🟢LIVE: Crypto Winter Is Over. Nikita Teasing. Crypto VC Reset & Paxos Labs, Project 11 In The Nest

Transcript

[music] [music] [music] Heat. Heat. [music] >> [music] >> Thank you. [music] Lord, we'll see you around the timeline.

Feels good to be back. I think the rollup [music] is one of the most premier media brands [singing] in crypto and Andy and Robbie are great experts [music] at everything they talk about and it's my favorite podcast. >> Adding HMR library potentially [music] multi-chain deployments. We are at day one here. I'm guessing from base. [music] [music] [music] [music]

Heat. [music] [music] Heat. [music] >> [music] [music] [music] >> JP Morgan, Black Rockck, DTCC, Fidelity,

the entire thing was just institutions. It's just it's next level. This industry is going to the next level. And guys, I I don't know what else to say. >> I'm bullish. >> He said it. He finally said it. So bullish. >> It is bullish. I'm bullish. We're bullish. [music] Yeah.

[music] [music] Heat. [music] [music] Heat. [music] Heat. [music] >> [music]

>> Parola [music] is headed to the top. If we're not already at the top, we're going to the tongue. Roll up is my favorite. >> People from all walks of life, all over the world, all over this industry [music] come together for the rollup. [music] [music] [music] >> [music] [music]

[music] >> Zoom out. The institutions aren't coming. They're simply here. It's the golden age of crypto, guys. Get right. Let's go. [music] Welcome to the next. See you on the show. We are back. Back. >> We are so back and spirits are back. >> Is it a bull market or what? [laughter] >> We're about to find out. >> Is it a bull market or is it all just a fake liquidity run to get the boys excited at major resistance?

>> Bouncy balls. Bouncy balls. >> Man, feels good to be back in the tower. Shout out to Plume. Welcome to the tokenization tower. The Nest where digital assets meet finance. Guys, you're watching the rollup. It is April 14th. Shout out to Plume. Let's give Plume some love. The boys are out in Bali this week, but we are at home in the tokenization tower. Rob, it's a beautiful day out here in New York City. >> Beautiful. >> Beautiful is right. Um, winter is over. YC allin on stable coins. Nikita is teasing us. I wonder why. We got VC, Crypto Reset, Paxos Labs with the fundra and the quantum debate today here on the

roll up, baby. Wow. A lot of green on that ticker today, Rob. >> Oh, yeah. Um, >> except for Arbitrum. Damn. RIP, man. Down a percent. Down half a percent. What's going on with Arbitramaton? I didn't know. Dang. Infinity Hedge says next up 90K. Agree or disagree? >> Uh, I'm with it, man. I'm with it, man. I think the crypto winter is over, ladies and gentlemen. Today, we've got Bal Katcha of Paxos Labs, Alex Prudin of Project 11, and Tom Dunle of Varys Capital. It's going to be a good show today. Let's get fired up, baby. We got the new light. We got some more lights coming. We got some more books coming.

The whole thing's coming together for the boys and the girls. Let's get into today's topics. what we got going on here in the tokenization tower. We're live from tokenization tower. Marcus and weather live from New York and from Miami with Rob as mentioned. Paxos Labs co-founder joins the show. Project 11 CEO also joins the show and then Ver Capitals head of venture who put out one of the most viral crypto VC tweets is also joining the show. >> Yeah, pretty insane. I think he got into traditional VC Twitter as well. Excited to talk to Tom. Uh man, ton going on.

Absolute melt up happening. Uh they're cringing the charts on Binance, but uh that is sort of the world that we're leaving behind as we enter this new generation of finance. It's pretty pretty incredible to see Hyperlid and this Colossus piece is continuing to make the rounds and overall uh things don't seem to be stopping anytime soon. >> No, no, they don't. They really don't. I mean, we will see, right? Like Michael Sailor is stretching hard right now. Uh that is what's happening on his product.

>> What do you mean? >> Uh STRC. >> Stretching hard. He is hitting the ATM and using the Stretch product to issue a ton of more debt and to buy a lot of Bitcoin. Um yesterday I think they did almost >> they did a billion dollars. >> Yeah. 700 million or a billion dollars billion product. >> Yeah. >> Biggest buy in a long time. Uh Tom Lee also bought a very substantial amount. the two largest purchases from the two largest treasury companies that we've seen in months.

>> Yeah. Yeah. I mean, huge. And it just it just seems like these guys are going back and forth trying to trying to one up each other. Um you know, who can who can who can, you know, build the better Ponzi is what people are saying on Twitter about this. >> Oh boy. Look, um, if they don't start, uh, contributing to these protocols, building some real productive value, then sure, call them a Ponzi. They're just honeypotss of of capital. Um, I think there's two very clear paths. Uh, I think Tom Lee is already starting to stake and contribute to the security of the validator network in Ethereum. Uh, very soon. I could understand a

strategy, a vault strategy or a DeFi allocation strategy where Bit starts to look a lot more like an Ethereum native investment company. Uh starts to generate some returns uh almost like the Ethereum uh Birkshshire Hathway if you will. >> Yeah. >> Um that's on the Tom Lee Bitmine side. On the Bitcoin strategy side, we know what it is. And you have Alex Prudin. We have Alex Prudin in the tokenization tower today. We we know that quantum is the biggest threat facing Bitcoin right now.

Maybe there's some push back there, but I don't think so. I think people would most likely agree that quantum is the biggest threat facing Bitcoin. If Sailor can rally the troops and put together a squad that can help push through either a Bitcoin soft fork, some sort of security best practices or quantum resistance in the Bitcoin algorithm and actually get some contributions through. That is where I think we could see um we could see Michael Sailor actually making some contributions, bettering the protocol itself and not just being a Ponzi. Uh, so I'd love to see Sailor contribute in this way. I think this would pull them out of Ponzi territory, put them into the productive capital

territory and ultimately make some very meaningful contributions on both the Bitcoin front for Michael Sailor and the Ethereum front for Tom Lee. Fact of the matter is coins are going up and uh that's what matters right now. So we will see how these things progress. Today's topics are powered by Treasure. Use code rollup10 to get 10% off your treasure hardware device. I saw there was a potential exploit on cow swap. Uh and so you guys want to make sure that you're protecting yourselves both on the contract side. Revoke any approvals that you guys have. Be better to be safe than sorry. Uh and then also on the hardware side, make sure that you are protecting yourself. use hardware wallets and

specifically use the code rollup 10 to get yourself a new treasure. Uh so that is what we're gonna be talking about on the show. We've got Paxos Labs co-founder. They just made a big announcement. Uh they also unveiled some new branding. Uh we've got Project 11 CEO talking about Quantum, how Bitcoin should should face Quantum, especially in the light of the new announcements and optimizations from Google and Justin Drake. And then obviously Varys Capital Tom Dunle is going to join the show and we are going to get through this viral post that he had and everything happening in the VC ecosystem. Seems like there's a lot of back and forth guys. Let's keep going.

>> I'm back. >> Shout out to Frack, the Genius compatible stable coin. Absolutely incredible. Frack is doing incredible things in the stable coin world. This is the cornerstone and the pin that underpins the entire tokenization thesis. Andy knows, I know, all of us know. It starts with stable coins. Then we get tokenized treasuries. Then we get tokenized equities. We work our way down the risk curve. We tokenize all the way through. All of these become onchain. They go into your favorite protocols. And then we really begin to rerate the valuations of onchain applications. This is what I'm >> 80 degrees in the tokenization tower.

>> That's not trench coat weather. >> No, it was uh short sleeve weather this morning here. Nice Chelsea boots, walk-on. Going to go meet one of those institutional folks later today. So, I'm going to wear this outfit with my nice tucked in shirt and all. went to the Salana Summit yesterday in a beautiful building in Brooklyn and had this 360 view of Manhattan and of uh Queens, if you will, and just kind of looked over. It's pretty epic. Um only saw two two crazies walking to the office today. So, that was a that was a that was a good sign. Um shout out to Relay powering our weather. Let's give him some love.

Relay. Bringing in the best crossing swaps in the market. Let's get off the weather. Let's get to the markets. People want to hear about what's going on in the markets. What we think is happening. People are trying to buy hyperlid under 40. I don't know if you're going to get it, ladies and gentlemen. Slight rebound in the equities market. Looking like the S&P is going to go to all-time highs. I think so. Uh oil's done. Oil's topped. You heard it here first. Oil's done. Sure. The inflation concerns could be kept alive. I think oil's done. Rob, the top is in for oil. You heard it here, guys. I think it's pretty firmly accurate. The top is in here.

>> Um Kevin Worsh just also came out, Rob. >> Yes. >> And we've come to find out that he is an early investor in Poly Market in Lighter. He he was in optimism Salana. This is This guy's a crypto legend Fed share. I mean, come on. I mean, come on. >> Yeah. >> I mean, pretty excited about that. >> Well, we're going to see how it plays out. uh this guy was uh hawkish compared to the other uh consideration that Trump was making. However, now that it comes time for him to unveil some of his personal holdings, people are realizing that he's got a soft spot for crypto.

Even if it means he's hawkish in the rate environment, we could see some very friendly regulation because remember, you know, the Fed's got a dual mandate, but they are also in charge of some regulatory landscapes when it comes to how these markets are regulated. And so uh yes we might see some slower pace of rate cuts but ultimately I think that's where things are trending. Uh we can check poly market to confirm uh but then also when it comes to how prediction markets how some of these things are integrated into the global financial ecosystem I think we could see a soft spot for crypto. People are really excited about it. Yeah, I mean maybe. I mean, I think what's cool about it though is like yes, definitely soft spot for crypto. Definitely interested in it.

