Hivemind: Ethena Founder, the GENIUS Act & Overvalued L1s

Transcript

Where are the three places in crypto that produce $10 billion of cash flow a year? It's Binance equity, Tether equity, and the futures market. Uh, in terms of the basis that's sitting there, Athena is still pretty tiny now relative to the whole derivative market. We're only like six sevenish% of the entire market. And I think like an end state of that is we could be 20 to 25% um in total. So 20 to30 billion if the market doesn't grow a huge amount from where it is now. Nothing said on the hive mind is a recommendation to buy or sell securities or tokens. This podcast is strictly forformational purposes only and any views expressed by anyone on the show are solely our own opinions, not financial advice.

[Music] Hi everyone, my name is Jose Madu and welcome to another episode of the Hivemind podcast. The goal of the podcast is to provide an inside look into what we like to call the deli hive mind. Bringing together some of our brightest minds from each of the divisions to share insights, alpha and [ __ ] posts. So today with us we have the usual cue crew cedus parabus from institutional research arm. Uh Jan Lieberman, managing partner at Delphi Ventures. Um venture partner Duncan also known as Flood Capital. Myself and we have a special guest, Guy Young, founder of Athena. So really excited to get into some of the stuff they've been up to

recently. So maybe to kick it off, guy, you guys had a big announcement this week in terms of this USD vehicle um getting into the treasury company game. Do you want to maybe give us some some high level background on that and why why it matters? >> Yeah, for sure. I think um we were actually approaching this vehicle uh back in December or January at the beginning of this year. So this is I think before uh you'd got to sort of the level of froth that we've seen within the market now where you seem to uh you know seem to see one of these vehicles now uh pretty much every single day coming out. Um I think the view that we took was uh following the performance that you saw of circle in the public markets. it became very clear that like the demand for this kind of theme or

narrative within tradi just so far exceeded the supply of ideas that you could express that view and the amount of capital that's sitting within those markets uh that wants access to these uh type of themes uh was just an interesting uh sort of opportunity for us. I think at like a super macro lens. Um I've had quite a bit of concern I'd say in the last 18 months broadly around like flows within altcoins uh in crypto. If you look at uh the peak notional market cap for altcoins in 2021 and then 2024, it peaked out at pretty much the exact same number which is just under 1.2 trillion. And to me it was a pretty strong indication that like maybe that's how much money actually sits in the world to bid what is you know largely

99% complete vaporware uh tokens and there is uh I think a maturation that we need to go through as a space which is if you're going to take that step from 1.2 two trillion to something that's a much higher than number than that. You actually need to sort of like put these assets on the plate of investors who sort of deal with real size in equity markets. And so I think the thing that was compelling to us was less around the sort of what I view as a very ephemeral moment in time where these things are trading at crazy premiums to NAV, but more actually just opening up an investor base where even if you're you're giving access to your token and at 1xnav that's better than just having no access at all uh to these markets. So I think it was just a very interesting

matchup for us of the theme that we're sort of building within is clearly in extremely high demand uh within within Trafi and then I also think we have an extreme flows issue within crypto and this is actually the way to solve it. Yeah. >> Yeah, makes sense. Um I also realized I didn't even ask for you to introduce yourself which I probably should have done. So maybe you want to give a quick quick intro and we can clip this back to the beginning. >> Yeah, for sure. Uh so my name's Guy. um founded Athena around two years ago now. And for those that don't know, uh Athena issues two distinct products. So one is a synthetic dollar and the other one's uh a normal f stable coin uh called USD and USDTB. Uh we came out to the market around 15 months ago with uh the core

product with USD. It was the fastest scaling dollar to ever reach uh $6 billion of supply. So it did that in in under 12 months. And then right now uh we're sitting at just under $7 billion of supply on USD and one and a half time high baby. >> You and uh one and a half on USDTV. So yeah, that's the brief background behind uh behind the products. Yeah. >> Yeah. And apologies for my shitty uh moderation. Just back from a festival. I think my brain's still a bit slow, but uh yeah, we'll maybe clip this back, maybe we won't. We'll see see how we feel. Um yeah, so it's exciting on the on the USD asset. And so when do you when does this like actually start trading and how much it did was raised

and like maybe all the details around that. You also had this tweet about how it's the highest cash to asset market cap ratio or Athena Labs did which yeah maybe a few more of the details on that would be cool for people. >> Yeah, for sure. So the total vehicle size initially at the moment is around $360 million and then 260 mil of that is cash. I think the important point here is that the cash component is by far the highest out of any of these vehicles that you've seen because um a lot of them have kind of just become exit liquidity vehicles where people are just putting in tokens in kind and then hoping to sort of flip them on to someone else in the public market. I think we had a very strong intention here that we actually wanted new cash to come into the vehicle um to sort of uh

you know help with some of the flows issue that we're discussing uh other in in this uh in this chat. And uh I also think that you know the majority of the vehicles that you've seen to date have been focused on the majors where if you just express the amount of cash that's been raised relative to the circulating market cap uh Athena's was roughly 8% of the entire circulating market cap that's been raised and is there to actually purchase the the coins in the open market. Uh and the next highest one there is actually hype which is sub 2%. So it's it's really quite um out of market in terms of the size of the vehicle relative to the size of the underlying um asset. And I think there's going to be an interesting sort of reflexivity that that results from that which is uh you know the cash man that's

raised here can have a pretty significant impact on the overall sort of token uh where you know 500 mil doesn't really move the needle on a on an ETH for example. >> That's awesome. >> Yeah. >> I think go ahead. No, what's really compelling, right, to so thinking about what makes these vehicles successful, um it's it's the the structure of the vehicle, which a lot of people have figured out how to how to get these things to be pretty lean. I think it's it's the the way that the cash is used, right? And and so I think you guys are doing it in a unique way where it's it's basically being immediately redeployed into the spot asset, which like you mentioned kind of creates that flywheel and makes the the value acrruel for the equity side really compelling. And then

the other is what you what you really need for this to to have legs is the demand for the the stock, right? So you drive that one way through uh this this way to generate an increased amount of of tokens per share. So what a lot of these things generate in term or they call yield is increasing the amount of you know bitcoin per share of micro strategy, right? And so in in this environment, you you have that ability to do so because of of the um the ability to buy from the foundation at a discount. And and that's certainly, you know, one of the reasons that make it appealing. And and I think the other that that most cities outside of probably Bitcoin don't have is is there is a very large amount of of kind of appetite for this pure play equity

exposure into stables. So you have the the regulatory environment becoming really friendly with the passing of the Genius Act and and then the the obvious elephant in the room is is Circle and and what that traded at and just the the insane amount of appetite and and price action on that asset and and so you know we can chat through kind of the the headwinds that Circle faces um from a a a Treasury rate perspective when when when that gets cut and and kind of how that's counter to to your business in the sense that uh when when when funding rates come down or when when Fed funding rates come down, crypto funding rates go up. And so I think, you know, there there's going to be this really big rotation from from Circle into your vehicle. And I think that that the kind

