GPT-5, Trump’s Crypto Executive Order, and Ethereum’s Bullish Saga | Roundup

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Wall Street has gotten around on the perspective that Bitcoin is digital gold. >> It's something that you can competence gold. There's a generational perspective on it. Um it it is, you know, a store of value in in should be viewed as digital gold in a lot of ways. Um maybe with the call option potential of becoming like a tech or a monetary platform eventually. Um whereas Ethereum is in uh very clearly uh the the place that people that Wall Street will want to tokenize assets and I as we start to see more post genius act um and as we start to see more um what we expect will be with clarity

tokenization efforts, it's all going to be tokenized and uh it's very clear that Wall Street wants to tokenize on Ethereum. Quick shout out to today's sponsor, Katana. We'll hear more about Katana's 1 billion CAT campaign later today, but for now, let's get into the episode. Hey everyone, quick disclaimer before we get into today's episode. Nothing said on Bell Curve is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only, and the views expressed by anyone on the show are solely our opinions, not financial advice. Our guests and I may hold positions in the companies, funds, or projects discussed.

All right, everyone. Welcome back to another bell curve roundup. You got me and Michael. Michael's holding it down. Obligatory joke about chopping the dead wing. >> Every time. >> Always land. >> Yeah. Uh yeah, this will be a fun one. I uh so I actually, you know, we didn't even talk about this before the program, but uh I don't know if you saw GPT5 came out today. They did a little live stream. >> It is. Uh yeah, we I I've haven't had a chance to play around with it yet. I know it came out I think like two and a half hours ago but exciting times I think um maybe like one predictive of just being here in San Francisco is like people are looking

forward to like GBT 5 day as much as like major releases of iPhones used to be. And I it's just really interesting to see how AI in the last three years has really captivated the consumer appeal um with CHBT in particular. And um yeah, it's um Rejie on our team was saying anyone who's used to maybe 40 is going to be really pleasantly surprised. Maybe not uh three pro. um he thinks 3 0 reasoning is is probably a little bit, you know, closer to what five is going to enable, but anyone who's been on 40 completely is uh probably going to be pleasantly surprised with the

difference. And if every year or so we get another one of these upgrades, um, you start to wonder like it's sort of like that boiling the the frog point where it's like if you slowly boil the water just like you don't notice the differences at each intermediate step, but if you were to take a step back and say, "Oh, well, in 2022 when we had the release of Chat GBT 20, compare that to five now, it's insane." >> Yeah. you know that that that's happening in you know not too distant or not not too long of a period of time yet they're like completely different products.

>> So I'm showing here uh the poly market for which company has the best AI model end of 2025 and actually you can it's it was interesting to see this as like a gauge of sentiment. So actually based on the poly market for this the chat GBT5 model was a bit of a flop because you had very tight in between Google at 44% and Open AI at 35% and then it split to Google to 53% and Open AI is now around 18 or 20%. Um >> well and and so I think the reason why is uh because this is the last release that chat GPT will have this year. Uh, I didn't realize that. Yeah.

>> And or or the ma it's expected that it'll be the last major release. >> Um, and so this is kind of like the finished product for 2025. Um, and yeah, we'll see what Gemini comes out with. Uh so I but I also uh so that might be the reason but also if you look at um actually it's even more telling if you just look at there's a market for which model will have the best uh will be the best by the end of August and actually that's an even larger flip. So you had Chat GBT at 76% and now you've got Google at uh like 84 80% basically. So, I don't know. I actually think that yeah, this I watched it. I watched the

stream. Um I I had like an hour and a half free. I was just like, I'm going to turn this thing on. Uh and >> then what was your what was your takeaway or or what? >> I I thought it was a little underwhelming. Like I watched previous ones. First of all, no offense. I know public speaking is hard, but I didn't think they picked the most uh you know, most charismatic people to debut this thing. Uh, and it was funny because actually some of this I'm loosely trying to learn uh Korean at the moment. Uh, fits and starts, fits and starts, but uh actually one of the things that it's supposed to help you with, they literally demoed using uh learning another language and they did Korean.

But I don't know, it just uh one of the things that was it seems like the big change is they're making a better model available to free users and they're also consolidating the model. So you don't need to you don't need to flip now in between 403. It just default. Yeah. it all is the same thing and it I guess it sort of for simple questions it'll automatically redirect it toward like think of it the way I'm thinking of it in my head is like routing right and I've actually noticed this using chatbt sometimes I'll ask for like really easy demographic data and it thinks for like three minutes it's like I should have just asked the easier model this >> wrong model >> they use the wrong model so I think they're taking that out of your hands which is good >> that's great

>> but let me uh okay this is I'm at risk of giving you the ultimate mid-curve theory here so I'm aware what I'm about to say, but I will say so, uh, everyone, you know, bubbles don't tend to occur when everyone's calling for bubbles. They occur when no one thinks that it could be a bubble anymore. And I will just say there's been a record amount of like a huge capex buildout in AI up to this point. And no, I don't hear anyone even questioning whether or not it's a bubble anymore. And this is this would be if it were to be that okay these models slow down and maybe they're really good uh but they get you know there's diminishing returns that would surprise everyone a lot right like we're basically pricing in you know exponential growth super intelligence

you know trillions of dollars of capex per year that's all being priced in like >> I don't know an interesting riskreward here would be that if you were to just say this plays out like every other big you know tech capex buildout where we get a little our skis and we have to correct and before we keep going up. >> But you you also just wrote just cat catted the problem in that if you call it a bubble then it obviously can't be a bubble. So >> I'm not sure I have enough or authority here. I don't know what the I don't think I can generate enough of the observer effect for that to >> Yeah. Well, I look I think uh you're starting to see capex build show up in GDP. It's at 1.2%.