But I saw a tweet that was like Kevin Worsh knows you need to hold risk to get paid. And that is the most bullish thing about this Fed share is that he knows you need to hold risk, get paid. Um, and this is the same guy who might have on Thursday who's been uh absolutely deep into PER, uh, the hyperlquid DAT from David Sheamus that we had on the show. Uh, I remember when David Sheamus left, I was with Aon. We were talking about maybe sending that thing to $25. He said he was going to be absolutely just stoked if that thing hit 25. Um, it's at 650 today. It's on.

So [laughter] >> there we go. $9, Salana 85. ETH pushing hard getting calls about that now. Uh, Bitcoin 75 near under that 1.4. I'm putting my Zama hat on today, ladies and gentlemen. This this thing is trading over 35% up today. Shout out to Zama. Privacy encrypted transactions and tokens all on Ethereum mainet. Also, number go up technology today. Shout out to Zama. Shout out to our digital assets market prices today. Ladies and gentlemen, >> I got one more thing that I want to add to the digital asset market prices presented by Zama. Uh this I don't believe is on our run show, but there was about when whenever that this

conflict arose maybe about a month or two months ago, um our resident macro analyst Arthur Hayes put out a piece about how the Iran war could potentially uh lead to more money printer go burr. >> Okay. >> Yesterday, last night, Trump announced a 1.5 trillion I believe that's the number. might want to fact check me on that, but I believe it's a $ 1.5 trillion dollar >> uh military package. >> This just comes directly from the money printer. In that piece that Arthur put out two months ago or so, whenever this this conflict initially started, he said, "The longer this goes on, the more likely that the money printer goes burn.

People are all, you know, we want this conflict to to to, you know, end." And look, you know, no one's a fan of people dying. We want we want the dying of people to stop, right? But economically, when these two these two countries are in tension with one another, we've already gotten over the initial oil go up, markets go down. The market has disassociated from this reality. And I think the Catrini research piece really put this in perspective and laid out a thesis for why oil can continue to go up, but markets can also continue to go up. These two things are not mutually exclusive. In addition to oil and markets going up, we could see money printer go burr as a result of Trump pushing through some military aid

packages. And Arthur was on the money two months prior. The guy gets a lot of slack for being a boomer in this market. People think he gets everything wrong, but I continue to think he's one of the most prolific macro analysts out there today. Ladies and gentlemen, our armchair resident macro expert, Robin. >> Everything I know, I get from Arthur. >> Hyperlquid, baby. Let's go. All right, let's move on to some of the news. Before we do, let me tell you about our premier AI partner. Near near.ai, the blockchain for AI, native applications, the agentic future, the execution layer for AI onchain. If if anyone's going to bring AI on chain,

it's going to be M. It's going to be Ilia. It's going to be the co-author of the Transformer paper. >> Let's get into the news today, guys. >> Builder advice from Kane. >> Build for the agent 6 months from now, not the agent today. Kane sat down with Robert Sagertton from the Fogo team to talk about how the old world doesn't exist anymore and what it takes to build for the new one. Let's play this video and hear what Kane has to say. fact like build for the agent six months from now, right? Not for today. The agents are still a bit too dumb to work all this out in real time and balance

the user trade-offs. Like they're like the smartest agents can do it, but it's very expensive. And so it becomes prohibitively expensive to have Opus like deciding you, you know, your $20 ETH transaction whether it should be private or not, right? Because it's going to cost you $5 for Opus to like reason about that. Um, but Haiku it costs two cents, but it's just like a little bit too dumb, right? And so we're like almost not quite there. Um and and so you know in let's call it two generations of models haiku is as smart as opus and it costs two cents and it can reason about it. And so the goal then is to get out of the way of the agent. Assume the agent's smart. Assume

it can figure it out and give it access to all of these things, all of these tools. Give it a uh a harness where it can um have persistent information about the user. So it learns the difference between you and I. What you like, what I I like, what the differences are. Some things we do the same way, some things we do differently for different reasons at different times, right? Um so you have to give the agent the ability to learn about the user so that it can actually do the thing that the user wants. Um give it access to all the tools. Um and you need to be flexible enough that no matter which agent it is that is the best tradeoff of cost etc that you're routing

to that agent in real time and and you know the system understands the trade-off space of the different agents. Um so that's like directionally what I think you need to build to solve this problem. >> Wow. Yeah. >> So >> I I I think you know a as we think about what the next couple of generations of models could look like, there's already open source models today that are I I mean just incredibly intelligent and can can make incredible in incredibly informed decisions with very little cost. And this is why uh in ironclaw you see this mass migration. Originally

everyone was using claude. I think you were also using claude originally for ironclaw. Then, you know, you have Kimmy K2 and and that is starting to get more and more market share from more of these agents. I'm also curious how open source is going to play into this, whether that is going to be a leader when it comes to these models. But ultimately, I think Kane is right. I think building for the smart there's going to be there's going to be the the frontier of intelligence and affordability. And I think that's what Kane is saying here. We should build for that frontier. Don't limit what you think the agent can do because by the time you ship product, the next model is going to be able to do it and it's going to be able to do it at very affordably. Uh so what you currently

think is prohibitive cost is no longer going to be prohibitive. >> Yeah. I mean I've experienced this firsthand, right? where like you're you're switching your Opus to Clawed Sonnet in Open Claw and you're like firsthand seeing the difference in the just reasoning and like the the removal of like the lack of back and forth that's required on Opus 4.6 versus Sonnet 4.5. completely different models.

And when you go to the API usage, the amount of money you spend on Opus versus um the amount that you spend on sauna is insane. Like like the difference is is absolutely insane. Um and so yeah, I mean look, I'm personally just excited for this. Like I'm excited to get to a place where the amount of capital that you're spending to get an Opus 4.6 six like response today is that of spending like a sonnet 4.5 model. So >> these things will get better and they will get more affordable um as these these models continue to come out. Um and I think that's that's the takeaway here. Also, if I'm a builder, I'm

building for I I'm not building for humans anymore. I think that's a huge takeaway and we've continued to talk about it. Build in real life experiences, build hardware. These things are built for humans. But when it comes to software, it's increasingly visible that the main modality in which we're going to be transacting and not just transacting, but navigating the internet is going to be via agents. And so if you're building a software business, you should build with agents in mind because those are the target customers going forward. >> 100%. All right, guys. Let's move on from Kane. Shout out to Kane. Um, the next UA the next UX layer will not be humans clicking. It'll be agents executing flows and apps. It's good to see infinex

believing in this taking part in this building with this in mind. >> Trump White House admin just said Bitcoin and crypto market structure will head to the Senate vote in the next few weeks. We are almost there. Very bullish for clarity. This is from Patrick Wit saying that the next few weeks is what the committee advancement timeline is looking like. Key progress being made. Mix of optimism and regulatory clarity here. also pessimism in terms of we've heard this a lot. Let's hear what Patrick has to say here at the NYSC with CoinDesk.

>> Market structure passed before that >> optimistic and I'm I'm mindful of the fact that it feels like a lot of times I get asked that question and it's like we're almost there. We're almost there. It can be a little bit discouraging but um again cautiously optimistic. We've made a ton of progress over the past couple months. This is a complicated piece of legislation and so it's not surprising that it's going to take a long time uh to close out the issues. We obviously had two committees of jurisdiction. We advanced the bill out of the ad committee and now we're just closing out the remaining issues on the banking side. So, uh we're hopeful that we're going to be able to get a markup this month uh in the next few weeks here. So, uh more work to be done uh when we finish here. I'll go right back

to it. But, um I'm very hopeful that we're going to be able to advance the the bill to the floor here in the next year. I mean, I was thinking and hearing that it was going to be maybe more like this week. Like, I was expecting um to get this mark up. The way that Cynthia Lumis was tweeting was suggesting that it may be this week. Um but again, we've heard this timeline so many times now. I mean, how many times have we heard the this week timeline? >> You know what I mean?

>> I Yeah, I don't have much to add here. where we get another one of these videos seemingly every couple of days. >> Yeah. It's honestly just like annoying at this point. >> It's like either pass it or don't, you know, but don't don't say that it's coming. The these politicians are like they're like the old announcement of an announcement. Bill L1 founder. Yes, we have something coming. Something big week this week. >> It's coming. Yeah. Okay. All right. Let's move on. >> Patrick Wit, ex player at ex quarterback for the Saints. One of the best quarterbacks of Yale University of all time.

What do we have here? The >> question isn't whether quantum computing will impact Bitcoin. It's whether today's systems are built to adapt when it does. >> We're gonna have um Alex Prudin on today. I'm actually I'm actually going to add him. I'm going to ask him about the Stretch product for sure. Um CZ notes that crypto will evolve with quantum computing. If we scroll down, I think there's a clip here um that suggests that there's going to be upgrading of network security. um a net networkwide fork. Let's hear what CZ has to say here on CUPN.

