Global Instability Is Fueling the Greatest Crypto Boom Yet with Arthur Hayes and Mike Silagadze

Transcript

If you're waiting for PAL to cut rates or restart QE and that is what's the signal to you to jump back in the markets, you might be waiting and the rally might Bitcoin might be at 500,000 before you get that signal that oh, okay, now it's time to do the thing like they did in 2008. There's never been really a fundamental season in in crypto, right? It's always been a hyper speculative kind of mania. I think more cryptocurrency liquidity in Bitcoin brings greater value to the cryptocurrency realm in general as well. Does gold kind of follow the same principles in your mind as Bitcoin? I think we're going to get under for a similar sort of move. I think this is our start to $1 million. Welcome back to the rollup, your home for technical talks and open conversations that shape

the modular future. Nothing on today's show is to be construed as financial advice. You can see our full disclosures list at the rollup.co/ventures. Sit back, relax, and enjoy today's episode after a quick word from some of our awesome partners. The intersection of AI and crypto is moving fast and soon an agent will be managing your onchain transactions for you. But without guardrails, it's a disaster waiting to happen. Newton locks agents to your intent with cryptographic proofs and real penalties if they slip. Learn more at Magic Newton on X. What's going on, guys? Welcome back to the rollup. We have our resident macro enjoyer, Arthur Hayes, and one of our DeFi OG builders, Mike from Ether, in the house today talking all things macro, Trump, DeFi products, and whether or not we're

bottomed. So guys, good to have you on. Thanks for having us. Yeah, thanks for having me. It's a late night here in New York for us, early morning for you, Arthur. And the question is the one to you as always. What the hell's going on? Are we bottomed? You're tweeting Yatsi. I put out a tweet that was like Arthur Hayes is gonna come on the pod this week and say Yatsi [ __ ] last time to buy under 100K. What are we thinking? Yeah, I mean it's I think we absolutely bottomed at 74500 back was it April 9th or or whatever it was? Um, you know, the Trump team took a max maximalist position on tariffs and that was throw thrown out the window with a week of bad market price action and you had Trump walking

back tariffs. Now he's even saying he's going to cut the China thing. Uh, you have Besson going on a tour of all the media outlets basically saying he's got a big ass bazooka and don't [ __ ] doubt him. He's going to make sure the treasury market's all good. you have a Boston Fed governor coming out and saying they'll do whatever it takes to make sure the market is properly functioning. And so we know that the bottom is in. They they caved. Um they couldn't handle the the stress of, you know, dramatically quickly changing the global financial system. Not to say it won't change over the next, you know, decades or whatever, but it's not going to happen in a quarter because these guys got to get reelected in 2026. So we bottomed. The money's coming. Bitcoin's up what, like 25% off the lows already.

And if you come back, if you think back to 2022 after the FTX lows, we rallied 6x when Janet Yellen took reverse repos from two and a half trillion down to zero. I think we're going to get under for a similar sort of move. I think this is our start to $1 million. Wow, Mike. Yeah. Anything to add? Um, well, I'm not I'm definitely not going to, you know, uh, I can't really add much more insight to the macro picture, but um, token, man, let's go. Yeah. Yeah. Mike's Mike's got too much Mike is holding way too much Ethereum that he can't he's not feeling the euphoria. Us fart. No, that's what I was That's what I was going to comment on is I'm gonna

put my neck on the line and say ETH has in fact bottomed. Um, I think there's there was so much negative sentiment about Ethereum in parallel to a [ __ ] ton of really exciting stuff happening both at the protocol level and applications including EtherFi that are going to melt people's faces. I think people are going to be blown away at some of the [ __ ] that's happening on Ethereum over the coming year. Uh, and so I think we're going to see that ETHBTC ratio reverse. Yeah, I mean that's the that's the big thing, right? Is is the Bitcoin is Bitcoin dominance topped as well is the uh is the ultimate question for all the pretty much all the folks watching, right? You know, that's kind of like the signal to go party. I I'm not quite sure

yet, but it's at one of the higher points that it's been in a while. Um the macro flows seem to be favoring BTC more, but Rob, maybe you can chime in here. I mean, I'm gonna I I'm going to take the uh the counter to Mike here. Nothing against Ethereum. I love Ethereum for all that it's got, but I I mean, we just got Micro Strategy 2.0 with Canton Fitzgerald, who's, you know, extremely tied in with the administration given that it's Howard Lutnik's son that's running that. and they just partnered with Tether and uh Bitfinex to basically run M Michael Sailor's strategy playbook, which I I don't know exactly how much buying power

that gives them, but you know, they they're talking in the multi-billion dollar range. And so I think if Michael Sailor had that kind of impact on Bitcoin and now we're getting more Michael Sailors and more micro strategies, I think it it's sort of, you know, Bitcoin's time to shine. But then ultimately, you know, this brings so much more liquidity into the ecosystem just like more dollar liquidity in in the global financial system pumps Bitcoin. More Bitcoin monetary value creates more liquidity in the in the crypto. I think more cryptocurrency liquidity in Bitcoin brings greater value to the cryptocurrency realm in general as well. Yeah, you have like version two, version three of Bitcoin

