DeepSeek’s Impact, the JellyJelly Launch, and Crypto Payments | Roundup

Transcript

what banks are also perfectly positioned to do is give loans against crypto and they're going to have a lower cost of capital than any other provider uh so if you want to put your Bitcoin in your JP morke account and borrow against it I'm sure they're going to have a product to be able to do that this episode is 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 Express by anyone on the show are solely our opinions not Financial advice our guest and I may hold positions in the companies funds or projects discussed all right everyone welcome back to another Roundup edition of alur

you got Michaels one and two just the Michaels holding down the forth this week how you doing my friend just the two best you know got the dead weight exactly yeah yeah um it's been a week man I feel like uh this week started off with a massive Panic around AI uh this new Chinese open source model deep seek um and it was the end people were calling for the top of the cycle it was going to be down only from here and we're basically trading back above where we were um at the end of last week so yeah you know some uh some weeks decades happen some decades weeks happen one of those uh yeah this is also one of the classic like in the depths of

we are so over we found that we are indeed so back um and yeah it's funny I actually saw uh shout out to hyper liquid and all the hyper liquid andjoy ORS that that was actually pretty fast back out of the gate um it's been pretty remark has it surprised you at all that Bitcoin has held up so well and Bitcoin dominance has extended so far into this cycle I mean I generally I mean this far like post having and just generally this far into a bull market I feel like generally this is around the time or pretty well past when that dominance starts to fall but Bitcoin has held up pretty well it actually held up really remarkably well even after all the Deep seek news and Nvidia sold off 17 or 18% in a day I mean still I don't think it ever failed below 100K um what

do you think about that knock on some wood there sorry dude yeah told me to J it oh God it's like it's like an announcer at a football game being like well he's never missed a kick before yeah very true but no I think look the Deep seed stuff was interesting in that uh I mean we could touch on that first and then maybe kind of like crypto macro um can you get just give like a quick overview of the deepsea situation as well yeah so probably for the 20th pod that if people are as Avid podcast listeners as I am uh have heard you know all of these terms and all of these explanations um I I

think broadly you know what happened is there there's a hedge fund out of China that uh created uh that has been working on um you know deep seek large language model um they on the 20th so this actually didn't even happen it just it sort of took a week for people to kind of get ramped up to the understanding they announced that they were able to train deep seek R1 with uh five or six million dollar worth of training resources now what this implies and and the performance of deep DEC car1 is that it was competitive with chat gbt 4 um at least on initial pass it looks like you it is it it is you know competitive it it works pretty well um you know there

are still hallucinations it it's unclear as to whether or not it's um distilling other resources or other language models um in in the way that it's operating so maybe it was trained on some of these models I I think there's still broad questions but if we take the Assumption on you know on the surface uh of of what they announced which is they were able to train with you know orders of baditude less resources than than open AI has been able to train their models you know what does this mean and and this is kind of why there was a market freak out which is that the expectations around not only compute resources but Power resources you know Nvidia resources um all all the things that go into what is expected to be you

know hundreds of billions you have stard being announced at half a trillion dollars of investment that's going into the ground yeah uh calls into question whether or not all of that's necessary and um you had uh and so the market freaked out because so much of the expectations of the stock market currently I mean are built in into Nvidia are built into the mag 7 are built into what is expected to be you know capex spend infrastructure buil out um I mean you even even had like uranium stocks and nuclear stocks sell off and energy stocks sell off because you know the forward-looking expectations on where Energy prices will need to go energy resources will need to go you know that calls into question everything

and so massive freakout massive selloff I think Invidia ended up losing like 600 trilli 600 billion dollars uh worth of value in a single day which is the most any stock has ever lost in a single day um it it I I I do think it level sets kind of the expectations though and um let's just assume that that it's correct for the time being um what this really does imply is that there are better more efficient ways of training these models and um Mark andreon came out and said that this is um you know AI Sputnik moment well what Sputnik was um you know was basically the first uh

satellite to go into orbit um and send a signal back uh to the to the world it literally just had like a basic ping and this invigorated um you know the Space Race uh for the United States basically said okay like it's US versus Russia we're going to go off and you know put a man on the moon and and beat them there um but it did hypercharge and Spark catalyze a um massive buildout a massive you know infrastructure investment and everybody was aligned and and so I think you know the Call to Arms that Mark andreon is suggesting I think is fair um I don't think and I think it's appropriate um because it it's happening right at a point in time when

um everyone seems to be recognizing that we can't lose the AI race um and the Space Race may be something equivalent um as an example but um yeah it it it honestly I think is a great shot across the bow because it hopefully will will force us to start to call into question some of the assumptions that we've made um and and just it shows that there is the possibility of lower cost implementations of AI and so how does that translate what what that means is in you had um um Larry Ellison on stage talking maybe a couple months ago um

about how if you want to play at the large language model game it's going to cost you hundreds of billions of dollars to do that which means that there's only going to be like five or six different companies that can do that whoever has the balance sheet to be able to support that if you're talking about five or six million dollars to be able to train one of these models and it's open source in the way that they released it that that means that it it's broken down to a level that's approachable for startups it's approachable for um you know hedge funds in in China um it it basically brings down the infrastructure level to the point where I actually think that the the biggest benefactor of this entire announcement is is potentially crypto and Ai and you know the

decentralized approach to um AI is actually something that becomes viable if you're able to you know stack a bunch of you know Apple Hardware together and build you know and train one of these models that's a that's a very different process than being able to needing to set up your own gigawatt data center with its own nuclear power station and train these llms uh to be competitive um it's a it's a very different ballpark uh ball game and so I I think spotnick is a is a fine example there was another um thread on Twitter that I saw which I think is actually a really interesting comparable as well which is um sputnick is probably not the best example maybe Google

