Hot IPOs and DATs on the Decline

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Hey guys, welcome back to another episode of OX Research. Today, uh, we've got a kind of a fresh crew, I think, uh, for the live stream. joined by Dan Shapiro from the research team, Effort Capital or David as some may know him from Blockworks Advisory and uh Carlos probably more frequent guest uh from the research team as well. How you guys doing today? >> All good. How are you guys? >> Life is good >> been better. The the been better. The coin news could have been better, but outside that I can't complain. Living the dream, >> man. And this cannot help. Bukacio absolutely blasphemizing you on the in

the comments calling Ever Capital a fraud. Tough I think tough way to start the stream. Uh I think we're all doing better than uh Anom though. Supposedly uh supposedly caught by authorities. I'm not really sure if that uh headline is true or not, but it's running around on on CT right now. So uh funny at least. uh rumors that he got a DUI and rumors that he's being locked up over misuse of whiff spear funds which uh I'm sure I'm sure the the whiff any whiff bag holders that if they still exist uh would love to jail him for those crimes. Um >> I would say like I feel like uh Anom wouldn't get arrested at the top of the

market. He get arrested in like the depths of a bear. So I this feels false to me just on that premise. Yeah, the timing feels off for sure. Um, usually it's, you know, you get a couple more months and then something explodes and then the lawsuit comes after that. I don't know that we've necessarily had that yet. Although, like if your reference is the whiff chart, then it's kind of already blown up uh pretty objectively. So, maybe the maybe the crime has already been committed. Who knows? Uh, want to give a quick shout out before we jump into things uh to Appto sponsor today's stream. uh appreciate them and we'll hear more about them coming up later. But uh otherwise, let's get into it. I think the I mean the markets look a little

rough today. Um there were some poor prints that are maybe kind of driving things this morning like broadly uh not just in crypto but across markets. Um but some of the other like interesting stuff I think the big thing maybe this week that I'm seeing a lot of chatter about is the Figma IPO. Um, the like IPO price for FIG was $33 a share, settled at 33 and then it basically instantly opened at $100 um at list the other day and then like after markets after close like got as high as like maybe 140. Um, and so I'm seeing like you know just Finn Twit but also CT people are kind of they're all over this

one. Um, and it's we're back to this narrative of like the bankers win again. like there's a couple billion dollars that like Figma missed out on because of, you know, mispricing um the IPO price for the for the shares. Um some different comments of like crypto fixes this, you know, do it on chain or, you know, fix the IPO process. Um I'm I'm curious if you guys have any big thoughts here. here. I know I was going back and forth a little bit with uh James Kristoff and Noah in the OXR Telegram and um James of course on the side of the banks was saying, "Yeah, it works well enough. We don't need to change anything." Uh but I think there was also some comments of like it's kind of a hard thing accurately pricing,

especially when you kind of have like retail mania right now, which I I think we kind of do have to an extent. I mean, you look around at like Palanteer um and have to think at least to some extent there's some like re retail fever back in the markets. I don't know if do you guys have any strong thoughts on on FIG? I got filled for one share. So, um you know, little upset but also can't be too mad, right? My immediate thought is um that like if you open this up to have it fully on chain that there's more market participants that I guess it's kind of similar to prediction markets uh with like poly market right it's like anyone can bet on anything poly market historically is better at pricing odds

of events happening before mainstream media or like people that are so-called experts in traditional sense um now I don't know exactly what this would look like if you have all IP IPOS or you know ICOs I guess onchain. Uh but I have to imagine that the more market participants leads to better pricing of what the market you know deems these equities or these uh these capital assets at. So it definitely feels pretty egregious. Um I have a good tweet up on the side right here I'm looking at. But Figma left $2.3 billion on the table nearly double what they actually raised.

Uh they IPOed at 33. Obviously, Target opened in 95. If you look at other um other major IPOs, historically speaking, Door Dash, Airbnb, those both left 3.4 to3.5 billion on the table. And it sounds, you know, this person that posted this is saying it almost see feels like deliberate mispricing because all that ass all that um you know lack of funds going back to the founders, the employees, retail participants is really getting sucked up by the IBS, the investment bankers and you know largely the insiders um that aren't working for the company and actually trying to drive value for shareholders. So it feels a little egregious. um don't know the accuracy of this, but they're saying in

2021 total this amassed over $50 billion in underpriced IPOs. Now again, you're never going to get it 100% accurate, but it does feel pretty off between Circle and Figma that they're off by such a large margin. Like if I was off by 200% in my job, I feel like Blockworks would fire me. Um like why is that okay in this sense? Yeah, I think I kind of agree with that. But it's also I think reflects the state of the market. Like I think in 2022 you couldn't even IPO or like no no one would plan that. Like I I'd be curious to see like statistics from 2021 and

like seeing like how those like how those compare to this year in terms of number of IPOs, amount raised, um, etc., etc. just to gauge I think like IPOs like it's at least one good metric for like gauging like fraud in the market. I don't know if you guys agree with that but I I also think like it's not just like it's egous like behavior by investment bankers. I also think like it's just a reflection of the state of the market today where we have like just very spec a lot of speculation and and it's it's a kind of a bull market in equities. So you you really can do a lot about it.

>> Yeah, I think that's a good point. Um I know James actually dropped a stat on us last week or maybe the week before on IPO numbers and like we're actually like multiples away from how frothy the market was back in 2021. I think on like a actual number of IPOs and as well as like dollar uh basis. Um I don't remember the exact number. I know we have a clip somewhere out there um that got into it, but it was something like, you know, a couple hundred billion in 2021 deals and, you know, maybe it's like 30 40 billion or so um in the past year. Um so like not even close, right?

And I'm sure the actual number, the amount of companies is probably it's pretty a pretty large multiple as well. Um but I do agree there's been like a little bit of a like we've seen a little bit of a trend here um at least in in recent months. Um, last year it there were some there's been some big launches over the past, you know, year. I want to say like Reddit IPOed last year. Um, and actually went on kind of an insane run, but it, you know, it didn't I mean, I think it was still up, you know, maybe 30 40%, you know, that first day or first week, but um, didn't pop 3x like it in a in a day or two days. It um, but it did go on a run over the following months. I think Coreweave is kind of another example of that, though. their

um their timing there may have been more market based where you know that was what I want to say March April time frame like the markets were kind of shaky hesitant um so it's you know maybe not so surprising that that the thing you know instantly ripped up uh on day one whereas now I would agree that like we we definitely see feel like we're in more of like an exuberance uh zone like a lot a lot of excellence I guess is being priced into a ton of equities right now um so it's not crazy like for people to look around and see that and go, "Well, yeah, let me just like shove into, you know, the hottest new IPO."