Um there's I mean I think the there have been some podcasts on block works about this investment thesis but it's a very common even some of our LPs are are uh some of our larger LPs were telling us they've been spending a lot of time with their real estate teams focused on data center builds. Um and even Tomoth is coming out saying he's building a gigawatt scale data center in Texas. like everybody and their mother wants to get into the GPU ddata centerpower game. >> Um, and it's because people recognize that if we're going to grow at the scale that we expect we will need to grow based off of AI demand that we're going to we're going to put

hundreds of billions of dollars, maybe trillions uh of dollars per year into the round. And that um that is just a gargantuan amount. Um, and so I I think I hear what you're saying in terms of what if the the user experience doesn't live up to basically like the capacity that is being built out um and therefore demand is always below and and people point back to the Cisco example where Cisco was basically the the networking layer for the internet and it had this famous runup um in stock valuation uh in stock price in in 1999 I believe. Um, and then with the blow up of the internet bubble, it it

dropped 95% plus. But what what's really telling about that is Cisco is still a very very large business. Um, and it has tens of thousands of employees and it's a it's it's a large business, but it's never actually gotten back to its peak stock price. >> Yeah. >> And that story is something that is, you know, etched into the minds of tech investors. because they remember well oh we got way over our skis in terms of what we expected the networking capacity would be required to enable you know but I what um I think the the main takeaway here is what's different is that was a networking layer um which is at a

certain point you haveworked all 7.8 8 billion people on the planet and we have done that and there's there's max uh max supply um but with AI is that there's increasing compute demands over time and so the the um increase of just a basic question to a reasoning question is like 10 to 100x because you have a recursive reasking of more questions searching for more information and so the compute demands scale logarithmically. Um, and and so I that's kind of like why everybody is thinking about this thesis as, oh, maybe this time's different. But to your point, if you don't keep up with

demand, and I think Chatbt has something like a billion weekly active users, um, which is the fastest of any consumer product to get to a billion active users. Um, but if that does if that pace doesn't continue, then you have to expect that it's not just the the growth of users that is going to fill be be what's filling that demand. Um, but it's going to be the increase in compute that's filling that demand, which means that you don't have any more deepseat type moments or you don't have any more algorithmic improvements that reduce compute requirements for for asking these questions. Um, and so yeah, it's it's a bet. It's an interesting bet.

It's a very common bet right now though. Um, and I I I do kind of get the spidey senses tingling when I see basically everybody thinking about things in the exact same way. Um and you know the one of the examples uh there's a very kind of common perspective right now that Bitcoin miners because they have power hookups well they can just become AI data centers or like oh you've got you know like Galaxy because they owned a bunch of debt from a company that went bankrupt they now own this data center and like they're literally building out an AI data center. So like Galaxy, the investment bank of crypto is becoming an AI data center operator.

Like everybody is doing this. Um and so yeah, it it does feel a little weird. I don't know if we can say the B word yet, though. >> I don't know either. I I'm just like look, also I'm I know my lane. AI is not my lane. I have no idea, right? Uh, but I will say if it were to be the case, right, it's always kind of, you know, you just I'm I guess the observation that I would make is you rarely hear anyone call this the B- word, right? Uh, and that's generally and it would be like the most classic, you know, mini bubble of all time, right? Down to like massive capex build, uh, get out over your skis. I mean, even something like what if we got drastically more even as like a small example of something that's kind of interesting. So a lot of the way

that uh you know you're measuring buildout here is like the amount of tokens right that gets consumed like computational power >> and chatgbt has effectively done like smart order routing here right through different models which should actually reduce the amount of tokens and computational resources that we need >> whatever um I know Ryan Connor head of research actually knows his way more than I do I'm sure is gonna uh excuse me this he's gonna have me at this uh this episode is sponsored by Katana. Katana is a DeFi first chain built for deep liquidity and real yield by redirecting chain revenue back to active DeFi users. The 1 billion KAT campaign is live. Bridge and deposit directly into vaults in one simple click and start earning immediately on your

Ether, Bitcoin, USDC, and more. Follow the link in today's show notes to get started. We're entering crypto's cloud era and IGEN layer just launched IGEN Cloud to power it. Just like AWS transformed the internet, IEN cloud is a full developer platform that gives developers cloudgrade programmability with cryptograde verifiability on any chain. To learn more about how the IGEN token is securing a new class of verifiable apps and how to get exposure to this growing class of crypto infrastructure, follow them on X at IGEN layer. As always, investments in blockchain technology involve risk.

Terms and conditions apply. Do your own research. >> How about another subject that we are totally the experts in? Uh macro macro. >> Yeah. >> Uh I'm seeing it here in the chat that uh that Trump has officially appointed Steven Mirren as Fed governor replacing. >> Um >> so we have a change at the Fed and it uh I mean to be expected Cougler resigned. Um but it's uh yeah Stephen Marin. Interesting. Did you see uh by the way shout out um Felix uh Ford Guidance who got um who got him on to the Ford Guidance podcast like nine months ago

which is pretty nuts. Uh >> did you see that this guy I think his name is James Fishbach? Okay. Do you remember a little while ago um Dan Loe got into an argument with someone who worked at uh Thirdp Point about being head of macro and there was this whole you're not head of macro and he was like no I am. Uh, I did. I was I was the macro guy and he gave himself this title. Uh, do you see he's making a little bit of headway towards trying to put his name in the ring for replacing Powell? Have you seen this? >> Yeah.