actually is and the analogy here is in 2004 when Google announced their S1 what they also released is that they had been able to connect together using Basic Hardware one of the most uh uh powerful computers um distributed powerful computers and at the time what you had was all the startups were basically in this race to build um to buy and build the biggest supercomputers basically from Oracle because that was the only provider of of the service at the time um and what they were able to prove is that through their distributed Network Technology they could take basic offthe shelf hardware and as long as you had

enough of it it was going to be just as powerful if not more powerful than you know the tens of millions or billions of dollars that all the other startups were trying to compete with with Oracle technology um and so that I I think lends Credence to um what is possible now if you have an incentive layer or an incentive mechanism to connect distributed networks and off the-shelf Basic Hardware you know the laptops that we're running right now as we're doing this podcast um it it opens the realm of possibility and in trying to wait as long as possible to use this you know term but everybody's probably heard it but J parad it is it is um it's it is probably

the best description of what's what's probably going to happen here which is and the basic con concept is as you reduce the price of a resource the aggregate amount of demand actually goes up over time because what it does is it opens up the aperture lens it opens up the possibilities of new use cases because it's a lower cost resource and so if you think about it in economic terms p goes down quantity goes up Q goes up more than p goes down so aggregate value goes up because price goes down and and I think that that um it it will be the effect that ultimately takes over um so I think this is actually extremely bullish um it just

means that what threw people for a loop is they like 12 Monon capex expectations and how those are baked into you know stock valuations and all of the you know analysts on Wall Street had to go back to their models and say oh wait what if we're off by a couple orders of magnitude for the next 12 months for the next two to three years or five plus years fundamentally constructive um but you know short-term pain for long-term gain yeah this buttnick analogy is a really interesting one and actually just as a fun thought there was there was a an Apple TV show that got produced a couple of years ago called For All Mankind and it started with the hyp and yeah it was a great show and it started with the hypothetical of what if the Russians had actually won the space race

and you know it the way that it actually played out in real life is the US won the Space Race you know we bankrupted the Russ the the Soviet Union economy and it would just created this ripple effect and we haven't really done much in space since but the idea was if the Soviet Union had actually beat us to the Moon then we would have been able to Marshall the resources to actually compete with them on the moon and potentially expand outward and I think it's a it's a good analogy or metaphor because I do think that AI is probably the next big strategic race that the two uh contemporary superpowers the United States and China ultimately want to win and you know I heard Bill Gurley make this point that I thought was very interesting which is you know the previous administration and the Biden

Administration there were all of these um actions that they took to limit China's access to compute uh to like modern gpus and so you know in some instances I mean there's this is like the the long debate right are sanctions and these sorts of economic uh you know preventative measures actually effective in this case it actually might have backfired because the the this is like the necessity is the mother of invention so by not having access to strong enough or like the same amount of compute resources they actually moved one layer up the stack to inference and they were able to train at you know two orders of magnitude cheaper um than us counterparts and I would I would like you probably looked into this a little bit deeper than me sort of anything that comes out of China you

probably have to verify some this data but I think it's starting to get replicated across teams here in the US and there's at least some Merit to what what happened with deep seek and so yeah I I basically agree with everything you said that I think that long term this has got to be bullish because you know if we all believe that the uh that the inference of these AIS are capable of is actually useful than being able to train models is yeah should be super bullish in terms of allowing people to use this stuff um it also was a little funny to see you know six months ago everyone was very bearish these AI startup r rappers right just a wrapper of uh you know gbt and now that people are questioning the value of the foundational model actually maybe those rappers don't look so bad

and so maybe it is kind of bullish for AI and crypto right if you can train a model for much cheaper than we thought then yeah some of this experimentation starts to look pretty interesting to totally yeah so a couple of points there uh well number one um what they said is that they actually trained it on Huawei um uh uh gpus which um exactly to your point um yes we limited them from buying Nvidia chips great they went different direction are now not buying from the US they're just using you know material resources that they have internal so oops you know bearish envidia potentially if you're of Nvidia after this um I I also think um I mean the CEO

of stai at dvo said we actually believe that they have 50,000 h100s that they just don't you know talk about uh because vport controls who so once again this is all with the assumption that what they're telling is the truth is that a fair assumption probably not um but you know it is what it is um and yeah I think the um it's hard for people to kind of assume that we're in this like equivalent Space Race until there's you know basically a counter a counter move and I think this is counter move yeah and and so and now I think it's time to recognize that we're in a race um if we're plowing I I just saw yesterday

that MSA and SoftBank are looking to invest $ 25 billion dollar into open AI if you have $25 billion doar of available spend and you're just going to go off and buy as much as you can and you think that you're like able to win based off of capex spend it's to your point you don't have resource constraints you have the opposite you have resource abundance and you're never going to with um a resource constraint and and therefore a creative perspective unless you have those artificial constraints and so I I'm fundamentally bullish on not just crypto AI but definitely you know AI startups as well um if they're able to basically facilitate the same sort of Discovery and launch as deep

seek was able to with an order of magnitude or two less cost it means that you don't have to have the hundred billion dollars to compete that's very attractive and you know opportune for for startups that are in this space 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 delegation platform that brings both liquidity and security to the salana network by connecting sole holders with the best staking rates on salana follow the link in today's show notes to learn more yeah I think the AI sector will be

interesting and you know here so I want to actually pull up um a piece of data here as well actually this might take me two seconds but uh this was this was you this is just leading into something that I wanted to get your opinion on here um which is so there's a group that does um a crypto insights group so shout out um they do this monthly survey of uh Crypton native investors I think they've got some 54 investors that fill the survey out and they there was a they do a poll of basically where are fund managers interested but it's so AI is by far um leading in terms of sentiment uh it's

