens that are earning you cash flow from other business activity that is gap accounting profit. So I would say we are definitely moving in that direction. Um being able to have a price to earnings on this stuff is going to be a fundamental difference where even Jim Chanos won't have anything to say at that point. But I I do think that the narrative is definitely moving there.

There aren't very many assets in crypto that can do this. Um, and so people who can figure out what those assets are, you know, those are going to be the things that have attention brought to them based on DATs. Um, but if you're just earning more tokens based on tokens, you won't have that same flexibility. >> Yeah. And um, maybe just a note on the Salana DATs. Um, I think one of the reasons that people were a little bit spooked and calling the top is because everyone is long soul and these stats for Salana have gotten off to a relatively slow start. Not in terms of the price action of Salana itself. I think the mission has generally been accomplished on that side. But I think in terms of the volume, uh there is something to be desired when you have

600,000 shares of daily volume and it's priced at 30. So you've traded $1.8 million today and um that's forward industries. And I don't I don't know about the other ones, but if you're seeking to activate a $4 billion ATM on $1.8 million of daily volume, um like what what have you done? And I think like you have to think about what are you trying to accomplish? like you're trying to start the retail, you know, like Bakanol, like we're going to get all the people buying and and excited. Um if you if your name is not Tom Lee, I don't think that's really possible. Dan Ies is a is a second contender, but he's also taken and so um you know that's not you know what they're doing. Are you trying to move the underlying with the amount that you're purchasing plus the

frontunning flows? I think that uh you can make an argument there and you've definitely accomplished that to some degree, but what we've noticed with these dats is that people will frontr run you to the dollar amount that you raise in the pipe and then sell that into you. And so the price movement that has happened in the recent days, months, weeks, whatever, um it is not like the go forward steady state because they're selling into the bid. Um and so you know is the last thing that you are trying to accomplish is like equitizing revenue from a blockchain. Um, and if it's just inflation, I think it's like there leaves a lot to be desired there, uh, in terms of the truthfulness of that statement. Um, and so like I think a lot of these are

like it's it's not like the max cynicism playbook where it's like, you know, no matter what happens, we're just going to launch this equity and it's going to do well. Uh, maybe it's not that cynical, but I do think they haven't even thought of steps two through five. And the best um rationale that I've I've only recently just heard is like we're going to buy the other DATs and it's just like you know that say you're okay say that you're below 1xmnav right and you're trying to buy who's even further below 1xmnav why would they sell to you if their optionality is just a dividend out the underlying at 1xmnav um and so like I think a lot of the um excitement is is is just like People are not thinking about what is actually

happening or what they're even trying to accomplish. >> This episode is sponsored by Katana. Katana is a DeFi first chain built for deep liquidity and real yield by redirecting chain revenue back to active DeFi users. The 1 billion KAT campaign is live. Bridge and deposit directly into vaults in one simple click and start earning immediately on your Ether, Bitcoin, USDC, and more. Follow the link in today's show notes to get started. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. I' I've got uh what do you guys think about this? Not related to market commentary at all here, but you know, I saw Kyle mentioned that for Forward Industries, the they plan to tokenize their stock and run the entirety of the

business on Salana, including dividends, governance, stock splits, fundraising, payroll, and vendor payments. And the reason I'm kind of interested in this is because we I I've been trying to think through what are the implications like maybe the less obvious implications of a bunch of stable coins um coming on chain and if the stable coin number goes from just under 300 billion today to three trillion like Scott Besson says what are the implications of that going to be? Um, and Blockworks has gotten pretty in the weeds on like the onchain data side of things. And you know, one thing that I've noticed in a lot of these conversations with teams is they run not using a lot of web 2 software because it doesn't integrate directly. And I'm so I'm thinking if the amount of payments

changes from dollars to stable coins, you might need to start rebuilding really basic software functionality like exactly what Kyle said here like payroll uh really basic just you know nuts and bolts business uh type stuff and it's pretty interesting. It's pretty interesting. There was an entire year in 2021 where an entire category of investors went after DAO service tools. And there was kind of like this meme for a while where it was like there's actually more service tool companies than there are Dows and you know it's like great we know how to do workday let's do that but onchain great we know how to do payroll or you know CRM or yeah like yeah I I do think

that there's going to be a lot of infrastructure that's built out to do this and look I I think maybe this is part where we can switch to stable coin conversations but like the reason why you have and I would separate the worlds very distinctly into stable coins which are used for payments and then yield coins which are used for generating yield. The reason why you have the two separations and the reason why you would have a blockchain adjudicate payments is that you don't have to trust that they have integrations into your Wells Fargo account or JP Morgan. I mean this is why Swift exists. This is why zel exists. Um you know all the different payment networks themselves, Visa. Uh but if you are using a blockchain, you don't have to trust that they can receive it on

your on their end. It just works. Uh and that's the advantage of having a stable coin that you use for payments. Whether it's person to person, which I think, you know, basically won't ever take off at scale, but businessto business is definitely something that will take off um and be used because it's just seamless and you can do everything onchain. Um and and you know, Tempo obviously launched as well. Well, you know, last couple weeks we should talk about that. But I do think that there there could be, you know, very distinct um uh business lines that would move onchain um because, you know, they need to move their crossber payments somewhere.

