How to Value L1s, SBF Arrested & Tokenomics Debate | Roundup

Transcript

all right everyone welcome back to another episode of bell curve before we jump in quick disclaimer the views expressed by my co-hosts today are their personal views and they do not represent the views of any organization with which the co-hosts are associated with uh nothing in the episode is construed or relied upon as Financial technical tax legal or other advice you know the deal now let's jump into the episode all right everyone this episode is brought to you by our friends at Avalanche they're the layer one blockchain that is fast stable and scalable you're going to be hearing all about them later in the show for now let's get into it sushi in 2021 they spent over 500 million dollars of token emissions that is so much money like and you know what happened what would happen if they

had that money now you know that would be a lot more useful than growing their market share and so like I think you keep incentives low you keep cash flow going to the core developers and then you wait to the last possible second to turn on the the fee switch welcome to bell curve uh we've got uh the four of us here back again um this week we're starting off with a couple of shills permissionless is the number one crypto conference in blockchain and last year's Miami event was one of the most well-attended circuit conferences that I've ever seen [Music] yeah yeah wherever it was it's a hazy period of time it was great um and next year they're doing it in

Austin Texas Austin Texas which is the capital of Texas um and it'll be super fun so yeah sign up now get your tickets we're both going and excited to attend yeah you buried the lead fellas you guys are both that's the draw here we've got the framework you're speaking yeah I'll be great it'll be a good time marketing role open I know who is not getting that role oh man the uh the other show that we've got for this week is a thousand X the new podcast coming out of block where it's featuring it's Avi who's leading it regularly I'll be Feldman yes yes Avi Feldman will be leading you regularly he

is the head of digital assets at uh I believe golden tree um and uh General crypto native exciting to hear more about the market takes from Avi he takes two he takes they will be had it's a great it's a great episode it's a great podcast guys it's going live on the Empire feed as well so um definitely make sure you check it out we're big fans of the work I honestly I honestly did listen to the first half maybe the first third of it this morning it's good I'm I'm gonna enjoy that one it's a really good first episode it is good yeah very good Vance he also calls you eight uh he called you a smart guy said he thinks that you know some things in my conversation with him today so you should you should listen to it actually

Advanced out of Facebook Vance was not going to listen that Vance is definitely listening to it they're men of culture they're men of culture yeah actually Vance got two shout outs on blockworks podcast we have a podcast that our analysts do called zero X research uh and there's a in the hot seat so basically someone who's uh messed up this week buying answers in the hot seat and then there's the cool throne for like best take of the week and Vance's uh L1 uh tweet thread uh was the cool Throne take of the week so yeah you got some get some shout outs yeah I mean sounds like a good place to start what was this thread

yeah we discussed this yeah yeah I don't want to beat a dead horse but you know seems like SPF put a lot of client money into Solana in a lot of these all ones are valued based on that come up so it could be an interesting year you know for those high value private projects if you raise 200 or 100 million dollars I say I saw today that Aztec raised I don't know who leads your next round but you know you're gonna have to prove your your worth as a public network which is going to become increasingly harder so that's kind of my take you know I don't think there's I've gotten a lot of [ __ ] for that take too people have reached out and being like you're so cynical you know how could you just like beat up

on the builders like that but like I feel like at this point we should be trying to not view the past with rose-colored glasses like we should be actually trying to figure out like what happened and what that means for going forward and that was my best approximation of the truth I'm worried about getting outclassed in the in the debate here but I actually think that Solana is probably one of the better risk reward bets that you could make in crypto right now and I'll not not Financial advice whatever that sounded a little bit like it's not Financial advice all right it's not Financial advice you can relax buddy uh but here here let me let me let me tell you my uh sort of thinking on this and then you can tell me why I'm wrong but the whole argument of SBF basically which it looks like he

was doing this right he was basically selling Bitcoin in eth so artificially depressing that price in exchange for pumping up his sand coins which you could sort of group Solana in that bucket but those that's not a fundamental argument why Solana may or may not have worth that's a technical argument right for buying and selling over a specific period of time right so just because Sam bought Solana doesn't necessarily mean there's a it doesn't affect the fundamental first principles use case for why Solana may or may not be valuable I think overall there's going to be demand for what Solana values which is they've got you know the way that they do their consensus mechanism and the composability that like uh I I do think that there's probably some some use case for for what they're building so I don't know I I

kind of think that if they make it through The Crucible right now if you look it's either not going to work or it's going to be a lot more successful than it is today so that that would be kind of my my argument so follow follow-up question there how do you value or how should you value evaluation theories of base layer chains I'd say I guess it's like whatever you can sell the block space for essentially right so it's kind of tough to there's like a fee market right so it's sort of I guess that's how I would roughly look at it from a high level exactly and that kind of equates to revenue revenue minus inflationary which inflationary tokens you could say that's cost and so Revenue Minus cost profit is generally how I

would say you know this is like super simplified but it is probably how you could value most of these businesses the other way to look at it as well the same way to look at it but another angle is to say okay all the different apps that are building on top of the chain the amount of transactions that are going through in each one of those apps and the amount that people are willing to pay or developers are willing to pay for the transactions going through those apps so it's basically quantity times price equals Revenue the the reason why I think a lot of this comes down to what who is actually buying who is selling um is that there is sort of a halo effect of wealth creation that drives a lot of people to choose one blockchain

over another and the same thing happened on the flip side which is as you're on the rise and you're seeing you know if you're a developer building on top of Solana chances are you either need to have Solana or you have some in general already and as you start to see your purchases of Solana of Seoul go up in value it has this halo effect where you are now kind of feeling good about the ecosystem feeling good about the blockchain it has a um reflexive up but also a reflexive down perspective and it sounds really simplistic to think about this but when eth was priced at four thousand dollars and some person who wanted to come into the ecosystem and buy I don't know like an eth and it costs four thousand

dollars that like price point is actually pretty restrictive and and so I think there is actually some effect of not only prices going up but whatever the price point is being really important as to how you should value you know these ecosystems because the value of the ecosystems is the leading indication is the leading indication of how many apps are building on top of it developers are going will ultimately translate to revenue anecdotally you know there's just a lot of people that are are pulling away from Solana for a number of different reasons right now and so that kind of leading indication is sort of the the reflects of down like I want to get into this idea like modular versus monolithic blockchain ultimately I think like most blockchains end up being modular but I think there is there is a there it's a

valid uh thesis I think to have some use case for monolithic blockchains but like if I just close my eyes and I'm like how do I think this is ultimately going to play out I think the big challenge of crypto is trying to scale throughput while maintaining security and meeting demand like that's the challenge that crypto like blockchains ultimately have right they are kind of deluged by this unbelievable increase of demand and some of that like spills over into these alternative layer one chains I think each roadmap is ultimately a good road map but it's not going to be able to scale proportionally with these insane waves of demand that come into crypto just by virtue of that alone I just think there are going to be other layer one blockchains that end up succeeding like I also kind of think some of this probably is just and honestly the other