the most uh bullish sector fund managers have ever seen I think the survey has been going on for slightly over a year uh with nearly 90% predicting it will outperform over the next three years uh just behind that is layer ones and Defi and then in terms of and memes are still although I just flagged it as sort of contested um at the very bottom of this is metaverse and some of the other less popular categories are lsts reaking da ZK nfts Etc um I've got a question for you you when you look at this putting your fund manager hat on here do you look at this as um like the overall bullishness on here on AI is like a counter signal if everyone is uh kind of in the same boat and bullish on that or still could just be beginning of a trend

because I mean that's definitely how I feel as well I feel like the AI crypto narrative is still just getting started I I I think it is just getting started um I I think you know one of the benefits of being you know fund Management in the space is our job is to meet with entrepreneurs every day like that's that's our core function and when we are meeting with people who are thinking at minimum you know 3 to five years in Into the Future um there's a there's a lag of like we want to get started we want to raise some money to go after this thing that we think is going to happen in you know X number of years and that takes time to develop it takes time to build I I would even say like gaming is a good example here you

know we started investing in gaming in 2022 real really um and a lot of the games we invested in are like just now launching yeah and and so it has hit these like Pete trough cycles of you know you invest a bunch of money you get really excited about it and then it's like okay then you got to build it and I think D5 was unique with D5 summer because you could have you know three smart contract Engineers put up you know an interface and and build you know some D5 primitive um and it was really you know moving at the speed of software open source and it didn't take very much to get the math was the hardest part basically whereas when you're building fundamental technology uh or something

like a game that needs depth and richness um and content it takes a really long time and so I think AI is um it's at that Peak uh because we are seeing some of the best entrepreneurs in in the space in the in the AI category right now and but they're still thinking in like multiple years down the road they're they're not even thinking about 25 or 26 they're like you know 26 is going to be a huge buildout year of infrastructure you know maybe we're going to have AGI by then but agents are going to be kind of the the new narrative you know in that time period and and like by that point you know X Y and Z happened therefore we're going to be there for that and so I think there's like the market reaction

and then there's like the Venture Market reaction and so Leading Edge of fund managers is is probably leading but I think you know and so you know where if we compare something like Eliza Os or you know formerly ai6 um uh the virtuals concept like everything that exists right now I think um is is is GNA start to be in that you know it it's going to take time to build phase where you want to build actual technology it's just going to be a while like you're going to have to get um you know a lot of fingers on keyboards for a long period of time um and um but I do think you know it's about finding the best Founders that are that have the the

best ways of navigating the admas um and you know AI is definitely in that category right now and frankly if you're an AI entrepreneur um the pitch you know to to joining crypto has has never been stronger which we talk about this especially with you know um with jelly um but um if you're a Founder in in the space and you know the last couple of years it has been and maybe this changes with deep seed we we'll see but um if if you're um been if you've been deplatformed by open AI like there's that um kind of crazy story of like I think it was winter 23 class of white combinator and they had like two-thirds of the class building uh chat

GPT uh plugins and and basically open AI announced a bunch of plugins and like eviscerated an entire class of startups um yeah like the D platform risk is real I also think the competitive landscape if you aren't able to raise billions of dollars is real or has been at least for the last few years and remains to be seen whether or not that'll be true I think it is largely true still um but it's Capital game and an AI intersecting with crypto is if you've got the right construct of a product and service it it is the best place to play um and so I think you're starting to see a lot of the AI entrepreneurs who you know have had trouble over the last couple of years or you know are recognizing the power of

what decentralized networks and and crypto incentives can bring um they're moving over into this space um so the talent is is definitely coming in yeah I think that um the other thing about AI that's been really difficult like any you know Paradigm Shift technology is what people are going to do with it and where value is going to acrew people love to opine on this on podcasts and talk about it with a high degree of confidence but just in the last week I mean the thought process in this is completely flipped 180 on its head and basically what was driving the US Stock Market and keeping mag sevens high is now like a huge area of vulnerability and people think value is going to acrew to a completely different part of the stack I would at this stage I would just welcome any in

all experimentation that's going on with AI and Eric Wall had a pretty good tweet thread the other day about you know kind of comparing um the relationship in like crypto Ai and foundational models is if you're a foundational model you're building the skateboard but crypto is the skate park um and the skate park is going to be a really great um way for people to just experiment with doing new cool tricks and things right and like the environment that uh crypto like crypto provides is going to lead to a lot of super interesting experimentation I know everyone has really hopped up on the agent meta in general and I know people are excited about it doing real stuff on chain for people managing your finances Etc I still don't hate the idea generally of just Creator AIS um that have basically tokens attached to them

for a couple of reasons which is one this is an extension of something that's already happening in real life you have completely fictitious hologram influencers over in Japan selling out Arenas it would make complete sense to me that the Natural Evolution of that is actual genuine thought like an llm that's attached to that influencer and having a coin associated with it is sort of just this really old uh Narrative of social F and one of the big advantages of AI coins are that you know you and I I don't really want a social like a token that's associated with me it um just feels weird maybe I'll that'll change in in my lifetime and I'll flip how I'm thinking about that but yeah I I still don't hate the original just use case of frankly like AI creators that have tokens associated with them um yeah