>> What is he like fifth on the poly market chart? >> I don't know where he's at. Yeah, let's actually check where he's at on the poly market. But yeah, and uh also we had uh so there was a massive downwards revisition in uh new jobs being created. so erased something uh you know in the zip code of 250,000 jobs uh over the course of the last three months and uh Trump fired the head of uh the BLS who is responsible for that which is probably somewhat of a controversial decision but there's definitely a big shakeup that's happening right in some of these more bureaucratic um you know kind of sclerotic institutions and you know if I was really bullish I'd say yeah get some of these people out of here they are not doing a great job obviously if I was to take the other

side and be like are these the best people to be putting in some of these roles and it doesn't look great when you're firing the head of uh your you know economic data that's a little you know banana republicesque I don't know >> you you ever seen the video of Matt Damon doing his Tom Cruz impersonation about stunt man's >> no stuntman >> uh well Matt Damon does this impression of he's like talking as if he's Tom Cruz and he's talking about the stunt that he's about to do and he's so super excited and he's like talking to his his stunt coordinator and the safety expert And um and he goes, "Yeah, so and then I'm going to do this myself." And the the safety coordinator goes, "Well, no, you can't do that." And he goes, "Uhuh.

Okay. Yeah. Right." And Matt Damon goes, "Well, what'd you do next?" He goes, "Well, I got a new safety coordinator." It's like, "Okay." All right. That number. All right. Who's up next? >> Yeah. Uh you know what that also reminds me of is you know Malay when he took uh you know when he gained power in Argentina and he's like they're going to throw 200 useless economists at me. Uh which is you know what I will say this is an interesting period of time to live through where yeah like every everyone with economics or like macroeconomics 101 is like these tariffs suck and you know to which I would say maybe I have no idea these things haven't been tried in a long period of time. Um, we're really digressing into macro now, but

uh, yeah, I guess we're I guess we're going to experiment with a lot of stuff and see how it all shakes out. >> Look, we we've had uh surpluses or closer to surpluses each month since tariff started. Um, more so than we have in decades. >> Um, that I think has been, you know, positive. Um, more positive than we than we would have expected. Um, as well the inflation expectations seem to be pretty tempered. in terms of what the effect of this would be. Um and and going back to what you said about Friday with the jobs report, the the revisions actually kind of give credit now uh to a September rates cut which um Nick uh Tom

Tomarinos, whatever his name is from the Wall Street Journal, who's sort of like the eye on P or like the the finger on the pulse of Powell. um he basically says now he's got the mandate now to maintain independence and be able to cut rates in September. And so that percentage chance of a rate cut after Friday jumped from I think 35% to 85. So the expectation is we're basically going to have a rate cut in September and we're going to get a couple more prints of both inflation and jobs before then. Um and I think if we continue to see sort of a upward trajectory in the infl sorry unemployment um the the other really interesting data

point is if over the last three years you normalized the unemployment rate for workforce participation the actual unemployment rate right now will be 4.9%. which would be getting dangerously close if not you know that we would have way far cut it cut rates at this point. >> Yeah. >> And so if inflation continues to temper and we knew that there would be base effects this summer based off of the inflation numbers of last summer. Um so we knew that we would have a jump on the monthly and CPI headline this summer.

We're working our way through that. If in September we see low in inflation, jobs don't materially improve and unemployment potentially even rises a little bit more, I I think we're going to see three to four rate cuts, you know, going into the end of the year. >> Yeah, it's one of those very interesting I mean, this is a core tenant of how of modern central banking, which is, you know, this division in between, you know, fiscal and monetary authority. And, uh, yeah, I am personally a believer. I think that that should remain intact. Um, I could see Trump's logic here, right? Again, not a macro expert here by any means, but it seems like, hey, I want to even out some of the trade imbalances, generate some additional revenue revenue for the US. I think that's probably going to stunt some growth. So, to

balance that out, you know, I'd like rates to get lower, right? That's probably the look through that he's trying to to get out here. So, >> y >> one thing that I would love to get your take on uh which is a little bit more uh returning this to a crypto pod uh which is this is a uh this is an executive order that Trump signed to ease uh the path for private assets in 401ks. So, this was an executive order which was signed this afternoon. We're recording this on Thursday. Uh to order easing access to private equity, real estate, cryptocurrency and other alternative investment uh assets in 401ks. Uh so what he actually signed was an order for for um to direct the labor department to re-evaluate guidance around alternative asset investments in retirement plans

subject to the Employee Retirement Income Security Act of 1974. Uh the full text of the order is not out. So we're still, you know, we're still kind of guessing what this exactly means, but it's pretty clear uh what Trump wants to happen here, right? which is allowing for crypto but also other things like real estate uh you know private equity whatever uh to get either depending on your frame of view point of view uh for retail to have access to those investments in a tax-free way or if you're more cynical to you know stuff assets uh into a new uh you know a new buying funnel. So yeah, what's your take on this? Yeah. So I I think um so Orisa is kind of the the name of that act and

bill and regulatory structure that limits what's able to go into otherwise managed products for 401ks or retirement accounts in particular. Um and what that typically pertains to. So I I don't know if anybody has actually tried to do a self-directed IRA. Uh it's actually a very difficult process. you you know to be able to invest your own capital in a um retirement account is I mean it's basic it's very difficult you have to basically set up new entities and get new accounts everywhere and um whereas the vast majority of retirement capital is actually managed and that means it's either in um a target retirement product like one of the Vanguard products or

it's managed by a pension manager or it's managed by um maybe the company account uh depending on the structure. So all this is to say for the managed accounts um people who are managers of retirement money have to abide by the Orisa requirements. And so it basically says like you can and cannot do certain things. And the idea is well we don't want people investing in risky things. This is supposed to be the money that they're going to live on once they stop working. And on the flip side of that, you have massive appreciation of capital um in both the private equity market over the last few decades um obviously the crypto market but also the real

estate market. And if you are only able to participate in let's say the S&P 500 or fixed income assets, it really does limit not only the capabilities what you know yield you can generate as a manager or as an owner of one of those retirement accounts but you also are limited in terms of the diversification potential that you get from having these as important elements of you know what would be considered a diversified portfolio. And you know, maybe we're a little bit crypto-heavy on our perspectives here, but you know, the Matt Hogan or the Bitwise perspective is that it's actually beneficial because it reduces volatility and increases return when you add something like crypto or