thing too is I think one lessons that investors might have learned looking back at this last Bull Run is that the only thing that is still really investable in crypto is layer ones like that's I do not mean this in any mean like way offensive like the the adapt Builders or you guys are [ __ ] awesome and ultimately I think dap should be more valuable than the layer ones they're built on but guys we've shown this chart uh before on this in on this podcast look at all of the dapps on eth denominated in eth it's like down only charts so I think what a lot of investors might have looked at has been like look daps are just uninvestable at this point um because you could just buy the layer one and history tells us that the layer one is going to return more than the

daps that are built on the ecosystem and they're the biggest and most liquid Investments that you can make so I don't know I'm kind of I'm kind of looking at all these things and being like I think there's a decent chance that Solana makes it here and it's like okay if you put some money in and you lose it it could go to zero but like so many people are so bearish on Solana at this point it's kind of like what do you make if you're right and what do you make if you're wrong and I think if you I don't know that that's sort of the way that I'm that would be my attempt to steal man uh because I agreed with a lot of what you said there Vance as well I mean just like on the topic of dapps this week actually there became a new number

one by TBL dap Lido and this thing is just inhaling eth and it's just stacking Heath and and pretty much all of the charts that you look at for its Revenue are up and to the right like they're are some apps that are really starting to demonstrate their value even in a bear Market I don't know if the lesson of last Market is is you know you should invest in the all-l ones I think it's more so like we need to prove Out product Market fit and use cases on the DAP level or else we're going to be circular forever Mike what I would add to that to your discussion and I agree like on par on the face of it all of that is absolutely correct the one variable that I'd add to all of this is modulo valuation where the value of what you're buying

something is a major component of how you can view whether or not like buying right now buying in tips months buying six months ago would have been a good idea and value once again comes down to valuation you know is this a good value investment right now even if it's down 90 it could still go down another 90 before it hits zero like the the value here is is a very very important thing um and I think that that gets overlooked because all of these have different if every single tote-in project I've ever seen a blockchain had the exact same number of tokens we would be able to evaluate based on price but nobody really he thinks about like what's the market cap what's a fully diluted market cap how many tokens are left to be unlocked what's the unlocked schedule

like those are all things that need to be put into the evaluation of when to buy or when to not buy something uh and I don't think that that happens enough and I wish it did I I think you're totally right and by the way at some point I would I would think that like dapps end up they should be like higher beta to whatever L1 they're built on I would think that that's the way that it should work right because they're slightly riskier right so you're taking more risk investors should demand a higher return and they should be like high beta it's like Lido should basically be high beta eth to like way oversimplify uh but you know you sort of combine that with whatever revenue and caught like their the their discounted cash flow I guess but it doesn't really seem to perform like that today so I I

hear you like I'm also on the train of like we got to build stuff that people want and charge fees for that and actually build sustainable businesses here but I could definitely also see with my like slightly cynical goggles on I could also definitely see in investors taking like the other the other side of that the the three businesses that are working right now selling block Space Trading digital assets and staking that's basically the only things that have you know you can point to multiple options of them that have over you know tens of millions of dollars of Revenue yeah I feel like on train on chain um like perps is like a pretty good like GMX and dydx also again not Financial advice uh but I think those are pretty

interesting a lot of financial advice section yeah yeah um can we talk a little bit about I know we've talked a lot about SPF in general but his trial uh he got arrested this week right so again uh so he was actually supposed to testify in a hearing on the 13th right and he gets it we get uh you know a tweet out the day before that he's been arrested uh in the Bahamas and is now currently in Fox Hill which is one of the top five apparently worst prisons in the world I don't know I'm not necessarily a fan of SPF but I also just think from a humanitarian standpoint like no one should be dumped in horrendous

situations like that they celebrated the Apparently contacted his family uh and let him know that they're not actually infested with rodents anymore so at least oh cool at least Fox Hill is a little bit better than when it was recorded there's kind of this interesting story of this guy his name's Victor I think it's like ozenki he's a Czech born businessman he he allegedly went to Harvard and he perpetrated like a few large Financial scams this is like in the 90s I don't know but it was like 1999 like 2000 that time Horizon and he bought Irish citizenship when they had like a pay for passport program and once he committed these frauds he fled to the Palmas

and in the Bahamas he was arrested and put into Fox Hill prison and he fought extradition he didn't want to go back to the U.S he didn't want to go back to Czechoslovakia so he fought extradition and he was in Fox Hill prison for three years fighting extradition I think he was from like 2005 to like early 2009 and he successfully fought extradition and now he is effectively confined to the Bahamas he's no longer you know in legal trouble at all at least in the Bahamas he's still wanted by the U.S and Czechoslovakia but he fought extradition he kind of lived a fight the other day and you know the kind of trade-off that he made was I'll spend three really bad years in Fox Hill for a lifetime of freedom on the outside I wonder how much

SPF is studying that that guy and being like you know hey how do you survive in Fox Hill and B like what is the calculus like do you tap out that foxtel is bad enough and you just get extradited or do you try to fight it and stay in the Bahamas and potentially get some sort of lighter sentence in the in the case of Victor you know whatever his name was but I thought that was a very interesting historical precedent for what's going on the the other historical precedence that I was looking up over the course of the weight is you know as the indictment or whatever process was unsealed you actually got to see what charges were being brought and how many of them were and and where they were coming from um SEC cftc and I guess apparently uh the doj is still working on other other

potential crimes as well but the southern district of New York has filed the charges it's eight counts if all of these counts are reached at the maximum level what you're looking at is 165 years of prison which is actually more than than Bernie Madoff got so don't expect that you know there's going to be that level of of uh time that's is served on the flip side you have Elizabeth Holmes who perpetrated 121 million dollar fraud against her investors and that was what she was committed you know that's what she was found guilty of 121 million dollars of fraud against investors equated for her to 11.25 years in prison um you know the the levels of fraud that we're talking about here and at least in

the charges that were unsealed is is to the tune of 1.8 billion um so you know these are massive in relation to what was just happening with theranos case but they're also against lenders and they're against customers and so I think the The Narrative of who this person is and and how they're viewed like the the court of public opinion it's it's going to absolutely sway against him the other thing that I found in Reading those indictments is it's very obvious that someone is talking it who we don't know but someone it's not possible it's not likely or reasonable to assume that they have this level of detail without sworn testimony Witnesses and and someone on the inside