>> How are you thinking about the risk of quantum computing to the cryptocurrency ecosystem broadly? >> Um I think there's some risk but I think overall though um any technology improvement is always going to be good. More computing power is good for crypto. So uh quantum may break the existing encryption mech mechanisms but with quantum computing there's probably new well there will be new encryption algorithm or there are already quantum approved u uh encryption algorithms that quantum computers do not have an advantage to crack. So we just need to upgrade the protocol to use those encryption mechanisms. Also more computing power with quantum that's probably newer encryption mechanisms we have not even thought about >> um that we can use quantum to encrypt

and decryption is always going to be much harder. >> How are you thinking about the risk of quantum computing? >> Yeah. I mean I mean if I mean look Yeah. I mean are they really going to upgrade Bitcoin? Like are they really like like Sailor said the same thing, right? And I actually saw this tweet that was like, "Sailor's appearance on the Bankless podcast did more for Sailor and Bitcoin than any previous podcast, like a Bitcoin maxi podcast because and and this person, I think it was like Eric Wall or or Udy and called them like the low IQ or low IQ concern takes um from the from the ETH side and um just

kind of showing that there's like these concerns and I don't know, it's kind of like the same thing here where it's like these concerns are real. Of course, Sailor's going to tell you that they're going to upgrade. Do I believe him? Do Do I believe that Sailor has any power over the ability for Bitcoin to upgrade? I I I I don't >> really >> um Sailor Sailor's one of the largest owners of Bitcoin. Who's >> who would have more power than him in the Bitcoin protocol? I I don't think Sailor could singlehandedly influence Bitcoin's protocol developers to do anything. I I think people can be bought with money and I think Sailor has a lot of money and a lot of Bitcoin and therefore a lot of power in the Bitcoin

protocol and I think he can uh effectively uh grant researchers a significant amount of of Bitcoin and I think he those researchers would then if they're very Bitcoin aligned look the the researchers want to upgrade they don't want Bitcoin they don't want Bitcoin to fail they don't want Bitcoin to fail the oifiers are the ones that are very conservative. These are the large institutions. If anyone's going to be strong oification, pro oification for Bitcoin, it's going to be Sailor. If Sailor saying, "Hey, we need to upgrade this so that Bitcoin doesn't fail," then he's he takes that right right there. He can go to the researchers. He can say, "Look, I have the firepower. I have the

clout in this Bitcoin protocol, and we can team up with the researchers to push this through." >> Yeah. I think the the quantum problem for Bitcoin is not an engineering or a research problem anymore. It's a political one. And I think there needs to be some alignment within this pol political regime of Bitcoin right now. We tal we we thought through this when it came to OPCAT, right? We did an entire Bitcoin series about what that was going to look like and we we were thinking through, you know, uh what what you know the taproot wizards and some of these cabals, right?

It's very like faction related, very tribal within the Bitcoin ecosystem. None of these parties want Bitcoin to fail. I think if there's some rough consensus that can be reached and there's an upgrade path that is very safe and there's a lot of development resources put behind that research path to ensure its safety. I do think that we will get an upgrade and maybe that's aspirational, but none no one wants Bitcoin to fail. That would be terrible. >> Yeah. Look, I just I don't know that the Bitcoin devs are going to just bow down to Mr. sailor cuz he's trying to keep his Ponzi alive.

>> I mean, the Bitcoin devs want to keep their Ponzi alive, too. >> And so do the miners, don't they? All right, guys. We've got Bow Coach coming up from Paxos Labs. Um, they just announced a $12 million raise in an Amplify product. Um, so it's going to we're going to just break this and just talk about what's going on uh with BA with Paxos Labs, a company that spun out from Paxos in 2025. Builds infrastructure for onchain finance, stable coins like USDG0ero, custom stable coins, DeFi yield products, and more. Um, he's based in New York as well. I think he just left actually. So without further ado, I think it's time to bring Bal up.

>> Let's bring him up. Let's congratulate them on the raise and give them some love. Let's give B some love. Congratulations on the $12 million raise. Um, welcome to the show, man. It's good to have you back, >> Robbie. It's great to see you guys. Um, thanks for having me. And first of all, I'm sorry I'm not in New York to see your new studio. I just happen to be traveling this week. Um, but I will be back and we got to hang in that fresh new studio you guys have got going up there. Yes, sir. >> Busy week for you, man. Busy week. >> Yeah. tell us a little bit about it. >> Yeah, definitely. Well, thanks again for having me on. But um as you mentioned, we announced um the launch of our Amplify product suite which is really focused around building financial

utility around digital assets. I'll talk about that more in a second, but the second part of the announcement obviously was um the strategic fund raise led by blockchain capital. Um you know, obviously this isn't a traditional venture round. we've been kind of incubated within Paxos and kind of been thinking and developing this product for a while and so um we did want to bring on some strategic investors that would help us grow in the ecosystem but on Amplify I think um the origin story is a little bit helpful here potentially right um I I I spent three and a half years at Paxos uh across the business looking at things like uh stable coin issuance white label stable coins right so we did the Binance stable coin PayPal stable coin back in the day now issue USDG on the behalf of the global dollar network which includes players like

Robin Hood, Kraken, OKX and others. Um and then you know the other side of the business was enabling crypto trading so access to trade bitcoin ETH in in embedded platforms right and so >> uh one of the things we spent a lot of time thinking about and talking about was hey this whole kind of like call it enterprise crypto 1.0 0 was all about enabling access, right? I remember in 2020 when PayPal first enabled crypto trading um via Paxos, you know, it kind of triggered this huge bull run where it was like, hey, like now everyone's going to be able to access Bitcoin and ETH and all these crypto assets. Amazing. But, you know, for guys like yourself that have been in crypto for a while, if I told you, hey, five years from now, every major institution will offer

access to crypto assets from JP Morgan to Interactive Brokers to everyone. But all you can do is buy and hold. I think we would look at that and be like, that's a failure. That's not the mission of kind of crypto and decentralized finance and what we believe can happen with digital assets. And so, what we were looking at at Paxos was, hey, this is great. A lot of people are starting this first step on their journey. who's going to enable them to take the next step. How do we actually enable financial services and products on top of this base layer of access and digital assets? And that's what we're trying to do out of Paxos Labs with our amplify product, right? Start with enable yield, start with enabling you to borrow against your assets, enable platforms to put their branding on their assets, right? Kind of that next set of

capabilities. And we have a lot more planned which we're excited to share in the coming months and and years. But that's kind of the origin and what we're working on and we're we're super stoked. >> Incredible. And so, you know, what I I I saw the announcement and I I thought you guys framed it incredibly well because the question of what's next, I think is what a lot of people are starting to ask themselves and and that's the one we should be asking. Ultimately, we have this tokenization thesis. It starts with stable coins and then it quickly goes down the risk curve until everything is tokenized. Treasuries, uh, tokenized equities, all of these things, real estate, credit products, all these things ultimately come on chain. The next question is, hey, what what now?

Once those things are on chain, our belief is that they end up in these same DeFi primitives, these protocols that we kind of know and love. They've been battle test and resilient over the last few years. Now, they're ready for non-cryptonative assets. And that's the tokenization wave that's coming. And so, help us understand this amplify product. Is it essentially, you know, kind of an enablized enablation layer? uh you're enabling all of these different you know Paxos stable coins to get yield to be used in DeFi. How how might this look?

How can customers start to get involved with what this could with what this could mean for their assets? >> Yeah, totally. And so right now the primary customer that we work with is someone that's already started with crypto, right? They're offering their end users to maybe buy and hold stable coins, buy and hold Bitcoin, ETH. Um now the thing that we're immediately want to enable uh help these platforms enable is well yeah how do you earn yield on these stable coins right how do you deploy them onto onchain protocols in a safe way and I think the really specific thing for us here is yes we're abstracting away the need for maybe a non-cryptonnative enterprise to integrate smart contracts and all that stuff but we're also helping them kind of integrate this in a way that they understand from a risk and compliance

standpoint right we can go into these rooms especially taking our decade of experience transform paxos and really understand how these enterprises look at kind of risk compliance legal all those things and help them structure an offering around that right I think that is the piece where I think we're really trying to bring together like this dream of decentralized finance and permissionless protocols and all the amazing things that people have built over the last 5 10 years in the space but bringing it into in a package that makes sense to enterprises right how do they enter this in a safe way how do they enter this in a way that they stand. So, we're starting with the yield on stable coins, right? Helping people deploy into onchain protocols. Um, but not just Paxo stable coins, right? And this is part of also the reason that, you know, we made sure this was a

different entity. Look, our customers want to enable all types of stable coin holdings, right? Some people hold USDC, some people have USDG, PayPal stable coin. It's all about serving the customer at the end of the day. And and you know, we're going to be um neutral infrastructure from that perspective. And look, if it's USDC you want to work with, we're happy to help support you there. Um that's kind of our position as a neutral infrastructure provider. I think the next step here is for anyone that's offering crypto trading, right? It's like how do you actually use those assets to go borrow against them, right? And similar thing where it's like, hey, I hold Bitcoin. How do I actually go borrow against them? And how do I do it in a way? How do we create guard rails here that um make it feel much safer?

Right? If you've borrowed on chain, you know the like waking up in the middle of the night and being like, "Oh my god, what's the price of my collateral?" Right? How do we put in the guardrails so that you don't have kind of the average consumer kind of sweating all these details? And so this is kind of the stuff we're doing with our partners to say how can we enable these financial services for your users in a much safer compliant risk mitigated way. >> Yeah. And Bo, when it comes to actually on the on more of the raise and the finance side because I know that we're going to get, you know, deeper into the tokenization and kind of product side here. is something that I think that the audience will want to understand is two things. First, what do you kind of plan to do with the 12 million? What is that

going to enable you guys to be able to do that you previously weren't uh either able to or were looking to expand upon? And then, you know, why blockchain capital? What do they bring to the table that other investors uh you know, you know, weren't exactly privy to? >> Totally. So I think um on the on the first front of where we're going to you know use the use the raise for um obviously on one is on the go to market side right how do we continue to kind of help customers understand um what comes next help them answer this question and have the right folks that can guide them there um you know I tell people when we talk to customers we probably spend 10% of the time talking about our product itself it's like 90% of the time is

helping them understand this journey that they should be thinking about and it's a lot of kind of like at the education phase, right? And then it's about like, hey, here's how we can help you take this to go on this journey. Um, but I think the second area that we're planning to um invest here is additional R&D, right? Really understanding like the existing protocols that exist enable certain use cases and we can put guard rails around them. Are there primitives that we need to build ourselves that have some of the guardrails built in, right? Whether that's privacy, whether that's certain types of risk things, whether that's certain types of off-chain collateral being enabled, right? That's where we're really spending a lot of time on the R&D side, right? Existing protocols, we can build around them. Are there net new things we

need to build all the way down to the primitive layer to actually enable um our enterprise customers to have the experience that they want. >> On the blockchain capital side, um so they were actually an early investor in Paxos, so about a decade ago, right? And so one of the things I think that resonated with us and BCAP immediately when we spoke about what we were thinking here is they immediately got it. I I really feel like you kind of have to have been thinking about crypto and stable coins for a long enough period of time to have arrived at this question as well right and so because BCAP has been involved with Paxos for so long they've also been thinking about these questions and have been along for the journey. And so I think we aligned so clearly on the vision and for them it

was as obvious as it was for us and so they became great partners and obviously I almost think of uh BCAP and and Paxos as kind of similar parallels, right? Um investors and an infrastructure fund that's been around for a decade in a space that's very young, right? Um so I think there was a natural fit there and um obviously we love the team uh at BCAP and and work have worked closely with them in the past and are excited to continue to do so. >> Yeah. Um, you know, Bo, you you've got quite quite the background uh in fintech because uh you know, you you spent some time at Square also uh I believe four years there and then also at Cash App for a year before joining Paxos and kind of continuing on a more focused journey within stable coins. I'm I'm curious as

you're thinking about some of the go to market plans for Amplify and generally how you've seen the adoption of new fintech uh new technologies within this space, you know, at Square. it, you know, how did how does that inform your perspective now and where you see stable coins going and how Paxos Labs fits in? >> Yeah, totally. And I think, you know, maybe that's helpful context as well is my journey to Paxos, uh, was very much informed by insights that I had in my fintech career, right? Um, while I was working at Square and Cash App, uh, it became increasingly clear like, hey, again, that's kind of in my mind like fintech 1.0, like call it 2010 to 2020.