Bitcoin to a portfolio that's diversified. And so I think uh and the same effect happens when you're, you know, and and you know, real estate, let's not say it, isn't like, oh, I want to buy my house with my 401k. It's more like I want to invest in REITs that have a diversified approach and a yield element to them and maybe they're going off and actually investing in AI data centers and you're getting a flow of those cash flows. Um, but with private equity, it's the same thing. I want to be able to invest in a fund that invests in private equity funds and gets me, you know, 15 16 17% IRRa in a diversified manner because it's across many funds which is across many many companies. And so I think there there is the you know

the the um the positive and the negative take on this which is this is just you know opening up these capital markets to to much more capital and like it people are going to get hurt like I I don't think that that's the case because the managers of these product of these accounts of these portfolios are still in thinking in terms of diversification. It's just like now they have more tools to use. It doesn't mean that they're guaranteed to employ them or or add them to the mix, but if you're trying to get as much yield for your clients or in as a diversified and and therefore um riskadjusted manner, you should absolutely have access to all of these tools. Um so I I think ultimately this is a really positive thing. Um not just

as um someone who wants to see more capital flow into crypto because I think it benefits um people. Um, but I I think it it it's something that's positive for anyone who has a 401k that's managed and you don't have control over it and you have to trust that that person is doing the best that they possibly can because now they have more tools, now they have more capabilities to to add to the mix. So it's giving people more choice basically is that >> yeah I think one philosophical question that I find a little bit difficult to fully answer because people approach it from such an ideological perspective is how much ch how paternalistic or much of a nanny state do we want involved in our finances? Um and you know my reaction to I think we're too far in one direction

to skip to the end of my opinion here where we're too prescriptive around what we allow people to invest in. However, uh I do understand why that exists, right? Like let's just take it from a problem. It's easy when you're very far away from an issue to just approach it from an ideological perspective. You're like, I like freedom of choice, therefore I like this. It's like, okay, but if you have a problem, which is people are idiots about how they invest their money, and you have the citizens of your country, you know, yoloing into dumb stuff and blowing their retirement accounts, that's a problem that you need to solve, right? So you have to find some amount of of balance here. Uh but I think that as a society we've probably done two things which is one gotten too prescriptive and paternalistic about

what are good and safe investments and not and that's contributing to the uh wealth inequality in the US which I would argue is still the most pressing problem that we need to solve u as a nation. And the other thing too is it feels like our markets are overregulated. At least like public public markets feel overregulated, right? Isn't it a massive problem that people want to stay private for 20 30 years? I mean, shouldn't regulators be highly focused on fixing that? >> Well, so a couple of thoughts there. The the reason why that is the case is not because they want to stay private. It's because the the threshold to come public as a as a company manager is is so much higher based off of this thing called Start Oxley uh that happened in 2002 following the accounting scandals and

the crash of uh Enron Worldcom and you know Arthur Anderson and so the the requirements to go public are now you know that much higher. I I would actually make the argument that that's one of the reasons why crypto has become, you know, a feature is because it fits in in the middle of the stack of private early stage growth growth stage tech companies, massive publicly traded, you know, companies that are going public at $50 billion. You know, there isn't really that middle ground or or that middle ground is in the last two decades has been taken up by the growth equity investors. And so there's no public participation in that growth and and that's a problem in my mind. And so, you know, once again, private equity can

invest retirement account money. Well, maybe now they can actually get access to some of those growth products and and be able to participate in that growth. >> But the the other thing in terms of regulation, you know, one of my favorite examples is when Apple computer went public, I think in I think it was 82. Uh, >> I I know exactly what you're about to say, but continue. >> The state of Massachusetts prohibited residents of Massachusetts from trading in the stock uh I think for a few years um because it was thought it was thought to be too volatile and too uh nent of a company uh and therefore too risky of an investment. Imagine, you know, you own

an Apple computer and you're an Apple fanboy. you love Steve Jobs and you're like great I I know I I know this company so well because I am the quintessential you know fanboy of you know Apple gadget guy and you can't even touch the stock because your government says it's too risky for you but if you live in any other state you're totally fine like that I think is uh obviously overregulation um but it does feel like we we kind of breach on some of those grounds with some I would say um misguided perspectives and you know this definitely came over the last couple of years in in the crypto space with the SEC. It's like hey you can't use this product if you're in the US. It's like I

just want to airdrop farm and get free tokens like >> that that I think you know we've definitely lost out on money but yeah th this is um >> this is great. Apple computer is set to go public today. Massachusetts bars sale of stock as risky. >> Too risky. All right. You know what else is just crazy when you think about it is, you know, Apple most, you know, even it was pretty hypy stock at the time. I Steve Jobs was still a known entity even at that point in his life. Uh they made less than a hundred million by selling stock.