of trifecta of those elements really makes it an appealing play. >> Yeah. And for the maybe maybe Yeah. Like adding on to that question for our extensive audience of public market investors and institutions, maybe you could give like what the what the pitch would be for for them in terms of how you guys how how USD out competes like the big two stable coins out there like how you can actually outgrow them. >> Yeah, I see them as actually just fundamentally a different product. So um I think the use case for stable coins or dollar adjacent assets uh is actually quite varied. So it could be trading collateral on centralized exchanges which is still one of the biggest um use cases today. It could be dollar rails for like the developing world. There's

payments remittances all these different pieces. And I think where the world's going is actually each issue is actually going to find a niche that it's particularly good at and try and dominate within one of those niches rather than trying to be everything to everyone. And so I think actually Athena's being quite honest around what are the use cases that we can actually do 10 times better than everyone else because I think when you're a startup trying to compete with you know multi- tens of billions businesses um if you're coming in and you know it's quite an arrogant point of view to think that you can provide a better product across all of those axes and so I think the view that we have is um for the savings use case rather than like a payments one um a dollar with a structurally higher return is a better savings piece of

savings technology than one without and that sort of can be carried across into different use cases whether it's trading collateral on centralized exchanges where you can use it as collateral to trade paps whether it's embedding it into different defy applications and using that to sort of build net new products I think that's the niche that Athena sort of found an area to actually grow um relative to to those competitors I think one other thing to just point out is that um it's important to remember actually the impact of being able to generate like 18% on your AUM rather than four um so average APY for USD was roughly 18% in 2024, which is, you know, four times higher than what Circle was producing on a gross um gross interest income basis. And so you actually look at the AUM of Athena if

you're adjusting for that, we're actually sort of at $28 billion of supply relative to where circle is right now if you adjust for it on on that basis. And so I think that that's one piece that people just need to consider, which is you don't actually need the balance sheet of this thing to be $50 billion for it to be of a sort of similar size in terms of revenue uh generation versus those businesses. Um and then I think one other point just uh with reference to to both of those competitors. Um I think we we see actually tether as more of a a partner and someone that we work with rather than against. Uh well I think circle looks slightly different. So I think one one piece that people don't understand is that actually atheolders of tether in the world and the reason for that is that actually to margin

derivatives in uh CFI you actually need tether for your collateral i.e. 70% of the per market is actually denominated uh with Tether. And what that means is actually a dollar of uh collateral that's coming into Athena roughly translates into 70 cents of Tether supply growth uh as that's happening. And if you take a step back and actually just think about why is it that Tether doesn't play yield? Well, it's because like the futures market and the basis within centralized exchange is paying the yield for Tether on their behalf, if that makes sense. So a huge amount of the demand that comes for Tether is people doing what Athena is doing outside of Athena. Um and so all we've done is actually productize the use case for Tether to capture basis within CFI and made a new product out of that. And so in some senses like Athena is like a

you know reward bearing version of Tether and and the vast majority of the collateral that sits within Athena there is actually Tether itself. So I think we're actually pretty helpful to the growth of Tether more broadly and uh yeah you know support each other in terms of doing that. Yeah. and and Guy just I'm sure almost everyone who's listening is familiar with Athena, but maybe could you just walk through how you generate the the yield on Athena? >> Yeah. Yeah, for sure. So, um the very basic idea is uh you know a cash and carry or basis trade where you long spot on one side and then you short the future or the per on the other side. And there's this concept of of a funding rate within crypto which I think you can kind of loosely anal uh uh loose analog here is kind of the proxy for the cost

of capital within crypto to be long and uh I think uh the very simple way to think about this is just uh naturally these markets drift up through time. Uh people want to pay to be uh long crypto on leverage and all Athena is doing is kind of harvesting that speculative excess that sits within uh the derivative markets. I also think there's a pretty good comparison here, which is all forms of dollar assets or stable coins within crypto um is actually just a form of lending. So when when you're buying circles USDC, you're just lending to the US government and you're getting an IOU in return. When you're buying Sky uh D, you're just lending over collateralized against ETH and DeFi. And then USD is just you essentially financing the logs uh within CFI in crypto. So you can always think about

dollar assets as just lending to someone and you're just getting paid a different interest rate for for doing that. >> And then yeah, that was a good explanation. And then so in 2024 versus 2025 um with kind of like the explosion of the ETFs and you know bases coming down quite a bit because now these more institutional players who previously like I think the basis trade in you know 2021 cycle was elevated at 50 or 60% on some of the major coins for like months at a time but now with like you know more liquid futures market um for these you know professional money managers and ETFs that they can you opposal I would assume a basis has obviously contracted quite a bit. So like how do you kind of

you know what are the dynamics you guys have experienced internally and and how do you see that playing out as like you know the Salana ETF comes out and kind of you go down the the longer tail here and you know these professional money managers can can get that opportunity. >> Yeah. So um I think the the pools of capital that are actually doing the basis with the ETFs and the CME are actually completely distinct to the pools of capital that are doing it within crypto. Um, so like a millennium as as an example literally cannot put a dollar of their uh of their collateral into crypto because you need like a a custodian that has like a double A rating as one example over there. And so there's actually just these enormous pools of of capital within Trady that do these things in the CME because it's

almost perfect credit risk to be able to do it there, but just literally cannot touch crypto. And so uh you actually see extremely wide divergence between uh the CME basis and what you find within crypto which is almost accounting for some of the credit risk that you find within uh the exchanges within crypto. So just looking at the numbers from 24 uh on a on a cash adjusted basis. So one important piece here is that you have to cash fund the CME. You can't put down just pure collateral like you can within on portfolio margin within crypto. The the basis was kind of like 6 and a half% last year. So like 150 basis point uh spread to treasuries while USD was at 18 last year. So you're talking about a gap of like a thousand basis points wide. Uh while people could do this in the CME

when that was happening. Uh the view that we have though is that for a bunch of different reasons it's more efficient to do things through Athena than doing it yourself. Um i.e. a lot of hedge funds who are doing this actually just put the majority of their fund within Athena because uh not all of the funds that are um I don't know if you want me to get into the details of like the dual staking. >> Yeah. Yeah. Yeah. >> There's a bunch of different reasons basically why uh uh you basically can amplify the yield because not all of the amount of USD is actually staked within SUSD. And so to the extent that it's being used as money in AMMs, in order books, all these different pieces, you're never going to have a 100% stake rate while that's happening, which means that Athena is always strictly beating

whatever you can do yourself when you're capturing the basis. And so the view that we have is actually yes basis will contract through time but when these institutional flows of capital come in to do it we want them to do it through Athena because it's a more efficient conduit for them to to be able to access things themselves. So this is part of the thesis right I think um one of the criticisms was like yeah basis is going to come down from 60% which is where it was when we launched and it's like yeah obviously it's going to come down and that the the person that's going to push it down is Athena and we're going to get a lot bigger when we do that and that's just like a very natural thing that happens in all financial markets which is you've identified some sort of excess