um they they were enabling a better user experience. People were going mobile first. It it was great. There was a lot of innovation that was happening there. But if you actually sat inside those organizations, you saw the pain that the enterprise build is internalizing on behalf of the user for building on traditional Rails, right? The payment operations teams we had, all the manual processes we had to do to make the user experience better. After looking at that for almost six years, I was like, you know, this kind of front end innovation is amazing, but there's got to be an upgrade coming to the back end, right? There's no way that this is going to continue this way. But the key thing there was I noticed at on the Square and Cash App

side how hard it is to do end consumer acquisition, right? Even or end merchant acquisition. And and the thesis that started to form for me was there's going to be a back-end upgrade, but it's actually probably going to be invisible to consumers, right? And that was very much the perspective that Paxos had like how do we enable the cachups of the world to upgrade their back end? How do we enable the venos of the world to upgrade their backend? The consumer experience doesn't change. Maybe it gets better. It's cheaper, faster, maybe, right? But really the problem you're solving for these fintex is for the enterprise itself, right? because they are taking the pain of building on legacy rails and we're helping them upgrade, right? And so I think that's what brought me to Paxos, right? It was very much like that vision of there's a

backend upgrade coming, someone needs to do it in the right way, in a regulated way, an enterprisegrade way. Um, and it's likely going to be sold directly into the existing financial institutions. And so that was a lot, you know, the the journey, all the dots connect together looking backwards, but it was very much kind of like, hey, this is where where the world's going and um it's what brought me to Paxos and and led me to um uh launch Paxos Labs. >> And and how much of the stable coin trajectory now would you project is going into this direction of hey, we're going to upgrade fintech 1.0, Paxos and Paxos Labs, you guys are already doing great work with PayPal like you had talked about earlier. You know, you mentioned Cash App is another one of

those fintech 1.0s that can get their backend upgrade upgraded. And then we've also sort of got this cons concept of remittances, payments, kind of these like, you know, userto stable coin use cases. Where do you think this shakes out? How, you know, what where is the market really valuing stable coins? >> Yeah. So, you know, maybe I'll I'll give like a um slightly hot take here where um I actually think the pay the payments >> use case for stable coins is kind of boring. Like sure, it's faster, it's cheaper, great, let's do it. I think there's a couple things people fail to internalize when they look at maybe cheaper payments or faster payments.

when you send crossber money do crossber money movements or payments in general what people like to compare is today's all-in cost of like the legacy rails versus like hey look I can spend a dollar on Salana for a penny or a quarter of a penny but people don't realize where the cost and payments actually come from right it's compliance and fraud and all the things you need to do screening like anti-moneyaundering that's where the cost adds up and so I think we're yet to really see the like what is the true apples to apples comparison I still think it'll be cheaper. I think it'll be great. It'll be faster. Um, but I I I do think the more interesting thing around stable coins and digital assets is well, what are the financial services that people

previously couldn't access that they now can? Payments is a financial service, right? And and maybe some people are left out of that and we should expand that and make it better. But I think about things like credit markets, right? who can't actually get access to credit today because the structural limitations of who gets in and who's allowed out, who's not allowed in, right? And so stuff like that is really interesting. Another example I'll give is like, hey, there's there's a entire markets around um you know, commodities trading and commodities leasing, right? Those are only available to institutions, right?

Well, why like right like how like starting to think about these things around there's a whole category of financial services that people just cannot access. And I'm not saying like, you know, consumer in Africa. I'm saying even the most sophisticated US investors can't access, right? And so, um, that's where it's really interesting to me. I think stable coins for payments, it's going to be great. It'll be an upgrade, exciting, great. But the real like mind-bending stuff will happen when it's like people are getting things that they never could actually access before versus something that's maybe a little bit faster or cheaper.

>> Yeah. But isn't the business model of payments where there's a lot of um opportunity on the margin, right? Compared to kind of like savings or compared to like storing value, like isn't that the big allure for um you know, kind of disrupting some of these credit card companies, disrupting some of these traditional payment networks? Isn't there just a lot of a lot of profit on the margin being optimized by these payment networks that you know theoretically stable coins and you know blockchainbased uh payments would kind of allow to disrupt like that's kind of that's kind of where the excitement is.

>> It is right there's definitely a huge opportunity there. Um the thing I'll say is and again I don't want mean to underell the opportunity in payments. There's opportunity there. there's there's margin improvement to be had. Um, but I think the reason payments is often top of mind for people is because it's most the most part of their day-to-day lives today. It's the most like obvious thing to look at. And sure, payments huge market money movement. There's a lot of value that could be captured there. But I think people fail to realize like, hey, like how big are some of the other markets, right?

There's hundreds of trillions of dollars of assets across global credit markets, across commodities markets, across real estate. There's all this other stuff that I think people just haven't quite wrapped their heads around around the potential there because again, like payments is the existing business model. So, it's very easy to look at it and be like, okay, we can improve that, right? I think there is a kind of a net new set of asset classes that are going to come on chain and then there's going to be utility that's built around them, right? um you might be doing payments on assets that you could never do payments on before, right? So like what does that look like? Right? And so um >> I don't mean to underell the opportunity in payments, right? There's definitely something there. I spent half my career in payments. There's a lot of there's a

lot of areas to improve. Um but it's more like the reason I kind of um try to like tell this story is I don't think enough people are thinking about like what else is there, right? For stable coins and digital assets, right? It doesn't stop at payment. So I think there's a long road to go ahead. >> Yeah. Yeah. Um so kind of thinking ahead into this future world where we will have a lot of tokenized assets on chain whether they be kind of on the equity side, on the T- bill side, on the stable coin side. Really just kind of like putting ourselves a couple years in advance here. You know, we're going to be over a trillion dollars in total stable coins. Likely continue to be led by Tether and by Circle. we're going to

have a lot more equities trading on chain led by hyperlquid other perexes and even spot markets as well. Um it's just like this entire world is going to look a lot different uh onchain specifically than what we're used to. It's going to, you know, it's going to rival non-crypto asset trading and speculation and activity on chain in a tokenized form will likely rival that of uh traditional crypto asset uh activity onchain on exchanges uh just at at large. It's kind of a popular opinion now you could say. In that world, in that future world, where is Amplify? What is the Paxos Labs kind of uh uh point in that world? what

what space do you aim to kind of take up and provide for the market? Let's look 18 to 36 months out. What's the vision here? >> Totally. So, I I think the the vision that you laid out here, right? Like, okay, we're at trillions of dollars of stable coins and trillions of dollars on on DeFi protocols. Amazing. Uh I think the biggest change that is going to take place over the next 18 to 24 to 36 months is where that capital is coming in from today and to date. A large percentage of what you see in the stable coin volume and trading volume and kind of the onchain activity are really still the early adopters.

>> Yeah. >> The people that like the people that we talk to that are like comfortable getting a Metamas wallet, getting a Phantom wallet, going and doing some of these things, right? When you think about that pool of people as a percentage of kind of the global capital market, right, it is a very small percentage. And when we think about our amplify product, it's like, well, how do we make it easier for the 50 million users that use, you know, Venmo Cash App or, you know, the tens of millions of users on New Bank or even some more of the kind of enterprise platforms, right, where they're actually serving businesses on the other side.

How do we help them tap into this, right? because I think the size of the market there is much much larger. Um I'll give you an example, right? If you look at some of the largest US-based brokerages, right? Kind of like maybe the the Vanguards and the Erades and the Schwabs of the world, they're sitting on like a hundred billion dollars of capital at any given time more, right? Like if you if you're looking just at cash, you're talking about tens to maybe hundred billion dollars. If you're looking at equities, it's trillions, right? And so now it's like, well, how do we make it easier for those platforms to start to connect into these markets, right? Because, you know, if one of these brokerage platform said, Gary, I have hundred billion dollars of cash on platform. I'm going to flip that to

stablecoin. That's a 50% growth in the stable coin market cap overnight, right? And again, obviously, it wouldn't happen in a one fell swoop like that. But it is like conceptualizing the opportunity where it's like it's actually to come from these existing platforms that have distribution. And so for a lot of what we're talking about with Amplify is how do we enable those platforms, right, to connect into stable coins, onchain markets, protocols in a way that meets their kind of enterprise requirements, right? So really we're kind of combining two or three things here with Paxos Labs and Amplify is deep experience in stable coins and crypto and DeFi, right? With deep experience in building for enterprises and regulated institutions, right? And then bringing kind of all of

that together in a single package that enables them to go right. Um and so I think those things together I I think you know takes us to 10x easily over the next couple years. >> And and what is the plan for distribution? Is it you know try to get consumers directly onto an amplify app? Are you guys going to be looking at centralized exchanges other NEO banks to distribute these earned products? Yeah. >> How how are you thinking about this? >> Yeah. So I think from this perspective right I I think we're very similar to Paxos in that we are a neutral enterprise infrastructure provider right we do not compete with our end customer or with our customers for end users we are enablers for their platform right and so we aren't necessarily bu building a direct to consumer product this is very much meant to be distributed

directly via enterprises instit institutions and platforms um and again I think this is a really important part of our strategy right and and this is a question that people probably have asked on the Paxo side is like, hey, you've been around for so long, why not build direct to consumer products, right? >> Yeah. >> And when you are an enterprise selecting an infrastructure partner, >> it is very unsettling to say to to to feel like, hey, these guys might actually turn around and just take my customers or compete for my end users, right? And so for us to go to our partners and say this is our business.