>> Yeah. I one quick note on that too is I I I see I think there's a big difference in between those DAO tooling uh companies versus the opportunity today because everyone's like everything's going to be a DAO. Let's like make this way more. But the the the pressing need actually is when everything happens on chain, it's real time and the data is standardized and you can do some cool [ __ ] with that that doesn't fit into a legacy software stack. So it's less about let's build let's reinvent an HR solution for arbitum from the ground up versus hey there's a bunch of companies that are now going to be doing payments on blockchain rails. What breaks there or what like cool new things can you do that you couldn't do before for tons of businesses, right? Well, on the CT

point, I deleted uh I deleted Twitter. How do you feel? Way better. Yeah, way better, man. It's I don't think people realize if you're like in, you know, you're basically grinding your face against a machine. It's just it's so negative now. Uh I I don't know what flipped. I don't know if it's CT or if it's >> these people own crypto. That that I think is the problem. No one owns coins anymore, so they just hate when things go up. Dude, I just feel way better. Yeah. Um I do feel like I've missed out on some stuff though. Actually, I you know, maybe to transition to stable coins here. One thing that I did miss out on the details of was everything going on with Okay, let's just break down to there's a bunch of stuff happening with stable coins. There was

the hyperlquid RFP which was pretty fascinating, good drama. You guys were probably more in the weeds than me. I'd love to just get a quick, you know, summary and your your thoughts and take on that. Uh there's what's going on in the sky ecosystem and feel like Spark has been doing uh super well recently. Um shoot there was one other thing but maybe we can just start with >> tempo there's arc there's >> oh tempo. Yeah. Can we end with that because I want to get your guys take on corporate chains. Let's start with hyperlquid. >> Yeah I mean look the the quick and dirty on hype or hyperlquid. Um I just to go through it they they put out an RFP for USDH which is a ter in the hyperlquid ecosystem. everybody who is a major financial institution, an existing uh

stable coin issuer like Circle, PayPal, uh they all kind of like came to kiss the ring in a way um and put out their own version of like their answer to the RFP which is we will bend over backwards to be able to get this ticker. We will give all the revenue to you, Hyperliquid, uh, if we can be what was thought to be and and I think probably still will be the blessed stable coin variant within the Hyperlquid ecosystem. And there was some scuttlebutt or kind of back and forth on um, you know, what was actually like native markets seem to kind of like come out of nowhere, small team, but honestly like I I think the it's the logical choice in a lot of ways

because you get to grow with the industry and it's kind of homegrown. So, it's a team that spun out um of the hype ecosystem. They're going to launch, you know, and they won. So, the validators decided that they would get USDH, but it doesn't stop any of the other v versions or variants from also vying for, you know, their own tickers. Um and so Sky has come out and said that they're going to continue to build a Hyperlid star. They're going to start putting things on Hyperlquid, especially the buyback as that becomes more possible. um like it doesn't stop any of the desire for these other ecosystems to integrate into the hype ecosystem. And I think that that kind of showcases the gravitational pole that hype is having right now. It's just daunting. It you you can't escape it.

It's like a black hole. Um and I I would say with hype in particular, what we have seen so far and and you know, hype just hit an all-time high last night. Um that is a recognition of you know the power of the perpetuals product that they have right now. It's you know making $1 and a half billion dollars a year or something along those lines. But what I think everybody's starting to realize is there's two things now. Um there's number one an adjacent business line which is the stable coin business line where where let's say some net interest margin even if it's two or 3% is going to flow towards hype in one of these models to be able to get kind of

blessed into this ecosystem. Um, and number two, you're going to start to see a lot of people, a lot of large platforms like Athena and Sky and probably PayPal and probably Circle and they're going to start building using a lot of the new launches and a lot of new infrastructure that's launching in the next few months from hype in particular HIP3 which allows you to create new markets. And so obviously native markets won, but you know, I I would actually say Hyperliquid is the one that won the hardest um because it's rerating right now because of all this recognition.

You've got pers, you've got stable coins, and then you've got all this other stuff that's going to happen through partnership. Um yeah, it just is a very exciting time for them. >> So, uh B, I don't know if you have thoughts. Yeah, I I think um I I don't even know if USDH is going to be the winner from this. Uh they have the ticker, they have the quote uh fee structure which is 80% lower, but they're going to be auctioning off more uh quote assets and there's a lot of people who would love a piece of that business and it's kind of like you know the function of expectations uh will that will be you know what's reflective of USDH's success. I think everyone expects that USDH will be the stable coin dour for hyperlquid on a go forward

basis. I don't think that will happen. I think there's going to be healthy competition and the stable coin game is going to be multifaceted both in terms of uh being a quote asset also in terms of who is depositing and farming HLP yield. So, um, yeah, I I think it's, you know, interesting that they gave it to, uh, a team that is, uh, backed by Stripe and, uh, you know, just like basically TRD five people. Um, good luck to you. We're coming. >> I thought it was, uh, fascinating. I I did an interview with Jeff uh, maybe four or five months ago uh, and we talked about this exact we didn't talk about the RFP thing, but we're like, what are you going to do with stable

coins, right? Because to me there was a big question here. Is Hyperlquid an exchange or is it a platform? Um I should also say I spent the last month I really nerded out I shout out to Chain Yoda who recommended Brian McCulla uh how the internet happened as a book which is really really good if um and then I went I listened to a bunch of these acquired episodes like these 10-hour deep dives on Meta, Microsoft, Google and yeah there's a lot of lessons man that we could take from these companies. Uh but it made me really think about what a platform is. Um and the lockin that a platform has and you know like different ones have entrenched their um you know entrenched their platformness in different ways like Microsoft had the uh monopoly on you know the operating system and the you

know the connection to the hardware manufacturers. Uh Facebook tried to be a platform uh earlier in the day early in their existence. They had a whole developer platform. They opened the social graph before they got disrupted by mobile and now they live on Apple, right, as an iOS app. And so that was always a big question for me. Is Hyperlid an exchange or is it a platform? I thought this RFP was a super interesting way to kind of thread the needle in between like if you look at Hyperlid as a business, it doesn't look that different from Coinbase. They have it's an exchange. They have stable coin revenue, you know, that they extract from Circle. Same thing with Binance.

like you can kind of squint at it, but I think the the amount that uh Hyperlid will be its platformness will be defined by how much does it allow independent apps to generate revenue on top of it. So, I thought this was a really cool way of kind of being fair, letting people take a slice. Uh yeah, I just thought it was a really interesting approach. >> You know, the the um the Bill Gates definition of a platform versus a company is that a platform is where the economic value that's generated on top is greater than what is generated within. Um, and that I I think is very much the case here. And this is what I'm describing. It's like if you look at Hyperlquid just as a perks exchange.