who knew who's probably talking right now um so I mean it just it just started coming out that folks are like uh what's the guy Ryan salami Ryan salami right Ryan salami went to the I think it was the Bahamut authorities and told them that he may have been committing fraud that SPF was committing fraud by sen he told them like the story it sounds like so it and and this is how it goes right they they say oh crap I'm facing 50 years in jail let me get out of that say it was all SPF and you know but also like you know Ryan salame seems to be doing the right thing so there's definitely like good people that didn't know about this seemingly that we're higher up um and I think that you know shouldn't

be lost like is supposed to work is that people come out and Yeah share the real story but I think that that gets to the point of like how contained this information was at the highest levels of FTX I mean I mean it but I think we know now like after that they said I think one of the interesting points is that only three people had the only three people at FTX had the required passwords to transfer funds to Alameda it was uh and this was I think according to salami it was SPF nishad and Gary Gary yeah where's Gary I can see the back of his head [Laughter]

the other the other tape that I had and this one's maybe just like more because we I share a similar Hometown to SPF um that you know listen to the whole thing with his parents and hearing kind of the backdrop of what they uh were going through what their you know reactions were in real time in the courthouse um and you know just the backstory of what they've been doing over the last few years with uh with with FTX um I I think uh this is representative of peak Silicon Valley hyper woke hyper liberal uh hyper elitist parenting um and you know you think about it

you've got SPF who obviously the the child of the product of two Stanford law professors goes to an elite you know uh High School uh obviously MIT is super smart super you know educated um and definitely it has a lot of the same politically names as his parents and isn't very well-rounded is hyper focused on this one category of the world uses the as in his words you know the the wokest woke perspective to shield and conceal what he's actually intending to do um and historically in Silicon Valley you've had this very hyper liberal hyper-educated uh group of parents that

have been overriding overbearing on their kids and it's it's been you know kind of boiling over and getting crazier and crazier over the last couple of decades um I would say it wasn't the case for me and my experience of living there but just hearing I have two younger brothers and hearing about what that what their experiences were like or what their friends experiences were like in Palo Alto um it really is like calling into question this entire like parenting and how do you how do you raise a kid in this example in situation it is um I don't know that's been one of the takes that I've had over the last few days just listening to all this what what um I so I I only skim that article basically but I saw you know when his when he was referred to as being a

fugitive you know his mother you know quote audibly laughed in the courtroom and stuff I didn't to be honest with you I didn't even have a take I was is that sad or is it confusing I didn't I really didn't know what to think I mean probably in shock right just like yeah I've gone fully to the Looney Bin you know temporarily as a deal like this I have some empathy for the family situate to be honest with you I I don't know I've I've heard and I under I understand how it looks I get it but I also I also sort of think you have a huge blind spot when it comes to your family and it's like hey I've got this son who raised a bunch of money from a lot of like other people clearly fooled other people as well and you know couldn't you know his family

was his it's now been sort of intimated that he was opening doors for him and it's like well yeah now that turns out he was an enormous fraud and lying to everyone that looks really Sinister but also let's say he had actually been what he was representing publicly to the world and let's say your parents give you the benefit of the doubt wouldn't you try to help your kid do these I don't know it just wouldn't have looked quite as Sinister maybe I'm maybe I'm extending way too much leeway here but I just when it comes to family stuff I I always maybe give people passes when they don't deserve it I don't know but I don't know I'm I'm not in the cool let's see if they were actually on the tape yeah like I'm very much there for like the you know they didn't do anything wrong

but they may have there was there was some interesting okay I have another question for you guys so Sam got arrested you said eight counts right it was like it was basically everything that you might have hoped that he would give it was there was wire fraud conspiracy to commit wire fraud uh Security fraud conspiracy to commit Securities fraud there's money laundering there they really they threw the book at him but they also threw the book at him one day before he was supposed to testify publicly in front of Congress and everyone I'm what I mean what do you make of that honestly I think it's nothing Burger the timing of it uh sure in retrospect the suspect um the but you you saw his testimony we

all read his his you know supposed testimony that I think Forbes published he was just in a placade and Pander and say hey I don't have all the data in front of me but like let me tell you my side of the story and here's what I remember I do not recall I do not recall like it was just gonna be that whole dog and pony show um you I think you wouldn't have been able to get him to stick to anything you're really like truly answer something that would have been more incriminating than you know basically Andrew Ross Orkin was able to accomplish and because of that like I don't think there's that much value the indictment was filed I think the previous Wednesday and then was officially issued the Friday so like the timeline here isn't like we got this thing in within 24

hours so that we could him from testifying it it's more so that like this this path was already getting was happening um but you know it wasn't something that we could really stop and it just happened to land the day before he was supposed to testify but I don't know wait can we just this is how he was planning on starting his testimony oh my God this is so bad he's such an idiot I would like to start by formally stating under oath I [ __ ] up that's the opening line it's old it doesn't get much better it's just like dude come on uh it's pretty classic pretty classic Sam though I think there actually was one pretty interesting tidbit so John Ray the Enron guy also

testified and I think he shed some pretty glaring light on stuff that people had suspected for a long period of time so it's not really news to people who've been following this podcast or deeply plugged into crypto but Alameda did have an enormous exemption right they weren't you know their Liquidation on FDX had been turned off they shielded the Alameda losses by moving it into an account titled our Korean friend the weird Korean account that was wild you kind of have to laugh at a little bit here's one thing that I thought was actually pretty interesting that didn't get an enormous amount of coverage so apparently there was a blog post that was penned by Sam that was supposed to

be that was going to be released in September which is we came we saw we researched so that was going to be a blog post that was announcing the closure of Alameda back in September so you know there's a lot of different I'm not surprised honestly like the secret to their success the secret ingredient was crime and then when they ran out of you know basically user balances the ability to stop hunt people you know special exemptions that they could move around like obviously then your next step is like okay how do we wind this down but at that point when you have a negative you know four or five billion dollar weird Korean account like it's just over you can't do anything well I've got it so one of the questions

that I have is like okay let's say they were able to accomplish shutting you down what would that actually look like and how would that materially have changed like the outcome of the events that happened over the last three months one of the ideas that I had is like they probably would have been able to conceal a lot of the losses within Alameda and you would have been able to like so yes Alameda had trading capabilities they had a bunch of losses but they probably would have been able to to shift you know money from right pocket to left pocket left pocket to right pocket I I think you would have been able to fill a lot of the whole of FTX but then it just got to be so big and then when FDT bottomed and all of that it just got to be too much