>> Yeah. One thing I wish is that ICOs behave the same way that IPOs just we're in the wrong industry, man. >> Yeah, maybe that's maybe that's a conversation to get into is like this idea of, you know, crypto fixes this or like bringing it on chain fixes this problem. I would kind of question that a little bit at least to the extent that you know we've seen a few tokens launch on chain um in the past few months and like they're definitely not the norm is not popping 100% or 200% on day one. In fact, it's been quite the reverse um whereas we've seen multiple IPOs now in the past few months that you know if you buy day one you're up multiex with you

know either that week or within the next few months. Um so there is definitely like a big capital difference and like um how people are allocating to these certain things. Um >> yeah it's almost as if there's opposite problem here uh where all the I guess like the the private market in trad values these things to the upside but in crypto the private market is overvaluing things. Um and ultimately either not necessarily retail gets hold left hold in the bag but more so um you know I mean in the case of pump fun ICO right

like almost I don't know how much money was raised from private investors 700 million plus of the 1 billion plus ICO for pump like they're down they're down nearly 50% in a matter of weeks like they got hurt badly by it but again I agree I don't know if moving things on chain just naturally is going to fix everything but um it isn't interesting to see like I guess the almost opposite problem that traffic in crypto has today. >> Yeah, I mean I I think um I'm not like I'm not an expert by by any means and everyone's made some great points. Um I think Figma is interesting because they're kind of like they're AI adjacent in the sense that if you're vioding any form of like front end or mobile app,

right? Like you're probably using Figma. So I think that a lot of um you know a lot of people that probably work from home, designers, software engineers, whatever that are also probably you know in the market all day um you know on their on their other monitor like they're probably aping into this thing right because they know what it is. Um I think coreweave that is very explainable um by AI as well in terms of what it did and then I think circle makes a lot of sense right because I think um you know everyone's been so excited about regulated stable coins and especially with like the you know the genius bill um like I think there was there's a lot of reason for

that to go up um so I don't know if it's just necessarily like a you know equity like an IPO versus ICO dynamic or if it was just like you know this was like an idiosyncratic thing like specific to these businesses. Um I do think the mispricing point is interesting because um like I'm you know like the whatever investment bank was you know managing this. I'm sure they've had you know I'm sure they have thousand you know hundreds of people that are on this and that are you know highly skilled that are pricing it. So, like assuming that they were trying to like price it lower, like I I I'm curious like if that was more on purpose as opposed to like a

mispricing. Um, you know, like something that got me into crypto back in the day, right? Is like like the fundamental reason why like public marketing. >> Sorry, >> I think it's just you. I hear him. >> Can you hear me? >> I hear you, Daniel. >> Okay. >> Um, maybe we lost me. Oh, it's that uh it's that Ohio internet man out there. >> Sorry. Sorry I interrupted. Go ahead. >> Um right, like the like the purpose of the stock market isn't to like make you money, right? It's for um you know, it's for the founders and and the team and the people actually like added value to the company. It's for them to exit,

right? Um and so, you know, IPOing, right? It's like an exit event. And so in a sense, right, like you're not supposed to be the one making money from that. Um, right. So, um, I'm sure like doing stuff like this on chain can make it more transparent. Obviously, that benefits everyone. Um, but you know, with like the pump ICO, it's, you know, it's not like that that helped at all. So, I think there's a lot of different different factors here. Um, but I think the biggest the thing I'd be most curious about is like why why was it priced so low by these, you know, by the investment bank?

>> Yeah. One last thing I'll say on this point is like I I don't I don't I'm not uh an expert again. Um, I don't know the behind the scenes on like what building a book looks like in the IPO process for IBS, the uh, investment banking side, but I kind of curious like when does a pro when does a company have to determine whether or not they want to do a direct listing or an IPO? Like how early in their life cycle or like leading up to potential, you know, going public is that determined? Because I feel like in this kind of market, Carlos, you said it like it's clearly a frothy bull market. Why didn't a Figma, why didn't a Circle just do a direct listing and let the market determine what that price was at? Like Coinbase did this in 2021. They launched at 475.

They quick, you know, there was a direct listing. I think it was market determined. Um, it quickly fell to 230 in a week, two weeks. It famously went back up to like 400 and something like that at the top of the 2020 bare market, top of the 2021 bull market. And then obviously proceeded to go down like 90%. because all you know bull market ended uh prices eroded quickly FTX blew up so there's a lot of reasons why but I mean if I'm a founder today I'm not doing the IPO I am going direct listing and it's like the worst case scenario I guess is that I underpriced myself but it's like clearly the IPO process is not perfect either >> I I mean I think it's a matter of raising capital like with the IPO you want to raise capital direct listing

that's not really the focus as far as I understand. >> Can you not can you raise capital though in the direct listing process too? You're effectively like putting a certain number of shares on the market and determining what the supply and demand is when you directly list. >> If I understand correctly, not direct listing, you're selling your existing shares, but not entirely positive on that. >> Okay. >> Yeah, I do believe that's correct. like often IPOs you're maybe um selling some some additional shares onto the market versus uh selling pre-existing. I guess the other I think the factor that maybe

plays into these direct listings as well is like Palanteer is probably like the strongest example where I I guess if you have like this you can you can build at least nowadays it seems like you could build this like retail enthused base of uh investors that rally around you. But I I don't know that that necessarily works for every company. But in the case of Palanteer, it seems like the, you know, doing a direct listing kind of like, you know, maybe targeting smaller investors, but giving them, you know, potentially more upside by having, I don't know, maybe a fairer price of listing the share and like kind of trying to target them rather than going

the trai-, you know, working with the banks going the traditional IPO route. Maybe it earned them some goodwill and maybe that is what helps them kind of drive towards a a much more absurd like P multiple because the people that buy it now, they don't really care. They're just like, "Yeah, we love we love Karp and we just want to like hold this stock to the moon type of thing." Um, but obviously that doesn't work for every company. There's probably a big trade-off here just in terms of like the level the amount of leverage that your business has. Like how strong of a brand are you? like if if you didn't work with intermediaries, like could could you feasibly go out and raise the amount of capital that you want to? Like do you have enough of a you know, is there enough of an enthused investor base to

to pull funds from them? Uh and that's probably the biggest question. Cool. Uh before we move on to the next topic, if there's no other thoughts, quick shout out to, let me get this banner up. Our sponsor for today, Aptodos. Uh Bitcoin DeFi is heating up on Aptodos. With nearly 400 million in BTC assets on chain, Aptos users can now earn yield on their Bitcoin via Echo ABTC and OKX XBTC without the typical bridge risks and high fees. Thanks again, Aptos, for sponsoring today's stream. Let's jump back into the action.

Uh, I guess outside of IPOs, um, or maybe even leaning into them a little bit. I know David, um, at least I don't know when that was, a couple of weeks ago. Coin versus Hood has been kind of all over the timeline for a while now. Um, those were two pretty popular. I guess you mentioned Coin was a direct Did they do a direct listing in 2021? >> Yeah. >> Um, Hood obviously IPOed around the same time. both both coming to market around um that 2021 like you know high high excitement. Um there was a again we mentioned it like period of like peak IPO activity and like uh kind of retail investor activity in the markets. Um retraced a ton in the you know going into the 2022 like bare market for

crypto. Um and have since then have both kind of performed pretty amazingly. Um, but there's been this big, you know, coin verse hood kind of conversation. Uh, especially recently, like for whatever reason, the past, you know, maybe four to six months, that's been all, you know, rather than talking about, you know, Bitcoin versus ETH versus Soul, etc. Um, there's been more conversation around these, uh, you know, sort of fintech trady entities capturing more value from crypto and like, you know, maybe what's the best way to to be exposed there. Uh, and these two names kind of pop up the most.

