Inside SharpLink's Massive Ethereum Bet With CEO Joseph Chalom

Transcript

Crypto's providing the rails to do something they've never done before. I like your framing. You see it as a business opportunity. You need to take a step back and say, "How am I going to strategically balance risk?" We're seeing this this flight into Ethereum. >> Co-CEO of Shapelink and a key figure linking Wall Street and Web3. At Blackrock, he led the launch of the iShares Bitcoin and Ethereum ETFs and Biddle, the first tokenized treasury fund on Ethereum. Now at Shapelink, [music] he's focused on bringing Ethereum to the center of global finance. Today's guest is Joseph Shalom. Real-world assets, I don't know what other assets there are. >> [laughter] >> I live in the real world. Welcome back to The Rollup. I'm Robbie. I'm Andy.

Robbie and I met at the University of Florida in 2017, [music] where we first found out about digital assets. We learned a lot along the way, and we're bringing you face-to-face with the leaders of our industry. Sit back, relax, and enjoy today's episode. Founder of of and now leader of Shapelink, previously the head of digital assets at Blackrock for over 20 years. You've you've really made an impact on not just crypto world and the and the traditional financial world. We're kind of going to obfuscate away those terms. It's really just the finance world at this point.

So, welcome to the show. Thank you. Love being here, and this studio in Singapore is a vibe. It certainly is. Singapore in general is is is quite a vibe. It's really a mecca of sorts for finance, and they've really been ahead of the curve when it comes to the digitize the digital adoption of of a lot of these things. So, let's start with Shapelink. I I think you're one of if not the largest holders of ETH now.

I believe maybe even greater than the Ethereum Foundation. And so, when you're thinking through the the mechanism of Ethereum both before and after Shapelink has accumulated all of this ETH, you know, the political dynamic, the landscape of of major stakeholders in Ethereum are starting to shift, and Shapelink is rising to the top. So, how do you how do you think of yourself and Shapelink as a shepherd or a pioneer, as one of the largest stakeholders of Ethereum in the network?

>> Sure. Even just taking a step back, we are the second largest ETH treasury company. We were the first. And if you take a step back, you know, why have a digital asset treasury on a token like ETH, you know, which secures all of Ethereum? I think we had a couple of years, maybe three, where BTC dominated the mindshare. And some of it was Michael Saylor, who's done an amazing job over 4 and 1/2 years demonstrating that a treasury can create a lot of value even beyond the underlying.

Part of it was the advent of the Bitcoin and Ethereum ETFs, but like institutional capital coming in to BTC as holders in a giant way. So, the idea of having an ETH-oriented debt is to do a few things. One is it's to accumulate as much ETH as we can for benevolent reasons, and I'll explain in a minute. Two is there was so much block space on Ethereum, and this really really helps solve that. But I think most importantly, you have a group of really interesting and smart people who believe that there is a macro thesis here that Ethereum is going to fundamentally change finance. And I'm talking about Ethereum and the L2s that

derive security. And we've now captured mindshare. We're educating, and we're trying to advance the ecosystem. So, it's more than just financial engineering. It's kind of putting your money where your mouth is. And to answer your question directly, when you're one of the largest holders of ETH in the world, it comes with massive responsibility. You can use it as a financial tool or weapon, or you can use it to influence outcomes, and you know, increase the pace of adoption, and go out into the DeFi ecosystem and find the best protocols, hold them to really high standards, maybe standards they've never been held to before. But when you have stacks of stack and stacks of ETH, you could do

amazing things to bootstrap the bootstrap the ecosystem, but do it in a way that is transparent, and in a way that's risk-adjusted, and bring everyone else for the ride. We want to do it the right way and be a benevolent force in the ecosystem. >> Absolutely. So, maybe you could talk a bit about those standards. When you have stacks and stacks of ETH, one of the most promising and appealing things about ETH the asset is that it is it has potential to be a productive asset. And there's a plethora of applications in which you can deploy this ETH. So, maybe you could talk a little bit about, you know, where you're deploying it, where you plan to deploy it, and what apps can do to try to fit into your portfolio of of where you're

deploying these things. What criteria must they meet? Sure. I have a history, and my history was 20 years at Blackrock. For the first 12 years, scaling financial technology in the centralized ecosystem. You know, this system called Aladdin was basically an operating platform for the buy-side, and the firm did a great job abstracting a lot of the complications of today's really complicated and intermediated financial markets. When we moved into digital assets, we didn't do it by lowering our standards at Blackrock to meet the ecosystem where it was. We watched, we set expectations.