um but thinking back to where ftt was in September there's a possibility that this could have at least been a better outcome how though there was no the the pile of money that they lost could never have been that big because it was a prop fund they didn't take outside Capital so I've got a question for you guys did you see that they lost Alameda posted or SBF through his combined entities posted a loss of 3.7 billion dollars in 2021 I I looked at that and I was like wow that's a really big number but how did they even lose that much they didn't raise that much money how did you even post the net loss even if it's just a loss that's realized on paper shouldn't there have been a game all the gains came in 2021 how could you

have posted that loss in 2021 there's there's like one explanation for that like the one big drawdown in 2021 was the summer right that's when you could have theoretically lost a lot of money um and if you look at the the market there's two peaks in 2021 there's like this organic Peak around like when do when Elon was Shilling Dogecoin on SNL and like everyone was like sailor was you know gonna get nation states to put Bitcoin in their their balance sheet uh like that was like the organic top then it died in the summer and then there was the Futures ETF run for Bitcoin where like we kind of ran it back Turbo my hypothesis is that they blew up shortly after Elon went on SNL and then they tried to make it all back by doing this like kind of like d-gen gambling

trying to force a Revenge pump on crypto which like kind of worked but then they somehow got out over their skis again and and got hurt more but like the only time that they really could have blown out was the summer Summers both Summers I mean I think they got really pretty badly trapped in in Luna and no no no no this is this is just 20. I'm saying both Summers the way the only way that you would have been able to realize multiple billions is if you lost but then the other way that uh you can do this is you realize the loss there's no tax loss harvesting rules in crypto and then you can re-buy at a lower valuation and then when you pull that out and you use that as collateral

so then you say okay I just re-bought all this Bitcoin it's at a lower cost basis I realized a loss and that's it my cost basis is now at whatever it was 20K at the time I'm able to actually go off and use it as collateral which is not attachable then when I pull out cash against that collateral to then go off and trade and and so I think that's probably what happened um but you know it takes some maneuvering from a tax perspective I'd be very curious to see what their expected financials would have been for 2022 um but to just go back to it you know the reason why I was saying Alameda could have concealed a lot of the losses just because they could have taken bad debt expense for Alameda and basically just like not paid back their loans and so you you probably wouldn't be able to

conceal and contain a lot of the FTX consumer losses if you just like basically had Alameda go insolvent and bankrupt got it I'm uh I'm going to move this past FTX yeah I'm I'm putting SPF in my 2022 rear view I think that's a good idea he's gone now there are some interesting still implications of FTX like they're they're still they're still a little spill over right like um there's some new stuff that came out with Genesis it looked like and then obviously I don't know how much Mike and I should talk about the block but like you know another media company was was taking money from from Sam so maybe one of you guys want to do that

story Justice uh just because Mike and I have a little yeah I'll I'll do the block um yeah I mean looks like the CEO had taken a personal bribe from Sam and not told the company and the circumstances surrounding the actual sale of the company are pretty murky but our base case is that like nobody else the block basically knew Frank Larry the rest of the people I think this is just like a case of massive wrongdoing for for just the CEO basically um and now the question for the block is it's all like you guys respect the block obviously your competitors but like they are they are a solid crypto journalism Outlet Frank's Great Larry's great the rest of the team puts out a lot of

research but the organization was huge um and I think they're going to have to you know potentially right-size themselves they're going to have to focus on whatever's generating Revenue because I think they kind of had just like tarte Blanche from from SBF and and The Funnel of of loans from from him uh but I think they're you know good people they're gonna make it uh it's just going to look a lot different and they're certainly going to be hopefully like a little bit more uh I mean they've always been pretty good investigative journalists I think this was just a blind spot for them and so maybe just like a redoubling of like okay who exactly is in this ecosystem who who's you know potentially nefarious all right everyone quick break from this episode to talk about our show's sponsors Avalanche many of you know Avalanche as

the fast reliable and scalable layer one uh the folks at Avalanche have a really great message for those of you who are in the crypto industry right now which is bear markets are for building so while a bunch of our friends over in CFI are kind of going through these struggles and travails the folks at Avalanche basically put their heads down and are shipping products that Builders want the the latest solution elastic subnets right and just to expand on that Avalanche is consistently upgrading all of their platforms right so on the platform side you've got elastic subnets you've got new VMS on the infrastructure side of things you've got core which Mike I just I know you used that the other day yeah exactly exactly uh so they're upgrading the infrastructure side with core and Enclave the chain has had like no downtime super customizable for devs

uh yeah if you're a builder avacs.network uh avax.network great place to be but do Yano and I as well so you definitely go check them out but click the link at the bottom of this episode click the link oh it's not going to get any credit come on yeah give us the credit exactly so yeah big thanks to Avalanche um yeah you I mean you you just had a great experience with them the other day on the user side of things so go check them out guys thank us later let's get back to the show I've got a I've got a question for you just in terms of you know could be for the block but it also could be for basically anyone that took money unknowingly sort of from FTX and SPF right I mean is there like uh you know usually you raise that from

someone then you got to pay them you got to pay them back plus interest but in this particular instance the guy that you theoretically have to pay back plus interest to is bankrupt and in prison so how does that look I mean does that end up getting clawed back by some sort of bankruptcy court or is it kind of just like hey you kind of got away with this because this person's in prison I'm not a lawyer here but how do you think that works it would have been cleaner if it was an equity investment in the bankruptcy process you're basically selling assets you're recouping whatever you can get and then you're Distributing cash from the estate and the estate is the person who's managing out like the shell John Jay Ray is the estate manager for FTX um for loans that's another category you

know those are things where you're sitting in a bankruptcy proceeding and you're saying what assets do we have well we have a bunch of loans out to people what are our options for recovering that loan well we can force them to pay it back and like go after them or we can sell it to debt collectors for pennies on the dollar who are going to go after them as well but like the common denominator here is that like you have someone coming after you for the money and in this case it looks like McCaffrey is going to be that person it's not going to be the block McCaffrey mechanically was the one who received the loan and then he went off and spent you know whatever it was to you know use that money on the bankruptcy creditor the bankruptcy state is not going to go

after the block they're going after Michael Michael's problem is a different one you know like you had these loans or this Equity purchase of the block he will then probably have to sell that to try to make hold the creditors to the extent that he can so just to to be clear on this there were three loans that were given to Mike McCaffrey the first one was 12 million dollar loan so that he could buy out the existing owners of the block uh when he took over as CEO the second one was a 15 million dollar loan uh given to his holding company all three of these were given to his holding company to be able to have operations expenses for for the block and then the third one was so they could have a penthouse in the Bahamas um all of those went to his holding

company um and I would imagine that the holding company therefore is the owner of the equity of the block and so you know not only is it sort of like gotta find chart A New Path for the block going forward you're probably going to have to restructure in a certain New Way um and then it's a question as to like who stays how does it work you know negotiations with creditors is is going to be the the thing that takes a really long time but this is going to be one of those negotiations and and that holding company is definitely one of the debtors oh I think you know if we have a take on it it's like honestly our heart goes out to the people like the block I know there are competitor of ours they do great journalism and it it really sucks

for the people that have been putting their life's work and their reputation into building something that stands for integrity and I think it still does but you know to have this sort of smear on it is like totally unfair to the people that I think did super good work there and wholeheartedly agree yeah so heart goes I'd say it's a crappy situation over there for sure but I'm sure they'll be sure they'll be okay um uh do you guys want to talk about sushi governance there's actually something pretty interesting going on in that world all right so there's a proposal so Jared Gray uh for those of you guys who don't know or might not have been following this there is a pretty big relatively hotly contested governance vote for who is going to be the new head chef over at