I'd be curious, David, your thoughts. Maybe we should get into like the thesis for Coin. Um, and relative to Hood, it seems like we're like we're kind of working with two businesses that are kind of moving in sort of opposite directions, right? Hood started on like the the equity side, like get give retail users like an easy platform to like trade stocks and then they've kind of they've expanded those listings and they lean they're leaning a little more into crypto now. Um, and then obviously Coinbase is the exact opposite, right? Been in crypto for a long time, offering exposure to crypto assets for probably in in the beginning maybe more of a a retail friendly crowd, though the institutional side of the business has obviously grown quite a bit, especially lately with, you know, being uh supporting a lot of the ETF um issuers.

So, you know, let's dive in. What what are your thoughts on coin um maybe relative to hood or or kind of Coinbase itself and like looking forward over the next few years? Like how does that story play out? We think >> Yeah, for sure. It's actually funny. We had a Zerox research episode in Q3 or Q4 of 2023, like literally almost two years ago, and we had this exact It was like very early in I would say Hood's uh leap into crypto. It was right when this is obviously before Robin Hood chain but this is when Robin Hood partnered with Arbitum uh on Robin Hood wallet. There was like some very small partnership but there was like the beginning glimmers of like

all right there's something going on between Robin Hood and Arbitum. At that point, we already knew about Coinbase and Optimism and Bass. And we had this whole conversation back then about like these two companies effectively converging on the same premise or the same uh offerings but on two sides of the you know opposite sides of the spectrum. Trafi, DeFi, DeFi, Trifi. And I think the every if you actually go back and listen to it, we much of the same, nothing really has changed outside of I would say the appreciation of both equities, the larger market, realizing that they're pretty much converging on the same thing, but it was pretty pressing conversation back then. Um, I would say the the thesis for both of them is pretty strong. I think Robin

Hood's thesis and I had a really good chat with Omar from Dragonfly on a Bankless episode two weeks ago. Shout out Omar and Bankless. Um, what I would boil that whole conversation down to was like over an hour and a half long. Uh, it wasn't even a debate. It was really like a round table discussion was Robin Hood is more of like a play on the demographic shift of old wealth getting in the hands of new wealth. new wealth, young folks like us, Gen Z's, Gen Alphas, you name it. Robin Hood is their financial services partner. That is the one that they're growing up with. Back in the day, people grew up with JP Morgan, Morgan Stanley, Goldman Sachs. It's like they are antiquated, outdated technology. They

can't speak to, they don't have the culture, they don't have like the tech uh I would say the product first culture that we like to see. Robin Hood has a beautiful app. Uh, and they're slowly starting to become not just like a trading focused platform, but an entire full stack financial services suite from retirements to obviously crypto, options, you name it. Um, and Robin Hood is more of a play on like this demographic shift of younger folks getting a larger percentage of global capital or global wealth. Um, and so far that is very much like proving to be correct. I don't know Robin Hood's earnings offhand. I know that it was a overall good earnings report. They

barely went lower on the news. Obviously, like Robin Hood's ran up so much, you would have to imagine a lot of that has already been priced in. But, um, the hood thesis is sound and I don't think that that, you know, I think they're going to be a multiundred billion dollar, you know, equity in the future as long as like they don't mess up. Um, they're incredible executors. They're product first company. they're best in the business and yeah, it's a really strong thesis for them. Now, on the Coinbase side, um the overall thesis of Coinbase, and I said this in the Bankos episode, if Robin Hood is a bet on the demographic shift, Coinbase is a bet on the secular technology shift to moving all capital

markets on chain. This is before Paul Atkins's, you know, discussion yesterday about project crypto and moving all financial markets on chain. like Coinbase. Yes, it is a ex exchange. Yes, they are vying for the same kind of like retail and like younger uh demographic uh you know of traders and DGens and all that good stuff. But I think where Coinbase differs is like maybe the short-term play is like they're trying to compete with Robin Hood one-on-one. The long-term play is being a thin infrastructure layer for the entire uh financial market. So what that means is they offer crypto as a service. they instead of trying to drive all flow to their front end, they say, "Let's just power the backends of all the different

trades that already have the distribution." So, you're already seeing this with PNC Bank. Last week, they announced JP Morgan uh two days ago, three days ago. Um, so I think their plan is to kind of try to be like an octopus, extend their tech tentacles all throughout the financial system. they become like the AWS or the cloud layer uh or you know the crypto layer for the future economy. Um their take rate is definitely going to be lower because when you're like a commoditized infrastructure layer, you don't have as much pricing power as you do as being the front end, which obviously Robin Hood and Coinbase today do have like large purchasing power, pricing power on that side. But I think the total addressable market for Coinbase is going to be much larger. Um,

I said something the other day. It's like it's not Robin Hood versus Coinbase. It's like Robin Hood versus all of finance powered by Coinbase. Like I think the the reality is that um there's a chance that Coinbase doesn't win because all these users that are on using JP Morgan, using Goldman Sachs, PNC Bank just ultimately like leave to go to join Robin Hood because, you know, they are a great product and they speak to our generation. But if you think that customer deposits are sticky, that brand of JP Morgan, all these major trady firms are sticky and will stand the test of time, then I think Coinbase is probably a long a better bet long term.

But you obviously need to see that thesis play out. You need to see revenue in those new verticals grow. And I didn't get into the whole stable coin side of the fence, but like Coinbase makes 60 something 70% of circles uh revenue today. Um, obviously a lot of that goes back to customers in the face in the form of rewards on the platform, but um, Robin Hood still needs to play catch-up on the stable coin side and stable coins are a trillion dollar industry, a multi-t trillion dollar industry over time. So, I think Coinbase is a better pure play bet on crypto as an infrastructure provider. Um, I've yapped a lot, so I'll pause.

Um, I I really love the way the way you framed it and um, obviously like we didn't we didn't talk before this, but um, I totally agree with what you're saying about Coinbase as being more um, infrastructure. I I think that we're at the very like we're at the very very early innings um, of a lot of their partners, right? Like a JP Morgan um, City Bank, etc. um of entering into um crypto officially, right? And I'm not just like obviously the first thing that's gonna is going to be is stable coins, but like I I I truly believe we're going to be moving towards the tokenization of all assets. Um and effectively everything being onchain. Um and so if if you look

at right if you like to what you said if you look at the total addressable market right of equities bonds you know treasuries uh funds commod whatever right like that is a that is hundreds of trillions of dollars and that to me that's like a lot larger of a market than just like retail trading um I think that the thing that tokenization unlocks is it's going to allow um allow these kind like outdated, you know, companies, right? Like your Wells Fargo, your JP Morgan, whatever. Like they're going to be able to um create like really um efficient, I think, um easy to use uh user interfaces for people to just, you

know, access their services. Like I think ultimately, you know, like people ask a lot like why like why do we need to tokenize this? Like why why does that matter? We can always we can already do that the old way, whatever. Like I think um what it like one of the big things it enables is just like ease of access. And so like I could see a future where um a lot of these right like to me the the network effect or the moat is in the asset is in the asset issuer right like the person that owns it directly. And so if the asset issuers themselves can go directly to customers, right, like they would effectively just be um going around Robin Hood, right? And so if Coinbase could, you know, be like an