Yeah. You know, makes one half billion dollars a year. S&P trades at I don't know 20 25x price to earnings, 40 50 billion. Yeah, that makes sense. like I it is growing like five times faster and it is in a category that's like differentiating and getting regulatory adoption and like so I would probably say higher so so maybe maybe the per alone is something that sustains a higher reasonable valuation but what I think everybody has seen from this RFP and then probably also digging in a little bit deeper on HIPP3 like we still talk to people all the time who are like HIPP what and I think what people are starting to recognize is is that the platform form capabilities here are are going to be far greater than what a

single product within the ecosystem can build. Whether or not it's built by the team doesn't matter, but the economic value will be driven back to the pro protocol and the platform itself, but there's also going to be a lot of economic value on top of it. >> Yeah, I also think uh I saw uh I think it was totally, you know, saying it's either this or that. It's either a decentralized platform or it's an exchange. I just don't think that's how this world works. uh it's obviously going to be more than one of those two categories. And hip three is more of a platform. The whole like auctioning off a stable coin on like nepotism, favoritism, that just feels like Coinbase. Um and then you have things like HIP 4, which is prediction markets.

Um and so I think especially in the era where equity and tokens are blurring, um there's no need to carve out these specific definitions. The only reason is for regulatory clarity. And you know, it seems like we should talk about that, but there's kind of this emerging battle um where it's like uh I'm not going to name which funds are on which side, but like there's some people who don't want any new rules. Um and I think there's some people who want like all these new rules, and I think our position is that we could kind of go either way. Um it it would be nice to have some clarity. Um, but I understand kind of overregulating at this juncture is probably not the move either. Um, but

yeah, like there's a there's a lot going on with the regulatory stuff and and Brian Armstrong was on the Capitol Hill or or Capitol Hill, not the Capitol Hill yesterday doing um, you know, market structure stuff. So that's the next big domino to fall. And if you thought that genius was bullish for stable coins, I think market structure is that for alts. Um and when that comes about and people were able to write research reports and um you know price targets and guidance and you know buy hold sell overweight underweight for these alts. So we're looking forward to that um if we can get this regulation done.

>> Yeah. Ju just as context a couple other data points. Um and these are anecdotal but like obviously we have a lot of friends who are in traditional venture uh ecosystems work at firms that are not focused on crypto. Um, and some of them are even sort of like the fintech people or on the fintech team. Yeah. >> Every single one of them is reaching out to us being like, "Great, >> stable coins. Tell me about them. Great. How how do I do Wait, how wait, okay, let me put this together. So, you put the coin and there's a dollar." Like, it is mindbending to them. Um, and I they're all playing catch-up and and this is postgenius reaction. Um and and I think as soon as you have clarity or whatever variant it ends up

becoming um it's going to be the same thing for every other asset because we know that there are banks who are waiting to write initiating coverage on these assets which you know is is research reports where banks we as investment managers cannot say we think price is going X as a research firm like Goldman Sachs they can put out research reports and say here's our analysis here's our market positioning here's our price target and as soon as that starts to happen I think you know you're going to see a rerating of the rest of the industry. Um, and the reason why you've seen, you know, ETFs, spot ETFs, is because they've been declared commodities. And so you're in this regulatory back and forth where you, if I was to say, I think gold's going to

5,000, you know, that's not that's not, you know, a perspective that matters, right? But if if you're talking about securities and you're talking about, you know, what we're what we're talking about here with postclarity, that's going to be um, you know, what gives us the opportunity to do that. Shout out to today's sponsor, Katana. Katana is a DeFi first chain built for deep liquidity and high yield. No empty emissions, just real yield and sequencer fees routed back to DeFi users. Incubated by Polygon Labs and GSR. Katana is launching with notable ecosystem of primitives, assets, and partners like Morpho, Chain Link, and more. Katana's 1 billion KAT campaign is live. Bridge and deposit directly into Vault in one simple click and start earning immediately on your Ether,

Bitcoin, USDC, and more. Follow the link in today's show notes to get started. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. >> Gold at 5,000. Where would that put Bitcoin? I mean, we are we are 20% higher than when the cycle topped two weeks ago according to CT. I I think there is like we should talk about this too, but um the end of cycles or maybe the reorienting of cycles. Um there's the business cycle which is I mean I think we are in the early innings of that. There's the rate cutting cycle which uh there's been a bunch of analysis both from like you know Julian Timmer who runs Fidelity uh and then I think BFA put out one that

was like hey if they cut rates near 20 near all-time highs it's literally been 25 and0 in terms of the stock market being materially higher in 12 months. Um there's all sorts of analysis like there is no evidence to suggest that the market has topped if you think about it from a rate cutting perspective. If you think about it from a rainbow bitcoin chart perspective um there are all sorts of reasons. >> My preferred perspective. >> Yeah. There's a force field that comes with that which prevents any logic from coming into your brain. And it's just like so tragic that everyone thinks like this. And like what what do you think the end of a cycle even means? like does it mean that uh we just like pile into the Russell 2000 and and buy like plumbing businesses and HVAC shops and things like that? I just don't think

they're going to stop debasing the currency. They're going to keep cutting rates. The price of money will keep going down. I just don't think people are ready for a reality where you don't have these clean four-year cycles. The last of which was punctuated by a war and then 500 basis points of rate hikes. I just don't think that's >> in in four cycle in four meetings. Like the most traumatic part of my life was when they were just going for 75 each meeting for like a year, however long that was. And I just remember losing so much money and being like, "Wow." >> This is what it feels like.