Sushi and this guy Jared gray won so he made a proposal or earlier this week basically to redirect funds into the sushi treasury right so I'll just read you hear what the proposal is in his words over the past two months has head chef I've spent most of my time analyzing the operational budgetary expenses and liabilities to ensure the Project's long-term success after reviewing expenditures it's clear that a significant deficit in the treasury threatens Sushi's operational viability requiring an immediate remedy my original post Sushi operated with an annual Runway of nine million dollars you nine million US Dollars however after my detailed review we've reduced that requirement to 5 million US dollars made the reduction possible by renegotiating infrastructure contracts

scaling back under performing or Superfluous dependencies etc etc however as previously stated Sushi is currently near full distribution of its token Supply this is important we'll get back to this and has yet to capitalize on opportunities to diversify its Treasury and provide necessary liquidity for ongoing operations the treasury currently provides for 1.5 years of Runway therefore the situation requires immediate action to ensure sufficient resources for uninterrupted operation so I propose I'm skipping a little bit here our proposed setting can pie to a hundred percent of fees diverted to the treasury multi-sig for one year or until New tokenomics are implemented helping return Sushi's fiscal resources to the competitive level an additional benefit

of kenpai's solution to the treasury is the diversification of assets which limits the need for Market selling Sushi which is a net positive for stakeholders in addition to kenpai's revenue the sushi team increased its funding by securing several multi-million dollar partner deals yet relying on Business Development deals is only part of the successful business model to secure Sushi's future do you guys I've got some some sort of thoughts on this but what is your high level take about this so six million to run this organization is very cheap I think it's the first thing if you look at the actual line items of the salaries that's kind of what people you know most focused on 500k for the CEO 400k 400k for another person 300K for a few engineers

that is expensive but like this is not a traditional technology job like you were taking on substantial Risk by running one of these organizations and like if I was him I would probably be wanting that much as well um Sushi's cheap to run you know it's 5 million I was looking up maker Dow's last quarter expenses 13 and a half million so it's like 3x the cost to run maker for one quarter that is to Sushi for a year and like generally where we want to see Dows like D5 douse and there's like a lot of them you know if you're small five million makes sense if you're big 10 to 20 million makes sense but like that's generally the range of acceptable inputs um I think you're going to see a lot of like this like oh we've minted all the

tokens we've given them all away like it's time to redistribute the wealth you're going to see a lot of token migrations like when lens did a token migration to Ave in the last bear Market you know that was to solve a lot of the problems that are endogenous in this proposal um but this is kind of what it costs and and I think people on the sushi token side the community are are pissed about well the whole thing about sushi is that you're going to give feasts to users and uniswap doesn't do that and now you're having to double back and say like okay we need to actually recapitalize the treasury for this to keep going and I think the answer is just like do you want like more of a much smaller pie or do you want this thing to actually like live on and grow and succeed and you

know the go go bull market everybody just wanted tokens and yield but now it's like you have to opt in to double down on this organization because they're just not going to be the same level of fee sharing that there was a year ago the economics just aren't there and it's just part and parcel of the whole deal I think uh one uh yeah to reiterate everything that van said kind of aside from the operations and the operating costs I think one of the more interesting things here is um you know just what happens with long term versus short-term token models and if you have the long-term perspective of you know what this token is where it'll be um and you know exactly where it's going to be in five ten years from now you're

probably going to be wrong and so what happens what you need to implement I think is is usually some sort of like inflation schedule some sort of you know change element that can be implemented um what was I think it was Wi-Fi wire and that minted an additional 20 of tokens to give to the core developers so that they were incentivized because remember 100 of those tokens went to users of the platform not the people who were building it so like you have to have the right incentive structures to be able to persist these in the same way that you would a technology company and the problem that you have with token models is that that when you have a token and you give 100 of it away 100 of it is gone when you have an equity in a

company and you have a hundred percent that's gone next round next time you raise money there's also an additional re-up of the employee stock option pool there's additional uh shares that are created so you're always increasing that hundred percent when you do subsequent financings for companies and you just don't have that mechanism with tokens um and so there isn't a natural point where you have the same you know a corollary with with companies and so I think people are going to have to figure out ways to do that all right can you comment on uh so that exact observation right so Sushi basically distributed an enormous amount of tokens right to its Community same thing with urine right but the way that works in equity this is

a little bit of a funny thing that I think you could make an argument that it sort of comes over from Bitcoin because the meme of Bitcoin is 21 million hard cap Never Gonna Be Another one fixed Supply yada yada and that sort of got borrowed right because Bitcoin was the first one that did it that makes sense for like a hard money commodity store value type thing I don't think it necessarily makes sense for a lot of these protocols and the way Equity financing happens which is you issue new challenges of equity every time you raise subsequent round of capital so that you have a smaller piece of a much larger pie kind of a better way of doing it for a lot of these I mean do you have commentary on just the what do you think about that I'm sort of looking at being

like why do we do it this way I think if you're going to have a finite supply of the tokens of your protocol you should have like a finished version of the product in mind is it going to take a year to get there is it going to take two years to get there but like at some point you need to kind of take your hands off the wheel and be like we're not actually governing anymore this is just done and like that's the model that works with having a finite token Supply where you can't have any more and you're making decisions that are supposed to be not reversible and I think like a lot of projects are getting there like maker Dow doesn't need inflation Lido doesn't need inflation unit swap doesn't need inflation like they're kind of like finished products and I think that's why

that works um but if you're building something that looks more like a company where you're pivoting the product you're releasing new things you're doing this you're doing that you're doing the other thing like just like Equity you're going to need the ability to inflate your supply to pay people to keep operations going to raise more money and so like I think we just had this mental model that we copied from Bitcoin but it doesn't actually work in all in all kind of scenarios but I'd actually I'd actually test that so I I think uh every single private round of any Equity financing usually for a technology company has new new class of stock and new refresh of employee stock option incentive pool what I think also happens with publicly Trader companies I don't know the number off top of my head but