Micro Strategy, but now you got Ethereum Micro Strategy starting up. you had that uh there was this IPO or reverse takeover of Janover which was like the which was going to run the the same strategy. I think they're actually starting with the with Soul. Uh and then you've got a bunch of others that uh that are trying to run the same thing on Ethereum. So I think uh you know a lot of these sort of financial engineering games um are are coming to ETH as well. So that's uh uh that's a reason to be bullish. Yeah. So guys, kind of zooming out towards more again on the on the macro side of what has just happened. It it really feels like Trump has just like walked back everything that he has kind

of said in the past with the tariffs and with China. Um today I think there was an announcement regarding a unilateral deal. Uh they mentioned the tariffs on China would be under 45 or between 45% and 65%. um when we're looking at the longer term ramifications of what has happened outside of just um more liquidity coming into the markets, do we feel that this is going to be something that is persistent over the coming years of Trump's term where he's going to be dealing with these trade deals and effectively trade wars that are going to cause more volatility and instability?

Um, I guess what like the root of what I'm getting at is is how how long do you anticipate us to be able to kind of have positive market liquidity and sentiment and is this all still kind of uh striving towards more rate cuts as Trump has been pushing forward for? I mean, I think the focus on rate cuts is a bit silly because um people who want to look into the past and say, "Okay, we know what happened from 2008 to 2019. It was quantitative easing. We know what it means. We know how how it was implemented. We know the communication throughput on how that happened. And so we were trained over, you know, a decade of, okay, Fed prints money every week. We go and buy stuff

and it goes up, right? And that's just it's just that easy uh to make money in financial markets. But then obviously everyone caught on to the game like oh this is inflationary. Quantitative easing means inflation. Inflation means I don't vote for the party in power. Therefore, it's bad to use the term quantitative easing. Like the normal people know what that means, which means it's time to change the game. And so people who were looking for QE missed 2022 in the end of the year when Janet Yellen did wasn't technically QE, but it was very similar. Money was created in some way, shape, or form. And stocks, crypto, gold, everything ripped over the next uh 18 18 24 months, right, up until the Trump inauguration. And now again, people like, "Oh, when's Paul going to

cut? When's when's he going to do QE?" Okay, that's 2008 2019 paradigm. Now we have Treasury buybacks. Again, it's not as straightforward as quantitative easing. But it accomplishes the same thing, handing more leverage to those who can buy Treasury bonds. There will be more trillions of them issued because the US government runs a massive deficit. Therefore, money will be created. Again, it's not as straightforward as 2008 2019, but it's the same thing. So I think if you're waiting for PAL to cut rates or restart QE and that is what's the signal to you to jump back in the markets, you might be waiting in the rally. Bitcoin might be at 500,000 before you get that signal that oh okay now it's time to do the thing like they did in 2008. So I think we need to be mentally flexible and

understand that it really all boils down to volatility and the bond market and the best proxy for that is the move index. Um, if you don't have real-time pricing, it's published every day at the end of trading hours in in New York. And you know, if you look over time, pretty much when it gets above 140, almost immediately, policy makers do something. Uh, so April 8th or 9th, intraday, it hit 172. Few hours later, Jamie Diamonds on TV and CNBC excoriating Trump for this tariff thing. Trump immediately walks back tariffs. Uh, 2022 in September, MOO is above 140. Janet Yellen shifts issuance of bills in for bonds and we start rallying and I can go

back over a bunch of other financial crises and say and show you 140ish levels and move policy makers immediately react and that strike price gets lower and lower as the leverage increases and increases in the system and so Trump is a very volatile politician that's his style he likes to throw [ __ ] against the wall see what sticks and change that means more volatility in the markets Bitcoin loves volatility we will do well I don't know what the policy is I don't care what the policy is. He's just going to try stuff. It might work, it might not work. We don't care because at the end of the day, as long as volatility goes up, we make money because we know that authorities cannot handle it because of all the liquid all the leverage embedded within the financial system. It's just that simple. And the the other ironic

thing that's been happening as a result of this is that gold has been on a tear so much that it's outperformed a lot of stocks out over the last 10 or 20 years. Um, I think a lot of people saw the this kind of like gold to Bitcoin rotation going. Um, as as a result of effectively what you've just described, Arthur, this kind of hidden hand QE or this I think you described it in your article as like ski cut, right? Uh, cutting across to make an avalanche happen. I tend to avoid avalanches, but uh, you know, tweet your own. And so I think a lot of like I think a lot of boomers missed gold. Like I think a lot of people have not been holding gold because of the performance of stocks. I vividly

remember reading a piece of of yours maybe a year and a half ago or two years ago. You predicted Bitcoin 250 gold 5k. I think gold may get to 5k sooner than people think. Obviously this been kind of you know parabolic move here now. it does gold kind of follow the same principles in your mind as Bitcoin or are you are you kind of thinking about them in a in a different bucket? Now I put gold I think it's the same expression of the same phenomenon and trade. However, different groups of people buying it, right? So if we want to take a look at like when gold really started to catch a second wind here in this bull market, it's February 2022 when the United States government decided to steal the money of the largest commodity producer in the world.

and basically are saying these treasuries things that you own, they're not there's no property rights in America. There's property privileges and you're you're allowed to own these things if we like you and if you do something we don't like then we're going to steal it and they stole Russia's stuff, right? And so if I'm a central bank manager and I just watched them steal the literally the largest commodity producer in the world makes the most, you know, base things that help us live this civiliz civilized life and the empire stole it. Why do I want to own the claims of that empire? So again, I'm not going to go out and just dump all my treasuries because that's just dumb. Okay. Well, if I'm generating more dollars on the margin, I'm going to be inclined to either buy stocks or buy gold. And that's what they've done. You,

you know, pick your central bank, who runs a current account surplus, and I'll tell you they're buying more gold than they ever bought in the last 20 years. That's the gold story. Um, obviously Bitcoin has outperformed gold if you want to look back to 2008, but at the end of the day, I think it's you own gold because a central bank's going to buy gold. You own Bitcoin because the retail population around the world is going to buy Bitcoin. But what are they trying to escape? The same thing. Um, too much inflation, possible collapse of the, you know, fiat postw World War II financial system.