>> Oh. Do you know the market cap of Amazon when it went public? >> I don't. >> 300 million. >> Actually, you know what? I was listening to Michael Dell the other day. He was 150 million when it went public. Like so once again that where it remove equity, remove token, remove you know market whatever it's like where do you see high growth opportunities that are trading or launching at hundreds of millions of market cap or market value. The only place right now is crypto. Okay, here's another what about the other reason that people site which is okay, you actually have very successful private companies which could clear the bar of becoming public companies, but they're deciding not to, right? Open AAI, SpaceX,

uh Stripe, these would be examples of companies that have stayed private, could be public, but they're like, you know what, I don't want to deal with the short- termism of public markets. I would I yeah >> there's an argument there as well where um >> look I I it definitely is hard to find and you have to have an income threshold that gets you there but if you want to buy in any of those three companies you can >> like there there are secondary offerings where you can get access to it um through a bank or a financial manager someone and and maybe OpenAI is harder to find than the other two but the other two are very easy to find And there are platforms even that support this. Um and

so I think it's not obviously that doesn't democratize it down to a level that is fair. Um and and so that I think is um you know maybe some of the efforts that Robin Hood and and what they announced in uh can a few a few weeks ago is something that they will help enable which is tokenized access to you know uh basically an ADR that tracks these stocks. But why would you go public when you are beholden to a conference call with you know hedge fund uh Wall Street investors every four every three months. Um you they think in terms of three months whereas you as the founder of the firm maybe think in decades or or multi multi-year horizons for everything you're doing. um you want to take bets

and make experiments but you can't uh because they'll hold you you know your feet over the fire in doing so. Um and I so I see both sides I guess it which is like you the short- termism of what that um publicly traded rigomeroll is every three months is real. Um, that being said, I think that there's a lot of credit that you get for um going out and and getting public. And it if you can raise capital in the private markets like they've been able to, that's great. But what they're not able to do is access debt markets. And so accessing debt markets would be a much better accretive way of accessing

capital. and and so I I still don't understand why um it's the it's the balance of go public, you know, clean things up, get things in order, and and start the process of of reporting every 3 months to be able to access debt markets or cheaper costs of capital um versus very expensive uh private capital. Shout out to today's sponsor, Katana. Katana is a DeFi first chain built for deep liquidity and high yield. No empty emissions, just real yield and sequencer fees routed back to DeFi users. Incubated by Polygon Labs and GSR, Katana is launching with notable ecosystem of primitives, assets, and partners like Morpho, Chainlink, and more. Katana's 1 billion KAT campaign is live. Bridge and deposit directly into

Vault in one simple click and start earning immediately on your Ether, Bitcoin, USDC, and more. Follow the link in today's show notes to get started. IEG layer is ushering in crypto's cloud era with the launch of iigen cloud. Igen cloud is a full developer platform that gives developers cloudgrade programmability with cryptograde verifiability on any chain. Igen cloud's use cases don't stop at crypto. AI's rapid growth is reshaping how we live, work, and connect, which has simultaneously made it today's most important and least trustworthy technology. IEN Cloud has arrived just in time to enable verifiable AI infrastructure with cryptoeconomic guarantees where incorrect behavior gets financially slashed. This isn't about picking winning apps or chains. With

IGEN, stakers can own the fundamental building blocks of the verifiable cloud. Every application built on IGEN cloud draw security from staked IGEN tokens. Every cryptoeconomic guarantee is backstopped by slashable staked IEN. To learn more about how the IGEN token is securing a new class of verifiable apps and how to get exposure to this growing class of crypto infrastructure, follow them on X at IGEN layer. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. All right, let's change topics here. Talk about um our resident hype man Tom Lee. Uh who is, you know, come out of the nosebleleeds just swinging. I mean, I I always knew who Tom Lee was. Uh, you know, I've been

following Fund Strat for a long time. He's been very right, done very well. People talk about him as kind of being a permable, but he took up the cause of Ethereum at a super interesting time when sentiment was in the gutter. Uh, ETH BTC has been bleeding and man, he has turned it around and I think he's teaching people in crypto, old bag holders of ETH, how to dream again. I mean, one really telling thing that's changed, you know, since he came on the scene in a big way is even people were bullish on like maybe 5K, 5K, 6K by end of year. And he's just come out, the reason we're talking about him today is he came out and was like 16k. I think we're having our, you know, 2017 moment and I think ETH still has a 100x

potential from here. And you need you need people setting those high price targets, right? So you can be like, okay, it might not be 100x, but maybe it's 20x. You know, >> the coming out of the nosebleleeds, I don't know is the most fair way of putting it. What I would describe it as is it's like you uh your current pitcher, you know, in the last year, you you realize he's got to go sit down. You gota you got to call the bullpen. And uh out from left field, you see Tom Lee running towards the mound.

But it's the equivalent of Mariano Rivera running onto that mound for you. Um, >> all right. You've lost me. I'm not I'm not for the sports. You're >> I'm following you in theory, though. Yeah. Okay. >> The best reliever in the history of baseball, but uh he I think has um I mean he's a mainstay on CNBC. He goes on weekly or or every couple weeks it looks like. Um everybody's giving everybody wants his perspective on the general markets. He's been very pro Bitcoin for a long time. He's also been very pro um Ethereum and broadly pro- crypto. Uh I think he's probably one of the first research shops uh with Fund Strat to really adopt a cryptonative perspective where they're valuing it, they're

talking about it, they're writing reports on it uh over the last decade. Um and I I think you know now that he is the chairman of Bitmine um what he represents is a very credible uh participant in the ecosystem that puts him you know on par with people like Joe Luben. Um and it's crazy to say but Tom Lee is the largest public owner of ETH period and and that is only going to increase. He says he wants to get a 5%.