Expectations around how you custody things, how you KYC see things. What are the risks that you can mitigate? And so, I spent a big part of my career raising standards in finance, and certainly in digital assets, not lowering them to where they were. So, in the Ethereum ecosystem to date, Shapelink owns around 3 and 1/2 billion dollars US of ETH. And most of it is natively staked through Anchorage and Coinbase, earning, you know, the typical staking yield. We do have a large exposure in a liquid staking token.

But if you take a step back, the responsibility of a treasurer is not to swing for the fences. First thing is you're really trying to safeguard and protect your asset. Like if you're a king, it was gold. For me, it's the ETH we own on behalf of our investors. But you can build the smartest, most risk-adjusted, efficient frontier of investing ETH through a combination of things. It could be native staking, it could be restaking, it could be liquid staking tokens. You can start interacting with curated vault technologies. You could do OTC trades. You can stay in cash for a bit and find those moments when people need unstaked ETH. Just think about the

unstaking queue right now. It's 39 to 40 days. There's a lot of holders who would like to skip to the front of the line. If you own unstaked ETH, you can collect a premium. So, we're going to end up building a smart, risk-adjusted efficient portfolio staking operation. But to do it, you need to understand there are risks. And for too long, the crypto industry thought everything was risk-free. It's like digital, neutral, programmable, all risks are gone. And that's not the case. I'm glad you brought up the the the staking and the unstaking queue, because this has been the source of a lot of debate on crypto Twitter and and beyond.

And when you're looking at this, I like your framing. You see it as a business opportunity. So, you're suggesting that Shapelink can build out some of its business income as a result of the dynamics that are taking place on ETH, and provide some services that only a company with a large stake of ETH would be able to provide. I'm suggesting we are going to build like a super smart strategic asset allocation. I know it sounds like TradFi, but when you own a lot of assets or you're building for the future, you need to take a step back and say, "How am I going to strategically balance risk?" And then in each bucket, you can make really tactical decisions to allocate to different protocols. You

can be the largest provider of liquidity to protocols. But I think in the crypto world, what we've noticed is it almost feels like every couple of months, there's some opportunity that if you hold this asset, you can help people. And right now, I think there is an opportunity in that really long unstaking queue for people who need liquidity. And they're not looking for 5 million or 12 million, they're looking for real liquidity. And there are a lot of intermediary There are a lot of intermediaries who know who's looking for it. And so, there is some idea of being nimble in this ecosystem, and when opportunities come up, take those opportunities. That speaks to the the crypto nativity that

that I think you and also your co-founder have in Joe Lubin. You know, he was at ConsenSys for a very long time. And there's ways in which you're deploying this capital and looking at the industry that I think only a crypto native would would look at. And and so, even though, you know, you're coming from Blackrock and you have a long, you know, experience and history there, you still see this industry through the eyes of someone with an acceptance of the ideology, and I think that is extremely important for someone and and for any company that has the the asset balance in in the network token that you do. And so, how important is the ideology, the the essence, and maybe, you know, you can

share stories between you and Joe Joe Lubin if if there are any about how you're employing these strategies in the space? Sure. So, let me tell you what I'm ideological about, Um, let me tell you what I'm not ideological about. I don't wake up every morning trying to flip BTC. I don't wake up every morning thinking we need to be bigger or better than Michael Saylor. Everyone will have their lanes. And by the way, if you're a investor, whether you're retail or institutional, there's probably a role for Bitcoin in every portfolio. There's definitely a role for ETH in every portfolio. It's just different.

So, I don't start ideologically that way. And I I think if you instead of using the word ideology, where do I have conviction? Yeah. So, I have conviction that there's a decade-long opportunity where traditional finance um, is going to need to go through a paradigm shift. Not because crypto is forcing them to, but crypto's providing the rails to do something they've never done before. Like not wait a day or two to settle a trade. Like not take counterparty risk for that night or two.

Not take settlement risk. Not to have to post collateral. Not have insurance contracts. Like there's a quote I heard that human trust in the financial system is measured at like 9.3 trillion dollars a year. Because humans are there trying to figure out how to build trust with lawyers and contracts and insurance and risk premium and capital. That what I believe in my conviction is something like Ethereum and the L2s that support it provide a completely different level of settlement and trust. It's programmable. It's neutral. There's no vendor lock-in. And settlement is atomic.