I saw this in your recent article, Arthur, and on the last episode that we did or maybe the the one we did previous to that, I had asked you about kind of like the refinancing of this like 9 to10 trillion dollars of debt. And you had kind of talked about why it's uh cash flow neutral, doesn't really add anything, doesn't really subtract anything. It's just something that they have to do. And then I saw in the article that it turns out through some, you know, mechanics it is cash flow positive. Could you just walk through why in fact it is cash flow positive and adds new liquidity to the system?

So the the assumption is that the federal deficit continues to rise. Now if you look at the um most recent Treasury monthly statements of the US the uh fiscal year which starts in October uh I think yeah October to March of 2025 versus October to March of 2024 um spending is up 22%. or the deficit is up 22%. So this is in the face of two months of Elon Musk uh Doge and in the face of all these government programs being canceled. The deficit is still rising. And so I make the assumption that it's going to continue to rise um because that's just how the US government has been structured. And you know I don't care what what strip of

politician you are. You know it's political suicide to really go hard at some of these entitlements. um you can cut around the edges and as we've seen Doge with the they said they were going to do a trillion Elon walked it back to 150 billion and now he's out the door in a few weeks anyways uh to go back and try to resurrect the Tesla stock stock price. So deficit increases who funds the deficit? We just talked about how the US stole Russia's money and if you're a central bank manager, we don't want your money stolen. So you don't make the problem worse. You don't buy as many treasuries as you would have bought otherwise. You buy other things. So we don't have we don't have foreigners buying at the margin. We don't have the Fed buying at the margin. They're actively um reducing their portfolio of

treasuries. And the private sector people in America are broke, right? They spent all the the still money on, you know, goods and services and you know that that economy uh is that the money is is run out. So who's left? Well, these hedge funds showed up, you know, starting in uh mid2022 with a basis trade, which is I buy a cash bond, I sell a futures contract, I earn a bit of a spread, I highly leverage that trade, and I make good money. Now, I can the more leverage I have, the more I can buy. And so, that helps the treasury fund itself because they don't really care what the yield is. They're going to buy the bond because it's trading at a discount to the tre the the futures imply price. Um so if Bessant can allow these group of

individuals to buy more at auction then he can increase the issuance of bonds. I mean he has to increase the issuance because the deficit continues to rise. So that's really the the mechanism here. As long as they can provide this balance sheet that sits in the banking system by changing the rules or alleviating some of the stresses then this these group of uh hedge funds can buy more bonds at auction uh at prices that are affordable to the US government. So that's the mechanism by which uh the treasury buyback which in and of itself adds no liquidity to the system helps the well functioning of the treasury market and helps Besson issue more bonds.

Got it. So, it's not necessarily issuing more liquidity. It's more so issuing bonds and they're able to do that because there's more leverage in the system. Um, correct. Got it. Cool. Um, okay. Andy, you have anything here? Yeah, I think we're all good. I think we're all good on the macro side. It's time to return return. Let's go. fundamentals, boys. Boys, I've been tweeting return to fundamentals for like a month long, two months long, and it's really the perfect left curve and right curve meme. I mean, Mike, maybe you can tell us what return fundamentals means to you. Uh, I'm super curious what your fundamentals season is coming because we may have a different understanding.

Well, I don't know. There's never been really a fundamental season in in crypto, right? It's always been a hyper speculative kind of mania. Uh the only things that have really made money in crypto have been casinos um and and I guess stable coins. Now stable coins are large enough that they're they're actually making some money. Um but uh token prices have been completely disconnected from that. You have ridiculous, you know, vaporware projects trading at 5 billion, 10 billion, 20 billion FDVS. Um look, eventually gravity has to, you know, bring itself to bear, right? eventually reality laws of physics have to uh you know have some sort of application and so fundamental season in my view at least is uh when things like cash flows revenues projects

that have customers actually have start having some sort of impact on the price of these assets and uh I think uh I think this is I don't know if Arthur this is a term you coined or or or somebody else but this concept of tokens for certain projects serving as pseudo equities in the sense that um um they serve a lot of the same roles that do equities. Uh all right. Well, uh, somebody said, and I'm I actually think it's a good analogy to to think about these things where if a token has a claim on revenues and has some sort of governance rights along with utility, etc., etc. Um, at some point and and we see this for example with hyperlquid being a great project uh uh you know

doing token buybacks and that that price you know price of that token I think has outperformed uh almost anything over the you know the time period that it's it's been trading. So fundamental season is basically when real [ __ ] starts to matter when gambling which will always have an impact starts to matter just a little bit less and so you know betting on things that um actually have users and revenues and real stuff that you can measure um uh will lead to more positive returns. Yeah, it's like really it's really quite weird how right now in the space it feels very apathetic like there feels like there's a lot of you know I've spoken to multiple content creators um people who are just giving up you know on kind of trying basically kind of

feels like the gig is up across the board but yet there we are on the precipice of what we think will be the largest you know next leg of a crypto cycle that we've ever seen so kind of weird timing I think people are getting shaken out however The core crux of why I believe is what you're hitting on where it's we we are we are existing as crypto in in a niche that is still just on the cusp of being globally relevant, right? Where there's actually crypto native businesses that serve tons and tons of customers outside of just, you know, this niche that we exist in now.