last I checked it was somewhere between two to four percent of stock based compensation for mature publicly traded companies happens every single year so there is a natural inflation for like products and services that are done because you still have to incentivize people to continue to maintain them to work on them to make them better you know even even like Yahoo back in 2010 when it was an absolutely you know doing anything it still had to pay people in stock based comp to be able to get people to show up every day and keep the lights on and it's not the exact same with the protocol because you put it out on chain and it exists there into perpetuity and users pay the cost of operating it but there is an element of like if you are 100 deployed with all of your tokens and you can't do anything

else that literally means that it's over and it's done and I don't think any of these things are really even close to getting there even even the Lidos and the unit swaps and the majors of the world I think that they're close maybe to having the product that they want but if they wanted to change anything you know how do you get people to do that if you're going to have a decentralized protocol both in terms of upkeep and governance at some point it has to be done you can't keep going back to the well like that's why Bitcoin is powerful that's why Bitcoin only has 21 million it's like it's done it's over like and that's my vision of a decentralized protocol and even in Vitalis roadmap he's like in five years ethereum is going to be a finished product We're not gonna have to govern anything more maybe

a couple of eips here or there but like we're not going to need the ethereum foundation we're not going to need all these discretionary tokens like I think that's where they should be going at least hmm do you do you think maybe because the way that I would sort of view it is like it's it's all about the return that you're getting for that inflation right so Michael to your point about okay so you inflate by two percent every year is that good or is that bad I don't know what did you get for that two percent inflation because if the workforce that you use to procure that you know with that additional issuance makes that value of the company go up five percent then congratulations you had like 100 return on that inflation so for me it's less of a like is inflation

good or bad it just depends on what you're getting for that inflation 100 I mean we talked about this when we're talking about the valuation model for base layers it it's what's the revenue and subtract out the net inflation and that's that's basically how you get to like net profit let's say for a decentralized protocol um I also think one other little Bugaboo is um this idea and we had Chris berninski on the interview part of the show this week and he I think put it pretty eloquently you know we talked about when is it appropriate to basically return funds to token holders and there was this whole kind of emphasis on cash flowing protocols for a period of time and that was always the appeal to sushi right that you got paid out basically and there's this idea that when there's a

bear Market well everyone's like well hey I'm already down 90 on on my my token here right and what now you're going to take away my my payment to it's like well yeah dude but you could be down 100 you know if you're not careful like things have to be sustainable and the you know the other thing too is like I I take your point Vance at some point these things need to be finished but I would argue almost nothing in crypto with the possible exception of Bitcoin is finished you know I mean I so before something is finished why are we returning funds to token holders as opposed to reinvesting that basically for labor yeah you shouldn't be you should be waiting as long as possible like start with the assumption that these markets are far larger than

we can even anticipate and that market share is the most valuable thing if you look at a discounted cash flow in 10 or 20 years down the line everything that I would you know guess would be keep internalizing the economic keep improving the product keep trying to get it to a finished point and then at some point maybe you can start returning cash flow to token holders to the Dow to whatever but if you don't get that market share it's not going to be worth anything and you can see the reverse where you you know spend your your wad of tokens too early you know and sushi in 2021 they spent over 500 million dollars of token emissions that is so much money like and you know what happened what would happen if they had that money now you know that would

be a lot more useful in growing their market share and so like I think you keep incentives low you keep cash flow going to the core developers and then you wait to the last possible second to turn on the the fee switch and then that's how you have like the the parabolic like okay Uber started in what Michael like 2005 2004 2009 have they ever paid a dividend no no like but you know it's been like a decade I think that's the right time scale at least a decade like started in 2014.

2022 2023 like that's the first time they ever talked about giving people money for holding ethereum the the other example that I think about I don't know if like I was living in San Francisco in 2013 through 2017 and um that was the Heyday for startups basically paying you to use their products and it would be like you get your dry cleaning basically like 90 off and they you know this company rents would literally walk up and give you a cookie every single time you got your dry cleaning delivered and like you know some guy that you got to know it's like you had this like spread concept which is basically like you know doordash before that blew up and it would like deliver you like lunches and like there were all these things all the all the free Blue Apron meals remember those exactly I got lunches for three dollars

a day when I moved I remember this you did that I remember you know did this actually I mean Uber it was subsidized Uber pool Uber pool usually literally would cost three dollars and 20 cents to get across San Francisco yeah um anywhere in New York I know like Uptown if I die at five dollars yeah dude it's like 70 now it's so expensive yeah so think about that and think about the correlation between that and everyone who is overspent on their marketing budget equivalently with totins or with emissions whatever you want to call it and sure maybe some of those implemented uh you know gains in in market share but I bet 99 of them did not work out and most of those companies are probably

gone and I know most of them the ones that I just listed are um it's the exact same thing if you if you spend your marketing budget too soon or if you use it previously uh and you don't maintain that market share or it's not good spend you're not gonna last long yeah I also think that I'm gonna there were some bad lessons that were learned in this era of like easy money and money Printing and blah blah blah and like share BuyBacks like all of this is a question of like where are you in the life cycle of the company right share BuyBacks make sense when you can't more profitably allocate that Capital towards like organic growth like r d or Acquisitions or something like that and you're like look I don't really have any good Investments on the horizon all the returns are below the cost of my

Capital anyway I'm gonna give this back to shareholders by buying my my own stock back but I think what that has morphed into in this like wacky last two years is yeah we should buy the stock to support the price like that and a lot of people took that lesson away and put that and and use I see some of people talk about this in crypto land like this like yeah go out there and like Market by the token it's like when you talk what are you talking about dude that is a poor use of capital yeah first of all Market buying a token right now you're just not going to make any impact like like you just don't have the size to do it the reason that it worked when Carl Icahn you know there was this

legendary meeting where he told Tim Cook to start buying back the Apple shares like they had like billions and billions and billions of dollars to do it but like this is not just a company thing this is how the stock market works this is what investors want to see when you look at a stock and you're an Institutional Investor one of your main question is what are the BuyBacks like what are the employees stock compensation like this has been institutionalized and it's not going away either like people are very quick to write the eulogy of like oh free money and you know how bad it was and you know how stupid we were and how it's never going to come back but like the 10 years at like 3.4 like the the average 10-year yield from 2010 to 2020 was 2.1 like we're not that

far away like it's not like we've gone to like eight to ten percent yields flogged ourselves and been like we're never investing in technology again this all of this stuff is still built in the stock market all of this stuff is still coming back I think we just have a little bit of a hangover from like a little too much a little too soon but let me let me also add on on the stock buyback part in particular you know that's not necessarily just like a one for one or like you know we're doing this or we're doing that like we don't have anything to invest in therefore let's you know give it back it's part of a cohesive strategy and a cohesive plan but also you know the reason why you buy your stock back isn't I mean it can be to support the price but but usually