Our business is to enable your business, right? and we are successful when you are successful and there is no competing kind of motive here to say hey we're going to kind of Trojan horse you here and and come in and take all your users right and so um I think it's a very important way of how we position ourselves is as this kind of neutral infrastructure provider and um our our customer success is our success >> and and who are some of the target segments are you guys looking more at kind of more the cryptonative like you know the the centralized exchanges with with some significant distrib distribution or you know kind of going more in the institutional front everyone seems to have an institutional strategy now uh you know what what are you guys mainly targeting

>> yeah so look I think um for for any company in the space um you have to balance two things right who's ready now and who's going to need a couple years of education to get there right and so when we think about how we spend our time in the market it is about like finding the customers are ready to go now whether that's wallets, exchanges, maybe cryptonative, neo banks, right? Who's ready to integrate this today and let's build together as partners and and and help develop this infrastructure. And the other side of our efforts are spending a lot of time with institutions, enterprises, and as I mentioned at the top, we're still at the education cycle right now. Everyone

knows what a stable coin is. Everyone knows what crypto trading is. Great. People are taking steps to integrate that. we're kind of looking ahead looking out two to three years for these institutions and saying here's what we should be thinking about coming next right so when I think about where we're spending our time in market it's kind of the find the right partners that are ready to go today and and build this customer base and and build kind of uh resiliency of our infrastructure while also spending time with institutions that um hey they might take two three years to actually be ready but we're spending that time being partners educating helping them get to that point um and one point I'll take there. I I think this has kind of been like a unique part of the Paxos DNA as well as now the Paxos Lab DNA is I think crypto

as an industry has had a tendency to be a little shortsighted, right? Very much looking for quick wins, very much looking for like kind of what's the exciting thing to talk about now. I think time and time again it's it's been in our DNA to say hey these things take time and you need to operate on kind of a multi-deade horizon and you can't be operating on the I need I need to like have a big banger of a Twitter post every quarter of like this thing right like if you operate that that way you're going to like incentivize your organization in the wrong way and you're not going to be set up for long-term success right >> yeah I mean Bo this this RWA stable coin tokenization regulatory efforts, all these fronts combined. I was telling Rob this uh on yesterday's

show. It's just like it's not exactly that exciting. Like it's like it's a lot of like bringing Trady on chain. It's a lot of like doing things the right way. It's like uh you know you know kind of like covering small gaps and and finding a little bit of inefficiencies in in the market here. But like what is exciting is that kind of future vision that that I was laying out in in in a previous question which is you know when we have trillions of dollars of all these non crypto assets on chain the mental model that we're using to value DeFi protocols blockchains infrastructure providers. It goes from, oh, we're just kind of building a small niche environment here

for some hardcore onchain crypto users to like, oh, no, no, no. We're we are literally building an alternative onchain 247 financial system that is that has a lot of uh advantages and benefits to the existing. And like that future world, you can start to think a lot about different markups and different assets. You know, you can speculate across the board, but like that is like the world where we're getting to. And a lot of people are kind of disillusioned right now by this intermediate what feels like a necessary step to get there. And you know, I get a lot of push back about like, "Wow, man, you're really excited about taking a centralized asset and putting and putting it on a blockchain. Like, is that really like the endgame here?" Um,

and so it kind of feels like there's like this intermediate somewhat um, you know, disillusionment happening with how the space is progressing. But I think as long as you keep your kind of mind on that end state to where we're going, it should appease both builders and speculators. If you can really kind of wrap your head around what we're doing here >> and look, I think some of the things that attracted a lot of people to this space is is some of the the ideals and the vision of like, you know, bringing bringing these financial services to everyone and inclusion and access. And I I still very much believe in that vision and future. I I do think it's now the right time to us for us to sprinkle in

like a little bit of pragmatism of like how do you get there? How do you actually take the steps to get there, right? We can't just be idealist and sit there and kind of like think about like oh how great would it be? You really have to kind of sprinkle in this like plan of like hey if we execute on this over the course of the next 5 10 15 years that's how we get towards this vision. And um candidly I think that's been a little bit we've been a little light on that in the industry over the last 5 10 years and and I think it's again to some people it might feel boring but to me it's like hey this is the right sense of kind of like balancing idealism and pragmatism and saying like how do we actually get towards this world and sometimes you

have to do some of the boring steps that get you there but um I think it'll be worthwhile when we do. >> Yeah. >> Well Bo let's give him some love. Congratulations on the $12 million raise. Thanks for spending some time with us today, man. Uh I know you have a busy week and I'm sure you have a lot to do. So congratulations on Amplify on the raise. Um and the future's now, man. It is happening right now. >> Thanks again for having me on next time in person in NYC. Yeah, >> you got it. You got it. Congrats, Bo. >> All right, see you. >> A boy, man. Coming out hot with a $12 million raise, huh, Tom? Come on.

>> Fired up. We're going to get Tom on here talking about VC. Meanwhile, $12 million raise. There's some projects that are not hurting out there. The VC capital is out there if you want it. I got a really good um pitch from another small company and I saw a clip from Xavier from Fractice on the bell curve pod saying how in cryptovc now you have to have a product with traction that will show potential venture-like returns. And then and then in this pitch that I got for a very small round, uh one of the more uh potentially attractive ones that I've seen the last six months, even though I'm pretty pretty skittish when it comes to uh any sort of angel investing

currently, um they have traction, they have uh products going, they have vaults live, and they're doing things. And so it's interesting how I mean, that's a much smaller iteration than what we're talking about here with Paxos Labs, but yeah, man. I mean, $12 million raise isn't isn't massive, but it the appetite is still there. Those guys have been building in, you know, for so long. Um, and I think they see the vision. I think they see where this is going and they're going to play a part in it and they deserve it. And Blockchain Capital is a great investor, obviously, an early investor in Paxos like Bo was saying.

So, um, got to be happy for them there. >> Uh, yeah, I think they're doing great, man. Um, Paxos Labs obviously is kind of standing on the shoulders of giants. >> Yeah. >> Um, they also had Robot Ventures. Uh, shout out to Tyrone Hart. Uh, those guys over there at Robot and then uh and then Uniswap was uh participating in that round as well. >> Um, yeah. No, I think uh they're thinking about this thing the right way. Um, man, don't let don't let those trolls get to you about these tokeniz tokenized assets, these centrally controlled assets. The look, I just as bad as you, dude. I want Bitcoin to be the world's reserve currency, but like

stable coins are the stepping stone to get there. No, I agree. It's the intermediate required step. Um, someone in the chat said, "What do you guys think of Onondo's new proposal to the SEC?" So, I think Ono put out a noa action letter if I recall correctly. >> They asked for a no action letter. They needs to issue it. >> I think they're going to get it is what I would say. Um I think the SEC is just going to be writing a lot of no action letters in the coming years. I think I I'm thinking pretty positively about every sort of regulatory initiative happening right now. Well, >> let's get into some of the content here that we didn't get a chance to go over before our next guest.

>> Yeah, I'll I'll just, you know, add one more thing to that, which is what we were talking about yesterday on the on the show and and how, you know, the things that we can do now to prepare for the potential, you know, Democrat invasion in 2026, as early as the midterms in November. This >> guy said invasion. What's going on over there, man? Is that not what it I mean look politically whether you're you know you you align with that or not you know we know what that could mean for this industry and I think it's important as a a founder and a builder in this industry to be going and proactively defending against this you know potentially offensive you know political regime that

could be coming in. Uh obviously the lawfare that could be coming from world liberty finance is just >> is just demonstrative and so I think uh you know is taking a step in the right direction going and asking for the no action letter because that would stand up if there's a new regime. >> It would take longer to unwind that than if you're just starting from scratch. >> Yeah. And so if if I'm a protocol looking for one of those, you know, I'm prioritizing uh action now. Yeah. No pun intended. All right, let's move on here into what we didn't cover. I think we have um something from YC here. YC will invest in any YC company in stable coins. The new financial rails will not be over a wire. Look, I totally agree.

Garrett Tan put out a a post here. $500,000 investment into totalis all in stable coins. This is the future of investing of payments entirely. We have been doing stable coin payments from for our business for like five, six years. Uh we've been paying pretty much all of our team onchain for five six years. It is so much easier, so much less of a headache. You don't have to deal with wire transfers, AC's, waiting times, fees. I mean, this is the most obvious thing in all of crypto right now is stable coins. It's done wonders for our perception change as well. Like, like truly, stable coins have done so much for the positive perception of this

industry. I just don't even think that we can appreciate it enough. Like coins took us out of the bottom of the depths of the sentiment hell because it was just a faster, cheaper, better way to move money. Oh, and guess what? You can also expand the US dollar's dominance into the entirety of the world via stable coins. This is a governmentbacked corporationbacked sentiment shift that I don't think the industry appreciates enough. Uh we are pro stable coins on this show.