And for people in traditional finance, like we'd be happy if it was in one day. Atomic, meaning it settles in seconds or milliseconds is a huge advancement. So, my conviction is that most of traditional finance and you will end up being tokenized and will end up running on crypto rails. And I think Ethereum is that leading opportunity. The last thing I'll say, and this is really important, is the crypto world is about a $4 trillion market cap. I'm sure it's it varies day-to-day. About 280 billion of stable coin supply. According to Secretary Yellen, it'll be 3 trillion in a couple of years. Most of that runs on Ethereum.

And if you look at the real opportunity, which is tokenized funds and assets, what people like to call real-world assets, I don't know what other assets there are. >> [laughter] >> I live in the real world. But fundamentally, it's so small right now. >> Yeah. It's 30 billion. And if you look at what BCG is suggesting, Boston Consulting Group, this could be 4 to 16 trillion. And before you know it, finance is going to start getting adoption on crypto rails. And we're going to stop talking about crypto crypto. We're just going to talk about digital finance. Yeah. And um, that is my conviction. And if you believe that, now is a great time to own the asset ether. And that's the opportunity we're providing.

People misunderstand how network effect growth and exponential growth happens. It's going to be shocking how quickly AI is part of all of our lives. And it's going to be shocking how quickly there's adaptation to digital workflows on decentralized platforms. So, I don't use that word ideology, but I have deep conviction. And I think that's a long-term macro opportunity. Habachi is fast [music] and private perps trading secured by ZK with Celestia underneath. Go to habachi.xyz [music] to start trading today. Not your keys, not your coins. From the team that pioneered cold storage, Trezor has just released its new wallet. Guys, if you're still using hot wallets in 2025, [music] 2026, you

are missing the entire point. Secure your coins. Get [music] a Trezor at trezor.io. Holiday is unified crypto payments. [music] Give your users more wherever they are. Go to holiday.xyz to never write a smart contract again. How much of that conviction was born out of your time at BlackRock? And And did it evolve as you started to learn more about finance and the direction that this industry was headed? How much of that did grew out of BlackRock? >> So, um, just to be clear, I went to law school. Okay. And I'll say it out loud to your listeners to make my Jewish mother happy.

>> [laughter] >> And I lived through what you call today web one. It wasn't called web one, but it was the first web. And I saw incredible business model change. Like the internet changed everything. And when you have this impactful change, it's very rare in history that it gets it gets adopted quickly. Look at the steam engine. Look at the printing press. Look at the assembly line. Look at the industrialization. It sometimes took like the printing press took a century to change how people live their lives.

You know, diesel engines took decades. Um, the internet took a decade. And I think crypto and blockchain's going to happen much faster. So, I I've learned in history exponential change uh, can come from different places. Look, I was with a great group of people who scaled this Aladdin platform. It has trillions and trillions and trillions of dollars of assets that are being managed, moved at scale like people don't understand. But it's wrapping a really, really bad market structure.

So, you're building a platform of portfolio management, trading, risk, and operations basically because the underlying infrastructure is so complicated, people need a new platform. So, I learned a lot there. At BlackRock, when we were getting prepared to launch our Ethereum ETF, which was July of last year, I kind of went down the rabbit hole. Uh later um, in the year I met Joe Lubin. And um, if you think about change, Ethereum is something that is absolutely fascinating. And because it's accessible. And it's available today and it's programmatic, there's no boundary condition that stops financial services companies from investing and participating. And then

finally, at BlackRock, we did a lot of tokenization research. We tokenized [snorts] a boring yield-bearing fund called Biddle. And we did it on public Ethereum mainnet. And we did it through a great partner called Securitize. Um, I had the pleasure of being involved with that company for almost two years. And when you look at why we chose it, it wasn't because it was the fastest or the flashiest, but it had three characteristics that financial players are obsessed with. Trust, security, and liquidity.

And there are going to be faster chains. There going to be chains that spend more on marketing. But you know, large dollar institutions want to be where there's 10 years of no downtime since the genesis block. They want to be where there's a million plus validators in 84 countries. They want to be where there's a largest development community. So, it's a very long answer to like I got to Ethereum watching market structure not work, launching products to help solve the problem, and then I retired after my favorite years at BlackRock.