spread or alpha and you just say I need 10 or 20 or 30 billion of capital to bring that down to an interest rate that makes sense. So all Athena is doing is kind of actually um bringing down the cost of capital within crypto to an interest rate that actually um sort of makes sense to people in Trafy and isn't 20 or 30% if that makes sense. >> Yeah, that makes sense. And then Yan and I have discussed this before, but I'm really curious to get your take on it. So just like kind of zooming out a little bit to more like broader leverage in the market. Um, typically like you know a sign people really look for is super high funding rates across certain coins, but now with like Athena, you know, you guys have helped dampen those funding rates and um you're not

necessarily like so you you bring down those funding rates which can kind of like mask maybe how much is on the long side or or how speculative the positioning is on the long side. >> Do you have any thoughts on that? It's something I'm pretty curious about. >> Yeah. No, I think it's true. I think uh things are more overheated than they appear on BTC and ETH than before Athena existed. Um I think one way to clean for this is basically looking at Hyperlquid funding rate. So if you look right now, Hyperlquid's at like 25 while Binance is at 11. Um there's a couple of different reasons for that. One is that the retail flow on Hyperlid is obviously much more organic than what you see within centralized exchanges which is generally um uh you know would have more

institutional investors sitting on there. And then the other piece is that you don't have portfolio margin on Hyperlquid where you can fully collateralize with $100 of BTC to short $100 of um of perhaps on the other side. And so you kind of have to like have the funding rates that you see on Hyperlid to to make them comparable to to what you see within CFI. Anyway, the reason I'm giving that context is that Athena doesn't yet operate um on Hyperlquid and so you can kind of think about that as like untainted views of like real retail flow which doesn't have as much like institutional capital sitting there. Plus, it doesn't have Athena and so I think Hyperl is actually a very good reference point for like how heated is the market actually without some of these impacts. Yeah, >> thank you. Yeah.

>> Yeah, appreciate that. Um, yeah. And then this year, this this week rather, we had something that crypto's been begging for for a long time with the passing of the of the Genius Act. It's the first federal law tailor made for stable coins. Um, and today you guys announced this partnership with Anchorage, which makes you kind of the first, I guess, Genius Act, um, compatible stable coin. Could you maybe talk a bit about the Genius Act, what you think of it, and then what like what exactly this partnership is and what it means for Athena because I don't think I I actually fully get that.

>> Yeah, for sure. So all that's happening in the background is we're just moving the issuing structure from an offshore uh BVI entity into one that's actually having Anchorage uh issue issue USDTB themselves. Um I think the important piece here is that uh you basically have an onshore regulated bank. So Anchorage is the only like federally regulated bank uh that deals with crypto in in the US. And this is going to be a broad product suite that they bring out where it's almost genius as a service for different issues who are coming uh through to uh to reach that level of compliance. Um I think the view that we have and different product approach here is that USD right now is not accessible to us retail uh which is a bit of an artifact of like the last administration uh when when we sort of launched pre uh

Trump coming in. Um and the view that we have is we almost have like a dual approach where USDTB uh is obviously uh you know once we get this in line uh with Anchorage is going to be there compliant with Genius and able to be used within the US uh in in any place that sort of like payment payment stable coin status um allows and then USD we see is more of something that exists within DeFi offshore uh and isn't there within sort of like the regulated financial uh system within the US and so I think they're both going to be important markets going forward uh but I Broadly actually the learning that I've had is uh we're obviously extremely excited to be able to do this within the US but I think the learning that we found is that uh the main use case for

stable coins actually kind of exists outside of the US like most people in the US have access to instant digital cash in just a different format whether it's in Venmo or these different um applications and uh it's also going to be a much more competitive market when it comes to your ability to extract uh revenue from that market because it's so intensely uh competitive when you have a money market fund sitting alongside stable coins. So I think the view that we have is we're sort of pleased to be doing this. Uh but actually the offshore markets that exist outside of the US are still the most interesting places to be operating and I think that Tether is just the best example of this which is uh that's the strategy that they took from day one and you can kind of see that that's paid off

um very well very well for them through time. Yeah. >> Yeah, that makes a lot of sense. You think you think Tether's going to come on shore for the for the Genius Act 2 because they've said in the past they weren't going to, right? >> I I saw some news article out yesterday which is I think they're going to issue a different form of USDT that uh uh is basically compliant within the US. I can't confirm whether that's true or not. It was just something I I sort of read online. Uh but I think that that makes perfect sense which is it's kind of similar to the approach that we're taking which is we'll issue something onshore uh which fits the mold of of what they're after and you can sort of keep the core product um operating in the way that it is now um in the markets

that we do. Yeah. >> Yeah. I think it was confirmed that they are just in uh like Sachs mentioned. >> Okay. How does that kind of fracture liquidity or if at all for you know all of these USDT margin you know per on centralized exchanges if they issue a new token is that you know are they fungeible at some level or >> it's US-based I think versus international basically the dichotomy. >> Yeah, exactly. So technically no one in the US should be trading on those uh offshore venues anyway. So, I think uh yeah, if it's going to be on Binance US or whatever, presumably they'll be using the lo the you know, local genius compliant one and then I think uh anyone in the US shouldn't be accessing those

exchanges anyway with normal USD2. Yeah. >> Yeah, that makes sense. >> It's going to be pretty simple. I mean, if it's anything like the EU one, um, like the EU regulation kind of banned using certain stable coins as collateral and then on Binance just invented this like Binance futures credits and just like autoconverted you to that. It was like, yeah, pretty pretty dumb, but such is life in Europe. Um, yeah. I'm curious like with we're seeing a lot of just like stable coins are heating up like everyone's talking about them. Everyone every big corporate has like a stable coin strategy. Um, there's a bunch of kind of infra startups whether it's, you

know, the the kind of tether chains or some other stuff being built. What do you think? Like you probably have a pretty good pulse on this. What's the most interesting stuff being built? maybe what's like overrated and what's what what's underrated right now in your mind in terms of the stable coin market. >> Yeah, I think I'm I'm quite bearish on like new issuers basically coming to market and being able to compete um with the incumbents. I think uh everyone's clearly excited about the theme and sort of struggling to find a way to express that view if that makes sense where uh one issue with this is that because the product is so commoditized it's extremely different difficult to actually differentiate yourself as a startup versus the incumbents and so if

you take a step back and just think about what are the three axes that you can actually compete uh what does a stable coin need to do it need to be a dollar and if it isn't a dollar then you're out of business uh like the next day you need to be and you never going to be as liquid as trading hundred billion dollars a day as Tether on day one. And then the third axis is return. And if you're backing your stable coin with GST bills, um it's going to be a race to the bottom right in terms of the margin they can extract. And Circle now is already starting to run that race in terms of how much they're sharing with Coinbase and all those different parties. And so I think I'm actually quite negative on the unit economics and business models for stable coin issuers

going forward. I think Tether was basically the exception to the rule and existed in a very unique moment in time where they could build modes within centralized exchanges that are very difficult to unseat now. And so I think everyone looks at Tether as the best business model on earth, which I think it is, but it no one's going to recreate basically what they did, which is came in a very unique moment in time. And so I'm actually very bearish on new issuers who are coming to the market and and sort of say we'll share 90% of the yield and that's kind of the the angle that we have versus those incumbents. I think that uh that's a very difficult sort of path to take. And then also like to make the numbers work for a business which is just taking five or 10 bips on aum which