You know, any day now or or any week now, he's going to announce that he's crossed a million ETH tokens in Bitine. >> Um, and I I listened to the Bankless pod with him and that's just like catnip for any ETH bowl. Um, but it is he's got really strong perspectives. um really good arguments and leaves a lot um frankly like open-ended because I think there's a lot of stuff happening beneath the surface that he can't talk about given him his relationship with Bitcoin. >> Um so I I yeah he is having a a glow up uh moment for the crypton natives.

>> Yeah. Um and he's really he look at I mean this is a ratio we haven't shown in a long time but this is uh what everyone likes to see which is the ETH BTC ratio which really bottomed out uh you know below 0.02 02. So like you have 018 and it's just been you know a rocket ship uh for the last 3 months or so and I think that I think that Bitcoin has still outperformed ETH on the year but in in terms of flows and price performance for the last 3 to six months ETH is now crushing uh Bitcoin which has been it's been a while since we've seen that which is uh what does it make you feel like like does it make you feel any type of way that what's driving uh the acquisition of all of this crypto be it

Bitcoin or ETH or whatever um is these treasury vehicles like I'm not really sure. We did that. We did that uh podcast with Jeff. He actually uh shout out Jeff. He joined Pro Cap with Anthony Pompiano as I think chief investment officer. So, >> yep. >> Uh well done Jeff. Uh but yeah, what what do you what do you make of it the fact that that's why everyone's buying all this stuff? What do you think? Well, um, so to to maybe take a quick step back, I I think what and Tom Lee talked about this in the pod, but um, Wall Street has gotten around from the perspective that Bitcoin is digital gold.

>> It's something that you can comprehend gold. There's a generational perspective on it. Um, it it is, you know, a store of value in in should be viewed as digital gold in a lot of ways. um maybe with the call option potential of becoming like a tech or a monetary platform eventually. Um whereas Ethereum is in uh very clearly uh the the place that people that Wall Street will want to tokenize assets and as we start to see more post Genius Act um and as we start to see more um what we expect will be with clarity tokenization efforts, it's all going to be tokenized and uh it's very clear that

Wall Street wants to tokenize on Ethereum. Uh and and so what is that worth? Well, it's worth a lot of value. Um and there's a great line uh that he also has in there where it Ethereum is 10 years old and it has 0% downtime. >> That is a requirement for Wall Street. >> Um and so if you think about these in terms of what is the narrative perspective, well digital rolled on one end, tokenization on the other and those are the two assets that matter. Frankly, right now, nothing else really does for Wall Street because why are people, you know, putting so much capital and and looking at the different products of, you know, all these different digital asset companies?

It's because they have an implied leverage to them to the crypto markets. And if the ETFs are buying spot and driving up spot, well, you're going to look at all these different other companies which have a positive MNAV and they've got the ability to raise debt and they're going to continue to outpace just in the same way that Strategy has outpaced Bitcoin over the last three years. >> And that I think um and there's different ways of breaking it down where it's like the the velocity of your MNAV based off of how much you're acquiring per share over what period of time. Um then there's also the the volume of your asset which uh or the volatility of your asset as well which gives you the opportunity to have a robust options chain which gives you leverage ETFs. If

you have high volatility then you have a better pricing mechanism for for convertible debt. Like the financial engineering that goes into these is pretty strong and interesting. Um, and frankly, this is where if I was to take a step back, I think the conversation with Jeff was great as it relates to Bitcoin and you know, ProCrap is going to be a Bitcoin, um, entity, uh, or Bitcoin predominantly entity. Um, where I could see these things getting really interesting, and this is what Tom Lee talks about as well. Um, when you have the ability to earn a native yield with the asset, and let's say Ethereum's native yield is 3%. If you were to slap a 20x multiple on that yield because it's basically 100% net income, um if

you're to put a 20x, you know, even below the S&P 500 um price to earnings on that, that implies an additional 6 of ENAV that is not capable with Bitcoin product. And that I think is another advantage with with some of these, you know, as we get further and further out the curve. You Wall Street, you know, it's simple-minded in in a lot of ways where it's like, okay, we finally understood the Bitcoin pitch and strategy and like great, Michael Sailor, he's won. Now we're moving on to things like Ethereum that have a native yield. They have a storyline. Um, and so yeah, I I I would say I think we're we're kind of like I don't know, inning three or four to go back to the baseball analogy. Uh but it

there's gonna be a lot of game to play and a lot of wonky stuff in a positive way will happen but there's still a long way to go. Um and just in the Ethereum last thought uh it there's three companies now uh two or three I think at least two um that want to both get to 5% ownership of Ethereum and they're at they're both at less than one. >> Yeah. You know what I've always loved that uh I just think that yield is the driver. Um, I think that people like you can go back and find all these quotes from Jack Bogle, the founder of Vanguard. And the the thing that bit I've always hated the strategy of like ultrasound money because it's why would you try to

compete with Bitcoin at its own game when Bitcoin has a ceiling on it when the world the world isn't burning and yada yada, but people really like productive assets. Bitcoin is not a productive asset and that's what ETH has always had going for it and it's such a killer uh it's such a killer value proposition. So I think that that's going to really work. Uh and yeah I think ETH has completely won I think ETH has basically won DeFi uh for the most part like I don't really see any of these RW like tokenization maybe not DeFi as so far but tokenization like real world assets all want it all went everyone's moving on to Ethereum. You know who else is doing pretty well is Arbitum at the moment. They've had some really big wins recently. I wanted to

talk to you about Boros, which is this new Pendle um basically interest rate swap market for funding rates. But yeah, they had Arbitum or uh they had Robin Hood uh build on them. Yeah, I think anyway, I don't know. I don't have any super sophisticated thoughts here. It's clearly ETH's turn here and it's going to run for >> Yeah. I I I think we're to go back to the Tom Lee uh uh quote, you know, 16K is his target. Uh he's like, "Yeah." And and the the the kind of amazing thing about his perspective, too, is like, and he calls this out, he's like, "Look, it's in my best interest if ETH just stays flat for the next five years and then rips. Like, I don't want it to, but this is what I think it's going to do."