infrastructure provider um you know, whether it's like, you know, treasuring tokens or um like specific services or you know, whatever it may be for these institutions. to your point, I think it's it's a more kind of robust bet because I think they're less likely to be disrupted. Um, and also like, you know, like I I've used Coinbase forever. Like I I think it's just I personally think it's just a it's a better way um it's a better product u to trade crypto than Robin Hood. Um but you know, I like to your point, I don't know if like retail trading is like the thing that's going to u make them win in the long run. And I'm not saying I'm like bearish Robin Hood by

any means, but I I I agree with your take that I think that Coinbase is working on a lot of stuff that I think it's been under the hood. Like, you know, like we always talk about like when a new L1 launches, right? Like it usually takes like two years for their DeFi ecosystem really get created and going. Like I think it's I think Robin Hood's probably a lot farther behind in crypto than Coinbase than than like the average person thinks. And you know, we don't really understand that cuz we haven't seen what Coinbase has been doing because, right, like it's been illegal to do anything cryptoreated like Operation Chokepoint, you know, etc. in the US. So, what have they been working on that could potentially start getting um released and veiled now? Like I know

they have something called Project Diamond that I think is very interesting. Um they have a lot of crypto knowhow and so I think it's hard for me to bet against that. Um, so I'd probably lean more to the uh to the coin side. >> Yeah. Last thing I'll just touch on is I coming off the back of this earnings report like to me nothing like no nothing that shocked me. I knew that I had pretty good feeling that they were going to miss on earnings. I I am surprised like candidly the market reaction to it. Um but uh it is what it is. One thing I'm unsure about, which has me a little shaken in my like thesis, uh, and I've been feeling this way for a while, is

there, I think they're trying to walk and chew gum at the same time. They're trying to become the everything exchange while also trying to empower be an infrastructure player for all these major trifat firms. And I love Coinbase. I speak with a lot of folks at in Coinbase leadership and and throughout the company. I think like they today don't have the product leadership needed to take on a Robin Hood is becoming the everything exchange. They just don't. The the mobile app is not nearly as good as Robin Hoods. And today most of our generation, younger generations are mobile first users. Um, and if they try to focus too much of their resources of becoming the everything exchange, which is like this new announcement they

announced yesterday, if they focus too much on that and try to go toe-to-toe with Robin Hood, I worry that they're going to lose out on the opportunity that's much larger as an infrastructure player. Now, maybe they can chew gummy walk at the same time. Maybe they can do both. But if I'm JP Morgan and if I'm uh Goldman Sachs and all these major firms, I don't want to partner with Robin Hood because Robin Hood is clearly going toe-to-toe with me. I want to rather partner with Coinbase because they are crypto first. They don't offer trading of equities. They don't offer other um you know financial services. Uh they can power my financial services suite as an infrastructure player, but they're not going to try to get like the retail and institutional customer. So I worry that it might like hurt them long term with

creating new partnerships. And I also think it could be a drag on resources if they try to compete with Robin Hood which candidly again has just had a better product and I think has just a better more traction on customer deposits and overall like user base. So, one of my concerns, but I will be happily, you know, hopefully proven wrong. And hopefully they can do both because if they can do both, then it's game over like they become a multi- trillion dollar company. If they can become the everything change and also power all financial service providers. Um, but historically speaking, they haven't been able to, I think, create the best product in either in crypto or again like I guess in US uh financial services.

Yeah, I feel like a big question is like if you look at the customer bases today, um they're both like both of these platforms are kind of moving in the similar direction, right? We've seen a lot of like product teases and announcements that are very similar in the past few months. Like Robin Hood dropped prediction markets. Coinbase just recently announced them. They're both talking about doing tokenized stocks and like teasing examples of doing those things um you know on their own like you know onchain solutions. Um there's a lot of like crossover there and and like you mentioned there's a lot of crossover in just in terms of like yeah we're starting you know in equities and then we're exploring like these other asset classes or like we're starting in crypto and then like inevitably we're going to want to serve

you know these other needs of users on the platform. I guess the bigger question there is just like who's going to have the greater brand leverage and like staying power of the average customer today or like in the future to say that like you know my 10 million monthly active users like yeah they already you know trade coins on here or like buy their Bitcoin from us. Are they also going to you know buy equities? Are they going to like use us as a bank? Uh are they going to like service loans via our platform? Um, and I don't really like I don't have an answer to that. Uh, I feel like it's kind of hard to have an answer without maybe pulling like hundreds of thousands of customers. But, uh, it seems like that's the question.

And it to me like the point around, you know, not trying to step on toes by like pursuing all of these avenues at once and like, you know, sort of like stepping on the toes of like Wells Fargo. It feels like kind of a non point or like a kind of a a mood point to even suggest because I mean they they should just be looking out for their future revenue potential and like if that means expanding the product offering then that's then that's what it means and I don't know that it necessarily matters if like that's going to upset a bank because or another you know institution because hey you know we used to sell you know offer equities trading for these customers that have now gone to you if there's still like this uh behemoth of a

crypto platform and kind of serving as some part of the backbone for like the the ETFs for example or like you know stable coin infrastructure for you know institutions it feel like it doesn't it doesn't like take away from that strength um but I don't know I think uh like it it I don't know it doesn't make sense to necessarily like discount working on something because you're going to step on somebody's toes like that's kind of the point right like you want to take that market share and like grow your profitability um either grow your customer base or grow, you know, the the amount of dollars um that you can make from those customers.

>> 100%. They definitely need I think they maybe it's dumb to not try to become an everything exchange. I think my and I didn't really I guess explain myself properly. I guess my worry or my point is if they're going to do that, they need to have um a better product because right now they like they added derivatives, they added perks and it just feels like it's a clunky at least the mobile app is clunky and it feels like it's a not one cohesive user experience. Um they have onchain loans now, right? You can tap into base morpho deployment uh for lending. If you want to use that, you actually need to go to their sidebar, scroll down on mobile app

and then click B borrow and I need to go through six different pages and then do another few other like jump through a couple more hoops just like take out a loan. And I guarantee if like Robin Hood did this tomorrow, it'd be like swipe up, one click loan. And I think they need to just lower the barrier of entry if they're going to become the everything exchange. They need to make their user experience much more um seamless. And they also need to figure out a way to vampire attack Robin Hood users because I think Robin Hood's done a good job of doing the opposite of vampiring Coinbase. So agreed they need to they should go down this route, but if they're going to do it, they need to think more deeply about their user flow.

>> Yeah. One last thing I will say is the kind of uh the onboarding kind of rewards like schemes that uh Robin Hood has employed, those seem to have been incredibly effective, right? offering, you know, boosts for, you know, transferring a a retirement account from a different platform. Like they've done a good job of vampiring some of these like kind of Tradfy institutions where you're right, like these younger generations, like you know, maybe they had a Fidelity account or they had a Vanguard account. Um, and then Hood comes along and says, "Hey, you, you know, we'll give you 3% on top of that right now." Um, you just have to keep it in the platform for a few years. Um, and then you get to use, you know, your favorite mobile app for your retirement account and maybe you'll gamble in it,

too. uh and we we'll earn some extra fees. Uh they kind of did a similar thing with crypto recently. They did like a 1% or 2% uh crypto like transfer match. Um so yeah, to your point, it kind of feels pretty similar to that, you know, vampiring Coinbase in that in that line. I'm surprised to not see like promotions of this nature and like kind of reward referral like call it a flywheel, whatever you want. Um but like interesting methodologies to kind of get more customer assets on the platform employed by you know Coinbase and others um seems like they've maybe like lagged there or not explored that opportunity so much.