I think I've told this story before. I was in uh I believe it was Msari mainet in New York City 2023 maybe 2022 maybe >> and I'm at a brunch one of the last days of the conference and it's like a it's like an accounting thing. There's a lot of like uh market makers and people there. Someone gets up, co-host gets up on the mic and goes, "Hey, you know, we want to ask how many people currently pay their employees in stable coins. 50 people at least in this brunch. I'm the only one to raise our raise my hand." And and I think I just proved that guy's point at the time, proving this point now that, you know, this is something that we've believed in. It's something that we've done for the last five, six years. And so, absolutely, this has been

a gamecher not only for us, but for the industry as a whole. And I think more and more people are starting to come around to this. Uh it was about time because even in 2022 or three, we just didn't see the kind of adoption and participation from the industry itself. Even within crypto, people were still relying on the old rails. And now what we're seeing is those other companies outside the of the native space Y Cominator uh here are now saying hey we believe in this technology enough that we're going to use it as our main mode of financing these companies.

>> Yep. Shout out to YC. Shout out to Gary. Give him a round of applause here for investing 500K into YC. Let's get on here. YC switching to stable coins. Why aren't you as a VC? All right, guys. Tether has just announced a new wallet. 570 million people trust Tether. Now, there's a self-custodial mobile wallet powering USDT, UST, XAT, the tokenized gold product, and Bitcoin onchain and lightning network. No more zerox crazy addresses. Just a tether.mme. You own your keys safely back up to your cloud.

powered by plasma, one of our good idea ventures portfolio companies here as the rollup and continues to invest in the future of finance. Let's watch this awesome video. I thought this was really really cool. I think this is probably probably in El Salvador if I had to guess. Uh considering their ties there. I'm actually doing an El Salvador surf trip here in the coming weeks. Pretty excited about that. Let's watch this video. Every morning before the world notices, >> we are already moving.

And the money also moves while we sleep. It always has. But now it's just ours. Moving money across the world shouldn't be [music] an event. It should just [singing] >> work everywhere. Bitcoin, digital dollars [music] >> all in one place. With Tether Wallet, your username is [music] your address.

>> One QR, any blockchain, Bitcoin, >> Lightning or Onchain. >> Yeah. Yeah, I got you, bro. The mandolita. [music] >> Empowered by USDT and USAT. Self-custodial. No 12 words to memorize, just your email. Your keys backed up to your [music] cloud. Money has always belonged to the people who earn it. 550 million people [music] trust Tether with theirs.

This is their wallet. No way. No way. They got all those people to make the Tether logo. >> No, dude. That's AI. [laughter] >> Come on, Drew. Come on. Come on. 550 million people is a lot of people, though. >> No, that's AI. >> Yeah, of course it's AI. Come on. What are you doing? >> Damn, man. >> What is that? That's like uh >> that's like 5% of the world. No. >> 570 million. 570 million out of 8 billion people.

>> Yeah, it's not bad, eh? >> That's a pretty good distribution right there. >> I mean, look, man, that video was awesome, man. I love the Spanish part of it. I I think Plasma's under represented in this. I think Plasma's powering this entire wallet uh underneath in terms of being the payments layer. I think this is the massive breakthrough for that uh for that blockchain, for that company. I mean, if they can get this uh at scale, this thing will be this thing will be rivaling Tron in no time. I'm sure they'll support Tron as well. I We didn't get any insight there as to what kind of blockchains they will be supporting or or who they're going to be supporting, but yeah, I mean, that video just got me fired up, man. If it's Plasma, that is so bullish for us. Uh

that chart has gotten absolutely decimated. Um let me just tap in there right now. >> How we looking? Uh, we're looking at 13 cents. Not much moving on the back of this, but yeah, man. I mean, >> okay. >> I think this is I think this is plasma coded. So, >> yeah. Um, we'll see. We will find out here pretty soon. But yeah, I think this is uh this is probably the right move for Tether. Um, you know, it's interesting. I mean, I could understand and see a strategy where they continue to verticalize. They've been making so many investments. Here comes a wallet.

you know, we've seen a couple of these uh these stable coin chains, plasma included. Yeah. And so, you know, we could be uh we could be in the midst of more of this verticalization from Tether because they have the distribution and they have the assets. So, they own the asset layer, the distribution layer. When it comes to the product development layer, whether they acquire, they invest, or they build it out themselves, I think we're going to see more and more uh coming as a result from this. Uh Tether's just a massive corporation and they're just going to continue their to make their US push as well. Obviously, this this video is pretty geared towards uh emerging markets.

>> Yeah. >> But I think uh I think that's what we're going to continue. >> Awesome video. >> Oh yeah. Okay. What do what's up next? >> Yeah. >> Let's see. Crypto has had a rough year. Maybe we should launch something to fix it. All right. All right, so Nikita Beer here is obviously teasing a potential announcement. This is potentially huge news. You know, we saw the uh developer that was XBA X a got joined on Twitter. We kind of heard that this is something he does all the time. He gets, you know, big uh big boosts from the founders at these companies when he joins. He had a viral uh photo with Elon. Um, we're hearing that Twitter could be launching

a wallet. Uh, that is what the rumor mill is spinning and saying. Uh, this would be something that's embedded to Twitter. It would allow users on Twitter to send money to one another. Uh, Twitter's also had an integration with Poly Market, I believe. Uh, and so we could see an accountbased model where you can hold money on Twitter. uh you could deposit into it and then send uh stable coins potentially uh as well as other cryptos to different users. Um this is what the speculators are saying.

Now there's also this the Dogecoin angle to this. Obviously Elon is huge proponents of Dogecoin. uh I believe he's a massive holder and so there are things potentially in the works here that we could see play out as Twitter becomes more entrenched into the crypto game. Crypto is obviously a very general word. Do they mean stable coins? Do they mean wallet? Do they mean Dogecoin? Do they mean Bitcoin? Do they mean stable coins? We don't know as of now, but they did make that higher um uh just a few weeks ago. Um, Benji, I believe, is his name. Nikita's teasing it here. And so, this is what we're seeing. And there's

plenty to come of this. You know, I I tend to think if we had uh, you know, think about the Libra project from Meta. That was uh that was a few years ago. And if that was occurring during the regime today, then we would have a very different reality as it comes to how social media is integrating with crypto and how distribution is is ultimately capitalized on uh when it comes to financial services. And so it's it it's pretty uh pretty exciting to see how Twitter uh with massive amounts of distribution could be getting into this landscape. Uh obviously the wallet front, the stable coin landscape. Um, if they do launch some sort of custody

product or non-custodial wallet, uh, we know how this goes. Stable coin would likely occur not short, not not too long thereafter. Uh, think about what is currently happening with Poly Market. You know, they have several uh, billions of dollars in deposits on their platform. And so, it makes sense for them to launch this stable coin and earn all of that net interest income. I could foresee a Twitter stablecoin, an X, excuse me, an Xcoin, an X stablecoin uh could be coming to the platform uh sometime soon. Remains to be seen. Guys, that is our news portion for today. Uh Alex Prudin is going to be in the

tokenization tower and we are going to head over uh to Andy and Alex in the tower. They're going to be discussing quantum as it relates to Bitcoin uh which is something extremely pressing uh these days and something a very hot topic uh as of late. So, we're going to kick it over there. Quick standby in the meantime and we will be with you very very soon guys. Don't go anywhere. Be right back. >> [bell]

>> Going 70 7th floor. All righty, guys. Alex, welcome to the tower, man. It's the tokenization tower. I'm not sure you've seen the view quite yet. >> It's a nice view. >> It's not bad. Welcome to New York. I Are you a Are you a a resident of New York? Are you Are you visiting? Are you >> I'm a visiting. Yeah, I live in Montana.

It's about as unlike New York as you can get. >> A cabin. And >> I do have a cabin. I do I do have a cabin, but I Yeah, I live in a small town uh called Boseman, so outside of Yellowstone. >> Nice. Nice. So, no animals or >> No, I don't have horses or anything like that. Um I I had a dog, but uh yeah. No, I I see a lot of animals like bears and stuff, but uh yeah, don't. >> Good. Getting it. Well, obviously this quantum stuff has been very very hot topic. Project 11, your company that you're the CEO of is kind of uh addressing this head-on, right? And I think for the longest time this ecosystem in in blockchain and digital assets has feared this kind of pushed it under the rug. Now big names Brian Armstrong's is coming out. He's leading

an initiative in this sees he's he's been pretty publicly vocal about it as of late. Uh this has been kind of going around after that Google paper. Maybe we just start with like where we at today, a bit of a a foundation as to what the state of project 11 is and what you guys are doing to address this quantum problem. >> Cool. So yeah, and maybe I'll just say even before that I'll say what's the state of quantum today. So the first thing it's important to acknowledge is there's no quantum computer today that can break Bitcoin or any other digital asset. So this is a fear about what what may come and how quickly it may come. So um you know project 11 we founded the company to futurep proof digital assets against a quantum threat potentially and this quantum threat has become more and

more real over the last couple years. There's been repeated experimental demonstrations and reductions in the resources that you know the scientists at Google among others have shown that you that you need to break the cryptography underlying Bitcoin. Right? So you know there's there's one aspect of it is that quantum is moving faster than it used to. The second aspect of it is that blockchains and digital assets rely so much on public key cryptography and like the risk is really existential compared to many other systems and the fix is potentially more difficult because these are decentralized right you know not your keys not your crypto there's no like management company for Ethereum or Bitcoin or whoever you know so so the fix is going to be a little bit more involved and so that was really kind of the motus you know that that's that's the the you know the reason why

we founded project 11 ultimately >> yeah and and so um on the on the state of the of how critical this kind of is. Uh people have different opinions and prescriptions as to how they think this is going to play out and the time frame and the level of uh seriousness. Where do you personally stand on that? >> I think it's critical and I think it's critical. Well, I think you can say it's critical and and you can say it's urgent without having to put a timeline on quantum computing because I I think frankly, you know, any number of people can come up and tell you what their opinion is about quantum computing. And I and I have an opinion, but I think what is uh, you know, I think it's it's just uncertain how quickly scientists at Google, at Caltech, at IBM, at all any