>> Yeah. and like they're trying to acquire as much ETH as they can at these prices because that's going to be the most beneficial for the equity that they own, which is Bit. Like I I I think we're about to see a lot of structural change and um price begets narrative gets price. People start talking about it and then I I think what we're also going to start to see in particular with this like reverse tokenization effort broadly digital asset treasury company broadly is you're going to start to see okay ETH. All right, we got the winners there. Now what are we doing? Okay, now it's on to other assets and maybe it's stuff like the Athena um or DeFi native, you know, treasury companies. Um and we start to move further and further, but this is how we basically like boil the

water of Wall Street with the with Wall Street being the frog. Um is like we just start feeding them more and more stuff as they get deeper and deeper and deeper into this. Um and pretty soon they're like crypto natives. >> Yeah. Okay. So, I wanted to get your take on this. Uh, one thing that I think is a very there are two interesting categories I think to look at here. You know, we talked about internet era companies like Amazon and I think we talked about on this show where it took Amazon 10 years to get back to its IPO price. Um, you know, there's a long dip and I'm starting to wonder if we are that's roughly how you can think about DeFi today. If you look at a lot of

these charts where yeah there was a crazy you know mania and speculation around you know the a and the unis swaps of the world when they first debuted and went live and to be clear there are still big governance problems I think at a lot of these protocols and weird uh you know conflicts misaligned incentives that type of stuff but in the last couple of years the charts don't look great but they're starting to build back in the meantime they've built monster businesses uh with huge moes in some cases and they're kind of just trucking along and they might be really interesting bets here. And two catalysts is one, you know, we're talking about, you know, uh these ETH treasury companies, if they're going to put that money to work, they're going to put it

to work in these DeFi protocols, right? Like that's where they're going to go to generate yield. Like the borrow lend uh protocols of the world, I think, are kind of a no-brainer here. Um and the other thing, too, is yeah, just all of these stable coins moving on chain. Um, and you know, we talked about on previous episodes checking accounts being a bit of a scam, right? Like, why do I just hold my money in a checking account, get no yield for my bank to lever up my assets, and get a huge net interest margin? >> And I want to read this tweet from uh this is Nick Van. Um, Athena Labs kicked off a new era for what I think is going to be one of the continued largest and fastest growing segments of cryptonative businesses. I'm still tinkering with the best way to

articulate this segment. Yield coins, onchain asset management. Don't love any of them yet, but the product is yield. Athena did several things incredibly well. Bring yield on chain in a yield stara opening up access to a popular profitable tradice strategy in a cryptodriven manner BTC ETH basis. Superior form and function. The $1 denomination was key instead of doing it on a nav uh slps basis like typical funds risk management and building trust. Uh and I he mentioned Baple as another great firm to put in this category. We just did our interview with Sid last week, which also got me thinking about this. And I I think that, you know, when I think about, okay, what happens if Scott Besson is right and we get, you know, $3 trillion worth of

stable on chain, what's going to happen? I think that money is going to look for yield. And I think that these dollar these dollar denominated yielding products I think a bunch of there's going to be a massive wave of these companies that go out bring you know good uh kind of I don't know somewhere in the neighborhood of like 10 to 15% yields on chain and you're essentially going to blur the line in between checking and savings account where you bring your stable on chain it just goes and sits in one of these yield bearing assets and when you need to spend it it immediately gets spent. That to me is like a big improvement and I think so anyway that was a little bit of a ramble but that's the huge driver that I see. I mean, so to to take it all the way back,

um, we kind of talked about this with Sid, too, like there there is that famous Carlo Perez technology cycles where you have like an initial boom that invest that gets the capital coming in to invest to build the the infrastructure layers, then you have a bust and then you have basically like the the path to productivity. And I think we are on the tail end of that now where 2020 or 2019, 2020, 2021 was the buildout era of DeFi. And I mean, we get this question a lot. It's like, well, what are you guys investing in? Um, from from RLPs, I mean, um, like, we're investing in DeFi. It's like, well, wait, DeFi? I thought that was done in 2020. It's like, no, no, no, no. You don't even get it. Like, we're just

getting started. And, and I think that, you know, bringing back the classics is kind of like where crypto is right now, which is it's a lot of the same stuff. It's a lot of dispersion where there's not going to be 25 different, you know, borrow le platforms. It's basically like there's a few that are winning massively, but the scale of the win is much much larger than we could have ever even imagined in 2020. And so I I think that's kind of like why this feels different, why this cycle feels different. It it's institutional. It's it's kind of like winners are going to be much bigger, but there's going to be much much fewer of them. Uh and it's back to the same stuff that we were doing four years ago. And um to talk about Athena in particular, I I think

where we are with that and uh yield um yield coins, stable coins, I completely agree like the the path here is stable coins come on chain. Um they are sitting idle in wallets. Well, why would you do that? You should go out and at least find some yield and then they move into yield coins. those yield coins get put into things like Athena or they get put into Sky or they get put into other yielding opportunities um you know on chain and the blurred line starts to happen where it's like well wait is this USDC or is this like USDC that was swapped for SU for USDS and then is staked and