>> Well this the problem right like uh again I don't I know we're talking about this for a long time already but they have a referral program but it's not it doesn't hit you over the face on their app. Like I'm not going to show my screen right now but you have to literally go to a sidebar and it's like invite friends whereas on Robin Hood it's right there. It's clear as day if you refer people or if you move assets on your platform, you get a boost. So like something stupid like that, it just I think hindering them being able to acquire their next customer. Ultimately, I'm worried about them moving into equity onchain equities or prediction markets or tokenized equities and it becoming another Coinbase NFT marketplace fiasco, which we don't want to happen because if they do that twi, they were able to dodge, you know, cats

that have nine lives. I think companies have like maybe two lives. It's like they already lost their one life by spending too much resources and it was bad. Uh the NFT marketplace was a show. Um I'm worried if they do this again like they won't be able to come back from it. >> Yeah, more product focused it sounds uh is the big takeaway. >> Um understanding that a little bit more. Awesome. I before we pivot uh to the next talking point, another quick shout out to our sponsor for today's stream, Aptos. With nearly 400 million BTC assets on chain, supported by a secure, fast, and affordable MVM environment, Aptos has become the BTC growth chain.

Apptos users can now earn yield on their Bitcoin via Ekko's ABTC and OKX's XBTC without the typical bridge risks and high fees. With support from Ekko, OKX, and STAX's SBTC, Aptos is the place to go for the best in-class yield on Bitcoin. Appreciate the support, Aptos. And back to the show. Um, are any of you guys absolutely dying to talk about something in particular here? I'll throw out some ideas. I'm just working through some like different headlines and some things that people have been arguing about on the timeline. One, I've seen Meipo uh throwing out a ton of takes like Zora has been all over the feed

again. We're back on uh creator coins. I don't know if you guys have any strong takes there, but um it seems we're this seems like a topic where we go through a it's so over, we're so back um every couple of months and it kind of like works it like works for a couple weeks or like a month or two um and then you know the coins kind of Eiffel Tower on the charts and then we give up on it and then somebody else does it. Um I don't know. Do you guys have that same view? Maybe I'll pull up the Meipo tweet as some background, but I think he he thinks very positively uh about these platforms.

Yeah, let's do this one saying, "The Zora hook is all about creator coins. For the first time, I'm logging in every day and the viral hook is, what can I post today that will make my creator coin go up?" Eventually, Zora becomes an indexed way to bet on creator coins as an asset class so much higher. Um I see I mean I kind of see like two takes here. I've seen some people say like yeah I could kind of see it like this there could be like a future of like a new sort of uh paradigm for creators to you know earn revenue in this fashion versus like the existing content creator like ad and subscription um kind of financed model. And then the

other side of it is like we've seen what these charts do like the coins go to zero and then everyone gives up on the platform and it dies. Um do you guys have any any any big takes here like thoughts on Zora, thoughts on creator coins in general? Like do we think this is eventually kind of like a new kind of market paradigm for creators or are we are we more bearish? >> Uh I don't know. I'm curious if you guys are users of Sora because personally I never tried it. So I don't know like I I don't have that experience of logging in every day and having like that hook, right? But like if if you're like a user, you can I think I feel it can

provide a much better perspective on like is it like um all speculation or does it actually have something durable that you think can on board a lot more people? I yeah, I like used it leading up to um their airdrop and then I recently started posting again. I don't love it. I'm not like hooked on it, but it also could be by the fact that like I don't have enough clout to get my creator coin to go up. If you're watching this, Effort Capital Coin is live and trading. So, if you want to buy, go for it. But not financial advice. Do your own research. My posts aren't that exciting. Um,

do I think it's a new paradigm paradigm for content creators? I would say like yeah. I I think it I think it's a more direct way of monetizing the content you put out. If you have interesting content, people want to speculate on it and therefore you get like trading fees. Like it's a much more direct way of doing it instead of how do content creators make money today? like through sponsorships and ads where it's like they're shoving something down your throat to and getting money for for doing that. Um, it definitely feels more direct. It removes like a middleman in the process. I think that content itself though is pretty worthless. I think that there is something though about like the creator coins themselves. So, I agree with Meo like creator coins are the the

secret sauce. Um, I said this in the Zurox Research Telegram channel the other day. Like I'm not too keen on buying a creator coin because they post like really cool funny Tik Tok dances or something. What I do want to bet on though as a person. I want to bet on that person maybe taking make converting their clout into building a network of like building businesses pretty much like leveraging a network effects of who they are, their brand and building real world business. Like I want to bet on Mr. Beast not because he's Mr. Beast. uh the content creator because Mr. Beast can then use his content, his his network effects and his brand to build Mr. Beast Mr. Beast's burgers, Mr. Beast whatever protein bars. I don't really know what he builds

or or creates. I have no idea. But just using him as an example like I want to have ownership in the future businesses he creates. I don't want to have ownership in him as a content creator. Um and that's I want to bet on Elon Musk in 1998 before he built PayPal, SpaceX, Tesla. Um, and I think who was it? Someone in the chat, I think it was Jim Pillo said it feels like indentured servitude. Uh, where you pretty much own someone and you get all like ownership of what they create in the future. And to me, I didn't say this back in the Telegram, but I feel like VCing, raising money from VCs kind of feels like endangered servitude. Like people pivot all the they take VC capital, their startup fails, and what they usually do is like you're betting on the founder.

the founder eventually pivots and uses your funds to try to eventually create, you know, returns on their on the VC investments. Feels no different to me. >> I mean, but you you don't actually own like in this example, you don't actually own any upside in Mr. P like business ventures like it's like it's not it's totally not tied >> endeavors like >> not yet. >> Not yet, right? Like yeah, the same thing as believe like I have no upside. I actually don't own anything from believe as much they want to say it's internet capital markets it's like not it's memecoins and these are still 100% memecoins on Zora but I think if you squint and think about like the the marketplace that's potentially being created here and if there's enough

regulatory environment and if there's someone willing first of all you got to get people that are create content creators willing to say I'm going to sell 1% of all future businesses or maybe the first 10 businesses I create in the future you know back to my token holders and give them cash flow rights or something I if there's a regulatory environment and you get people that are interested in doing something like that, um I think that there could be a huge market here and I do agree if Zora can do this like it could be a a hundred multiundred billion dollar company or or token, but the the bet is that these aren't just meme coins. It does seem weird though that like a platform for content would become then the platform for like

creators to sell equity in their businesses. You know what I mean? Like those are very different. >> Like I could see if you get Mr. Beast interested in crypto, he could just do an ICO. I don't he doesn't even have to like he doesn't need to have a Zorocoin and then make the Zorocoin have upside in his future business revenue. he can just sell a portion of that business um by tokenizing it on chain or even you know doing a traditional raise and then going into the markets like I think I mean Mr. beast is big enough that he could raise money if he really wanted to for a business venture. Um certainly and then go and like you know do a traditional IPO if it was successful what have you.

>> I don't know. I'm I'm a little bearish on Sara to be honest like on a longer term horizon. I think it will tie down uh I I could be of course wrong but I don't know. Um I mean believe also started as cloud like before it was believe and also as focus on creator coins and didn't get more much traction. I I my opinion is that it will remain like I'm purely a memecoin and purely speculative and the reason creator coins are going up today just because we're in a exuberant phase of the of the market.