is kind of where those things uh get down to. You need to be operating at like a hundred billion dollars of scale to be a venture scale outcome business. And so um I think that that's the piece of the market that I'm most bearish on which might be surprising to say as a issuer of all dollars and stable coins ourselves. Yeah. >> Yeah. Yeah, it definitely seems like a cost center for a lot of these guys to just increase distribution rather than than some new source of revenue. Um, yeah, business model is insane. It's just like they get to internalize all of the margin just by virtue of being so ubiquitous and and widely used that the liquidity they provide is basically the the that's their profit share is like you're welcome for the liquidity and

we'll internalize all the yields. Yeah, you can kind of think about it in a different way as well, which is the guys who are trading the most on Binance, BTC, USDT, they couldn't care less if you're paying them 4% a year because it's a high frequency fund who's trying to save one basis points on execution when they're trading the pair 10,000 times a day. Um, so what you're competing with isn't actually like zero versus 4%, you're competing with like the internal cost of capital for HFT um funds and and market makers who are trying to make 50 or 100% annualized. And so like that USP of like we'll pay you a bit more yield on this collateral um on the exchange if it's just one basis points more liquid >> no one cares about that yield basically

for the biggest uh players and so that's kind of the mode actually which is the most liquid pair on earth is just the BTC USDT pair and Binance and until that isn't the case then Tether can easily take all all of the income to themselves. >> Yeah. Um >> one one follow up on that and then I'll let you go Duncan. Are you so you said you're not bullish on the issuers. Um are you bullish on any of the infra like stable coin infra plays like the plasmas the stable chains but also some of the even more like >> which one? Sorry.

>> Tron >> Tron an insane amount of money on transaction. It's like a couple million a day. >> Yeah. Yeah. Yeah, I mean if you overlay the USDT supply versus Tron price, uh that's kind of how you longed to Tether actually in the last 5 years. It's literally just a graph that goes up and to the right. Um I am actually pretty bullish on on Tron if they can sort of continue to have as much share as they do uh in terms of actually transacting Tether. There's obviously quite a few new entrance who are coming in to to >> converge, bro.

slightly different angle there and I think the the scale of tether looks slightly different in terms of uh transaction volumes there but um yeah I think uh yeah Tron is interesting with the sort of mode that it has right now um I think it's it's going to be just quite difficult to unseat the sort of scale that they have but uh obviously a few of these these different projects that are coming to market are pretty closely uh backed by you know either Bitfinex or or the team around it and so um it'll be interesting to see how those play out. I mean the thesis for for plasma right is is is basically Tron. It's like how do we capture some of that activity?

>> Yeah, I think that's fair. Um the piece I think that looks slightly different is my understanding is that they're also enabling like zero fee USDT transfers on there and so um yeah I don't know how the business model sort of compares to to Tron given that uh but um yeah I think that's like directionally correct. Yeah. >> Nice. I had a question on the the Genius Act and just talking about like incumbents coming in, you know, maybe a slight counterpoint. Um, so I'm pretty sure in the Genius Act, it said that you'll be able to issue stable coins against, you know, bank reserves held at the Fed. And so like after 2008, um, they did all this QE. So, you know, the Fed buys a bond from a bank and then the

bank holds that cash on their balance sheet. the Fed holds the bond, but that to kind of like prevent that money from flowing into the real economy and starting like insane inflation or like stimulus, they started paying interest on reserves. Um, so you basically have, right, I have the chart pulled up, 3.5 trillion or 3.3 trillion of like reserves from banks. I think they're held at the Fed. Um, but the Genius Act, I believe, will allow you to. And so if everyone like went to their bank, withdrew that money, and then spent it in the economy, that'd be super stimulative. But a lot of people keep their money at the bank. But I'm pretty sure you're now this will enable um banks to issue stable coins against

these reserves, making the money way more liquid. Uh, do you have any thoughts on that or is my understanding correct? >> Yeah, I'm I'm not as actually familiar around that piece. I think the the one area which I do think is interesting which is get getting along the same lines that you are which is um like the transmission mechanism to actually get credit into the economy is always through commercial banks right and so it's like money is sitting within a commercial bank they'll go and re lend it out to to everyone else and so actually like your bank deposit sitting there within a bank um has a hugely uh you know very large impact in terms of like credit creation throughout the entire economy. if every single dollar that's out within a deposit account was withdrawn into a money market fund or a stable coin that actually kind of

collapses credit within the economy um unless something sort of changes. I think it would be like kind of a double dip where it would stay there but it could also be spent as a stable coin like that would just be backing the stable coin is my understanding and then because basically the US has a huge financing problem right now and you know they've continued to shift issuance towards the shorter end of the curve and find demand for US dollars at the shorter end of the curve. So like this is kind of like uh continuation down that path of you know enabling stable coins um and kind of sourcing some demand for for the US debt.

Yeah, I I do think it's also an interesting question for even um and I do actually believe foreign countries are starting to actually get concerned around stable coins and particularly within the EU where if you're actually pulling all of your banks out of all of your money out of European banks to put them into stable coins, you actually have massive issues with not only the banking system but then also your currency as well. And so there is like a level of scale when this gets to um a size where like literal nation states start to have issues with um with the growth in these products. Sorry. >> Yeah, >> I was always worried about how they're going to manage that. You know, if they have stable coins readily available in the US paying like flowing through the interest, why would I hold money at my

bank versus holding a stable coin where the interest is flowing straight through? Those get deposits get taken out of the bank >> then, you know, there's like you said massive issues for them, you know, providing commercial credit. So maybe this is kind of a solution to that where it's like, okay, the banks will issue their own stable coins. They can keep their money like at the like in the bank but which they can also lend against but the people can spend it more freely. >> Yeah. All right guys let's let's move to let's move to markets. I think we spent spent a good amount of time on stable coin stuff.

>> This is like insanely bullish markets if this happens because it's like 3.5 trillion and then you make that liquid to people and in stable coins especially like crypto markets you assume some of that money goes into Bitcoin. It's pretty exciting. Yeah. Um, and on the crypto markets front, since we last spoke, markets have been pretty good. ETH has been outperforming. ETH BTC is back above 0.03. So, also has been has been is is looking pretty good or or pretty bad, I guess, um, in in that denomination. What do you how are you guys feeling here?