And so I think like the community right now has been somewhat apathetic. I don't know if it's like a dis diselillusionment phase where we're kind of like uh you know need to find our true core sense of self or something as a space but there is this there there is this very unique feeling that um people are kind of kind of tarnishing as we as as they feel that like what they've the effort that they've put into the space over the last couple years has kind of not not gone to places. So, I think that this is probably the the logical next step for return to fundamentals. When I say it, I think about the ethos. I'm thinking about the core reasons of why we're here in terms of a lot of the core

properties of blockchain. Um, and so, you know, I think bringing these back into the limelight will do wonders. I mean, I think always had fundamental season if you think about what what's BNB the number fifth fifth or sixth, I don't know whatever largest coins. Centralized exchanges are not fundamentals to me but you know to each their cash flow let's say fundamentals in the terms of like cash flows right cheesy makes infinite money he takes a portion of that infinite money and buys buys back his token right and that's created BNB as the monster that it is right so I think there's always been fundamentals and then you have fugazi like Cardano and Ripple but again it's all a spectrum yeah like when I look at uh for example

Etherfi like our goal, our next big milestone that we're shooting for is to create the first DeFi protocol that generates a billion dollars a year in revenue not from gambling but from actual users paying money for services that we provide. Uh and the result of that I think with we we've had value acral we've had token buybacks since day one I think will be hundreds of millions of dollars of token buybacks per year. uh in that world I think again that act is basically a force of gravity that pulls the you know the market into reality and recognizing the uh the value of that and yeah BNB is a good example Hyperlid is a good example a just introduced uh uh you know their tokconomics model which includes buybacks I really think this is going to

be table stakes for any serious protocol moving forward and Mike I think at the top of this podcast you know you were arguing for like ETH Bitcoin rebounding and I think you would probably take the argument that you the tokens that have these buyback programs and this real cash revenue that is and are cycling it into these tokens are going to outperform kind of the basics the Bitcoin and then you know maybe the L1's and then you can kind of get more beta is going to continue to outperform that's always I think the baseline will this outperform Bitcoin at least in the crypto market so you know Arthur do you agree do you think in the current dynamic we're going to see like these these tokenized uh products that have

real cash revenue and are putting that into into their tokens outperform some of the more fundamental coins like Bitcoin. Well, I think I think this is a Warren Buffett quote. Um price is what you pay, value is what you get. It's all about what price you pay. Um Ether 55 cents, yeah, outperforms Bitcoin if they do what Mike says they're going to do. Etherfy at some ridiculously high other price will not outperform Bitcoin from that p that point onwards if they you know do another billion of of revenue which is obviously much less percentage gain off of a higher base right I think so yes anything can outperform Bitcoin is what price did you pay for it um and then what was the change in revenues

over that time period so I think that's how you have to look at it not like in an absolute sense does this outperform better than than Bitcoin and so I think a lot of these tokens that are, you know, earning real revenues, uh, that are not sort of appreciated for that fact have the ability to outperform Bitcoin when we get the, you know, alt season or fundamental season or whatever you want to call it, uh, when the Bitcoin dominance peaks in this part of the cycle and then some of those tokens and projects um, really start uh, spiking in price. Before we get into alt season and everything that entails, would you say Bitcoin dominance has peaked for this part of the cycle? No.

No. Okay. I don't think so. I think that you know the folks who are who have all who have who didn't get smoked in memecoins and all the other past alt season obviously they're institutional investors or have family offices or high net worth whatever it is right because now Trump has shattered this illusion that there's this American exception exceptionalism this like um paternalistic empire that's looking after people's capital but is now just looking after you know the base voters who got this person into office then I think these people are going to start understand why Bitcoin exists. They're going to start to appreciate gold more and they're going to buy less NASDAQ, uh buy less treasury bonds, buy less boons, buy buy less of everything, right?

Because now there's this, oh [ __ ] things are changing. I don't know what that change is going to mean, but I had it so good in the last situation. I might not have it so good in the next one. Let me buy something that is um not correlated with the establishment uh persisting in its current form. So, I mean, that just brings a large quantity of buyers for Bitcoin and not necessarily the other tokens, which is kind of they're not going to buy, you know, shitcoin XYZ, right? That's just not they'll get there eventually, right? Because everybody loves a DGEN. I don't care how rich you are, but you know, you're going to start with Bitcoin.