>> I think wait last thing is like um our LPs have asked us like, "Do you think there's a bubble in crypto? What do you people buying metaverse land and like you know beach beachside real estate in crypto voxels uh four years ago it would like that is not happening there's no euphoria in alts the ETFs and DATs are what are pushing Bitcoin and ETH up there's only four coins that have outperformed Bitcoin this year what what's the problem >> can I actually one more um you know one more fundamental driver here is yeah we were talking about genius uh and actually Jake Tvinsky you know, did a did a big post during this whole USDH uh overview about because a lot of people are lab labeling their offering as uh

Genius compliant. And he made the point that there's no such thing as a Genius compliant stable coin today. Uh it Genius doesn't become effective law until 120 days after the rules are finalized, which is supposed to happen by July 18th, 2026. So that expected effective date of Genius at November 15th is at November 15, 2026. And even then, it really depends on the team to be able to navigate, you know, all of that regulatory molass to actually get now all of the regulatory bodies are trying to make this easier and easier. But still, that's a that's a huge uh catalyst next year. Um and >> and and you get three years until you get to come into compliance. And like everyone loves this legislation because it makes it legal, but like the legislation is actually like kind of

dumb if you actually think about it. So what people are doing is they're saying our stable coin is genius compliant which means that you you know you give us a dollar we'll put it in treasuries and we'll give you this like you know this crypto dollar back and then they say if you want to stake that genius compliant dollar in a non GS genius compliant stable coin you can do that the workaround is literally that easy and that is what has created this huge boom of interest in stable coins in this industry I I would I would I would clarify and say this huge interest in yield coins.

>> Yes, huge interest in yield coins. Imagine something like that for market structure. Market structure doesn't even need to be very good for people to get super bullish about it. It just needs to be like conforming to just like not to overuse this word, but like boomer thinking like they just want some sort of stamp so that we can just move forward and be done with it. They don't actually care if the regulations are good or not. >> I have a question for you guys. Uh going back to Vance, what you were saying about a little bit of a a war in between different asset managers in crypto. Some people want to keep the rules the same, some people want to change them. Can you talk to me a little bit what is the current state of uh clarity? Because the way I've heard it described is one

iteration or approach seems to be enshrining some of the stuff that uh you know crypto people have talked about for a long time. No more than 20% of the token supply going to the team. Stuff like that, right? We're trying to en enshrine this idea of decentralized governance. It seems like there's another faction which is saying hold on a second some of that old thinking didn't actually materialize or work and we actually want people to be able to you know launch a token that isn't necessarily security but not you know give away governance to the community within a couple of years and things like that and they're actually moving towards this like equity light uh framing. So could am I right that those are the two sort of different approaches here and where does it seem like things are going to shift? Yeah, I mean like look like if

you incubated a corporate blockchain with somebody I'm not going to name names. Who could they be? And you own 50% of that blockchain and the threshold for decentralization is 20%. You're probably going to advocate against that regulation. Like I don't even hate that. I think that's >> it's like you don't you shouldn't hate the player or the game. Like you're kind of both. Like it's it's fine. But I do think what we should not throw out with that is basic disclosures like basic information standards for sharing with retail. The reason why CT has become so cancerous is because we have burned everyone else that he's even sought to come near it uh through just like [ __ ] Ponzi schemes and like dumb token ideas and people that don't disclose information that should stay within whatever legislation gets passed.

I think the decentralization thresholds um I don't even know if that matters honestly like >> well I think you I think you have to have that to be able to have this I I think the other element that's really important is a path and this is like v to use the vance terminology the boomer thinking part of it like we need to know what's a commodity and what's a security like they're they're they're still going to be holding on to that and that's like the definitional requirements that they need so the path to get there is what is sufficient decentralization because That's when you move from a security offering to a commodity and I think that that part still is going to be in there and and it definitely is something that is core to what is you know market structure for every other asset.

>> Yeah. >> And then everything else that comes with that. So to maintain that status you have to have disclosures you have to have decentralized governance you know ownership targets etc. But I do think that you do you definitely have to have decentralization as an element because that's the path to commodity status. I I have a um you know also in this last like month like one thing that I've just been thinking about in general is you know how people always say that crypto is regulatory arbitrage as if that's something you have to hold your nose and look down at maybe crypto is just the answer to the financial system being way overregulated like if you look at the the opportunities if you think about like when I came into crypto I looked at ICOs I was like this feels crazy I had a lot of negative thoughts about ICOs like

many people did they're very scammy retail gets burned but then you know when you think about what's happened since then and the different iterations of investment metas, they've weirdly got less and less friendly to retail since then. And I I believe I'm not picking on uh VCs at all here. You guys know I'm not like that at all. But the you know the it the next iteration was retail didn't get to invest early. So you got a bunch of these like very overpriced infrastructure tokens that went down. Arguably less good for retail. And then this next iteration is DATS which whatever. I don't have really strong opinions about DATs, but it's definitely very good if you have a lot of private access to information and you can participate in these pipes. It it's worse structure for retail and it's way more opaque, but somehow it's allowed

and it just seems like >> let's clarify a few things. Number one, most of the DATs, at least currently, the underlying has far far outperformed the the actual DATs themselves. So, if you're investing in a DAT, it's probably because you don't have access to the underlying. And there are still a lot of players in large financial markets that don't have access to crypto. They, you know, they don't want to have to go through a new system. They can't go through a new system. Like there's a lot of structural process that is leading the way for DATs. I also think that's one of the things that the ETFs, the spot ETFs enable as well, but DATs also have a yield component and maybe that gets solved eventually. So like DATs are one thing. I also agree that I think we're moving in a direction that at

least historically it was it was the wild west, right? Here's an Ethereum address. Here's the block number that we're going to start our ICO and poof, four blocks later, we raised $40 million. That's >> super illegal. Also, people got really badly hurt in those situ. Some people made a ton of money. But the thing that definitely happened is all of those fundraisers raised all that money. A lot of them also got sued because of that. But what I what I think is important here is that there does need to be some level of control around who is able to invest in certain types of opportunities at which stages. Is it here here's a deck that has Vitalic listed as an advisor and we're going to build