That's it. Like I don't think longer term you'll have like the next like YouTube stars growing like going on Zora and like tokenizing their their coin. I don't think so. >> I also I agree. I just want to say like yeah I'm not necessarily bullish but I agree that like content I I think creator coins are an interesting phenomenon and just to Daniel I know you just to say what you said about I Mr. Beast could just like ICO I think the idea is like yeah they can IO in this world you bet on Mr. beast and then he maybe also ICOs for the individual product lines or businesses he creates.

But pretty much the index bet on their portfolio of businesses is the creator coin which is like kind of cool. Now is it will it ever become something? Who knows? But I like the concept. It's just whether or not it's feasible. But sorry. >> Yeah. No, I I think Zora in its current form I don't I don't think it's it'll last. But like what we're talking about here um is is like a your creator coin is like you know it is a call on your future cash flows like I think that's entirely valid and so u like in 2021 um when like NFTs were getting big music NFTTS like a lot of the talk was around like music bonds so it would be like you're like an upcoming artist um you

know you don't have a lot of money you're working a job or whatever you could say hey I'm, you know, I'm tokenizing. I'm going to make I'm going to make an album. I need $50,000 to quit my job and live for a year to make it. And if you, you know, if you if you invest in in the bond or whatever, right? Like you you have a call on like whatever it is, like 50% um of all future cash flows from this album, like through everything like all you know, every source of revenue that it generates goes back to the the token holders. Um, and right, you could like apply that concept across like a myriad of of different um, industries, whether it's like, you know, music, art,

whatever. Um, and I think that that's like super super interesting, right? And then also, right, you can speculate on the token itself. Um, you know, so you can like, you know, if you're if you're bullish on a content creator, um, you know, you can just buy their coin. You don't even necessarily need to own it. And then you know the the coin can give you access to like special things like I I think that it's absolutely um going to be a thing. um you know I I think uh you know going 10 20 years down the line like um you know like if AI and that's it's too long of a time horizon to to talk about but just for fun like you know if we enter into a post labor society and AI and robots do all do all

the physical work and everything like and everyone just becomes creators like yeah everyone's going to have their own their own creator coin um because then like you know if we're not like working all in an economy to like help each other live like then everything just becomes about like clout um you know cuz like if you don't need to like work to like live the other like objective function of life is like mate selection or whatever right so everyone's just like working for clout um but I do think it's like I think it's directionally correct I just I don't know I don't think Zora is like the the one that that's going to get it right >> it could it could just be too early. I can't see the comment anymore because I

had to refresh from Ryan, but he was kind of like Ryan Connor saying, you know, why would someone why would a creator move from a platform with like billions of users to one? Thank you. With I think somewhat somewhat jokingly 7.5 mus. It's I think we've got the numbers on daily posting accounts on Zor. It's probably like 20K. Um, but the point stands like why are you going to take a 1,000 or 1 millionx cut in like your potential audience reach um just to get like coins to be associated with your posts. Um I think the other thing is like expectations of like the norm today are are a big factor here, right? like the incentives behind

like going on if you were a big creator or like modestly size and then you like went on to Zora and made posts um and kind of hype this thing up and then there's no expectation for you today to like give any sort of future value um from like enterprises or other efforts that you go and do. Um, and so the incentives today are almost like aligned in such a fashion where if this is kind of like a fad or like a hype cycle, um, you should just dump your you should dump your content tokens and like and take the value out of that. Um, I guess they don't even have to sell the tokens because they get, you know, the tax revenue from the trading volume on the coins, but um, like the it feels like the incentives today just aren't really aligned on it. And you have there's like

maybe years that would go into like reforming the kind of like general market expectation that when creators like make uh a creator coin on some standardized platform or way of doing it that that then means their future efforts like go to the holders of that thing. Um there's no belief or like expectation of that idea today. And so like if you're getting into this now, um you kind of have, you know, for yourself, you don't have any like future downside as a creator in this situation, it's you can kind of take the profit today and um not have to worry about that in the future. So that feels kind of tough. But I I do agree with the point that like down the road I could

see the potential for it because I do agree that there is there would be interest like I think I agree with a lot of points like people would love to like bet on their favorite creators like one just like getting bigger or getting more popular, right? If if you really loved Mr. beast when he was a 100k viewer guy and you wanted to bet on him going to you know doing hundreds of millions or billions of views like you know that that's kind of an exciting trend to be able to like ride out and have upside on. Um similarly like if you could have bought a steak in you know kind of his enterprise value before he went and did like beast whatever he did like the burgers he did he's done chocolate bars he's done different stuff right um you know if you could have explored some of

those those opportunities that's great but yeah I don't know it it kind of hinges back to this this same like difficulty or like question around the traditional like IPO or like kind of tradi process of like building businesses and raising capital for them versus just like having unfettered access to all markets. Um, and like historically regulation has been the the difficult part there. But um, yeah, I don't know. I think a bigger part of that is just like today it doesn't it's not going to make sense for Jimmy Beast to go out and get capital from a bunch of small you know small fish when he knows fairly reasonably that he could go and raise you know

probably couple hundred mil or tens of millions from larger investors with with you know limited issue. There'd be no no difficulty in doing so. Um and they wouldn't have to worry about all these extra kind of like forging the frontier of like a creator coin. um which would have obviously more risk involved. >> Agreed. I think the same concept that I think Ryan I don't know if he's still listening right now but Ryan had this whole case on believe why it was so potentially paradigm changing because it's going after underserved builders that create hype cycle type apps that don't necessarily generate VC returns but like generate really good returns like let's serve that market.

This Zora today does not serve Mr. beast, Kaisen, all those huge people. It serves potentially it potentially serves very early content creators that are posting the same content on Tik Tok and YouTube and wherever Instagram and are getting zero dollars, but then they're getting maybe if their content's good, $100 on Zora. And then eventually if the people like their content on Tik Tok and Instagram, like yes, they will rise the ranks. They'll eventually maybe start making money on those platforms, but maybe the bet is that they're going to be loyal to Zora because they were the first people to give them their first dollar and their first 10 views. And then what those people are going to try to do is say, "Don't come to don't watch

me on Tik Tok. Don't watch me on whatever. Watch me on Zora. Move to Zora." Uh, and hopefully the demand follows the supply uh on and and vampire attack these other social media platforms long term. So again, it's a it's a once in a li like it's a long shot. It probably won't happen, but I think it'd be foolish to just like dismiss it immediately. >> No, you're right. It's it's such like a network effect based thing. It's like before and this this isn't like a network effect thing. It's it's an economy of scale thing, but like same dynamic. Um, it's like other than Tesla, there hadn't been a auto manufacturer in

the US since 1950. And so maybe this is just the type like social, you know, these consumer apps. Maybe it's just the type of thing where it's like none of them are going to work and then there's going to be one that just kill that just kills everything else and becomes the thing, right? It's like I think it's it's so intuitive that there will be the you know cryptoification of social. It's just you know it's it's it's not going to need to be 10x better or like 100x like it's going to need to be like whatever a thousandx better um and for whatever reason blow up um for it to actually work right or maybe it's

just the social apps integrating like this this stuff into them. So, who knows? But yeah, I think um it's it's I think it's I agree. It's definitely like it's not serving the Mr. Beast. It's like the the upand cominging people that that want to get exposure like this is where they could start um and you know sell their future cash flows to you know start start their creative journey or whatever right? >> Yeah, I think that's I think that's a fair argument. I think if you're looking at like pump live streaming, you kind of have to be making that same um taking that same position as well, right? Like you're not going to attract the winners today. It's like trying to carve out a new a new marketplace of creators that's going to hop onto this

this platform that's like, you know, content plus tokens behind it. Um that's unproven, but if it works out, then like there's potentially a lot of upside for those those new adopters. Um, yeah, you're battling uphill from both directions, right? Because it's you're working with the unproven creators and you're working with the unproven platform. Um, so there it's sort of like a moonshot idea in that sense. Awesome. I got one more topic. I'd love to talk about treasury companies before we close out today, gentlemen. But before we do that, I want to give one last shout out to another sponsor for today's stream, Algarand.