of these places or China will actually realize this technology. I mean, look at AI. AI went from kind of this thing that didn't seem like much was changing for years and years and then it exploded. you know, maybe it'll be like that or fusion power where it's h it's still dragging in a while. I mean, we just don't know. But the the I think the the reason why I think it's critical is because of the critical impact it has on blockchains. In blockchains, we use public key cryptography for effectively identity and authentication, right? Your Bitcoin address is where I send money to and then I send you money by signing a message using my private key. Only the owner of the private key is able to send money. So, as the owner, right? But if a quantum computer is able to reverse engineer the private key from the public

key in a very real sense, they own everything. And so like it it kind of breaks the entire philosophical model of ownership in crypto. And that's unique to crypto. Like no other area of the world or the internet that uses public key cryptography has that deep of a dependency. So because the threat is critical, we need to prioritize it urgently, I think, over everything else. >> Yeah. And on I think on the bankless podcast a couple days ago, Sailor said that he's not worried about it. That that that on the Bitcoin front, they would just do a community hard fork if they needed to and you know, problems is going to be solved. You know, we don't even need your company. Why, you know, why are you even here, Alex? Um I think that that that the oification of Bitcoin

is going to prevent that. And I was arguing with Rob today about it. I was like, look, I don't think Sailor can just come in and dictate what the core devs are going to do. Um and and but but but he seems certain. He literally he he kind of went in and basically went against all this Ethereum kind of like takes and just stood his ground and said, "No, we're we're going to be fine. You guys are over over focusing on this, overfixating on this. Stop. Um if we need to do a hard fork, we'll do a hard fork." Kind of like he's like the central command of Bitcoin. I mean, Sailor is among many things a great salesman. So, uh I you know, I I don't doubt that he delivered a strong pitch.

Um, look, I mean, if saying it made it true, then uh I don't know where would we be in blockchains. We'd be on Mars already. We'd have tr, you know, blockchains with trillions of transactions per second. Bitcoin would scale to infinity and be worth a trillion dollars at, you know, like look, at the end of the day, you can say all these things and and I and I I don't disagree that it's possible to solve. So, that's that's one important thing to know. Like, we're not I'm not necessarily a doomsayer that like, oh, crypto's screwed. No, I I think I I believe, you know, we can overcome this. And I even believe even more strongly. I was at the MIT Bitcoin Conference yesterday and people asked, "Hey, what's your 10 out of 10 or one out of 10? How do you rate the chances of Bitcoin

surviving in the future?" And my answer is 10 out of 10. Yeah. >> Some some version of Bitcoin and every digital asset will definitely survive this. It's just a question of how much chaos do we want to experience along the way. And I think we all want to experience a smooth transition because that means you know price stability and infrastructure stability and no one's losing money and people have renewed faith not less faith in these digital assets. So if but if we want that outcome we have to prepare for the worst case scenario. So even though Sailor may be right he's not worried about it people will ultimately hard fork like that doesn't take away from the enormous amount of work that has to be done and especially has to be done if he's wrong about quantum timelines.

>> Yeah. is the is the common uh like understanding that proof of work is more susceptible to quantum than proof of stake. Is that accurate? >> It's inaccurate. Uh proof of work is actually more secure than proof of stake. And the reason is proof of work uses hash functions which technically have a quantum vulnerability but practically speaking it's it's not really going to be feasible to do a quantum attack into proof of work in the short term. Proof of stake uses you know what is proof of stake? A bunch of validators signing messages and sending them to each other. these signatures can be forged just like that's the same way you would steal assets and so that has to be addressed. So if anything I think it's the inverse proof of stake is actually a little bit more vulnerable than proof of work but you know it's

hard to say whether like Bitcoin is worse off than Ethereum or if Ethereum is worse off look all of these chains face a unique set of challenges that are fundamentally existential and I I wouldn't necessarily say that one chain has it better or worse. >> Yeah. So that's a misconception then. >> In my opinion, that's a misconception. Yeah. >> Yeah. And Okay. So then what would be the kind of logical process to build a quantum resistant uh kind of blockchain, right? Like I think Starkware just put out a a really interesting uh piece about their kind of quantum resistant fix if they were to kind of make that run into changing the actual uh you know the actual blockchain of Bitcoin. What does that progression look like to build

towards a quantum resistant network? Is it a one, you know, uh, flip of a switch in terms of like a hard fork or is that multiple progressions like like what what is some of the work that you guys are doing there? >> Yeah. And I mean I so I just use this opportunity to acknowledge that, you know, I think I think there's some sentiment some people I think feel as though uh some people uh are saying that there's no work being done on Bitcoin uh you know postquantum cryptography and I think that's not true. I mean like you see the starkware stuff like there like that's an example of some work. I mean others have done work. There's been proposals over the years to do this or that postquantum thing and that's all great. So I I want to acknowledge that and say it's good. But I also want to

say that's insufficient. And I'll say the same thing about the Starkware paper. The Starkware paper described a using some very old and in some cases deprecated logic, a way to in an emergency use uh you know like have this kind of very complicated technique that by the way would require uh you know a lot of money to run like a GPU hours to run to recover to prevent your coins from being stolen once. So if you did a transaction, you would you would ensure that you would your coins would not be stolen. But then if you did if you did another transaction, you'd be vulnerable and you have to do that same thing again. And by the way, this does nothing for like Satoshi's coins or exchange wallets or anything like that with exposed public keys. So look, and this is actually a good way to kind of

showcase and because I think this is another common misconception is people like, okay, people are doing something about it. We're all fine. There's many levels of doing something about it. And and one thing that's unique about crypto compared to a lot of other systems is >> um you know, there are layers that have to be considered here. protocols all have to change. The cryptography, the postquantum cryptography that we're talking about has to get integrated in these protocols. And this postquantum cryptography is very different than ECC. You can't just, it's not just a trivial swap in, swap out. Then you have all the infrastructure providers or in the case of Ethereum or Salana smart contracts. Those all have to then redeploy or basically rejigger how their systems plug into the underlying blockchains.

And then when that's done, all of the users with assets in whatever wallets they're using uh have to move. Every single person. There's not a world in which you can just stay with what you have and be postquantum secure, right? And so this is just what like the term I like to use is a full lift and shift. >> Yeah. >> Everything every protocol is going to change. Every smart contract is going to redeploy. Every user's balance is going to move from one place to another. And you know, if you think about that in the context of prior crypto transitions, even big ones going from ETH1 to ETH2 or tap read for Bitcoin. I mean, nothing has ever been done to this scale. And so this is sort of why it's like, yes, people are doing stuff. Yes, there are cruel ideas, but the gap between that

and where we need to go is still enormous, and I think we have to acknowledge that. >> Yeah, there's really two forces right now that are offsetting the previous Lindy of blockchains and of DeFi and smart contracts. It's this uh clawed mythos AI white hat, if you will. I can find any bug in any smart contract very, very quickly. better than any hacker, better than any human and then quantum and I think it's really shaking the boots of investors specifically those on chain thinking about the future of this kind of landscape. H how do these two go together like AI and quantum is there any kind of tie in there? I mean quite quite frank well I mean yes I mean first

off people you in quantum use AI to do various things to accelerate quantum and then you can imagine a sufficiently advanced AI could leverage a quantum computer as a sub routine to do some kind of specialized attack. Um but look I think the higher level easier way for people to conceptualize this is they're two flavors of the same thing. this this this thing is that we don't have there's like no mathematical proof that the cryptography that we're using is secure for all time. Why do we trust it? We trust it because no one has broken it up to this point, right? You mentioned Lindy law. This is like there's a big Lindy law effect happening where you know that has happened with cryptography over time. But with the advent of quantum computing and the advent of advanced AI, you may just end up we may

end up in a world where attackers are continually evolving and the lifespans of these various cryptographic algorithms or these smart contract systems starts to go down. >> That doesn't mean that blockchains or cryptocurrencies are dead. But what it does mean is that >> oification becomes very dangerous. Yeah. because you're effectively betting against all of the innovation that's happening in all these different areas that it's never going to go obsolete. And quantum is just the most obvious example of this, right? And it's most obvious because for 30 years, people have known that these like quantum algorithm could break the cryptography underlying Bitcoin. But people just rationalized by saying, "Ah, it's always going to be 20 years away." And now we're facing a

potential scenario where it may not be. And then people are realizing, wow, we really baked in all of these assumptions pretty deeply and now to fix this is going to be hard. And so what this implies and one of the philosophies that we have at Project 11 is this concept of of crypto agility. Like you have to have the ability to you know relatively quickly and seamlessly swap in or swap out different cryptographic assumptions in case one gets broken or you know for you know for different use cases. I mean that's going to be the world that we move to I think. >> Okay. So talk to me about like okay so as a user who done tens of thousands of transactions on different blockchains how how will my experience change like like if public key cryptography the exposing of the public key is causing a

significant uh security issue within the private key how will my experience of interacting onchain change in a postquantum world like what does that mean for actual users of of of these things >> well first off if if your public key is exposed and so Let's just talk about that for a second. So, Bitcoin, everyone uses most people use addresses, which addresses are hashed public keys. Hashes are used in proof of work. And like I said earlier, hash functions are more secure against a quantum computer. So, the the public the UTXOs that are basically under underneath, you know, these uh these hashed addresses um are more or less safe for now. Now it's the exposed public keys on Bitcoin like where people have sent from the same address twice uh or you know it's like

older addresses that you know Satoshi's coins for example you know those are at risk of potential near-term you know quantum attack for the first generation of quantum computers the the story changes when you get to the smart contract blockchains uh Ethereum Salana right because the way we use it as our accounts right think about DeFi >> and think about ENS like I pick a name and I associate with an ETH address it doesn't really make sense to like always like constantly re-rotate the address underneath. It's meant to be static, right? So that means there's more public key exposure, right? So there's basically anywhere there's public key exposure across any of these networks, people are have risk of their funds being stolen. Now assume that there is a migration, how does the experience change? It changes in a couple ways.