Dentacoin for dentists and it's going to be this amazing thing like absolutely not. Like you need to have some backing that you have some core technology. to have someone who like a venture capitalist historically is the one who takes on the technology risk, takes on the execution risk, helps build the team, like actually does real valuable work at the earliest stages, which is why, you know, we we can pull capital together and build a portfolio. Is that something that some random person who hears about it on the internet should be putting half of their life savings into? Absolutely not. If at a point of sufficient decentralization or in the case of you know some iterations of the clarity act you're able to invest a certain amount of your capital into a

pre-token offering that's structured with disclosures with clarity literally into the process that's a totally different situation like I actually think if if done well clarity will be a step back towards retail getting more protections but also more access And and so I I would say it's in both cases a step in the right direction. >> All right, guys. I want to get your take on last thing on stable coins is tempo. So this was again a couple of weeks ago. So if you're listening and you've already heard a lot, you know, bear with us here, but I'm curious to get your guys take because I looked at kind of the headline figures here. Matt Hang of Paradigm Fame is uh leading this as CEO.

There's a lot of connections in between Stripe, Sequoia, Matt that probably gave birth to this this particular construction. Uh, but they're their own L1, right? Which is the that's what everyone's talking about. It's not built on Ethereum or Salana or any other chain. So, and and it's got people talking again about corpo chains, right? This is the, you know, we've gone through several different iterations of uh enterprise blockchain POA to now. I mean POA and corporate chains are really the same thing, but I I would be curious to get your guys take maybe on tempo specifically, but also just on the proliferation and success of these chains. How much more of this are we going to see? That type of stuff.

>> Yeah, there's been I mean I I think this is actually fairly interesting. I I honestly don't know enough about the payment stack to determine if this is like a real threat to the banking establishment. And there's been two reactions to this. One of which is like, oh my god, the banking establishment is over and they're going to eat all the fees from all their card partners and payment partners and all this stuff. And then I think there is the minority opinion uh which is that this is going to be a slog uh to build and bootstrap and um if there's no token that's you know going to be tough and they have all these amazing design partners and and we've spoken to a couple just because like we've been interested in in what

they have to say and their response has been pretty much as vague as just like our understanding of it which is they said like it's like we're going to do things on a chain. Um, and so I think there is a large chance that this is um, people are like too over like reacting to this like in terms of it being like a cancer to the industry because it will be so successful. I think the realistic take is that it's going to be a slog to build. Um, but I do think the the things that are interesting to me outside of just the actual blockchain itself is, you know, if you bet your firm on this, which it seems like a lot of the thinking is that Paradigm is is betting the firm on this working out and all that stuff, you have pissed off

basically every single builder in Ethereum and Salana and all of your portfolio companies that are doing stablecoin things like Nick Vanek uh who is the CEO of a stablecoin company called Agora. um like he was like going after you know Matt Wang on Twitter and and like you know the USDH proposal was like uh like Paradigm needs to recuse themselves from voting for this. So I mean if I if I were going to bet the firm on something I would just need to be so confident that it would work and it would be a real business opportunity because I would know that that would piss everyone else off and I just kind of wonder if they actually thought about that. That's that's my thing. And I think Tempo will be pretty interesting and um they've been making a lot of big bets and like Hyperliquid I think they

have like a billion or north of that of that coin and like man that that will serve them well and maybe this is another one of those or maybe this is like just a misstep. I think it's kind of too early to tell. >> Definitely too early to tell. Maybe a little bit more of the payments background. Um, and I'm I'm sure people some people know this, but um, the way Visa got started, actually, Visa started within Bank of America and then spun out because what they recognized is that you can't have this be owned and operated by a single entity because what you need is you need true partnership in all of the entities coming together. And so you need to create a new entity and they called it Visa uh, to be able to do this. And originally the way that it worked was you had all the major banks

who were you know taking the concept of credit cards or charge cards and sending them to their customers. And what you had with Visa was a program where you could participate in the Visa network and however much volume you brought as let's say Bank of America that was how much profit cut you got from the total network. And so it was basically like a eat what you kill. Well, we we all work together. And that's what enabled the ability to go to every single retailer restaurant everything point of sale, and say, "Hey, Visa, it's all the banks coming together, and hey, like we're going to be able to distribute this to every single person who has a bank account. You just got to accept it." And like that's how you build the

two-sided marketplace. It's going to be really difficult to do this from essentially a single entity, which is Stripe/P Paradigm. And you know, whether it's Paradigm, you know, who owns a significant portion of this and it's just like the Paradigm chain or whether it's the Stripe thing and they own a significant portion of this and it's the Stripe chain. I I I hope and I'm sure they know this stuff, too. Like, you know, the Stripe people are some of the smartest in payments. But the history suggests that this has to actually become decentralized over time. And I mean I think this is one of the reasons why people are giving it are knocking it so hard as to like look we've already got a pretty decentralized ecosystem that could run this infrastructure and yet you guys chose sort of the profit path. um you know if if this becomes