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The other thing I want to do is pull up some data from uh we have a treasury company dashboard now on Blockworks Research. Shout out to Dan Smith and crew. I don't know who all helped with that one, but I imagine quite a few of them. this seemed like it was kind of a a pain in the ass to put together uh to put it lightly. Um we've talked about the treasury vehicles, DATs, there's like acronyms for them now because everybody in finance industries loves to just and tech loves to spit out acronyms for absolutely everything. Um, so the DATs, the treasury codes, um, there had been a ton of excitement the past couple months, like especially with the Ethereum, um, based ones like Bitmine, uh, Sharpling Gaming, Espet, and BMR,

um, did some massive raises in purchases of ETH. Uh, going to pull up some data here just showing, sorry, I wanted this chart. We're we track I want to say like 20 or 30 uh of these companies and just looking at the the aggregate trading volume on the stocks you can see like mid July there was a little bit of like um a spike not too crazy relative to the recent activity. It seems like um these shares these these companies have kind of been bouncing up and down in terms of volume, but from like a low of you know 3 to four billion on the daily to up over 14 billion um back in the middle of

July. And we've kind of fallen off from that period. Um and it seems like some of these have not been fairing so greatly u in the past week or so. ESBET, Bitmine, both down significant amounts in the past two weeks or so. Um, one of the the big talking points here has been around like how long does this go on for? Like there there's been a lot of like pretty open discussion honestly like Empire had some folks on from Pari talked about, yeah, the Pipe investors like it's a pretty great deal for them.

You know, you get in and then you know, you serve out your lock and then you sell your shares. Um, and it's a great time. and they were pretty candid like yeah if I was a retail investor I don't know that I would be touching any of these things with a 10-ft pole. Um it seems like fundamentally there's kind of like a clock on these things where when those unlocks start happening like it doesn't it's a big question mark like it really does not make sense to be buying anymore. Um, I'm curious if you guys have any big thoughts or takeaways like is this something like with the exuberance in the markets today like kind of generally you know we're seeing IPOs go crazy um a lot of these companies have you know they make the announcements of purchasing or like

securing funding you know 500 million new funding to go purchase ETH or Salana or Bitcoin uh and then they pop on the news. Um, do we see that continuing much longer or is this really just like when these when these pipe unlocks start to occur that the game is kind of over and what does that mean for like Sailor and Strategy because he's they've been able to kind of keep chugging along along. >> Um, I don't have takes on the performance of these like stocks in particular like how will they how will they perform. I think like Micro Strategy or strategy is just a special like Golden Nugget. It was the first to do it this focus on Bitcoin. I I feel like that's different from the other like uh treasury companies we have seen

pop up. Uh what I will say is that if an investor's goal is to just get exposure to the underlying assets, I think ETFs are a much better way to do that and have a much more favorable structure. I think like treasury companies potentially make more sense for assets that don't have like spot ETFs live. Uh so you can have like an easier way, let's just say, of getting access to it if you don't have like this like favorable vehicle that's been tried and tested multiple times. Um longer term I think treasury companies may have a place uh if they kind of advance the network or contribute to it which is

something that ETF issuers cannot do. What I mean by this is uh consider the example of DeFi dev curve where they have their own validators. They run they spun out their own LST which is the FDD soul. uh with Santum they have on boarded that on Camino you can use it as collateral to borrow more soul and loop that uh asset um and so in that way you kind of have like uh vested interest in the network and you're helping advance like its defi ecosystem so like that's that's one way that I would say like maybe there's a longer term like uh

outlook for these companies But if you're just like providing a vehicle to invest in the underlying asset, I I think ETFs are just a much more better way to actually do that. And longer term, I would expect them to die down if they don't like um work as operators inside the network or do something like to to to like do something more than just get exposure to the underlying if if that makes sense. I'm I'm not educated on the topic. I vaguely understand how these work in practice. I haven't watched any of the other podcasts unfortunately on this topic. I know again like I know like a naive way of of how these work. I've

honestly just like blocked my blocked it all out because it just is it just sounds like it's another sophisticated way to raise money and dump on retail and generate quick cash. um I want nothing to do with them and I'm just going to put my whole my hand head in the sand and just act like they're not real. But I do think that um my understanding is every single, you know, treasury company has their own different structure and like the proof is in the pudding or like the the devil's in the details and like how they're raising their capital, the debts, the covenants, the warrants, all that good stuff. But uh I don't have time to read the 10Ks and 10 Q's of all these. I'm sure there's maybe money to be made, but not my game. Um, but I do think there's probably going to be a

blow up from these eventually. >> Yeah, I guess that's been the one big thing is um it seems there's a lot of conversation around like, you know, they're really not that, you know, leverage or there's not really that much like debt in the equation here. The big thing is really just like them popping up on a premium relative to MNAV. And if we look at the ETH ones here, um there was like a significant pop in a bunch of these companies uh earlier in July. And we're seeing, you know, over the past few weeks those compressed down to, you know, in the mid like ones in terms of like a a premium to their kind of like mnav of uh like ETH assets, I guess in this case, or

maybe ETH assets plus cash. But um either way, that's that's been kind of the one underlying question here is, you know, if the excitement kind of goes away when the premium to MNAV kind of erodess, um you know, how do these play out if you then get to like a a parody level where you're trading at like a you know, premium of one or like a lack of a premium um or below a premium? Um, and then and I did see some uh notes the other day from strategy about kind of like formalizing their process around, you know, when they're going to offer um do ATM issuance of new shares. And they had like a pretty specific guideline of like we will not,

you know, do any new new ATM offerings if the premium DNA is like less than 2.5. um on the belief that like these other these other offerings that they're doing like these preferreds um you know they have all of these like instruments now stride uh stark stretch like there's what four of them now or so um and I guess the belief there is that they don't need to like directly continue diluting the shares they can do these you know offer these other vehicles raise cash that way and then buy more Bitcoin um via those means um I guess TB But I do know that I think the stretch offering is expected to raise like 4.2 or 4.3 billion in

cash. So I mean that's again another big clip that say will have to to chuck into Bitcoin. Um maybe the broader question for like the crypto markets is like if the premium and the excitement around these things go away or like kind of cools off a bit and investors aren't shoving cash at them to then shove into crypto assets like what does that mean for the market itself? Like do we see a loss of a bid there? Um and does that mean you know downside for Bitcoin and then alts? Um I think that's maybe the the broader concern here rather than like you know if you're trading these you know that you're you're kind of gambling right um but you know Sailor and the others have been a big like for

ETH especially right there's been several billion raised to buy ETH from these companies in the past you know two months um that's a that's a pretty big like net positive bid into that asset and if that um just disappears because you know these premiums go away uh that leaves kind of like you know some downside potential There's a really good um there's a really good piece that was written by this uh Count Bwater Ltd. I don't know if you guys saw it. It was shared around a lot. It pretty much compares that to um the what was it?