However, some some more kind of financialized institutions might be interested in Etherfi if they figure out how we're going to get to $1 billion of revenue. So, I'm like, I don't know if that if that surprised anybody else, but a billion dollars is a lot of revenue. I have the EtherFi card on my phone today. I use it on the subway like a pleb. Um, it's $2.90. I can borrow against it. I can borrow against my ETH as well. Um, so that's part of it. Mike, how are we getting to a billion dollars of revenue? It sounds like a very lofty goal. Um, and kind of what has been the financial growth so far of Ether?

Yeah, I mean, I I think there's a a very credible path. I mean, I I come my background is building real businesses. My last company, we we got it up to I think it was on 70 million in revenue when I left. So, I want to at least 10x that and and more in this this time around. And I think there's a very credible path to uh to doing that. Um uh you know, we did in our first year, uh we didn't expect it, frankly. It kind of blew away our expectations, but we did over 25 million in revenue. Uh we did, I think, two or three million in profit. Uh so we we raised a bunch of money in our series A or seed round. We haven't touched it. Um you know in sitting in the bank earning uh you know treasury and staking yields um and the way we did

that is by creating the best product in the in the staking restaking market and we captured I think we're at like 70% market share in liquid restaking uh and growing uh and have a continually growing chunk of the the staking space. So that was our starting point. Our endgame is to create this really this new category that I think is going to become uh a very frothy place. There's probably going to be dozens of players in this new category, which we're uh calling a DeFi bank, which is an end-to-end financial services solution onchain, self-custodial that gives you all the services you would normally get from your traditional bank or neo bank like a Revolute or New Bank or Chime or whatever you use. uh but 100% on chain with structurally lower

fees uh and higher rewards because there's just higher rewards, higher yields available in DeFi than uh uh than you would get in in Tradfi and lets you pay your bills, get your payroll, do your taxes, everything in one place in a single easy to use ass app, easy to use app um with no um none of the crypto nonsense that maybe users uh uh have come to uh expect like seed phrases. and hardware wallets and any of that. All of that complexity abstracted away in a in a great user interface that rivals anything else you you find on the market. So that's the dream. Now the way you get to a billion dollars in revenue is twofold. on growth obviously I mean for us I think we get there with sort of

mids singledigit millions of users depends on a couple of different assumptions but one of those is that crypto users are inherently much more valuable than a typical let's say neoank user typical neoank user generates 50 to a few hundred dollars a year for uh for for a neo bankank uh depends on the the particular market that they're they're in uh crypto users are just way more valuable for a bunch reasons. One, they just have way more money. Uh, and two, they're just much more active with their money. So, you can provide more services for those users. So, a crypto user is worth more like 1,500 to $2,000 a year uh across all the things that they they do. And so, you with a much smaller

number of users, you you are able to generate a lot more revenue and you're able to provide those customers with a much higher level of service than you would provide uh you know, a typical Neoank user. So you just end up having a much better product uh and better margins, better uh their ability to uh to drive revenues. I think uh credibly we can get there within three three to four years. I think that's a that's a possibility. Uh by this year I think we'll have a run rate I again I'll stick my uh my neck on a line. I think our run rate is going to be north of 100 million revenue this uh this year.

So the natural question of that is um disclaimer as an as an ETHI holder, how am I a part of this growth and like what is the what is your thought process towards being a a fundamental uh project a and kind of distributing revenues and and is that possible? Is that part of the plan? Innovating finance, global, institutional and onchain. Deep liquidity to drive capital efficiency. Now maximize yields on institutionalgrade liquid staking with me. Unlock trillion dollars of capital via

Fitbitcoin. All of this secured by Mantle's treasury of billions in stables and ETH capital pools. This entire ecosystem is coordinated by a vast network of seasoned VCs that are aiming to create the next generation of banking and financial technology. This is Mantle. Yeah. Yeah. It's 100% part of the plan. So, we're one of the projects that basically from day one, maybe like day 10 or whatever it was, uh we've had a revenue uh buyback uh model. We've had a fee switch. We started it at uh at 5% of topline revenue. So the profitability I mentioned actually includes the the revenue buybacks that we it's net of the

revenue buybacks that we did. Uh we started that really as just a way to set the floor. It's like look, we're going to do something because everybody else is doing [ __ ] nothing. Um we're going to say no, this token actually has value. It it is tied to the success of the protocol. It's not just a memecoin with the name of the protocol. Um and the goal is to ramp that up. We've we've done uh governance approval to allow us to ramp up to 25% and we'll probably increase that over time. Um but we want to be uh uh I guess reasonable with how we do it. We don't want to ramp up our buybacks just for the sake of doing it because frankly we get a higher return on investment by uh building more product and investing more in in R&D.