super successful um which TBD u so I don't know I I I come at it more from the payments perspective and um I think the power and the success of this will be uh determined based off of the true decentralization not just of the technology but of the assets and the you know incentives >> and and we only have two mega funds in crypto one of which is paradigm and they're doing this and the other one is Andre and they're pursuing a very different strategy I think of the andre strategy as more consumer, more kind of ecosystem based. Um, sure they do silly things like story, but it feels like they are investing in the future of consumer apps. I feel like Paradigm has kind of given up on that and is going in this direction. And it's always so sexy

and interesting to build infrastructure because you don't have to like come up with a use case for it. Um, and so, you know, if they were kind of like on the other end of the spectrum doing like the cipher punk, you know, decentralization flash bots [ __ ] and now it's like full corpo chain. Um, you know, maybe the pendulum is swung too far in one direction strategically. Well, we'll see. It's like, you know, I don't think everyone needs to be up in arms about this. You know, it's not a guaranteed success. >> Yeah. I uh yeah, you guys will have to uh forgive a couple analogies here cuz I just read this book and it's just fresh in my mind. But I mean, this was the whole battle, right, between the open internet and the superighway, the information superighhighway, which people literally thought that the

internet was going to be basically very similar to corporate change, but it's actually going to be on your TV. It and and they thought that the winner of the internet was going to be an interactive television, the cable providers, and Microsoft. And there was actually a joint venture that Bill Gates got all excited about called Cableoft. >> So, didn't win. Sorry to interject. This is where MSN comes from. >> Yeah. Yeah. Yeah. Network >> MSN. >> Yeah. So, and and I saw some of this in the I popped in, you know, here and there and I saw some of this in the, you know, hyperlquid RFP. Oh, Venmo, you know, x many users. And I'll just note that this this is a point of almost extreme skepticism, pessimism. This is why being off CT has actually been very

helpful. Um, you know, despite the amount of proof points that this industry has, the amount of successful startups that it has, people have never been more pessimistic that we aren't going to be able to out compete incumbents. And I just think that we can um, you know, I think there's a lot of reasons why that is. We don't need to get into it now, but yeah, I I I think also with the corpo chain specifically, you guys know I used to be a big Cosmos guy and I' I've always saw the desire to own the full stack, but I've kind of come around on it and it's like infras is really hard. It's not core. uh if honestly if you're if you want to do payments and by the way you can extract most of the value there are systems like appsp specific sequencing and the rollup

architecture you can literally kind of have your cake and eat it too you you don't need to actually build out all this crazy infrastructure and you can still keep most of the economics for a tiny toll that's not core I don't know it it seems >> here's here's a higher level question would you rather is is selling block space for stable coins good business may Maybe there's some element of this question that is like unknowable currently. I would I would bet against that being the case. >> Do you want to own a percentage or do you want to own the blockchain that has the higher frequency of trading or do you want to own a blockchain which has more TVL and like lending liquidity? I think everything that we know today about stable coins

would say that you want the lending liquidity because that's the natural profit engine of stable coins. Tether has made zero dollars like maybe dimminimous sending stable coins back and forth. I I do not think that is a real business and so maybe the endgame of Tempo is to build financial services around this block space, but I do not even think that the block space is is like tempting enough for people to move their existing payments stack onto it. So like it doesn't follow that they would then be given the opportunity to build all these other services around it. This is a rare case also. Maybe this is cope or maybe I'm washed. I don't know. But this is uh this is how I think of it.

>> Well, I mean there's a there there is a real world example of this playing out which is um hype versus Salana. You know, high transaction throughput, the amount of revenue that's being generated by Salana versus hype, which is taking a fee for the purpose exchange that they built. And and that hits on the frequency uh question, which is this. If the native speculative engine of your blockchain, the trading paradigm is based on high frequency trades, that's a bad business. And the reason that's a bad business for the for, you know, the the market is because a lot of, you know, you think about hyperlquids exchange fees and trading fees and all that stuff. A lot of that is just lending.

>> It's people lending, you know, on a per basis from one person to the other and those lending fees are what are the actual fees versus like I click and there's like a percent trading fee, which is what Salana does. So that's why like Hyperlid is able to generate so much more fees is because they have more duration on their actual trading paradigm. >> So So just to like play a devil's advocate here, um I I do think that that when we talk about payments, a lot of people immediately go to like I swipe my credit card at the store and I that's payments in reality like that's not payments. And there's a there's another type of payment which is businessto business payments, crossber payments.

There there could be a pretty distinct strategy with Tempo where you're you're holding assets on chain. You're putting them into money market assets in the meantime. You're flipping them from pesos to dollars and like that's an application that they build. I don't think there there's it's going to be extremely difficult unless Visa switches all of their infrastructure over to stable coins for credit card based payments to be run on a blockchain. Period. Stop. And and so I I think you know payments it there is kind of a middle ground here which is like businessto business you got more duration you've got you know more bespoke financial services potentially but you do have to go in that direction and I I think you know anybody on the

tempo team listening to this I would say move more in that direction to have a more sound investment in business strategy. >> Yeah. Well it'll it'll be interesting to see how it play. I I also think if I had to guess at why this annoys people is like this doesn't seem like a desirable end state. I think like real like going from a world of fragmented tradey databases to a world of fragmented crypto databases doesn't seem like a step function improvement especially when interop is still so poor in between these different chains. So at least for me I'm kind of like okay I can see it. I see why they're taking that swing, but also I can't really root for this that much because I don't really want the end state of crypto to be all these

different L1s. >> Let me let me put a finer point on it. I I think that this is more a shot at Stripe than anybody else. um or or that's where the anger should be uh pointed because Stripe I I don't know if people remember this but Stripe actually was an original investor in Stellar and they own like two or three% of Stellar from 2014 >> really >> and yeah and uh when Jed uh spun out of Ripple and started seller uh started stellar um stripe was one of the original partners um so they've been in crypto literally for a decade which there are very few people who can say, you know, that they have onchain transactions from pre205.