I I I think that there's a lot of so it's a great analogy the skateboard and the skate park um maybe tying a little bit this back to what we were saying on deep seek to um I I think um you know one uh Steelman argument for why um the infrastructure buildout in the capex bend is going to maintain is um if you just look at the Arc of any sort of like progression of Technology um the like I I could go back as far as like my mom worked at Apple and like one of the things that they were um trying to figure out was do they put you know 64k ram versus 128k Ram onto the mac and it's like well you know how much how

much do you actually need and and then it's like okay the first iPod had like I think it was not even a gigabyte of of storage yeah and like when I worked at Dropbox um if you did the whole sign up flow you got like 250 megabytes of storage and that was like your little taste to be able but like you can't even store a video in 250 Meg and so like the progression of Technology moves at exponential scale and I think that that's what we're seeing in it as well with the different you know developments of you know gpt3 GPT 41 like the the the ability to have chain reasoning now is like you know it's factorial to to

whatever you know the llm was doing previously um and so I I I think it is worth it to continue to build out and and probably like will cost a lot more to push the boundaries further on what these models can do um and ultimately like humanity and and consumers of AI Services eventually will be the benefactor of this but you know Sam and open Ai and everybody else who's building this stuff is willing to spend the tens of billions of dollars right now to be able to be first even if it gets commoditized eventually like now you know the cost of of using or or training a a basic llm that isn't as good as you know the the bleeding edge is probably you know five or six million

dollars um and and so I think like the cost curves are important here and as we push the boundaries further and further as to what the techn the core technology the core models can do I think um open AI is great and you know they 200 million daily active users apparently of of chat GPT I I wonder if there will be you know the the point of experimentation as to what the end consumer services are I wonder if that is something that might take place in crypto just based off of the level of experimentation that we as an industry have like look at what happened with defi summer if we were to take the core

Technologies and maybe it's not rappers and startups who are providing specific services but maybe it's you know happening on a platform for agents and you're asking the agent hey can you do this hey can you do that or hey we used it in this way or you know the the rapid iteration and the experimentation that we have in crypto paired with the capex and massive buildout spend to build the core technology and you know the the MA 7 plus um I I think that's kind of what makes me excited about Ai and crypto it's not that we're going to be able to Source all the resources in crypto I think we're going to Source all the use cases in crypto and that would be amazing um and I honestly I would love it if we were

doing this podcast in two years and no one was asking what are the use cases what are the use cases right like that would be cool if AI was a big part of that story and AG is kind of like a broad monitor for what you know use cases might be because an agent is is basically just a chat bot you know or a chat box with um you know someone on the back end who's doing whatever you need to do Michael let me uh I want to change topics a little bit and actually get your your take on you know we're looking at that invest survey a little bit and you know the block wrote up this this piece based on you know to my understanding that survey kind of with this idea that fund managers are getting ready to allocate again and um I I would

love you know we've talked a little bit on the pod in the past about you know what the allocator sort of sentiment looks like and you know pursuant to that as well I I think there's you would probably know a little bit better than me but in terms of the returns of uh past vintages of fund I think especially with some of the longer dated Venture funds it's performance has been pretty tough also think anecdotally this has been one of the more difficult Cycles to invest in crypto right unless you were in kind of it's just been really tough right it's a much larger space there's so much more dispersion than there used to be and uh yeah I think returns have been just pretty difficult in general coupled with the fact that there still haven't been many crypto successful crypto exits outside of token launches

for the most part um I actually there was a great I I just found this but this was an interview that Thomas lefont did at the all-in summit um from I think a couple months back where he was describing the state of the Unicorn market and he had a couple of really pretty jarring statistics on there that this was you know there were less IPOs that happened last year than there were in 2008 which is pretty pretty Stark uh statistics right so kind of and his you know overall mental model for this is something we've talked about on this podcast of just working through this insane bubble inventure that happened in 2021 and 2022 but you know I kind of wanted to get a sense from from your standpoint of you know what's going on from a fund manager standpoint in crypto right now like how have returns been

over the course of the last couple years what is the state of like the Venture and fund management Market in in crypto two two very different conversation points um maybe first on just like the the state of funds in crypto um dispersion has become very very pronounced at this point um and it used to be and and used to let's say like in the 2019 through 2021 era um you had a concept maybe it was um B lend maybe it was uh money markets maybe it was some category within some ecosystem and there was like a leader board of like who is

the best and who are like the next three best and if you were in the top three you kind of had like a pretty decent profile of return for that investment I think what has become even uh what has become obvious over the last couple of years is unless you're in the top of category it's really not going to be something that has you know fund economic level um potential and and so you you have to being the best and um you have to have ownership and Alignment you know in in the best um opportunities um so I think what you're probably going to see is a lot of um you know dispersion equivalently in the different funds you know funds will will kind of separate themselves as to the ones that are consistently outperforming

and the ones that are consistently underperforming um the market of crypto Venture um what we have at least heard from you know in rlps are you know the ones that you can imagine large you know endowments on the East Coast um you know large asset managers um all over the world um but what has been um what has been the case for them and you know when you're an asset manager managing you know billions or tens of billions of dollars you you basically have an asset allocation and you say okay this much to real estate this much to uh public equities this much to private equity and within private Equity this much to venture capital and within Venture Capital we have like a small book we

have like a crypto Venture program um and so when the bucket of venture capital is in a troubled State and I would describe the last you know three to four years um unless well yeah the the last five to six vintages which means you raised a fund that's like 2018 plus um uh those vintages are in a very tough position and I I just saw Angel list posted this basically no one has DPI uh from any vintage 2017 fund um the IPO Market is basically dead anything uh at least over the last um Administration um

anything that was over $100 million of acquisition value had to go through uh the doj basically got brought down down as a potential acquisition so the m&a market has also been completely slowed um and so what this does is um and at the same time you have higher and higher valuations of private companies SpaceX uh stripe uh you know all all the like hundred billion dollar plus companies that are like waiting to go public what this causes is um what you know endowments call the denominator effect where they have a massive um over allocation to venture in their asset allocation uh program because they don't