But as as our margins scale, if at a billion dollars in revenue, we're doing 30 40% margins, which I think structurally in a crypto financial services company, you absolutely can uh get there. Uh that's I mean, we're going to jack that up. We're going to jack it up to 20 30% uh buybacks. I don't want to, you know, uh uh the the price of the token can do whatever. I mean, it can go to zero. It can do, you know, whatever. I don't want to uh forecast any kind of prices. But what I can do is say look this is what we're going to build for the protocol and that's what uh uh what it's going to mean as far as um uh buybacks and uh you know relative to the market I think uh I think we'll we'll likely do pretty well and there's other

projects that are as I said doing the same kind of thing. I think I mentioned a and hyperlquid are good examples uh and we see those tokens have just done way better because they've just you know I think people recognize the value cruel properties of that. Yeah. Arthur, when I was talking to Ashadot in Hong Kong, he mentioned that you guys were doing a bit more M&A work and kind of integrating new crypto businesses at MailTorm. curious if any of what Mike said has resonated with regards to the idea of some of these cryptonative businesses or kind of what unique ideas that you've seen um you know within the broader space that are particularly compelling um and if

there's any kind of gaps that uh that are available to to fill whether it's these DeFi kind of neoank applications or just tokconomics insights u just curious broadly here Yeah, I mean I guess specifically on sort of token stuff, right? I think what Mike and Ether are doing is quite unique. Um, we've been sort of going back and for a while now on their their cards program because this is something as I've been in the space since 2013. I know I have very difficult time with banks as you can imagine for obvious reasons and so the ability to have uh a Visa or Mastercard where I can like you know tap something and and and spend my money is like amazing. Now,

this is not a new concept, right? We've seen hundreds of uh companies say, "I'm going to build this online offline ramp using the crypto and blah blah blah blockchain, all that kind of [ __ ] right?" And either a it never worked, or b the fees are absolutely astronomical. And so, um, when Mike came and said, "Yeah, I've got this car." I was like, "Okay, well, prove it to me because like I've seen this [ __ ] 500 times and never have I seen a car that actually works." And I have to say, giving these guys a lot of credit, it works. Now, we sign up the entire Maelstrom organization. We all have our virtual cards. I can see what people are spending on online. I go, you know, use my Apple Pay tap and it pays. I can see the fee breakdown. I see these guys uh

aren't [ __ ] scam artists. Uh maybe Visa is, but no, not Ether. And uh Visa is great. We love Visa. Um, but yeah, and so I think this is a supremely undervalued thing and it's going to stay that way for a while because again, we have such bad post-traumatic stress from all these companies saying they're going to have this card that works for reasonable fees and it doesn't. But I think these guys have actually they've done the work, it works. Um, we like it. We're going to keep using it and you know I think you know these guys will be in token Dubai next week and doing lots of uh activations. So hopefully if you're going to that conference, you can, you know, swing by and get set up in a few minutes, right? That's the the whole

point. Like the workflow is is good. On sort of the non-token stuff, um we actually uh have a sort of a small little buyout um business uh that we're working on. Uh and we have some interesting businesses that are cash flow generating crypto businesses uh that just are for whatever reason misunderstood by you know the type of investor that would typically buy some of these things. Um obviously we have a lot of flexibility in how we deploy capital because it's all my money and so I don't have a PPM that I have to follow. And so, you know, we're looking at a few uh strategic uh crypto companies right now and we'll probably do a sort of leverage buyout of one of them um and sort of try to improve the business uh as a sort of sponsor of

that. But again, I think there are a lot of, you know, niche crypto businesses, high cash flow generating. They might not be like a blockchain business, but a service provider within the space that really isn't loved by your traditional private markets investor because it's not like the Coinbases or the Binances or the Hobies of the world. These are much smaller uh service providers. But high profit margins, high potential for growth um if we assume that this space grows because we need certain types of services that are you know only provided by cryptonative uh institutions.

Maybe if I could like add a bit of uh context. I mean, I think uh you know to to Arthur's point, there's there's probably a hundred different cryptocards out there right now. Uh every single one that I've tried has been awful. Um and I think there's a bunch of reasons uh for that. Um uh one is that I believe it or not, you know, infrastructure and tech actually matters. creating a good product in this category, specifically this DeFi bank concept, has not been possible until, let's say, six months ago. I mean, we're we're talking like it's it's pretty bleeding edge. What you needed to have is uh really good layer 2s that are actually super cheap and

fast. Uh that just didn't exist until pretty recently. you needed uh cross-chain tech. So, bridging technology so that you like with Ether or you know other uh DeFi projects, you can bridge within seconds. I mean, you you send money through, let's say, through base that shows up in your card literally seconds uh later. You don't care what chain you're on. You're not thinking about any of that stuff. That hasn't been possible until uh until recently. So fundamentally uh in addition to certain licensing providers like uh some of the partners that we work with that enable a lot of the crossber stuff even like issuing cards and doing the fiat on-ramp and off-ramp these things literally did not exist

until six months ago and so all you had were these like exploitative like you know garbage products that basically didn't work and to the extent that they worked you know you're you end up paying 5% of every transaction just for the various kind of intermediaries. So, but I think we are now at a stage where you have this like holy grail of DeFi. This is what you know everyone's been trying to get to, which is basically like an alternative financial system that is much more transparent, much more accessible uh and probably an order of magnitude cheaper to operate than a transfer and the the five billion in TVL deposits uh uh revenue that we have.