Investment trusts in the 1920s. Um I don't know if we can share a link. I don't know if we're allowed to, but um he has like a three or four part series on like comparing these DATs to what were pretty much these close-end mutual funds back in like the 20s and it was like a sign of exuberance in the market and pretty much using financial alchemy to ARB the NAV to premium and it pretty much ended in no surprise tears if anyone knows what happened in 1929. So, um, again, there's a lot of parallels. They're not exactly the same, but it is I think it's going to end the same. Um, I think that the moment that one debt dries up in terms of bidding, it kind of um shows that the emperor has no clothes

and then there's just going to be a bunch of selling of all the other debt. It's going to have a a domino effect. And again, who knows what that means for the actual assets on these companies balance sheets. Like, are they just gonna have to dump them? And yeah, uh not going to I don't know. I'm trying not to I'm trying personally I'm trying to diversify away from anything that has a debt uh actually like in in size um because I I do worry that it's going to lead to um a large like event. >> Yeah, I I agree. Um I was looking into these I was going to write a report on this. I think we still are writing a report on this, but um we um on Empire there's there's a great podcast on this

at Permissionless. We had a we had a live panel um talking about this and like I I really do think that it's like a case you have to you know you really have to dive like dive in and do um analysis on them like it's on a case by case basis, right? like to like the framework I kind of put together um was premium or discount to NAV asset per share accretion uh capital structure and leverage profile asset growth drivers um the quality of the management team and their ability to execute their plan and then obviously like you know the underlying asset profile like whatever it's on so like if you just like looked at Bitcoin um and in like Bitcoin dots in particular like obviously like what

what Sailor's doing I think is Um, right. Like if you're if you're investing like you're effectively betting like he he's slightly leveraged, right? And he's betting that the US dollar will depreciate faster than the interest he's paying on his debt, right? And as long as that happens, then right effectively, right, like the his company's going to be worth more over time. Um, the problem is if we have a two-year crypto winner, right, how many of these things are actually structured and have the investor confidence to get through that? And the answer is probably like, you know, you can probably count on one hand max. And the problem is if you know

all these things, they're they're not as liquid as if you just buy Bitcoin as well. So if the selling starts all of a sudden, right, like selling begets selling, right? like asset markets are reflexive and you could see massive drops in these things, right? Like below their fair valuation, right? If you look at if you think of these as like a a leveraged bet on the underlying asset. Um you know, there's probably right like a fair market value. Um whether that is a higher sharp ratio than Bitcoin in itself, that's a different question. But like to me, if you're let's say buying one expecting like 1.2x 2x performance against Bitcoin, but the downside is is, you know, you could it could go down by 80%.

Um, or gap down, you know, 20 30% over a weekend or something, right? Like it just it just doesn't make sense um on a riskreward basis, right? Now, like maybe you know, sailors, you can make an argument like, oh, this has a higher sharp ratio than Bitcoin. Um, but right, like once again, it's like you need to analyze each one of these. like I don't even you know it it's it's it's quite a hefty uh um task to to try to understand them on a case- by case basis but I think there's some there's some basic things you could look at and um yeah I mean I agree like for me it's it's like a stayaway um because even right even if sailors was theoretically is theoretically like a good bet you can

say all right at this point in the cycle is it still a good bet if you know that it's going to have you know if it's going to outperform form Bitcoin to the downside. Um, so I think that they're interesting. I think for assets that you can't that there aren't ETFs for, like what Carlos was saying, I think that they they could particular be interesting. But, um, right now I think yeah, I think it's um it's pretty risky. Like if you don't fully understand them, it's probably best to stay away. >> Yeah. I guess the tough part here as well maybe to just to round it out is Sailor has the benefit of like averaging Bitcoin since you know what 2021. Um and the highs then are minus 50% from or

2020 even. Um so some I mean some of the highest prices that he paid years ago are still you know minus 50 or 60% from today's price like all time you know Bitcoin basically at alltime highs today. um all these brand new DATs that just kind of like jumped uh into the into the playing field. Um they're basically they're all like averaging into the highs right now, right? Like they've they've secured investor funding and are shoving in, you know, a billion into ETH like right as it's at like its highs for the past year. um which is a bit different than like you know Sailor averaging into some Bitcoin over the course of you know 2020 2021 but then also 2022 and 2023 and like now having a bunch of those like a big portion of

that like stack that's been averaged into uh be up you know maybe 10x. Um obviously some of his purchases are also up here at the top but he's kind of he's weighted down by his his lower average p purchases as well. Um, so you know, a 40% pullback or something like that would not, you know, be scaring the pants off of him, but it might scare the pants off of all these companies that then just bought the top uh into a pullback. That would be probably a a concerning situation for them. So they uh they don't have, at least these newer companies, right? They don't have this like um greater room for downside, I guess, that Sailor does that he's kind of built up, right, for for being in for a few years now. So, um that that's maybe the bigger concern of of just like

entering the marketplace, you know, taking in 5 billion and just shipping it into a coin um near or at its all-time high. Um that's a tough one to consider. Um but we can move on from it and close out for the day. Uh maybe just to land on a friendly note, uh any thoughts on chill house, guys? Um going into the weekend, anyone going to be chilling at the house? Any grass touching? Um, I saw, funny enough, I don't own the NFT, but the Chill House devs or maybe someone related launched a little Chillers NFT collection uh, which is kind of funny.

Uh, it had a little bit of a pump and dump on the chart uh, the past day, so maybe not too exciting if you were trying to gamble on those. But either way, the Chill House meme has been living on despite being a beta of a beta of a beta. Chill House token is effectively a greater coin. So, I'm bullish. Uh, very bullish. I I will be chilling in my house this weekend. Uh, and we'll be buying more Chill House while I chill in the house. So, >> you own Chill House, David, or is that a meme? >> I met the dev and I was like, I'm good, fam. Yeah, >> honestly, shame on me because it did didn't go up like 100% like two days ago.

>> It's been very volatile. I say that much. So, if you would have been excited when it went up 100% and wouldn't have sold, then it's probably better that you just weren't in at all. But, >> yeah. >> Awesome. No other thoughts? We'll close it out there, guys. Thanks for coming on today. Uh, Shapiro, Carlos, David, Eric, Cap. Uh, glad to have you guys on. And I'll have to have a few of you guys on more frequently, David, and Shapiro. Um, we don't the viewers don't get to see your guys' faces that often. So, well, unless they unless they follow you on Twitter, then maybe they do. Um, >> yeah. Thanks for coming on and we will uh see you guys next week. Enjoy the weekend. Touch some grass. Uh, the

markets are kind of red today, so it's probably a good time to get outside and get away from the screens. >> Thank you guys. >> Appreciate it. Thanks, guys. See you. [Music] Hey hey [Music] hey.