what it's for is that adds to the treasury stock that the company then owes owns and you can give that out a stock based compensation and the ability to say okay like we are added to the profits of the company we think that our stock is relatively undervalued right now is usually a good sign with a stock based or stock buyback because you know they probably know the internals of the company just as well as the CEO um and they're able to tell whether or not whether or not the stock is undervalued so I think there are multiple reasons for stock BuyBacks but you know it it is part of the the options and and the plethora of things that you can do as a company I would have more sympathy for that argument if companies weren't absolutely [ __ ]

horrendous at deciding when to buy their stock like you can look at all this data they buy the top and they sell the bottom except for one guy John Malone who's like famously good at this this uh usually sort of telecon Tycoon who's really really good at buying his stock when it was low and issuing stock when it was high and see the T-Mobile guy no no no no what's happening Cowboys still kicking still kicking yeah I missed that guy you used to watch his like Sunday cook-offs I think John Malone is now the largest landowner in the entire United States I believe that's correct it's either him or Bill Gates or Ted Turner or maybe Ted Turner yeah

um yeah you know it would be very interesting I wonder if anyone I'm uh on Janos recommendation I'm listening or I'm watching this documentary on Rupert Murdoch it's on HBO it's pretty good Empire of influence and my my mom actually just read the Ted Turner documentary and she their lives you know supposedly as guys on the total different ideological Spectrum there are mirror images of these in in a lot of different respects yeah I'm just you just take a while back then like uh same with John Malone by the way all three of them so I I watched this Rupert Murdock documentary and then I read John Malone's biography and Ted Turner's biography they're all like these media tycoons

just they just bet the farm over and over and over again for like 40 years in a row like every three years so much survivorship bias in the biographies that you read the ones like oh God yeah 100 100 and like people just told this these guys like this is a bad idea there's a low likelihood of success for a minimal outcomes but they just kind of rolled the dice in it ended up working for a lot of them they also both let's talk about let's talk about 2023 yes all right yeah what sense what are you going to talk about I don't know how are you guys feeling

I have a question for you Vance are you um this is not about 2023 are you guys buying so there's I we just started seeing like the The Venture stuff at like 80 discounts like some of these later stage stuff all right do you guys buy those just out of curiosity we have we look at it we look at everything all right good to know yeah hard maybe I honestly feel I mean just because we have to be accurate we have uh we continue to look at stuff like that got it all right now we can talk about 2023. I well first of all we I want to do it like a more all-encompassing predictions episode we should do that to kind of cap off the year but I also think I honestly am going to 2023 feeling very optimistic

like very positive and I sort of think it comes across a couple different dimensions which is like a period of time like post Luna when everyone was like oh this has got to be the bottom and Yano and I used to have these conversations where it's like I don't think so because everyone's still way too angry there's like a lot of emotion and angry and people are engaging and yelling at other people and now we've sort of entered what feels like this very is apathy you know and when it isn't apathy you know what people all right so people at the peak of the bull market this purely a sentiment-based thing but people used to get very angry when you'd even suggest something negative right

when you like breathe the word of uh you know possible skepticism about like X Y or Z thing people would yell at you now we get a lot of comments on like our YouTube the best Contra indicator is the blockworks YouTube uh comment section because whenever you say something bullish or positive people get mad at you they're like not having it you know and I don't know FTX you know which is a top three crypto exchange imploded and we didn't really put in new lows so I'm kind of just like I don't know I feel sort of positive uh going into the new year to be honest I share I share the optimism um I read a lot of like Financial history not because like I'm trying to

like out macro people I just like like to understand the different cycles and how people felt and and you know all that stuff and the cool part about you know the history of Finance is that there's literally you know 200 250 years of data about how things traded what happened after big collapses what happened after big booms and you know mean reversion is is a seriously powerful force you know if you look back it's very rare for you to get smoked twice you know back to back you know one year and then the next usually there's some sort of at least relief and so you know when you're up 20 or 10 or 15 like it was in 2021 you naturally get nervous about the

downside but now it's like I don't know unless there's centuries of mean reversion data that's wrong uh feels like it'll at least be a little bit more accommodative and washing out all of the the bad players you know helps that to add to that story the worst thing that we could do is just carry some some bodies with us into 2023 I would like to leave those behind if if at all possible the the thing that I'd add just from a macro perspective I think from a micro perspective my quick take is that things are starting to work like we're starting to see games that have you know hundreds of thousands or potentially you know single digit Millions monthly active users like things are launching you start to see the revenue numbers of some of these dating options and and providers and like those are working as

well from a business perspective so like the the the green shoots of the micro side of it are are popping through and I bet that they expand over the next six-ish months I would say the the overhang that I'm thinking about right now is um what happens once uh Shanghai goes in like that feels like the last piece of fud that oh my God you got 15 million eth that's about to become withdrawn and sold on market like obviously that's not going to happen but like that's one of the big kind of like variables that I'll be able looking to in March when that finally goes through but I'd say on the macro side the way that I've been thinking about it and advanced and I had a conversation this week with you know a couple of other friends in the space and um basically the CR the stock market has

been A Tale of Two Cities over the last 12 months maybe like the last 15 months where you've had you know the S P 500 is only 15 off of its highs right now it's not a bear Market in the sense of like the global U.S economy uh unemployment still doesn't budge even you know this this week with the new uh unemployment numbers like the economy is still working but the thing that's the other city has been anything that's a risk asset you know growth stocks are down 70 80 90 crypto is obviously taking a shellacking and I think what we're going to start to see is like a shifting back of the subcategories of the market that have done well you know energy and materials and chemicals like they've all they've all done really well this year

uh back to some of the risk assets some of the growth that you know just got hurt over the last 15 months um that's probably how I would Peg it but I don't know if you know we're gonna have like a banner year in this in the s p writ large I think we're just going to have like sub sectors doing much better and the ones that have been doing well probably a rotation out of those but last last thing I'll add to to add to Michael's point if you look at Goldman's 2023 Outlook uh the two top ideas that they have are short the s p and then commodity super cycle so they think Commodities are going to go up 43 and they think short s p is going to net you like you know 20 or something like that same people who were telling you last

year that we're Bound for all-time highs this year and that long s p was the consensus Okay so there was a all right so I was actually at the Solana like the break point like top signal of all top signals and I actually remember somebody saying at this crypto thing because people back then this was a legitimate thing people debated on do you believe in the super cycle and someone was telling me how you believe in Santa Claus no someone was actually telling me how every couple of years in Commodities someone comes out and calls it a commodity super cycle and it never ever ever is and they were like oh well like we see this in Commodities and like that's why I don't believe in the super cycle for crypto and it's just at the