Like, do we do we go do we go higher or Yeah. Where do you think where do you think we are in the in the cycle? I guess maybe Jan and then and then and then and then and then and then and then and then and then and then and then and then Guy will be or maybe you haven't spoken yet. >> Yeah. Either Guy or Setters first. >> Yeah. >> Yeah. Uh I don't know. It's like it seems like there's a lot of momentum. The thing is a lot of this is just driven by the Treasury plays. So nothing. It's it's like a market that when this stuff starts happening, I don't really have any sort of like edge like how much longer are going people going to keep aping these treasuries at like 2x and like running this. Um seems like there's a lot of

flows and that's good for crypto because those things kind of get like put in these vehicles and then they're not like super easy to get out and so they're pretty good syncs and it gives people an easy way to kind of like ape them in their brokerage. Um, personally, like I would never buy one of these treasury vehicles on the open market. Maybe that's like mid IQ, but um, I do think they're kind of dumb for the most part, but it's like, yeah, I don't know. Tom Lee came by and he started like pumping this narrative and he is a big influence and you're kind of just like going with the flow. Um, for now, I don't know if I have like any

good insights. It's just like we have a period of momentum right now. Like nothing else has ch like what has changed other than people seem to be getting more and more fired up about these treasury plays. Like nothing really has really changed from the >> regulation, the Genius Act and then Clarity Act market like that I think is going to unlock a lot of capital. I honestly think this whole Genius Act thing is really important if if they allow these banks to issue their own stable coin because that like $3.3 trillion in these bank deposits that could turn into stable coins is [ __ ] huge. And I think Bessant used the number 3.7 trillion in stable coin demand he sees over the foreseeable future. So like that is a massive, you

know, stimulus to the crypto markets. And >> yeah, I think that just plays out over much longer time horizons than than these markets in the interm. It's almost like week by week, month by month, whereas that that's like a, you know, a longterm support, but ultimately the fluctuations will be driven by more acute things. >> Yeah. >> Yeah. What do you think, guy? And curious, I know at some point when we spoke, you were pretty worried about ETH. Um, ETH pumping I think is good for everyone, especially since you named your your company after your your your project after it. Um, but I'm curious, yeah, how you feeling about markets about ETH?

>> Yeah, I think uh on a long-term basis, I'm still um very negative. I think ETH, but then also L1's. I just kind of broadly think L1s are kind of the most overvalued financial assets that have kind of ever existed. Um, and yeah, I think in the short term there's obviously a very different angle and narrative that ETH's playing right now, which to me I think in a very simple term is it stopped sort of punching down to Salana to try and compete for user activity and you know actual usage on the chain and has basically sort of uh rebranded itself to compete with BTC again which is kind of like Tradfi piling money into these vehicles to come in. Uh so I think that that's kind of uh the only change versus where we were uh two months ago. Um, and I think the I

think the market can basically continue going up so long as these vehicles are trading at two and a half to four times NAV. I just don't see how it goes down. While that is the case, I think the real like uh indicator to me that I'm concerned about is when some of these multiples start to move and drift below like one and a half times towards one. I think that to me is going to be the signal that uh you're probably coming towards the end of the the cycle basically. >> Yeah, it seems like the obvious signal, right? like when the premiums start collapsing. Uh but that maybe it'll be that easy.

>> Yeah, I think premiums will start collapsing when um new vehicles stop coming online. Right. So, right now all the capital that's getting deployed doesn't require an equity bid to come in. Right? It's these new vehicles there and there's still a bunch of them for for Bitcoin, for ETH that that have money to deploy. And so that props up the this the underlying asset and and so and the momentum will carry over into the equity vehicles of of the the ones that are live. So I think um in in the same way you know if you think about like what happened like Zer and and VC collapse like once the last money stops buying then everyone before them starts to fall off and and so here you still have this new supply of bid that doesn't

require or new supply of of capital that doesn't require a bid on the equity side to support it. And so it it's it maybe you know the collapse will probably happen when these existing vehicles are now forced to do at the money sales right and and now you're actually forced to have a supporting bid in the equity market and and maybe you do have one right and so that that would be great and you you get another cycle of of kind of everyone raising dry powder um but I think yeah that's kind of what to monitor is is new vehicles slowing down because you basically tapped every major geography and and so you can only run the same play so many times in each market and and that's when yeah the potential collapse could happen.

It's just hard to agree it's hard to be bearish because the question in crypto is always you know who's your next buyer and and that tends to happen in in very momentum heavy assets and and we have a clear one now and and so it's you know you kind of just don't want to overthink it and and that's why you see you know people you'll ask people like where they think the top is. Some people say, you know, I could see 130, I could see 200. And and ultimately it just boils down to, you know, if you do have another large buyer. We haven't really seen at least publicly any kind of nationals buying. Maybe they're they're doing it in private and will eventually announce once bags are filled. But I think that would probably be what can really continue to carry this thing forward. We

just saw Sailor announce the next launch and they upsize it from 500 to two billion. That was earlier today. So it seems like the appetite is still there. All all of the the um preps he's been issuing in the market are trading higher than than where they started and so you can do at the money sales there. Um yeah, seems like things are going to kind of continue on that front. >> Yeah. But and so you think basically slowdown of new vehicles then leads to the collapsing sort of mnav premiums and then kind of end of the cycle >> or not even just like new vehicles it's just like the existing ones are starting to drift towards not being able to raise as aggreively and then I think you just

have a >> a view that the forward flows just don't look as attractive as now because like when they're trading here you know for a fact there's more money coming into the market like next week >> from one of them >> um almost by definition and I think it's yeah when you're starting to feel like they might not be able to raise cash at like above one that's when you know that the flows are going to turn the other way. Yeah, it it seems very obvious to say but yeah and that was more of a response to I'm not like thinking about an actual price target on ETH or BTC. I think it's actually just looking at those numbers rather than the the price of the underlying that that makes more sense. Yeah.

>> Yeah, that makes sense to me. But and but if you think ETH and like L1's generally are the most overvalued assets on the on the planet, um doesn't that bode terribly in general for the alt complex because like most alts are are priced versus these L1s in some way, right? whether it's all L1's or like the actual just old coins on these L1's do isn't that like if if ETH is like um if they are all the most overvalued assets on the planet isn't it like all carnage other than the the the very few who have like cash flows and and some fundamentals >> yeah and I might um obviously not talking about my own project here which would be a bit inappropriate but I think like the broader view that I had is that

um I think Hyperl is a great example here which is like Hyperlquid has detached itself from any uh pricing of ETH or another L1, right? It's just it's printing cash flows and if it continues to print cash flows, it's going to continue sort of growing through time and that just looks and feels like a real business or almost pseudo equity um in terms of the way that it behaves. And so I think alts kind of need to go through this maturation phase where they're just they stop being just kind of beta to the L1 that they're sitting on and sort of trade up and down completely in line. They're going to just basically grow up a little bit in in the same way that we were describing. you can't just be tapping into crypto native capital when when you know the five to 10 alts that actually have real

revenue, real businesses, real users have access to an equity market. There is going to be a different way that these things are priced which is equity investors can look at these things and say I'm actually just willing to bid this thing at 10 times earnings or whatever it is and I think that they actually start to decorrelate with uh some of the infra that sits in the background. So I think this is just like a painful process that we have to go through which is um I think like BTC dominance should be like 90%. Um alt L1 should be basically a tenth of the valuation that they're sitting at now and there's going to be five to 10 equity like businesses um that I think look like hyperlquid uh which has been an incredible story this cycle uh that can sort of come out and and emerge in

the same way that Coinbase and and Robin Hood has this year. So I think that's kind of where I see the market structure um going through time or or like an end state that makes sense to me. Yeah. And for Athena, so I think USDE is 6.8 billion right now. Like how much think the market could support? Like if everyone knew about Athena and knew that you could get you know this yield there, what do you think like the you know futures per market could support right now? >> Yeah, it's an enormous market that people underappreciate how big it actually is. So like OI is roughly 110 $120 billion and it was spitting out 15 20% uh yield on $110 billion. So if you think about like where are the three