have any distribution yeah and so what that trickles down into is it says we're not you know most of them say we're not doing any new you know Venture funds or basically any new managers in the Venture bucket and we don't really you know have any time to look at crypto because that's a subset of venture um and so it it basically cuts off you know anyone that was deep in in venture over the last decade is is basically not in the market for new Venture let alone new crypto Venture um and and so how this affects is you've got uh a lot of managers who have you know the light speeds and Sequoia and CER Persons Of The World they've got relationships where um their their endowments are are

signed up for three four five funds um but anyone who's trying to break in is is not able to do so um and and and so I think that that hurts um you know the allocator market for crypto Venture if you're doing really well so ways that you can get around this if you are outperforming you know no one no one will uh no one will b or or you'll be able to get a meeting with anyone if you have great performance um then the rest is kind of you know up to you to to deliver but I I think how you know this manifests is it's just going to be separation um of you know good from great in in the Venture landscape and so people are coming back raising less um

basically you know what we've heard at least is most of the Venture funds that are in the space are either like in the process of raising or or starting their raise basically right now um and and this all makes sense everybody kind of announced like a late 21 early 22 last fund raise um which you know historically you know two to three years is how much time you have to invest These funds and so everybody's kind of coming back for their next cycle but I I think you know Paradigm announced that they raised 850 or 750 one of the two um down pretty far from 2.5 billion I think that's representative of what you'll see with most funds so there's less Capital

to go around um how this translates to the crypto Venture landscape the actual investing side of it I think um it's a lot it's definitely possible and probably easy easier to do the seed round or the lower Val a whatever you want to call that very very hard to do the multi hundred million valuation rounds um let alone you know the the growth rounds um because the other effect that's going on um yes there's liquidity with tokens but um binance still controls you know the vast majority of liquidity and activity um and and they're not launching nearly

as much as they were three four years ago the bar for getting launched on one of the top exchanges um is much much much higher um and so once again if you're the second third fourth place in a category you're you're kind of not going to have any ability to launch a token that does well um and I think that dispersion is is also what's taking over um so yeah there there's a kind of a lot of effects kind of happening simultaneously quick shout out to today's sponsor Aries markets Aries markets deployed on APS in 2022 and is now among the top 10 lending protocols across all blockchains with $280 million of tvl Aries markets has expanded its

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marinade follow the link in today's show notes okay so I want to talk a little bit about that last point on the binance side of things so one of the charts that I find pretty interesting in crypto in general is this Dex to sex spot volume percentage and you know this is going back to 2019 and uh you especially over the course of the last year the the market share of dexus has grown relatively High uh so now we're at you know about 20 or 21% which I understand is still far below what binance is that that's like one fifth yeah one F I mean and I think the I'm I'm curious to get your I I just did an episode with uh Jesse and Austin Adams I don't want to front run that Jesse Walen and Austin

Adams I don't want to front run that too much um but you know it seems like the dominant Trend and you actually saw this uh Brian Armstrong the CEO of coinbase tweet about this is just more and more assets are being issued um on chain than ever before and it's kind of overwhelming the listing process for Sexes and so coinbase at least has basically said hey we need to basically rethink this from the ground up in terms terms of how we think about listing these assets but there's just no way that we can do this um from a centralized way and obviously with dexes the friction of issuing on a DEX is you know two orders of magnitude lower you know much much lower right also the pound of Flesh that you have to pay to list is much much lower as well for uh I

was talking to Austin and he mentioned this pretty crazy statistic actually from investment banks that the amount that you as an issuer end up paying uh to the IBS that are supporting IPO is actually about 27% of what you're um selling out into the market that's about 7% that gets paid in fees about 20% in this is more statistical but in uh system systematic underpricing of your inventory so when investment Banks go public they Warehouse risk for you and then their incentive is to get that off their books as fast as they can so they basically sell at a discount binance from what I've heard um and don't quote me on this but it's more like 40% of the amount that you are the the circulating Supply that you're issuing onto the market there was some uh data that got

released around this on scroll um I don't have any specific proprietary information that might not be totally correct but still the word around the street is right they took an enormous amount uh from issuers and what's interesting about this is you know these Sexes are going to continue to struggle with listing um and the longtail of crypto assets from this like meme coin meta or pump fund meta or whatever it is uh meant that the longtail which frankly was the original product Market fit for UNIS swap back in the day has just become a much more important segment and now actually with especially a lot of meme coins it used to be a huge deal when they got listed on binance now everyone sort of knows it's the exit liquidity because of the Gap in between when price Discovery happens which is on chain on dexes versus when it gets

listed on binance or coinbase so if this is if this is the trend and the number of new ass assets that are being issued on change just continues to grow honestly probably dexas are in a structurally advaned uh position here um and you know you could see a world right where I think be a better world where price discover is happening on chain and you could see a world where if a lot of like the the long taale continues to be increasingly important when it comes to crypto just because of the sheer amount of assets that are getting listed or are going live then eventually you can have enough volume where uh you can actually start to win some of the the larger trading pairs as well and maybe hyper liquid has an interesting shot at this but so a couple yeah a couple things I

mean I I I think actually like you probably say the vast majority of tokens um because the vast majority of tokens that have launched in the last year and a half have been meme coins the vast majority of tokens actually have price discovery that exists at least starts on a deck because it's pump and R um and so I think it definitely starts there um historically what this has meant though is that you kind of get and the market structure is constantly changing by the way and like I absolutely expect that the market structure will change in the direction that you're describing it's just a question of when currently where we're at right right now is your um at least over the last few years if you got a coinbase