Congrats. Thank you. Thank you. Didn't last long. >> No. No. And now you're now you're at Sharplink. >> Yeah. You've gone and tokenized the sharp Sharplink aspect on Ethereum. And this is a trend in which we believe more and more of these assets will continue to be tokenized. You mentioned the Biddle fund. More and more of these assets that exist in the traditional financial world are coming on chain. We're seeing We're seeing this this plight into Ethereum. How long until the entire S&P is tokenized on Ethereum? First, let me start by like why we did it.

>> Yeah. I think you have to put your money where your mouth is, which is if your belief is financial services should exist on Ethereum or in finance. We worked with Superstate. Um, and we worked really hard to do the right thing, which is we actually are tokenizing the same stock that's really boring that you can hold in a brokerage firm. It's not an IOU. It's not a wrapped token. It's a digital representation of the same stock. And that's really important to share because it can then be programmed and you can start using it in DeFi in ways that we had never imagined. So, today most stocks trade from 9:30 in the morning till 4:00 p.m. Yeah. Um, you can

see a little bit of activity at night, but not so much. But imagine that you own a stock like Sharplink. It has yield in the sense that it's staking. It also has capital appreciation. If you own it in tokenized form, you can then put it in a MetaMask wallet. You could lend it. You can borrow it. You could do really programmatic things with a digital version of it. And so, that is what we're excited about. I think you're going to end up seeing The real question is not when you're going to end up seeing all 500 of the S&P 500 stocks tokenized. The question is when the S&P 500 itself in different formats will be tokenized.

And I have a view that for those 6 700 million people in the world who own a crypto wallet, and the first thing they bought was Bitcoin ETH, and then they went down the rabbit hole, they're going to end up owning the Mag 7. They're going to end up owning the S&P 500. And as they grow up a little bit, they're probably not going to own a brokerage account, but they're going to own traditional assets cuz those help solve goals. And so, I I think it's going to happen rapidly. The number one thing is that there's liquidity for these assets and they're not stranded. Was this a similar realization that was was had at BlackRock and in an effort not to be caught flat-footed and essentially skate

to where the puck is going, you you learned some things and you realized some things at BlackRock and and started to adapt its its its strategy. What would maybe the the couple of things that you learned while you were at BlackRock? Just being being there and seeing the way that a mega Goliath of a company operates, what what were some of the things that you learned? Well, I learned a lot of things and I was taught by some of the smartest people in finance who thought in decade periods, not asking what happened in the markets yesterday. And the reason is a company like BlackRock who's a fiduciary, Mhm.

it's not their money. They're managing other people's money to their risk tolerance and tastes and goals. Over 60% of the money they were managing for people was in some way retired to pensions and retirement. Mhm. And someone once told me like that's an incredible responsibility. Why? Cuz if you get it wrong, people don't retire in dignity. So forget about crypto for a minute. Like you're manage managing people's longest liability that they have. It's not their credit card bill, it's not their student um loans, it's not their mortgage, it's that lifetime that they have to live and save for. So if you grow up with that that standard like you always have to do the right thing by the client with the right

standards because if you get it wrong, people's lives are impacted. That's a pretty fundamental view of of what you expect and what clients expect of you. And I'm certain I learned that the crypto community doesn't start that way. Mhm. And this idea that this is a zero-sum game, my protocol wins, yours loses, is just not the way I think about this. And [snorts] we spent at BlackRock, we had an amazing team, five people and seven engineers. We spent years watching the ecosystem, seeing if it was ready for prime time, meaning ready for people's actual investment accounts. And I'm not talking about speculating or trading strategies, I'm talking about buying and holding it

in large amounts. And we eventually realized that there were rate great partners out there, but we raised their standards. Mhm. And when it comes to staking at Shapelink, I'm not lowering our standards. We're going to raise the standards of the industry because if you're a treasurer, you're responsible for investor money. You can't get it wrong. Yeah. So I learned a lot. Now looking to apply some of that knowledge in your work at Shapelink, you know, kind of circling back to an original question that we had, what what are some of the standards that you see that currently apps are not meeting those, the the high standards that you have so that these applications are ready to absorb a lot of this institutional capital. What are those standards? How can we improve them? So just in general,