>> Yeah. >> And and so I think it's important to note, you know, they've been following this industry this entire time for the past decade plus. They've been waiting, they've been building their company, and they have chosen a path of centralization in a world of decentralization. And I I think, you know, they they aren't just coming in at the end of this and being like, "Oh, wow. Stable coins, what an amazing invention." like we're going to plug in now. It's like, oh, we've been waiting. We've been biting our time until there's an opportunity for us to step in and own this stuff ourselves.

>> We're going to take this away because like we don't think you guys should have it and we're going to co-opt stable coins and we're going to co-opt kind of like this entire narrative because we're the biggest payment company in the world and that's what we want to be in. We're going to continue to be. So, like thanks for doing all the hard work. we're gonna take it from here is kind of the perspective that I think you know they basically told everybody >> just move your stable coins. Just move them. Why are they not coming? Oh no, we didn't think about this. I don't know. I don't like the corporate chain stuff. I think it's it's I think it's very dumb.

>> But they're going to take their swings, right? Like you can't they're just businesses. I don't really blame them for trying to do something that they think makes sense. But but I but I remain optimistic that I don't think that that's going to end up winning out. I mean the the the the real value proposition here is, you know, Stripe is really good at generating profits and extracting revenue, right? Like you want I I agree with something like payments, you need something that's more net neutral. Um, and we'll see. We'll have to see at the end of the day. >> It tells you more about where Paradigm thinks crypto is than probably anything else. Like the use cases, the platform, it could be very successful. Who knows?

I think it's a bit silly, but I think the reality is that a lot of the cipher punk stuff that got funded did not play out. Um, like DAT investing is replacing a lot of venture investing. Um, and I think that's totally fine. Like the the winners are going to be more on a power law basis. Like this year, four coins outperforming Bitcoin. Um, and there's going to be less space for like we invest at a hund00 million fully diluted network valuation than it opens at a billion. Um, and so with, you know, less things to sustain like that, I think you're going to see more people doing these things where it's like we do a dad, but we get all the sponsor and promote. We do a blockchain, but we own 50% of it.

>> Is what it is. >> It's a it's a little bit of a spiritual bare market at the moment. Um, in like people are very just >> only for some people. I was going to say only for people who expect we're going to run back cycle was going to come and everybody's going to it's going to be raining tokens and you just throw a dart against the wall and hit a 3x. Oh, this is going to be easy. I I know this playbook. I saw it four years ago. >> Yeah, >> absolutely not. >> Fair enough. Yeah, fair enough. Um but I I think also I mean even like what are we talking about on this podcast? It's like corpo chains and dats. It's like it's a it's a little bit less right.

doesn't you know you know get the hair in the back of your neck standing up like some of the early you know ideas >> you guys put on digital asset summit you're trying to get the institutions to come into the industry this is what it looks like >> it it shouldn't be exciting though it shouldn't be every week we have a new primitive to talk about that's not a real industry like that it's just not what >> metaverse land coming soon like it's just there's so much there's so much going on under the surface that that's where you need to drive your excitement Um, but nobody has a right to make money in this market or a right to be entertained by it on a weekly basis. Um, that's just such a weird way to think about it. That's not how traditional tech thinks about it. I mean, I guess

there is some AI stuff like that and TVPN is kind of encouraging that culture, but I don't even the TVBN guys seem a little burnt out. Like honestly, >> they just had a Wall Street Journal article come out about them. Did you see? >> Yeah. No, it's great. And like, you know, but like how many startups can you interview? Can you get like the best startup of ever of all time on your show every week? No, there's only like 20. >> Wait, did you guys see the Tucker Carlson interview with Sam Alman? I'm taking a bit of a detour here. >> This is so I mean there was a you know this is not the but there was a you know tragic death under relatively suspicious circumstances of an OpenAI employee who was going to be a whistleblower and he was found dead in his apartment and the

security feed you know around his place was cut out and Tucker Carlson's interviewing him. >> Yeah. right before and he's like, "So, did you kill him?" And >> he didn't. He didn't say that. He said the the response from Sam was literally like, "Are you implying that I had something to do with this? >> You need to look so guilty. Oh my god, dude. >> You need to watch the interview where he claims that he was attacked by a demon. >> Oh my god. >> In the middle of the night and he has like all these claw marks on him and then he's and then like two weeks later we were like, "Yo, you cannot." He's like, "That was my dog." It's like, "Yeah, >> dude." Peter Teal's talking about the Antichrist. He's doing like a five-part series on this.

>> Look, the uh >> we live in times. We live in times. >> There's a great bit from Tim Dylan uh talking to Rogan and he goes, "So, the guy that's building all the drones to go and attack, you know, our enemies." And the guy that's building the tech to surveil on all of us and everybody else around the world, his his natural biggest thing that he's interested in is the Antichrist. But like >> Tommy goes one, two, antichrist. >> I watched that there. I don't think Joe Rogan is like low IQ, but like I do think, you know, he's like, yo, these practice guys are start they're trying to start a new state. It's like, yeah,

we've we've met the practice guys. They're nice guys, but like they're no threat to the West. like that. I I feel like it's just the the mis constringing of tech and Silicon Valley and what it's capable of. Um I think people are more uh interested in them being like the men behind the curtain than there being absolutely no plan at all. >> Yeah. >> And I think that the latter is true. Like there is no there there are no lizard people. Um it's all just fake. It sucks, but that's true.

>> Yeah. We're in a a time where it feels like, you know, you want to keep your mind open, but not so open that your brain falls out. And I feel like some people's brains are all over the sidewalk. It it's Yeah. Some of the stuff that people are binging around the Do you guys see as a you know, we're not a macro podcast this week, but we are a uh did did you see that or there was a $300 billion deal uh that OpenAI locked up with Oracle securing compute? That also just speaks to what amount of money will people not th I guess maybe one thing that's different this time with this platform shift is what would you not throw? How much money would you not throw at what people think is going to be an infinite money printer, right?