places in crypto that produce $10 billion of cash flow a year, it's Binance equity, Tether equity and the futures market uh in terms of the basis that's sitting there. So you're operating in a market which is producing enough cash flow for for there to be a very large outcome. Just as like a general comment, um I think it's obviously extremely dependent on like leverage demand within the system where if you asked me that question back in December when funding rates are like 30% and Athena had just grown to six and a half, we should have been at like 20 to30 billion I think in size if we're doing our job properly for funding to be at like 10 to 12%. And so if like if we pretend that uh let's say Athena is plugged into some institution that sits in in trad

for now and they could put unlimited amounts of capital to basically compress that rate down to to a rate that is sort of like appropriate to them. I think we should have been at that size basically in December uh to to get to an interest rate that makes sense. And so kind of my job right now is just putting in the connective tissue to places like that where when the demand for leverage sort of reaches those levels, you can sort of adjust to it very quickly. So the simple answer is that like Athena is still pretty tiny now relative to the whole derivative market. We're only like six sevenish% of the entire market. And I think like an end state of that is we could be 20 to 25% um in total. So 20 to30 billion if the market doesn't grow a huge amount from where it is now. I

think like my biggest issue with this thesis is that all these apps that are revenue generating uh do it because we have L1's that are valued a lot like Hyperlid makes all its money off of trading like Bitcoin, ETH, Soul. Um Athena obviously needs ETH to be big. I know you guys do a lot with Bitcoin. Maybe only if only Bitcoin was around you could still run it. Um but like that's not a reason for the L1's to be valuable, right? That's like just the reality that if the L1 tokens become less then a lot of these products that are built around it. Um like there are very few businesses in crypto.

Um I would say like pump was one and who knows now. Um seems like they're losing a lot but like these these launch pads don't really rely on having big valuations to make their money. um they just make it off of like new token issuance. But uh >> I fully agree with Yeah. And I wasn't disagreeing with Zay's comment, which is like if Altel ones are worth a tenth of what they are, BTC DOM is going to be 90%, which is kind of what I described earlier, which is everything comes down and is worth less. I'm just saying that there are equity like businesses that can sort of like come out of that and produce products that that um >> that are worth something. I'm not certain apps are

>> 10 times undervalued where they are right now. That that wasn't like my >> Yeah, it's just like the general reflexivity of the whole market where it's like a lot of people earn yield that is correlated or earn revenue that's correlated to these like inflated you know L1s. So I think that like as those come down just general revenue numbers will likely come down as well. Could couldn't you have said this at sort of any point? I guess in I mean you could have said this at any point in crypto's history, but maybe in 2021 we still had this these like rosecoled glasses of NFTTS are going to be big and social networks are going to be big and stuff. So, but maybe after 2021 once or from 2022 onwards once it became clear

that a lot of these things you know had failed to far find product market fit you could have kind of said this thesis at any point then right like L1's are the most overvalued assets on earth they actually looked even worse right at the at the bottom on on a multiple perspective they need to come down a lot and you're going to have these revenue generating businesses but somehow we keep finding bids right for for these assets uh Yeah, good. You're shaking your head. Curious. >> Well, I mean like yes and no, right? Like if SUI hadn't done the run that it had done this cycle, would you say that like the LTL1 thesis like was still alive basically? Um like on a relative basis, right? All of these things are down massively versus the rest of the market.

>> Do you know that? >> Yeah, I mean more more like Ethan >> ETH and Soul are still up like pretty significantly from the 2022 bottom, right? Is more more so what I'm saying. Like there's there keeps being demand for for for buying these assets. Would you agree generally though that like the sort of like infra launches and just like consistent stream of these pieces of infra have just literally gone to zero like there is zero bid for any of these things. Obviously there's some lasting power to ETH having existed for 10 years and that kind of stuff but directionally it does feel like that's what's happened to the space right where last cycle you had like four or five L1s that reached hundred billion dollars of valuation obviously had Salana do extremely well on the cycle and outside of Soul and and ETH none of them sort of

got to those heights. It's true though. Like Soul has kind of hit Soulless hit like a ceiling. Um the Soul is a good trade for like the end of 23 into like Feb of 24. Um and it's kind of just like oscillated for a long time now. And ETH has been a good trade for like this past month, you know, um after three years of bad. And it's true like yeah a lot of the other L1 ones are just down only. Um, which I know this is something we've talked about a lot, but I do, yeah, like I do think you could see a

market where you do have some winning apps that start taking like the like I don't know what the app dominance market cap thing is, but I think it's fair to say like you're going to bet on Bitcoin dominance up, app dominance up, and L1 premium down. And that's kind of like how that L1 premium gets distributed a bit. Um I don't know. You're already seeing tokens, you know, go away from their L1's like pump, right? It's kind of diverged from Salana recently. Um >> I just don't know if it gets distributed in that in that case because yeah, like if if you're not bull like everything is priced versus or a lot of things are priced versus these L1's. So I think if these L1's lose their bid, I don't feel

like it gets distributed into apps for kind of the reasons we discussed before. >> Maybe it just goes out. >> Uh I think it get distributed. You have to think about the size of of these L1s versus the size of these apps, right? Like you obviously not fully, but even if you get uh the single digit percent that'll materially move the needle on these apps. >> That's fair. Well, >> I feel like L1's get bid and they get bid early in the cycle because people just want to be bullish again and so they're like, "What do we bid?" And we bid the L1's >> and then later, I don't know.

>> Yeah. It's like the opposite of the delution thesis, right? It's just like if everyone can agree on one thing to get excited about, it becomes more compelling. >> Yeah. >> Yeah. >> Yeah. >> I don't know. We've talked about this a lot. Like I know we disagreed about this, but it it definitely is clear to me that we're moving to more like, you know, obviously there's some outliers like XRP or whatever, but for the most part, we are going towards more like people want to see real numbers to buy this stuff, >> guy. Um, >> it's just funny that the crypto top five looks so similar to what it did like four or five years ago.

>> Network effects, bro. the cult. >> Um, guy, what outside of Athena, what Hyperlid, what is like uh I guess one of your favorite crypto projects that you think is like carving out a good niche and and generating revenue? >> Um, yeah, I I I do have respect for Sky and uh what Make a Dave have done. Um, I just think the longevity that they've had, you know, flexibility to change this cycle. Um I think we respect them a lot and obviously work quite a bit with them. Um I think a couple of projects which impressed me a lot this cycle were were maple syrup and then um Oiler. Um, I don't know if you guys have seen the

TVL charts for both those products, but it's like literally imploded and went to zero. And I think 99% of the builders would have basically just thrown in the towel and gone to do something else or raised for another token. >> And uh, yeah, I know both of the founders there. And I think just the grit that they showed to basically just like knuckle down and then come back in the way that they did, I think was just uh, an amazing example for everyone in the space to to look up to in terms of how to um, persevere. So I think those are probably the two stories that I um were most impressed by the cycle outside of the success that um Hyperlid found.