when people approach us with opportunities and we're engaging with entire DeFi community and there are really really innovative founders and protocols doing incredible things, it's really important that they don't just tell me the return. >> [snorts] >> Right? Like let's talk about what the risks are in a strategy. I know the risks, the slashing risks in native staking is .05%. Like very .05 of a percent and that's if you take all validators, you can do better. But when you're speaking to protocols, I'd like them to explain what they do to review their code base. What's the smart contract risk? Tell me in advance what the protocol risk is. What's the counterparty risk? Is there credit risk

involved? What's the regulatory risk? And guess what? How is it treating how is it treated from an accounting perspective? And you get blank looks. Why? No one's ever had to do accounting in a public company for crypto yields. So I guess I'm not I'm not saying that the standards aren't there, I'm just saying the conversations have to be great, start with the rewards, but let's talk about the risks. I do think over time there's going to need to be um an expectation of third-party audit of protocols, of code reviews. And there are companies that are doing it programmatically with AI with almost guaranteed results. And those companies need to be the saviors of this industry

because it's hard to think of moving billions of dollars to a protocol if they haven't kicked their own tires. And historically in DeFi, the litmus test was how much TVL times how long have I been around times have I had a bridging hack before. That is a good indicator, it's directionally right, but you've seen in recent events that that's not that's not the answer. Um and it's not that we believe that our standards cannot be met, it's just it's people's money. And especially when you're thinking about BlackRock and their their asset landscape, it it's it's money that retirees can't afford to lose. No one is looking and going into this with

with money that they intend to lose. And for the longest time the the the philosophy was like, hey, just don't put in as, you know, anything that you can afford to lose. And it's like, well, look, if we want this industry to grow beyond uh just, you know, toy experimental land, we need to bulletproof it so that it is ready for people that, look, they can't afford to lose this money, but they still have it here because it is the best risk reward adjusted return on on the market. >> Exactly. Exactly. And by the way, there are great protocol leaders and there are some people who are leading with security first. Mhm. It's just the conversations need to be more balanced.

Yeah. Maybe one one last question on BlackRock because you know, this is uh an entity that primarily is increasing its its uh foray into the crypto sphere as the ETFs grow and as some of these financial products grow. What do you think is the upper bound? What how much ETH do you think BlackRock will accumulate? So if you take a step back, you know, there's this movie um where someone built a baseball field in in a cornfield and it was like, if they build it, they will come. It's not how finance works, meaning the reason why the Bitcoin ETF and the ETH ETF were so successful was there was customer demand.

We're not selling these products, these products are bought. Mhm. Meaning there are institutions, it could be hedge funds, it could be wealth managers, it could be direct individuals. But if you look at the public filings, it's like the state of Wisconsin pension fund is buying Bitcoin. And so um I think a lot of it is the upper bound is just what is the interest of investors in Bitcoin and ETH or whatever is is next on the list. But I think we're going to stop thinking about it that way because eventually everything will be tokenized.

Yeah. Um so a stock will be tokenized, a bond will be tokenized, a fund will. Um but the difference is >> [snorts] >> um when you think about an ETF, it can accumulate a lot of assets, but it's not there to fork the protocol. And there's a lot of misnomers and, you know, early in the days when people were talking about BlackRock, they thought that BlackRock owned the ETH on its own behalf and it was accumulating a too large a position and it could influence the protocol. Here, we're holding on behalf Sorry, BlackRock is holding on behalf of many many clients. In fact, in some ways, it's democratizing access to crypto. So it's very different. People have a conception conception that ETF

managers own the assets. It's owned by the clients. >> Trade on anything, economics, weather, [music] sports, crypto, and more. All on kalshi.com 24/7 for the world's biggest prediction market. Yeet is built for big moments. The most fun you'll ever have with your crypto. Go to yeet.com to yeet until your next game. Looking for yield that stands out? Infinitify gives you just that. Deposit stablecoins and earn far more than the current savings rate. Infinitify is a battle-tested, reliable DeFi platform that is [music] ready to go. Head to infinitify.xyz. That makes a lot of sense because as more clients have an interest in in gaining exposure to this, BlackRock will will match that

and provide that. Um I I just to push on this one one I I'm just curious if you think just from your experience, you're not there anymore, so, you know, but do you think there could arise a situation where the fiduciary duty that BlackRock has to its its uh customers would necessitate a fork of the Ethereum protocol? I don't even know how to think about that. I think about it differently, which is there are [snorts] certain products, like certain crypto hedge funds, certain hedge funds, certain small cap funds, they have capacity limits.