now it's SUSDS and then you're like but it's earning 5% and like I I think that there's like we're at the levels of abstraction where it's still hard from a consumer consumer perspective to see this and I think we're also at a capital perspective now where a lot of the capital frankly is still just slloshing around internally like we haven't broken through into that oh we're getting billions of dollars or tens of billions of dollars coming on chain every single month it's happening slowly but it's not it's not going direct into things and even this week um Spark which is built on top of Sky saw that because the basis trade um the basis uh within uh Bitcoin and Ethereum is is much lower than it has been over the

last few months. USDE, which is the Athena product is is much lower on a staking rate on a on a yielding rate than it has been. So Spark, which had allocated almost a billion dollars into Athena, decided to pull that back basically in one vote. They're like, "Okay, Athena's got nine or 10 billion of TVL and we're 10% of it. Like, we're going to pull it. We're we're basically pulling one of the billion down." and we're going to put it into our own other things because we need to go find new opportunities. And so it's not like everybody is just flushed with, you know, incoming cash.

It's like it's moving here and then it's coming back and then it's it's it's yield finding right now. Um but yes, like the narrative here is that yield is what is driving adoption and activity currently. But what frankly I am looking for and looking forward to is how do we bridge the gap of getting dollars into these yield opportunities >> with like robust flows and and truly I do think like one of the mechanisms for doing that is going to be yieldbacked bonds issued by digital asset treasury companies >> where if let's say the Athena uh treasury company which I I can't

remember the name of it that they they've launched or they've announced the launch. If USDE is yielding whatever five, six, seven, eight, nine%, why not go off and just issue a bond that just passes 100% of the yield back to the bond holders and you take the cash and put it in like that's more TVL >> and and so I think like there's going to be some really interesting productization here. Um, and the like I was describing this to Vance earlier, like I don't know if you remember from biology, but like the the description and the visual of osmosis is like these little holes pop up on the side of the cell and like that's how water moves in and out of a cell.

>> Yeah. >> These little holes that ha that allow for the the transmission of water through a cell membrane. It are these these digital asset treasury companies. It's like how we're going to bridge the gap. >> You know what I hadn't even really thought of? Uh it's a massive advantage for, you know, if you're a a crypto company like a protocol or company like Athena, you really only have access to like VC funding or token funding sort of markets. And now you can tap uh public markets, you can tap uh fixed income markets, just a whole new source of funding and investors and buyers.

>> And it's not going to be something where like all that we've done so far is like, oh, let's go buy our own coin, >> right? >> Let's go buy our own token. No. Like that's what what if you own a bunch of you know ENA in this company but you want to go raise10 billion dollars in a bond not even a convertible note a bond that is backed by USD >> and it's yielding 7%. And like the other thing that we haven't even talked about which we talked about earlier is like and we're doing this at the start of a rate cutting cycle.

>> Yeah. where credit spreads are about to increase >> like the attractiveness relative of these opportunities is going to only increase over the next few years relative to what you could get in a money market fund >> and and so I like that that's why I think we're at the start of this like oh DeFi is going to be massive and these these winners are going to be massive because it's not going to be like cool we like got added 100 million of TVL today it's like oh we added 10 billion this week. Yeah. Damn, Michael. That's a That's a good pump-up speech. I agree. I agree, dude.

Uh I think uh the osmosis is a good that's a good analogy, too. Um yeah, so maybe these uh um maybe don't know what happened there. Uh but yeah, maybe these treasury uh like these DATs or whatever they're treasury vehicles, uh we just need a little bit of time to experiment. Uh you know, more interesting mechanisms there. Uh and one other thing too which maybe just like a side shout out here but I think that you know you mentioned all of these rates are variable in DeFi still right um if you remember back to the origination of the blockworks framework relationship but the first bell curve season when Jason and I were hosting this podcast together was the importance of fixed borrow lend uh in DeFi and it took forever uh to get there but I think

we're finally like Morpho V2 is going to have that built in um Boros is an interesting way to basically for you to trade. It's like an interest rate swap uh for funding uh funding rates. So if you're you know using pers like you don't have to take that interest rate risk essentially and yeah I mean it makes sense that you would do that for uh for basis trades too. So yeah I think that we'll outside of even just capital moving in you'll have all these interesting new exchanges and sort of side businesses to package these yields in uh interesting ways to investors allow them to hedge. Uh, actually Pendle's a pretty interesting. Again, nothing is ever a financial advice for me, but Pendle's not looking bad here.

And I'm I'm happy that they didn't try to launch a second token or do some kind of weird shenanigans like that. They just, you know, built another revenue stream and had that value acrew to the token. Like, what a concept. But they've just been chugging along. They're doing well. >> Exactly. I I I think that that's the right form of alignment at this point. Um and and yeah, I think I I completely agree like a primitive that isn't as as widely solved yet is fixed rate. And um fixed rate as well as fixed term, >> which I I think is another kind of it kind of implied with fixed rate, but um being able to say like, hey, here's $100 million. Um I'm going to give you that for, you know, 8% for the next 12

months. um like that that is uh and and being able to pull that offchain and do whatever you need to do like that that I think will uh open up capital markets in a pretty significant way because you can start to go off and once again productize different um products that Wall Street will be expecting to see um and put them in an equity wrapper. >> Yeah. All right, Michael, what did we miss? Anything else or how we doing? I think that's pretty much it. >> No exciting times. Uh hopefully everybody's going getting out getting some sun.

>> Yeah. >> Um yeah, it's going to be a fun fall, but >> rest up for the rest of summer. >> Rest up. Yeah, the uh sell in May and go away was not actually the Well, actually, you did okay. Um yeah, >> it depends on when in May, but yes, I was just thinking about. All right, partner. I will uh catch you next week. Cheers. Yeah.