listing it kind of implied that they did you know regulatory DD on you and you were kind of safe um same thing with binance like there there was a due diligence process and there was um I think binance like we we counted it up had like basically 60 listings last last year so like almost one per week but that's that's like probably onethird or 1/4th of what they were doing a few years ago and maybe maybe I I don't even know um and so there there's sort of like a higher bar higher quality level and so it's sort of like if you get on listed on binance maybe you had to pay an arm and a leg to do it and so there's questions there as to like how much of the of the supply did you give to BMB stakers um but uh you know you do get

kind of like blessed in a way um and so I think that there is that element of at least the current market structure suggests that if you're not on binance it's it's hard to have you know real activity for your token um and right now real price Discovery real liquid price Discovery for any of these massive platforms doesn't happen anywhere than other than centralized exchanges and yes the Hope 100% is that this moves to a de it's a listing it's not a listing process and a listing fee um but we're not there yet yeah I completely agree and it's actually a the fact that price Discovery happens offchain on these Sexes is actually a cost to LPS and amm who have to pay

arbitrageur to move the price back to uh at least for like the current design of Unis swap it's actually not insignificant this is what people call Lever or lvr so it's definitely a challenge right now I do think I mean you know just as someone who likes to see more decentralized you know on chain-based product wins it's it's cool to see dexes continue to grow in market share so hopefully that's hopefully that's the case um we have that c in Our Deck oh really nice let's go it's growing it's just it's still relatively small there's a lot of Market left to capture yeah um you know so speaking of memec coins in general uh there was pretty interesting launch this week of jelly uh a new meme coin I saw Sam Lon who is one of the he's the founder at it

slow Ventures which is a pretty traditional web2 VC firm although they dabbled in crypto a little while ago I know um Jill gun that they were like a small investor in the seed round of salana um and then I think Sam has posted you know he's like he he like vacillates between extremely bullish and extremely bearish crypto so basically like everyone who doesn't work in crypto it's like when it's going up he's bullish let me guess so but but there was another I mean I don't know if you want to just give a quick rundown of this story which is you know there was a sort of unrelated uh startup and then Sam and and the founding uh you know members of that startup launched a meme

coin mostly to just generate awareness um is my understanding of it and it's called jelly so yeah so I I think Sam is friends with the founder of venmo and I don't remember his name um but venmo launched in like 2009 um it was a massive success from a user adoption perspective and you know the the original idea of VMO was I think actually kind of like not that great which is let's share a social feed of all the payments that you're making to friends um what it became is because it was and so then ultimately brain tree bought it and I think bought it for like 28 or 32 million like a very very small

acquisition um because they had no business model it was a social payments app um and then PayPal bought brain tree which owned venmo um and so it became deeply integrated into the payments stack and it and that's really when venmo kind of took off as a as a payments mechanism just because um yeah the Integrations to the to the tech stack um and it it's like now one of the larger contributors of of Revenue I think to uh to PayPal itself um so goes down as one of the best Acquisitions from a dollar um uh perspective but I think um you know the founder of emo and Sam and a

couple of others um all got together and launched jelly um jelly is a meme coin it doesn't have any utility doesn't have any affiliation with VMO either but it's just made by the founder of venmo and a couple of his friends and I checked last night it's like it was 200 million um market cap and I don't who knows where it is right now could be a billion yeah it looked like it went to 250 million in three hours or something like that which is yeah not Financial advice just because we're mentioning this Ticker on this podcast don't go buy this thing necessarily yeah 165 million market cap right now thank you Mark um but look I think what what what people are testing

is um and and actually uh he's not here right now but shout out Vance for a great tweet on this um um we can link to it in the show notes but uh basically people are testing liquidity when you know you sold your startup too soon for too little uh you're like wait a second Trump just launched a meme off of his likeness and brand we've got some likeness in brand too what if we do the same and I think with jelly I I did see the dev wallet only has like one and a half percent or something like that so it's not like there this isn't like a cash grab um it's maybe not a HW Tua coin but um I I do think like there there's interesting stuff happening where going back to it um if you're an

entrepreneur in you know traditional technology markets um and you're going to spend 10 to 20 years of your life building this company which may or may not get bought it may or may not go public but you have this like hope of liquidity at some point um and you're looking at what's going on in crypto right now and you're just like wait a second there's a different world there's a whole Better World on that side of the fence um it it it's kind of obvious as to where you want to play and if you're an AI entrepreneur and you're looking at crypto and you're like wait a second there's actual real things it's not just like let's launch a utility lless Valu less coin um I I think that there's real opportunity for you know a a wide swath

of these entrepreneurs to come into the space and yeah to Vance's point it's like you don't have any utility you don't have any value flowing back to it and it's gonna go up and then it's going to go down and it it just furthers the point that you have to be building something with fundamental utility that's connected to an onchain an actual onchain organization that's doing real things and at least the way that it currently seems is the best model is have the value that's being generated go into BuyBacks of your token and that um is the value cruel mechanism that that works um and so we're starting to see that play out at

scale yeah so I mean one of the the other ways that I like that uh Vance FR so just actually to build on that point of this people are calling this it's fun like an Arbitrage of sorts right where they're seeing much higher valuations given to tokens uh that have extremely dubious claims to any sort of cash flow the other one sorry I didn't mean to interrupt the the the other contest here is that uh Vine Founders launched uh a Vine coin earlier this week as well and so it's it's not just jelly and venmo it's it's other startup Founders who are doing the same thing right so you know I I think there's part of this and actually I gotta well I'm actually sure if I can say this up but there I know

they are relatively serious people not even just startup Founders but asset managers that are aware of this valuation Gap or mismatch in between token markets versus more Trad markets and they're taking it more seriously um uh but also you know this this point that van sort of made of yeah I think this is and we talked about this when the Trump coin initially launched and I think I did actually a a stream with Santi and and Yano and that might have been on the Empire feed or might have been on this one but um Alex Krueger had a pretty interesting take on this which is now there's going to be a bunch of experimentation with new he wasn't even thinking about startup coins or company coins he was thinking about um you know government coins right or or uh you know different countries will launch coins