Right? Like if you're doing something active in life and you want to get the best return for clients, there's maybe you can handle a hundred million and invest properly and create get great returns. Certain strategies you can handle billions. If you're managing an infrastructure fund, you could have a twenty-five billion dollar fund investing in airports around the world. These type of products that are passive, meaning you're just owning the asset, you're not trading it, you're not trying to outperform the underlying, those things tend to be very scalable.

Like how much gold can you own? Well, you can own as much gold as as there is um in a fund. So I think of it less of like would BlackRock have to fork the protocol? That's a scary thing. The bigger question is can they stake? >> That maybe is more to the root of my question because what I'm what I'm picking up on is a difference between the strategy in which BlackRock is going and the and one that Shapelink is going. Um like you said, Shapelink is is holding Ethereum applications to a higher standard. BlackRock, to your point, is a bit more passive. They're not as involved in Ethereum at a protocol level.

Uh they're simply serving this as almost a custodian and and a gateway for their customers. Is that Is that more of the right way to think about it? >> I like history. And let's not even go back too far. In 2017 and 18, when institutions were interested in crypto, and they were, they couldn't hold spot. They didn't have a custodial relationship. There were no ETFs. So, the way they got exposure was they invested in crypto venture funds. Mhm. And it was kind of a proxy for owning the underlying. And it turns out it actually underperformed the underlying.

And so, the the revolution that happened when these 11 issuers last year on January 11th launched ETFs, and it wasn't just BlackRock was you gave people like a really familiar wrapper. Yeah. And that was great. Uh right now in the US, the ETH ETFs cannot stake. Right. So, you get the exposure to the underlying, but you don't get the productive yield that ETH has. Yeah. It's less of an issue in Bitcoin cuz Bitcoin is a less productive asset. Sharplin or any other Ethereum treasury company will own the underlying, so you get that capital appreciation, and we can stake 100% of it to get that yield for investors. Eventually, the US SEC will approve staking. That's my strong

belief. But, if you think about what an ETF does is it has to provide daily liquidity for people who want out. Mhm. Like, people redeem every day. You need to give them their money back. How do you do that when the staking queue is 40 days and you hold ETH? So, I I believe these ETFs will be able to stake, but a real subset of the total ETH they own, because they can't risk not giving people their money back um the day they want it. And these staking queues have gotten under out of control. >> Yeah. So, it's it's a different product.

Um it's a click of a button to own an equity, but I launched great products at BlackRock with amazing teams with the most trusted brand. Um this is just a slightly different audience and product. Yeah. Okay, got it. That That makes a lot of sense. If you're up for it, I got a couple couple spicy questions. Great. Okay. Um the SEC recently said that there are digital asset treasury companies that had some uh interesting behavior in their market uh d- um previous to kind of announcing these cryptocurrency treasury plans.

How do you react to to seeing this news out of the SEC and generally this DAT mania that that we're seeing happen in the in the markets? Yeah. So, two totally different questions. Um I can't really comment about what the SEC is investigating, but you know, they generally do a good job of policing the ecosystem. Uh and that's actually important. You want regulation and you want enforcement. I joined after Sharplin was started, so I have no view whatsoever. So, it's kind of a no comment. Okay. No comment. Um the the second question about DATs in general, I think people are watching this like it's a tick by tick, and that we're watching this and every day things are

going to change and we're in the you know, use a US uh analogy like we're in the eighth inning or something. We are in the top of the first inning. Yeah. Just to be absolutely clear. Like, people are like, "We're in DAT 2.0." No, we're not. >> Someone recently said, "No, we're not. We're still tying our cleats in the dugout." >> Completely. [laughter] We're We're batting practice. No, no, but we're in the first inning. And what's interesting, I think what you're observing is Michael Saylor has built a reputation and demonstrated that you can provide excess returns to the underlying, not just through financial engineering, but an expectation of growth, Mhm. which is what com- public companies get that holding the the underlying you don't get. I think what's really interesting is my personal view

is ETH is a great treasury asset. Mhm. Why? You have the element of it's a store of value. At times it's deflationary. It has capital appreciation. It has a network effect. And it has a thesis behind it. >> Yeah. Great. But beyond that, it has a couple of things that are a little bit different than Bitcoin. It has more vol- volatility. Yeah. 40 volatility, which means there are a lot of investors who like that volatility. You You can issue equity-linked or convertible bonds. But what's even more interesting is when you do that, remember, you're staking your ETH, earning 3-4%.