Like people didn't really get what Google was doing the first time, but now everyone thinks is going to be the next thing. Maybe that explains at a smaller level the Stripe approach to owning their own platform, right? Like everyone wants to be the platform. Everyone wants to be at the base layer. >> I don't know. The things I'd say on that are well number one nothing has moved in terms of the quantum of capital like the AI infrastructure buildout and as the uh the $300 billion deal. So couple of notes on that. Number one the money is not raised.

>> Number two is not available. >> And number three OpenAI is saying this is the first of a few of these size deals that they'll be making. And number four, MASA has not even raised the money that he's going to put into OpenAI for the last round, but they're also number five doing a secondary deal at almost twice the valuation that Masa is investing at. And so like the bubble right now is in AI. And I think if there is any sort of bare case and like if there's any sort of bare case for crypto, it is related to AI. The problem with that thinking is that AI is actually the most rate sensitive industry because building these data centers like people are talking about

quantum of capital exceeds the amount of money that are available in capital markets today where like we talked about at some level it's like Sam Alman competing with Secretary Bessant on finding buyers for paper. Um, and so like rate cuts bring that it's like the most beneficial. And so maybe like the rate cut cycle uh is correlated to like this GPT release schedule in the sense that like there's maybe another year or two. I took the side of like there will be no recession or bare market until the AI bubble pops. And I think I've been proven right on that so far.

>> Uh we got five minutes. Can I just get a super quick take? The big story that we didn't talk about is Brian Armstrong teasing the idea that there might be a base token. >> Yeah. Yeah, >> Michael said this would never happen. You go first. >> I didn't hear you say that again. >> Michael, you said this would never happen. You go first. >> Teasing it is not launching it. That's what I will say. >> That's fair. That's fair. So look, I think um the only way that this happens is if there is regulatory clarity with the Clarity Act. And I think that's what they're essentially teasing. And that's why Brian is working on the Clarity Act

because if there is a path for there to be a decentralized utility network token that is issued or by a subsidiary or by a publicly traded company, then there's a path forward for that to happen. And I think frankly until that happens like they're not gonna be able to issue a token. So my comments really don't remain uh you know unchanged. But um I I will I will eat my words if they launch a token. >> 100% they're going to launch the token and it's gonna be a disaster because I do understand Michael's point is basically like you can't launch token and not give 100% of it to shareholders.

there's there's no like third door where you can just rug your shareholders and like pay yourself money uh you know if you're not like an employee and even all that stuff is regulated by uh board compensation agreements and and and frameworks and so uh I think they will launch it. I think they will find some sort of legal novel way around it but it's certainly not going to be a straight path. And if you're banking on the base airdrop to to bail you out of two years of holding whatever Cosmos, um I just you're so wrong. It's it's I I think you're you're already done. Look, and and I'm I I I will eat my words if that happens. But I will also say I think that if there is a path for them to launch it, that also means that

everybody else who's a publicly traded company who has the same type of infrastructure will be able to do the same thing, which I think is actually bullish because that's how you can have this integration of like token and equity and we'll figure out what the rules are. Like there will be a structure and and we'll figure it out. Um but yeah, to Vance's points, all of those things need to get sorted out. And I look I think the other thing just to quickly call it out um I know we're running up on time but the other thing to call it out is um the rate cut and I know we're on a macro pod but what we also signal what they also the Fed also signaled is that there should be two more 25 basis point rate cuts by the end of this year and then another two

potentially three in 2026. And what that gets us to is frankly a and I think this is going to be something we're going to continue to talk about and we're going to continue to see but we're going to start to see the spread actually be a huge driver of the narrative within crypto which I and what I particularly mean is what do you get in a money market versus what can you get deploying stable coins into DeFi and as that spread widens you're going to see inflows and as we see inflows you're going to see more activity I I think you know If I was to point on anything, I think we're are entering into as we're looking at these rate cuts and two more by the end of the year, we're entering into what we'll call the DeFi super cycle.

>> I completely agree with that. I totally I also think I might have told you this right before we left, but you know, I was talking to someone who their framework was kind of like I'm buying coins that I think boomers are going to buy. And the way someone else phrased it is like, hey, I'm trying to think of like what is uh you know, Phipe or what's his name? Philip Ku the Cotu guy. >> Leont. >> Yeah, Philippe Leafont. when he looks at this market, what's he going to think is interesting and buy and >> he's buying ETH. >> He's buying ETH, too, 100%. And but it's also very good for ETH, right? Like the other big thing for uh Coinbase this week is they rolled out um their earn product that leverages Morpho. So, shout out to Morpho. Also, shout out to the

chefs at Steakhouse for being the uh vault curator here. Um but yeah, you can see like Morpho's done extremely well. Oh, they've got a very interesting architecture here, but you can also see um the amount of interest broken down by asset. People are really uh leveraging um uh stable coins for the most part, but there's a lot of yield that's being generated on ETH. I'm not going to be able to figure this out right now. We're doing it too fast, but yeah, it's really good for ETH uh basically as well at the same time. So, I don't know. Um I think it's a really interesting time. I agree with you guys. a bit of I'm glad you guys are all pumped and also uh yeah ignoring CT at the moment as well because I think that's >> sometimes you got to go put your phone

down and go for a ride. >> You certainly do >> or go build something or like contribute to something like sitting on the sidelines and watching it happen. It's not a job. >> It's Yeah, I would agree. It's super lame. All right, fellas. This has been a really fun one. Uh I know we got to wrap here, but uh pumped to be back in the saddle with you guys and see you next week. [Music]