We'd probably be a two to 300 person organization if we were in Tradfi, if we were doing this kind of service for a bunch of different reasons, operational costs, etc. Either has 25 employees. And so that's that's an order of magnitude reduction in costs. That's like a like a law of physics thing. We pass that on to the customers. That's why we don't have to charge, you know, 5% FX fees. We don't have to charge topup fees and you know, whatever all kinds of [ __ ] that uh games that that people play. Uh, so you just end up creating a better product, not a better crypto product, just a straight up better product. And within probably a year from now, I think it'll be essentially indistinguishable for a user from like a let's call it Revolute or or Ether or some other u,

you know, equivalent app. Uh, they won't be able to tell the difference, but they'll know this one's cheaper. It gives them higher rewards, higher yields, lower costs. Um, and so they'll use that one. So, I think that we're we're we're finally on the cusp of this like uh you know, of this uh watershed moment where you're going to see hopefully hundreds of millions and eventually billions of users uh getting into this space. I mean, I think to further point on uh talk about that point, think about what Tether has done for traditional banking, right? Tether is the best version of a bank that's ever existed. They have like less than 100 employees. They make what is like $10 billion of net interest income a year. It's the number one best financial services institution ever created in

human human history. Um enabled by, you know, a bunch of different blockchains and holding some money in custody uh with their treasury um counterparty. That's it. They don't and they do what they need to do. They help you move money from A to B very cheap, very fast. I think Etheri can be that for all the other types of banking services that you require because again you can't expect a merchant all around the world to instill a new POS system so that they can use some sort of like crypto enabled blockchain enabled payment system you know Visa comes out the box wham bam thank you ma'am now I can use you know my Ethereum my staked Ethereum my USC my USDT whatever and spend it in the real world on products as I would spend a

dollar a euro a yen a yan so I think that's sort the opportunity set that these guys have to deliver on and hopefully the token price will, you know, catch up with that uh vision at some point. All right, let's talk tokens then. Um, man, I think a lot of people that are listening to this are probably decimated on their altcoin portfolios. I mean, the best of the best have just gotten smashed. I I was thinking that these things are so reflexive that the value as soon as we get any sort of liquidity kind of from the macro perspective these would be the first things to move. Um Arthur in your piece you you wrote that you know you expect a lot of these uh

smaller coins to start to kind of pick up as the as the market uh as Bitcoin breaks all-time highs. um what are you looking for in the in the crypto assets that that you want to accumulate in that time period whether it be now into I mean what seems like it could be in the next couple of days to weeks um you know is there is there a certain type of of of buyback cash flow narrative idea that you're looking to kind of track down um and just generally what's your kind of what's your broad view there so first off is I want to see a business or a protocol that as uh users spending their own money to use the service. They're not spending token emissions. Um they're

spending their own stables or other crypto to use this product or service. Like the easiest example is an exchange. Obviously, Hyperlid is the poster child for that. They've gone from zero to like what 10 or 20% of Binance and OK and Hob's uh volume in the span of 18 months. Again, they've just built a very very good decentralized exchange and users spend money in the fees that they pay and Hyperlquid buys back the token. Very simple model that just makes sense. And then the second thing is, okay, well, I'm a token holder. There's lots of projects that make a [ __ ] ton of money, aka Uniswap, right? The best, you know, decks ever created. And me as a token holder get [ __ ] all of that money. So then that's why UniS swap is I don't know what's what the price is now. I

don't even track it anymore because [ __ ] them. Um, that's the one that uh [ __ ] dude on that part with memecoin Messiah that was his example as well or or that was yours that you guys were going [ __ ] back and forth on huh unis swap you you're at ends with that one. Yeah but again I want if you're doing well and you've got paying customers and you're making money and it's a great protocol and you finance part of finance yourself by taking my money and for me to buy your token. Well, [ __ ] you. I want some of that money, right? And so I want to see how I'm going to get rich. I think that I think we've lost a lot of that ethos, right? As shitty as Ripple and Cardano are, at least their users got rich or at least, you know, elevated

themselves in terms of their socioeconomic status as those protocols um limped along over the last, you know, 5 10 years. But today, it's just like, okay, I'm going to take all this money and, you know, even if I'm successful, you get [ __ ] all. So I think that is over. We've done that so many times. Uh and so we're want I want to see, okay, how am I getting paid? Is it a token buyback? Is it an emission? What's the scheme? You know, there's all different flavors uh depending on how you want to incentivize behavior. But again, at the end of the day, I buy a token. I want some sort of APY. And then I can take that APY and run some financial analysis and see, okay, is this going to continue in the future? How what kind of discount rate should I apply to that? And then I

get a multiple. And then I get, you know, okay, well, I think this is trading cheap or expensive to uh where I think it's going to be in in the future. And so again, there's very very few protocols that had number one have paying clients and then send you part of the money. It's a very small universe of of projects, especially if you're talking, you know, has enough money to really move the needle for any one token holder. So that's really what I've been focused on and, you know, I've been patiently buying these things um for the last month and a half uh some of these protocols because I just saw, okay, they're getting beaten up. It's just like, okay, I it's not Bitcoin, so therefore I should sell it even more than I would have sold Bitcoin. And so everything got maybe got thrown out with

the bathwater. And so if you've been very selective and patient, I think you've gotten some really really good entry points into some stellar projects uh across the space. Just to close the loop on this token conversation, we started off talking about treasuries and then Bitcoin and then just went further down the risk curve with you know fundamental altcoins. Like you know Arthur, the first podcast we did together was with memecoin messiah Murad. Like there is no facade with memecoins. It is like you say like you know their point is to enrich the community like the token holder base like kind of similar you got etherfy hyperlquid these are pe these are projects and teams that are buying back their token there is

that profit share with the entire community do you have a similar ethos when it comes to memecoin to to like they're not trying to pull a unis swap they're not trying to extract and keep they they're just they're made by the people for the people does that also apply to memecoins Yeah, my super curious your perspective on this. There's no there's no cash flow in memecoin. There's literally like I'm trading human culture. What is hot right now? And what is that worth, right? We know human culture is worth something because, you know, once the AI overloads are take over, that's all we have is, you know, each other and that's worth infinite money. That's when Jesse Pollock's content coins idea is finally going to play out.