And uh I also forgot to mention I think Fluid had a pretty similar story there and I think the innovation that they had around uh DEX almost being embedded within the death of the money market is interesting for like stablecoin uh looping rather than just like uh volatile assets. But again, I think they had another great story which was kind of like left for dead and then came back with real innovation that just like forced an outcome out of the whole thing. So I think those are the stories that I like the most. Yeah. >> Yeah, that's a good answer. Those are some good projects. >> Yeah. All right. We talked about apps. I think it's pretty relevant to to pump fun, which I know we discussed last time. I don't think any of us expected it to be trading. I think it's trading sub three billion at this point.

>> It's trading Yeah. 2.8. Oh god, it's getting down to crazy. >> What's crazy is that the the ICO sold out I think quicker than a lot of people might have expected. It was like less than 15 minutes. >> Yeah. >> There's no way they don't have some tricks up their sleeve for this thing. >> Yeah. So I set the stage on on this if you want. Um so yeah basically you know pump uh darling of along with hyperlquid of of Q4 and and and Q1 um revenues were were through the roof. They made 700 million

in in about a little over half a year. The the I think the concern was the trend. This is one of the most kind of contentious uh raises we've seen for a host of reasons, right? So the the trend being one of them um it it was declining more so a function of the the kind of appetite and interest in the memecoin market um since there's direct proxy but on an absolute basis the the business was still doing really well. Uh on top of that they they made about 700 million and and you know rumors basically that they still have 600 plus of that on the balance sheet. Then on top of that, they went out with initially went out with a raise uh of 200 million from privates, 800 million public. And that raise took

place, I'd say about 6 weeks ago. And then in the weeks leading up to the ICO, there was a huge change. And so that raise again was 200 private, 800 public. They were raising a billion. Then all of a sudden it pivoted to about 700 private and uh 600 public. Right? So that they they upsized the private from 2 to 7. They downsized the public from 8 to six. They raised so uh 1.3 billion there. The 600 million of the public sales sold out immediately.

You know, reasons for it being contentious. Other reasons being that you know why do they need so much money? That's like an obnoxious amount of money. There's been, you know, countless stories of people raising too much and and failing with it. Uh I think that the the easy counter is if the money is there, you usually want to take it, right? Because you never know. And and um ultimately you're better off having it in the bank than than trying to speculate on on potentially being able to raise more later on. So the raise wraps up in in 12 minutes. Uh but the token doesn't go live for I think three plus days or so. And in that time um Bybit and and Hyperlquid and a handful of others launched PEPS. Hyperlid dominated the the per market because

Bybit had limitations on size. So everyone was just trading on on Hyperlid and that was really kind of where we saw proper price discovery. It traded up as high as uh six and a half or or almost seven uh before the the token launched and then it it traded pretty well afterwards as well. Um then it started trading lower. Reasons why it it traded lower I I'd say you know Bonk being the big comp a big competitor was was taking market share they you know unconfirmed but it seems like they they strategically kind of paid some of the largest um token issuers based on the fact that they all kind of moved simultaneously which seems more than coincidence. Uh that allowed them to capture a bunch of market share. They've

been doing a great job on the on the marketing as well. I think the recent thing they launched where 1% of of of revenue goes to like the top five pairs is a big one. Uh because ultimately what do you need in this space to to drive excitement is you need a few runners to really hit billion dollar valuations right because that just means the ceiling is raised on on everything else and the EV if participating goes through the roof and and that becomes very reflexive as capital flows into the system. um at the same time the the pump guys have been fairly radio silent um up until the the interview that took place yesterday. So uh they they were pretty quiet and and you know people were naturally anxious. On top of that, the

entire supply was unlocked, which is fine because it's not as if this was an unknown, right? Everyone knew it was unlocked. So, everyone has the same information, but you started to see capitulation and it becomes very obvious on chain, right? So, everyone can see when people are selling and and it that also becomes reflexive. Uh, so you you saw kind of some of the bigger whales sell and and I think it makes sense if you're a big fund, you just deployed 100 million bucks and all of a sudden it's worth 150 on paper. there's some fiduciary duty to realize a 50% move in in in a matter of days. So that naturally led to more selling and and that created a lot of pain because at the same time the rest of the market was ripping. So you had massive opportunity costs and everyone sold soul and and

other things that that then moved materially in their face while their pump position kind of dragged. And so um you know people are still anchoring to the idea that they have this two billion cash. Then comes yesterday where Alon goes on thread guys stream and this was basically the first time that they spoke publicly about um about pump and it was a bit underwhelming. It seemed like they had a bunch of answers that that needed to satisfy kind of legal requirements, right? Where they had to be kind of ky and and couldn't really disclose too much. But ultimately, you know, I think the the the response to that is is why do this knowing that um you couldn't really give the information that people wanted to hear. And it's not necessarily

that you have to give them the answer that they want, but I think people were just looking for a vision and an idea because what it boils down to is can they spend this two billion in a in a in a creative way and and the market wants to get confident in that idea. And so I think they didn't really get that confidence across with the interview. Um and and so now it it kind of continues to sell off and and so now you're hitting this point where there's a bunch of kind of liquidation prices and you know the market naturally tends to move towards max pain and and so um you do have that element against that though everyone is up big so I think a lot of capital can come in to to provide additional cushion and and move those liquidation prices down so I don't

necessarily think that that is going to be a reason for those to get hit but yeah so now we sit at it with like 2.8 8 billion in market cap or so. They do have two billion in cash. They've done one acquisition for K scan that was broadly accepted as being kind of underwhelming. Um I know there were rumors of the Axiom acquisition which I think people would be pretty against considering the cost relative to what they'd be getting. they'd be buying the top of of this platform that that they could realistically kind of build themselves um with enough capital and talent at at like a a huge fraction of the cost or like a very small fraction of the cost rather. Um so now yeah I think you know you I kind of view it as a pretty good risk return here because

you know the reason that they are down is is is something very solvable right it's messaging and narrative it's not something fundamental there's no real change from why people invested at four billion obviously part of it was just because it was unlocked and people thought of it as a trade so there's certainly some of that you need to work through but ultimately if you think that they can spend this funny at least somewhat interestingly then it it seems like this is a great opportunity. Um but that's just me talking my bags. >> Wait, so Yan, you think so people bought this at 4 billion, you know, a week ago, two weeks ago and you think they're just like chasing and puking it or what is the big cause for the move down below

the that because I thought that that should have acted as a decent floor but seems like >> it did until that interview happened, right? Like right now it's just narrative construction. Can we reinvigorate the trenches? I think market share in this space is insanely fluid and not sticky. Um, I think yeah, Bon did a good job of capturing it, but with enough incentives, you can easily capture it back. This is like the most mercenary group of capital and they'll just flow to where they think they can make money and and it's still a relatively small market. And I think, you know, the opportunity is there because the rest of the market is doing well. So, people have cash to deploy.

It's just there the e the EV of the game needs to be higher and I think in order to get there you need to have some of these runners do well and and so you know we were talking about how potentially you can kind of artificially stimulate some of them and and and get things going that way as one potential solution but I think you just need there needs to be some kind of coherent vision for how they plan to spend the money and it doesn't have to be insanely granular transparent but but still something kind of thought out rather than um what's what seem to you know, kind of high level and and and just ky.