time I was like sure it makes a lot of sense you don't you don't understand suzu man you you just you don't understand I'll be honest I never knew what revanchist was I never Googled it I've seen it come up on Twitter quite a bit I've never looked into what that term meant but I will forever associate it with suzu suzu and his big brain yeah I mean Commodities are are very similar like I grew up uh in Canada and part of my family is in like the Commodities business in in Vancouver in British Columbia but like they were the original people who um there was this one year where uh oil went up like two or three X or something

crazy like that uh one of uh like the the rich kids that I knew growing up his dad bought the Calgary Flames they won the Stanley Cup so like you had like the commodity super cycle you won like the Super Bowl of Canada and then like there was this whole theory that like you know Canada was just going to be the biggest country in the world and like we were going to take over the Americans and all that stuff and you know a year later there's bumper stickers around Vancouver and Calgary saying like Lord give me one more Super Cycle I promise I'll sell the top this time and and like you know like getting worked and coming back like this was a lot of the story of like at least the businesses that my my family was in um but it's the same thing you know

people always thinking go forever and then it inevitably doesn't yeah I'm looking for there's a uh there was a chart on on the margin night there's a guy named Yuri and Timmer over at Fidelity who does like macro analysis for them um I like that guy a lot and he showed this chart that basically forever changed how I thought about Bitcoin as a as a long-term investment and you he basically showed I'll see if I can like pull it and I was just looking for it on my email but I can't I switch computers so I can't find it but basically he showed like the very long-term returns of Cash Gold equities like debt like Cash Plus debt and over

like long periods of time and what you can really clearly see is equities crushes everything else like it's not even close there's an enormous Gap in between everything but what gold does over periods of times it has these like spikes it has these spikes that like is because because it's the exact thing that everyone says that it does it protects your purchasing power over a period of time and it's a hedge against like when there's a crazy debasement or inflation or whatever it is and it just made me think I mean it's the it's the thing that people have always said which is you want your assets to be productive and you know it kind of made me think more of Bitcoin as a trade that is like a long-term hold into eternity because it

doesn't it doesn't compound um it's interesting I just looked at the price gold down six percent this year you know you're only like marginally better than the S P 500 where you might get a dividend too yeah now I'm I'm with you on the gold thing I it would be tough to own but I'm my mind is still blown that gold has a 12 trillion market cap how does that make any sense at all I oh sorry I have a theory about this too dude when it there was if you go back and look in the history of gold like the vast majority of Gold's gains all came over like two periods the two periods of time right when they uh made it legal basically to own again and then like once in the 70s or 80s and that

crazy volatility I think it just imprinted on one like generation that you just hold this thing and it goes up forever and that that imprint that psychological imprint has carried it as an asset class to this to this very day for like 60 minutes yeah for like 60 years because people like I learned my lesson I don't sell gold and I just think that I respect the people who hold the gulp but yeah yeah I that's kind of what I think how much of the gold reserves so wait so gold has a 12 trillion dollar market cap how much of that is uh held by countries because you gotta you gotta assume the U.S has probably the largest gold Reserve I bet they have like I bet they I bet the US has like 10

of that I bet they have like a trillion but I think more than I think more than that even top 10 Central Bank gold Holdings investing gold.com which is a real website you okay you want to go first what do you think the United States has oh I'm gonna say less than a trillion yeah way yeah far less um okay if y'all know you wanna go for them 100 billion I'd say what do I think they actually have yeah somewhere between 500 billion and a trillion I think I know the bank that has the most can I just skip yeah no guest arrange which was not actually allowed you guessed a 500 billion dollar range

smart yeah it is 528 billion dollars and and strangely all right for bonus what's the second biggest country Russia and how much do they have one of the European countries or it's either Russia or or it's either Russia or one of the top you're or probably Germany or all right I'll give you a hint it's culturally on the nose that they would have this much gold India nope that is a good guess though Germany there we go very German to hold a lot of gold yeah wow okay that's interesting yeah very conservative wait and why do what do we what do we think they have relative to the uh I bet it's one

quarter of what the US has yeah I was gonna say a hundred they've got about half oh wow there's a good Economist article that's saying like how all the autocratic nations are buying up gold this year yeah so Russia has about 100 billion quarter of what the U.S has yeah they've been buying yeah they they've like totally petered off track but if you're in rush I mean people really disregarded this when we froze all those Central Bank assets for Russia and uh and people said well look it's a it's a signal of strength for the dollar but come on like put yourself in the position of a nation that does not have

their interests aligned with the United States I mean you have to be developing contingency plans right is that a crazy leap in logic like if your largest adversary on the political the global stage can just freeze your Reserves at any given time it's not going to be tomorrow but like you have to be developing a contingency plan there right I would think that's what Felix zeloff was saying yeah I was listening to that on the treadmill this morning I was like this is way too depressing I gotta take this out he is uh he's he's a big proponent of like the autocratic nations are going to buy Commodities and bury them in the ground yeah I don't I don't know if that even really matters if it's on the margin like these things are so small

I've been listening to Felix Zula for a while he's pretty on the money I'm not gonna if you listen to him over like periods of years he's he's pretty good actually um but I hope that I hope he's not right because yeah his his predictions have gotten like pretty dire although he sees uh he thinks the bottom is coming in like q1 or Q2 of this coming year and then one big up and then the thing about like all these guys is like you know I remember what was it like four years ago listening to Kyle Bass the Hong Kong dollar is going to zero we're gonna short the hell out of it I'm getting massive leverage and I'm like on these foreign exchange sites trying to figure out how I can like short the Honda

that's going nowhere literally the whole trade has gone nowhere you know China's gonna blow up for the past 10 years you know technology is overvalued for the past 10 years like everybody's got an opinion I just don't think his is like well-founded in reason inflation's going down like it's like all of the components negative other than rent you know like you can really see it so I don't maybe he's just smarter than I am entirely possible but I don't know where it comes from one call out uh just on the inflation point I don't know if you guys follow true inflation uh it's it actually has like a crypto component whether they're putting it on chain I think via VIA chain link uh but anyways they've created their own proprietary

um and I would argue probably more accurate in real time CPI measure or or alternative to CPI um someone figured out that their their predictions and their sub component predictions are exactly correct they're just they're just uh moved forward three months so the I think the October one was the equivalent of the December one and like they nailed every single component and the Top Line number um it was kind of a fascinating Twitter thread and Analysis but shout out to trueflation interesting just gave him a follow-up all right guys great uh great episode and we will um we'll see you next week [Music]