and people people are just going to look at this I think the Trump mem coin is going to break a lot of people's brains they're going to see how relatively successful it was and how much money got you know raised or value got created and they're going to be a bunch of different types of entities and it was probably inevitable that startups would do this as well either as a way to to get liquidity or as a way to it seems like this was more of a publicity stunt and an attention grabber which which if that was the case then it definitely worked I mean here we are talking about it I think everyone saw this um so I don't know I think I I agree that there G there's going to be a lot more um experimentation along this along these same lines um the other thing that I

think you know the the The Meta of this and kind of what Vance is talking about um is there's the market structure bill is hopefully going to be something that crystallizes a lot of the definitions that we're missing right now and what we've got um and I think David saxs even said this he said look nfts and and main points are are basically commemorative items think of them as like Collectibles and they could be fungible they could be non-fungible but they don't have any utility and they're not going to be something that you like derive um you know fundamental value from uh other than you know pure speculation that's basically it and you're you're willing

to sell you're willing to buy it um for whatever price is trading and you know you're selling it to someone for whatever they're willing to buy it for and that's basically it then we need a subset category of actual utility tokens what are the functions of the decentralized protocol how is it decentralized how do these utility tokens actually you know generate value how do they derive that how do they deliver that value back token holders um you know how do you get to be decentralized enough to have a commodity status like all of those questions that were put into um the market structure Bill draft that went through the house you know those will be kind of like the delineation points that say okay this is a utility token there's value cruel this

is a meme coin there there's not any value cruel but because we don't have the definitional difference right now everybody's looking at crypto markets and saying oh wait it's just like a mean Point wait maybe there's utility and and I think that will do is frankly like quell a lot of the fervor that's going on in meme points right now because people will really start to see oh this is truly just you know a commemorative item and um utility tokens with actual value acral will probably take off at that point because the delineation once again is like any any you know value enterprising person will be able to look and see oh this thing actually does have value um whereas these things don't Unis

swap labs is rolling out the red carpet and launching a $15.5 million bug Bounty this is the largest bug bounty in the entire history of crypto to anyone that can find a critical bug with the UN swap V4 protocol this bug bount aims to make it the most rigorously reviewed codebase ever deployed to ethereum now the Unis swap name is basically synonymous with security 2.4 trillion dollar in cumulative volume has passed through Unis swap V2 and V3 without a single hack so Unis swap V4 is dedicated to bringing that same level of security and transparency to the V4 protocol so if you want more information or eligibility or scope or Rewards or payout or any of

that good stuff there is a link in the bottom of the show notes I highly recommend that you stop listening right now go to the show notes click the link head over and tell them that I sent you start earning money today maybe we can close on some of the comments that uh Jerome Powell made actually during the fomc which felt pretty interesting along these lines which was so we had the fomc this week this is the you know once a month augur that Everyone likes to try to read J Pal's facial expressions to understand where the market is going to go it's like our own monthly repeating version of Groundhog Day that we do um anyway apparently like it was a good it was a good fomc from just the perspective of his tone and some of what he was indicating about where he thought

inflation was and and that type of thing but he did mention explicitly that you know he talked a little bit about crypto and basically said that it was okay publicly for banks to support um you know these types of services and I was just that was a super interesting comment for him to make uh historically I think treasury has been relatively opposed to crypto or certainly anything that even smells like uh banking touching crypto rails and so obviously that doesn't mean that anything is going to happen overnight but it did seem super encouraging at least from my perspective I don't know what your thoughts were no exactly and I think people are reacting to that um look I think broadly the last few weeks and you know basically post

inauguration has been a complete breath of fresh air uh in terms of the tone of the administration and the direction from a regulatory or legislative perspective as to where we're going um you know you got Hester Pur leading a crypto Task Force at the SEC um you've got Cynthia Lumis you know talking about all the initiatives that she wants to get done on the crypto Council and you got the head of the FED saying hey we can enable crypto payments um and you know how this translates and we've talked to you know leaders of digital asset teams or the digital asset teams at these major Banks you know the goldmans the JPS the Bank of Americas even Brian Mahan at davo said like hey when they say when they

say it's ready and it's good for us to go like we're ready to go and that's across all the banks is like we haven't just been waiting and like hoping that this industry goes away we've been building and we just don't know how to interact with it yet from a you know Bank regulation standpoint um I think once given the all clear it's like it's going to move pretty quickly um payments is going to be the thing that happens first and Banks um are going to look at crypto and be like well we can just build an international payments network with this um and stable coins is a great mechanism for doing that they're also gonna you know Sab 121 is repealed yep what banks are also perfectly

positioned to do is give loans against crypto yeah and they're going to have a lower cost of capital than any other provider uh so if you want to put your Bitcoin in your JP Moran account and borrow against it I'm sure they're going to have a product to be able to do that soon um so I think a lot of the positive things that we've been hoping for are on the way um I do fear in the same way that everybody I mean I can't believe people are still talking about this but like the government's going to put a t- on bitcoin and have a strategic Bitcoin Reserve it's like guys that's not going to happen yeah but but maybe uh you know we're we're just not going to sell the ones we have in the same way I think all the banks are like oh we're gonna launch

a bunch of tokens and we're gonna have them like get launched via JP Morgan or Goldman Sachs in the same way that they do IPOs it's like no they're not going to do that um and and so the expectations of what this enables I think are always going to supersede what the reality is but any any positive developments that further entrench the banks into the crypto landscape is positive because they move from from foe to friend I completely agree and you know I think when at least I think about what uh how banks are going to want to interact with blockchains I do think that they're going to want um man I can't remember if we were talking about this but I I do think a lot of the enter do you remember people used to debate Enterprise blockchain