Yeah. So, I mean, that's that's the point of memecoins in a philosophical sense. Obviously, as we've seen with MLE and some of the other interesting folks in this ecosystem, it's not exactly how the reality uh holds up, but at least that's the theory. Yeah. Mike, do do you find uh memecoins to be particularly um alarming as a real builder or or do you just kind of just blow it by the wayside? I mean, I think of it like uh as different universes, right? Uh I mean, we can talk about the whatever different meme coins and moral properties, but like that's almost irrelevant. It's like trying to compare Apple stock to like spins, you know, in

a in a rellette wheel in in Vegas. Like, it's just they're just different things. Uh and I'm a I'm a terrible gambler. I like I I I try to stay away. Every gambler is a terrible gambler. Yeah, that's right. That's the point. Uh yeah, so I like to play poker or chess. So like those those are things I get because you know it's your decisions actually matter. Um but yeah, I like so I I don't know the meme coins are fine. Uh people that enjoy them, right? But it's just a different universe and I I think um um there's various ways that the world gets there on this, but you're you're going to have these, you know, different buckets. like we we put all crypto tokens in the same bucket in in

this like really kind of bizarre uh way, but these are these are fundamentally different things. You know, you look at let's say BNB, good example. You look at like a BNB versus like Trump token or or Fcoin, they're just different things. Like it's just it's not the same thing. Um so, you know, at some point there's going to be categories. Um uh and it's going to be much more explicit, you know, what what you're buying. Uh, we're not there yet, but I think we'll, you know, gravity will assert itself eventually. I I like the analogy, Mike, to poker and, you know, these skill games versus pure roulette, which is pure gambling. Like, like you're saying, you can play chess, you can play poker, there is an element of skill. Even if there's some element of chance, there is more more elements of skill than going

to the roulette table and picking red or black. It It's totally random in theory. So, I I like I like that take. Unless you can martingale and I guess I mean you gota be I have an infinite bankroll to martingale. Sam big tried it. He you know and we saw the saw what happened. Gentlemen um really enjoyed this conversation. Just want to close out Mike with your with your kind of two cents on where you guys are going to go out for customer acquisition kind of go to market with this. Obviously, you guys just had this big launch. Um, what's next? H how do you guys take this product and start to work towards that

100 million mark? Um, and where do we go from here for Ether 5? Yeah. So, maybe I'll I'll say briefly like what most crypto projects uh that try to create these sort of systems that people can use get wrong is they go after the wrong customer base. That's often times uh as much as like building the wrong product or bad product, going after the wrong customer with the wrong go to market can kill you just as easily. In fact, more more likely that's the thing that's that's going to get you. Um and so they do stuff like we're going to build a crypto product for the unbanked, you know, in in Latin America or Southeast Asia. Great. That they have no money and they don't know anything about crypto and you're going to die. uh

like maybe in in 10 years that'll be the right the right strategy. But um our approach is really simple like we're building to start off with DeFi natives. There's some number between 1 and 10 million DeFi native users in the world. Uh we're going to start to go after those and we think we can get 50 to 100,000 customers over the next year uh from that user set. That's that's a subset of the current Ether users. We think that's very attainable. Got a marketing budget to to spend to do it. The next circle that we go after are crypto users who are not comfortable with DeFi because they don't want to have to deal with the insanity of seed phrases and hardware wallets and transaction signing and North Koreans hiding, you know, behind every Telegram chat trying to take their money. Um, uh,

so we we think we can bubble wrap DeFi, make it accessible and easy for people who love crypto, who want to, you know, use these products but aren't comfortable using it today. And that expands our circle to probably about a hundred to 200 million users out there. There's monthly activives on on exchanges. Um that I think can get us to a billion dollars in revenue. That's very viable. We get there with 5 to 10 million uh customers. And then let's let's call it three years down the road. Uh we're able to go after the broader set of normies and and bank the unbanked and and so forth. And then that's that's how we get to a billion customers. But I think you you got to take this approach where you start with the most fanatical users that love the product that are

willing to sort of eat glass just to use this stuff uh and focus on them and then expand outwards. That's that's the right approach. That's what we're doing. Yeah. Ether is American Express, not the other credit cards. It's for rich people. Rich people spend a lot nice. Well, I I found that the experience has been fantastic. Um and I mean I I will be using it. I will put Crypto.com to the wayside, man. They [ __ ] every time you send them every time you send ETH over there and try to sell it or anything, they absolutely destroy you on the conversion. Like just rip your nuts off. And then and then that there's a feed of Yeah, it's just it's a it's a whole thing. So, um Mike, you you got a user in me, a user in

Arthur, so he can, you know, do his little surveillance on all the strip clubs that Oxshot's going into or something. And uh you know, we'll get we'll get Robbie on it as well and we'll be in good hands. Let's do it. Yeah. Well, you guys are the pioneers. Thank you. All righty, boys. Cheers. Thank you. Thank you. Thanks guys.