>> So, you thinkwise it is just people puking it because they, you know, the market's running and they don't have a lot of confidence and it's selling off. It's like momentum. >> I mean, >> Twitter was littered with people that were just capitulating. >> I don't know. It's pretty clear to me like they uh the opportunity cost of things started ripping right away. Uh, a lot of people evidently were looking at as like a free money quick trade and then when that doesn't happen and then other stuff is stuff is ripping, you get put in kind of a weird spot because you don't actually have any conviction or belief in what you bought into, right? Um, and there's a lot of money that did that and

so then it kind of becomes like an easy decision to sell and then more people do it and then at the same time Bonk has gotten more market share, right? So all these factors together I mean yeah it kind of I mean it makes sense. Um but they yeah they have a lot of like I didn't think this was going to happen. I thought it would be trading probably at least like 50% up at this point even with like selling. Um Bon has obviously done a good job controlling the narrative. Uh, but I mean these guys have a lot of money and they've been doing this for a long time.

Um, I definitely wouldn't like call it over. I think there's a lot that they can do here right now and they haven't really done anything yet with the money that they raised. >> Uh, >> what do you think? >> Yeah, sorry. Go ahead, setters. >> No, I'm just saying like listen, I don't know. One thing I've been getting better at is like not trying to catch stuff when it's falling. Um because I probably would have bought this at like 4 again and then I probably would have bought at like 35 again. But uh I don't know there's it's been what a week since and it's been like two or three weeks since all the deployers move from pump to bonk, right?

Uh there's like a lot they can do. I think also though like overall the memecoin trenches have not really been the hot area of the market either, right? Even with like Bonk doing pretty well, coins are still not kind of like running how they were in the past, right? So, >> yeah, there's definitely a lot of headwinds. I'm curious what you think, guy, because I know you you actually met uh these guys back at the the Dragonfly Summit at some point last year and were we're were impressed at the time, but yeah, I'm curious what you what you think of Pump here.

>> Yeah. So I think um one caveat is I I do hold pump myself and then I'm actually reasonably close to one of the founders on like a personal basis. But I think um uh one one piece that is actually slightly different here which I had an argument with someone about on Twitter uh this week is also just the float dynamics of the whole thing look very different to a normal launch where pretty much every launch that comes out now except for hyperlquid or pump is basically artificially controlled in terms of how much actual supply is sitting there in the market and the the number that you see on coin gecko is not actually the real number in any way. uh the amount of capital that was actually sitting there on float for pump is just a very different number to what you normally see and to engineer that sort of like up

into the right graph in the beginning um it's just almost impossible with like a very real float that's sitting out there and so to me this is actually what organic price discovery looks like when you haven't got tight tight control which is like stuff happens uh people change their mind and you can actually see it sort of expressed in the way that it is um I have a huge amount of confidence I think in them personally just you know the conversations I've had and and knowing them as individuals. I do think it's a pretty ruthless part of the market, which most of crypto is, and it's extremely mercenary. And I think this is just like a very good indication where uh shows how quickly like things can change basically overnight and how um weak or like non-existent like modes that you perceive to be there really

are. Um and so yeah, I I have confidence that they can turn it around, but it is like a difficult space for them to be uh competing with uh within right now. Yeah. >> Yeah. I don't know. I'm I'm pretty I would be kind of uh I'm I'm buying here and but I would be buying a lot more. It just feels like for me the main thing that's that's tough is just this equity token dynamics and obviously like most crypto projects have this dynamic where there's a labs entity and then a token. I think the main difference is that for most crypto projects the token has to go up for the founders to do really well.

Whereas here there's an equity company which has you know $2 billion in cash collet plus 75% of the revenues going into it and they've already pulled 1.3 billion out of the token. So my main kind of concern is is just like to what extent are the founders like to what extent is it in their economic self-interest to for the token to to do really well and to to like really pump value into this token considering how much cash they have in the the equity. They probably own a lot more of the equity. Um yeah, that that that's really my honestly my main concern and reason for not like really buying in size here.

Yeah, I think I think it's a valid concern. Um, I'll just say what I know of them as like individuals is that I I think they are motivated by just more than that. And I think um for founders who have sort of come into the success that they have and made that kind of money, I think like the incremental hund00 million on top of like two billion doesn't actually change anyone's life at the stage that those guys are at. Um, and so I think it does does come down to like are you actually motivated to make a point and prove something uh to other people which um I think that they do want to prove something just based on the way that um uh I see them sort of like behaving and interacting.

Yeah. >> And what's the Yeah. What do you think like what are they going to use that two billion2 billion dollars for? like what's the maybe maybe for everyone here like what's the biggest bulkhead you guys see for how they could deploy this $2 billion dollars to really make pump successful because I think you were the one that put me onto this guy but really seeing them as social like Tik Tok competitor with like financialized you know that this is this isn't the social we thought we'd get but it's it's the one we deserve to some extent as an industry um and it's like I do think uh it's a really interesting path but I'm curious if you have any other insights or or things you you you know or or see there.

>> Yeah, I think that that idea of um you know like trading and investing almost becoming like a social sport. If you think about the way that people sort of interact on Reddit, the way that we interact on CT, it's almost become like entertainment to sort of like trade and and speculate with your friends. And I think the same way that Tik Tok had that pirality, I could sort of see that as a different form factor that people engage with each other to speculate and I could see that becoming popular. The thing is that these are like v venture bets right on like an unknown market within crypto right now uh which you don't know if they're going to be able to go and capture and execute. And I think that's one of the difficult things which we've run into as well is that like people

almost presume when you've done something well with your first product that uh you're able to continuously sort of roll that success into new ideas and new products. But in the beginning these are things are still always venture bets and your ability to sort of carry them through are obviously pretty low probability. uh given that um the one piece that I was quite surprised by was that they didn't um at least until now like think about some sort of cross-ell into perpetual swaps uh because in in many senses like they own the most valuable customer in crypto right which is like the most retail individual who doesn't know what MEV is uh will cross any spread they'll pay 100 bips like both ways in like that's actually the most valuable user in crypto which like even Binance is jealous about that if

you actually own that that user and I think your ability to take them from like spot casino gambling on memecoins and actually you know cross- sell that into perhaps in some way um I think is actually a very valuable user base. So um I don't know if that's sort of like the skill set of the team uh but to me that felt like a very natural way to uh give a very profitable product to a very valuable user base that they already own. Um, but yeah. >> Yeah, I'm in a similar camp where if you if you have that distribution, you kind of tack on other reasons for them to stay on the platform and then you bring other users and while they're there, they're going to try out other things and it becomes kind of very synergistic and and just uh way to build a broader

user base that and then have them access products that they maybe initially wouldn't but now will because money's on the platform or whatever it is and now they can try different things. by the way for >> Same with us. >> I think we're we're about we're we're we're finished here. Honestly talked through most of the topics we wanted to. Thanks so much for coming on guy. This was awesome. Um >> yeah, thank you. Appreciate the time. >> Yeah, thanks guys so much. >> Thanks everyone for tuning in. See you in See you in two weeks.

>> See you. >> See you. [Music]