back in 2017 and 2018 and yeah but some version of that is probably what ends up coming to like a lot of these banks are going going to need their own permissioned environments right even if you look at how something like Biddle works today it's a it's permission you need a kyc to interact with it um I actually just saw that Apollo put one of their debt funds on chain today as well look up actually what the exact details for that Fortress has been looking at doing this with one of their distressed funds um distress debt funds um look you've got uh um Black Rock SE saying it's time for the SEC to allow

for the tokenization of equities like that it's not going to happen immediately eventually that that will happen when that happens I don't know but the the ability to have that in of itself is such a massive win for the industry now it's not going to mean that you're going to be able to go put your tokenized Apple at least initially you're not going to be able to put your tokenized Apple that is you know technically held in The Brokerage of Goldman Sachs onto a but it'll be tokenized and you know maybe the next step will be that you have other services that are within the four walls of golden sacked that allow for other services um within their blockchain ecosystem but it's not going to be

something that you're going to be able to remove from you know their four walls I think yeah and you know I think that there's a there's an interesting discussion to be had here as well around how these institutions are going to where are they going to decide to deploy um and also like how can we retain some crypto values or the ethos or some of the benefits of you know deploying onto you know permissionless Global ledgers and you know it's very it feels very likely to me that banks are going to want entirely permissioned environments um like I could imagine something where you have to kyc at the sequencer level or something like that and you everyone who's you know operating at that in within that environment is a kyc person that type of thing however you know the one of the benefits of ethereum right

and being an actual L2 is you have things like an escape so you know there are these like small incremental benefits that I could imagine where okay maybe uh you know just because of how efficient blockchains are you drive down some of the services and there's still a Goldman Sachs or JP Morgan W Garden but you have these other benefits of you know being able to you know opt out and Escape down to L1 where it's less censored things like that and anything that has to do with a financial service institution is going to be kyc just make that assumption right now yeah totally um and it's interesting to see how you know maybe path dependent it you know there's this whole world all building the same thing and you know converging on different models but you know it is interesting right like ethereum has

taken a little bit of a different approach here with uh than salana and you know salana one of the benefits there has been they've been one shared layer they've got a bunch of activity there you've seen a bunch of Dex volumes migrate over there but they're not as friendly with l2s and it's been interesting at least for me to see oh I haven't asked you about this but um this is public so I don't know if you could comment or whatever but I know uh uh you know an x uh framework uh gigabrain and now most recently jump uh you know uh ex employee who's being sued by by jump for is spinning up basically a new L1 which is inspired by his work on fire dancer um and it's been interesting and there was another chain that launched which is a fork of fire dancer Fogo um and it's

been interesting to see I sort of assume that these would just be l2s but they're not l2s they're they're new l1s and that could be for valuation reasons it could be because it's much more difficult to build rollups on salana than it is on ethereum and so maybe these are more maybe these paths end up diverging a a little bit more at the end of the day than at least I had originally thought it's something to think about yep I I think that that's 100% the case and um you know can't say much on on the subject um I do think Fogo and unto are are pretty different but you know fire danc is open source and it's an open source protocol it's an open source project um that's how you know these these ecosystems build themselves um and you uh the other part that I thought was

interesting um was Brian Mon from uh Bank of America I I didn't see this I saw this in a tweet so I I hope it's actually credited to him but um he said as soon as we get the all go uh we're ready to start filing patents and it's like dude you're totally missing the point and and uh you know patents is just not the way and like IP rights is not the way that this industry works because it's all Source technology it's software and you have to build your Moe in a different way which is community and um engagement and it's just a totally fundamentally different construct um it kind of reminds me of

like I don't know 2018 2019 when Nike filed the patent for like shoes on chain it's like oh my God I know which is funny and you know that is you know there has been this broad assumption that you know banks will just win and you know it's basically depending on which side you are on right if you're in more on the crypto native side and you like startups and VC sort of like oh these banks are going to get disrupted and if you're on the finance side you know they rarely entertain the idea that this could be a disruptive that is real disruptive potential here the Moes that you know financial institutions have is obviously uh Capital um there's a regulatory Moe uh and they have trust right like I think trust is actually a massive Moe for financial institutions but th nothing is they have users that

have trust those two they have users that have trust right like you have I mean even for me right who's like extremely deep in the weeds and you know a but you know holding assets and Fidelity I feel pretty safe about that Bank of America I feel pretty safe about that so but over time right you can start to chip away at those Moes and if banks and financial institutions have completely the wrong idea of how to compete in this space you know they can't they those modes can get eroded over time for sure so you I could imagine these two worlds smashing together and small subsets doing much better than other subsets but yeah I I I can see multiple ways that this plays out I think it's possible that we are on a complete competitive plane with the

banks over the long run and it's sort of like Us Versus Them Zero Sum I I also actually more so think that there will always be a permissionless ecosystem that exists that is adjacent to the financial in financial ecosystem that exists all of it will be powered by blockchain if you want to you know do things within the Fidelity ecosystem you got to be kyc you got to be a Fidelity customer and you've got like select services that they enable that within their four walls and if you want to do some of the more like Fringe creative uh out there stuff like that's going be the open and permissionless world my bet is that the open and permissionless world will will kind of take over over the long run um but they'll for a while live in in you know parallel um and all of

it's going to be underpinned by blockchain it's just you know one one's going to move faster because it's going to be open yeah all right Michael I think that's probably all the time we have for this week but this was a fun one my man and uh I will see you here uh same time next week yes sir