If you take out a convertible debt on a really good volatile asset like ETH, you have revenue coming in from your stake that allows you to potentially cover Yeah. your debt cost. So, it's it's a really interesting asset. You are going to see a f- a few things, and I've learned this in every cycle. You're going to see actors going to token number 186, thinking that if they have a DAT on a 200 million market cap token, it's going to increase their value. I don't know if that's true or not. I know it's probably better to make your asset productive and revenue-generating.

Like, be Uniswap. Like, [snorts] be Uniswap. It's got revenue. It's a productive asset. That's a great thing to own and tokenize. If you're token 188, try to do something productive. Just wrapping it in a token or an equity is not going to change your life. And then second is I really hope I really hope that DAT five through 10 on every asset who wants to catch up doesn't do silly things. >> Mhm. Like, go way out the risk curve, swing for home runs in a need to feel like they're catching up or differentiating themselves. This is a risk-return game, and you've seen in every bubble, the dot-com bubble, the mortgage bubble, the sovereign debt

bubble, and multiple crypto bubbles, people swing for the fences, and they struck out. >> Yeah. And like, that should not happen in the DAT space. But, I think they'll be more. I think the ones that have the largest scale and the ones that have an underlying that has the largest market cap will by definition be the survivors. >> Mhm. But, we'll see. It's another way of raising capital. I think a lot of people were looking at the DAT space, and they said, "Hey, when you know, these these MNAVs start to turn into discounts, you know, what's going to happen?

They're They're going to have to, you know, sell their assets in order to repurchase some of these shares." But, that simply just hasn't played out. As I understand it, we were below one MNAV for a period. It's not a fun thing to be, but we did the right thing. Yeah. How does a DAT react to that? >> Sure. I mean, if you're a responsible DAT and you're telling your investors that you're only going to issue new shares through your daily at-the-market facility or you're only going to raise new capital when your MNAV is positive, over one, then what you do is you don't raise capital when your MNAV is below one.

It's actually dilutive. It's a terrible thing to do. The best thing to do is to go out and buy your shares back. We had cash on hand. Okay. We bought nearly 2 million dollar share of share 2 million shares partially to show that this is the most accretive thing you could do for shareholders. So, I'm not in the business of going and selling my underlying ETH, but I had cash on hand that we had reserved in order to buy back shares. Part of it is to show that we're going to be responsible. And then you have to scream at the top of your lungs, "We've never raised capital in an ATM when it's below 1.0." because there's a lot of fud in the industry who believe that you're diluting every day, and that's not true. And I hope others have that same standard.

And if I could plug one thing about standards, >> [snorts] >> public companies generally have to report every quarter. But, most public companies aren't raising capital every day. So, um in the DAT space, we started at Sharplin doing weekly basically a press release followed by a public filing in AK to tell people what we did last week. What do we own? And it turns out that was great. Mhm. But, we ended up doing something better. We built a daily dashboard. You can go on our website, sharplin.com, you can go to an ETH tab, and you could see tick by tick every day our stock price, how much ETH we own. Literally, our MNAV is calculated uh all the time. You can

understand the staking rewards we've gotten. And we talked a little bit about standards in the beginning. Mhm. That is a standard that every DAT should have. Why? Because people are entrusting you with their money. Tell them what you're doing with it, and don't make them wait 90 days. Well said. And Joseph, that's all the questions I have. Thank you so much for joining us uh joining me on the show. It's been an absolute pleasure, and I think you've demystified a lot of misconceptions that I think people have around the DAT industry. So, thank you for for sharing your your wealth of knowledge and experience. >> It's my pleasure, and you got the memo. We're For the listeners, we're both wearing blue navy shirts.

>> Navy blue shirts. So, you know, keep your suits out of crypto. Absolutely. >> Wear a navy blue polo. I look forward to the day, and I said this before we started, where we don't have the word trad fi, we don't have the word defi. It's just finance. >> Yeah. And um there's an amazing th- there are amazing things coming, and it's going to come faster than people expect. So, thank you for having me. >> Yeah, absolutely. Thanks for being here. >> Love this.