First of all, the cryptography that's looked at or that's being looked at to deploy in these contexts is more expensive. Uh it's more expensive in terms of the sizes of these signatures are bigger. Uh in some cases, the cost to verify the signatures or to sign goes up, right? So this has implications for hardware wallets and you know limited you know kind of you know user devices that may not not have the same you know be older or something that don't have the same features as a modern device. uh it and it has uh implications for cost on chain gas for example right higher verification cost mean more gas and then the last thing I would say is you know this elliptic curve cryptography really enabled so many nice features around threshold signing and multi-IG stuff and there's you know BIP 32 where you can

derive many many keys from a single seed from a single public key yeah um you know none of those things >> translate over necessarily to the postquin world we have to rebuild all of them so quite honestly ly from a user experience standpoint. Um, if you did all this, if you put all this postquantum stuff in today, it would be kind of a UX downgrade from what exists. And you know, crypto is already not known for having the best UX. And so, this is again one more reason why it's important to prepare and to start preparing early to ensure that we can transition safely and not have to destroy the UX that we've taken a long time to build.

>> Yeah. And to build up for Yeah. >> Exactly. You know what's interesting then is something like Zcash is interesting from the postquantum angle because yes there is a public key that is uh part of the Zcash algorithm the way that that you know if I were to send you some ZEC that's how it works but the whole aspect of the private key and the shielded nature of it completely changes the dynamic versus the public key cryptography setting with something like Bitcoin. Is it is it fair to say that Zcash is far more quantum resistant than Bitcoin?

>> Uh, in my opinion, no. I and I, you know, I think Zcash is a really cool system and I do think there are aspects of it where the problem is not as acute. But Zcash has a couple of problems of its own. One of which is that a lot of this Ze and circulation is not in the shielded pool. It's just public. So in that case, you're kind of just like Bitcoin. You're no really no better off. The second is there's actually multiple shielded pools over, you know, as Zcash has gone through upgrades. Um, you know, again, this is like in blockchain, you can't migrate everyone's funds. People have to migrate their individual funds.

So, as every time Zcash has done an upgrade, there have been these like shielded pools that it's kind of like the V1 shielded pool is still there. But those older shielded pools, they rely heavily on these elliptic curve assumptions that, you know, enables you to break Bitcoin. And the problem there is taking advantage of those assumptions means not only can you steal coins potentially, but you can actually mint money and you can mint money in a way that's totally undetectable, right? So, so it's kind of, you know, so I mean now theoretically you could address this by deprecating some of these older shielded pools, but my point is again like, you know, no, there's no one chain that's really better or worse. everyone has effectively the same, you know, or or

just a different set of the same flavor of problems from the dependency that we all have had on elliptic curve cryptography. >> Well, well, that question stems from this paper because there's the, you know, Zcash bulls quantum resistant, you know, swap your Bitcoin to Zcash because we're going to be the quantum resistant version. But then Google comes out with this paper and Algorand is the blockchain mentioned as the leader of quantum resistance in blockchains. Do you buy that? Again, I mean my my take is that everyone is kind of vulnerable in their own way. Algrand has, I believe, an implementation of a postquantum of of a postquantum transaction type based on an algorithm called Falcon, which is one of the ones that NIST is considering

standardizes standardizing for the broader internet for their postquantum cryptographer, the internet's postquantum cryptography. So I I guess maybe it's fair to say Algrand is ahead in terms of something exists that users could theoretically move to. But how many people use it today? I mean very very few and very very few very very little funds are actually secured in there. So >> you know yeah I I don't think it's fair to say even in Algrand's case this is an openandsh case. We're done. Right. Right. By the way Falcon like all these other postquantum uh signature schemes are is bigger and slower and worse in a lot of ways. So it's like I you know I I like again I don't think we're done and even Algarand is not I don't think it's fair to call that postquantum truly.

>> Yeah. And I I think if you recall as well there was other there was like three or four other um small companies listed in this paper. Um some some of which had like sub 100 million market caps and went on like a crazy run for a day there which I thought was absolutely silly. Um any comments on on those specific companies that were mentioned? Is there any is there anything that we should be looking at from the uh kind of uh research perspective from the investors perspective as to like companies that are doing real work in in this field? I know Google mentioned a couple I can't bring them up off top of my head but where are we at on that front? Yeah, there's a there's a whole bevy some of which that Google mentioned of these of like you know quantum

resistant layer ones and the idea is basically you're you're just saying hey look you know all this elliptic curve cryptography is broken let's just make a new layer one and make it quantum resistant from from the get-go right like the reality is beyond Qday the day that a quantum computer shows up you know everything has to be made quantum secure or it's busted right so you know if you don't believe that existing blockchains can actually affect a migration then I think you and and but you still believe in blockchains then I think you have to be bullish some of these much much smaller chains I think the challenge there though is you know it's a it's a cold start problem right everyone believes in Bitcoin you have Michael Sailor talking about how Bitcoin you know they've launched their stretch product and you know there's so much buy

in and adoption of these existing digital assets that if you're one of these new layer 1 quantum resistant networks you're starting from zero and you've got to convince everyone to sell something they've already basically decided that they want Yeah. >> And you know this on this basis that they won't be able to actually migrate, right? And so you know like I said I it's all a set of trade-offs. The the the network that I would highlight here is you know I think doing a reasonably good job of at least having a plan to solve this um is Ethereum. I think so that Google paper was co-authored by Justin Drake at the Ethereum Foundation and I think they have acknowledged that this could be not only a threat but an opportunity right

because they realized that if other blockchains don't move past this point then there's an opportunity potentially grow market share and by the way I think this applies to any blockchain um it's it's a competitive opportunity for you know these blockchains to b maybe grow market share versus chains that don't migrate or migrate slower so you know Ethereum has done a good job of like you know ma basically prior prioritizing it internally. Now look, again, like I said before, saying it doesn't make it true. So we got to see what happens. >> Yeah. Yeah. I mean, do you do you really envision Qday to happen? Like is that a certainty in your mind that this could because I just could see a re like just a world where it just never happens. We just never get there.

>> Yeah. So look, I mean I there is no, you know, guarantee that a quantum computer ever exists. uh to be clear there's also no proof anywhere that a quantum computer will never exist or won't exist in the near term right so I think >> you know you even physicists argue about this right so I mean the reality is I don't think anyone knows you know my personal belief is um there's a better chance than not that a quantum computer arrives within a decade >> um that's like so 50/50 I I in my view and there's a possibility that it arrives even before this decade is out um you know I believe that for a couple reasons one um you know the tremendous progress that quantum computing has made in just the last two years. uh two the opinions of many experts. There's a

there's a global uh kind of risk survey that's released every year that they survey cryptographers and physicists and they say hey how likely is Qday going to be in this time this time this time. So you know those that that those those estimates have come down >> uh quantum company road maps you know you could obviously these are bullish but still like you know they've they've kind of crossed the threshold of this initial you know uh systems and now they're thinking about scaling and their road maps have you at the number of cubits you would need to break cryptography by 2030 right and then and then the last way is like we have our own assessment based on some research we'll be releasing soon where look if you just kind of do some napkin math and say hey I have this many cubits I have

this kind of high error rate I have I have you know these constraints and I just assume they're going to grow by a few% every year. You basically within 10 years you get to the scale that you need to get to, right? So, you know, look, there it could very well turn out that some fundamental physics prevents it from ever reaching that point. But again, >> I I think betting against that is a bad idea because if it's wrong, if that bet is wrong, well then, you know, trillions of dollars of value goes up in smoke. >> Well, I think a lot of people use Qday as this bare case for crypto, for digital assets, right? And you clearly have strong reasoning to believe it is going to come based on uh you know past evidence plus your extended experience plus your entire life's work. Might be a

little bit of bias in there, but we'll just keep rocking with it. >> I Yeah, I like to I like to say I'm the most bullish person in crypto, right? Because I acknowledge that qu is an existential risk threatening everything basically. But I also believe fundamentally that blockchains have a role to play in finance and it's an everinccreasing an ever more important one. And so I'm very bullish on the existence of blockchains after Qday. In fact, that's what project 11 is all about building. So if anything, like my time horizons are way longer than most people. So that's sort of why I like to joke I'm like the most bullish person even though like you know I I sometimes I'm obviously raising awareness about this critical threat. Um, but I do that because I believe in the importance of

this asset class, right? And I believe that in order to save it, people have to get out of their seats and do something. And this is actually something when I advocate, you know, for people a lot or, you know, at various conferences and people, hey, what should people do? I mean, you know, obviously you guys secure your own assets, but one other thing is like look, one of the power, you know, powerful thing about decentralized blockchains is it's not just one central authority. It's a community. But but just because you know the power is diffused among the community does not mean that we don't all have a responsibility to advocate for and try and contribute to you know maintaining what makes these systems work right. can't just basically like the worst case scenarios are some kind of reverse bystander effect where it's like like well you're doing something

right no you're doing something right I'll just sit over here and wait for something to happen because then nothing will happen and it'll all fall down right and so I think uh you know we can't get comfortable with the success that crypto's had we can't take as a guarantee that it will continue to succeed to work hard to make that make it succeed and we have to work hard to make sure that it survives Qday >> yeah but I think like with you know I agree with that sentiment and I think that that's the right way to be framing this but isn't Isn't there going to be a lot bigger problems if Qday comes than just like a couple trillion dollars of assets on blockchains? Like there's got to be this has got to be a minuscule problem compared to the relative scale of what could happen from databases to

ledgers to governments to banks to world information flow to telecom like are we not talking about small peanuts here? >> I mean look I think this is a myth and I'm always I always like to take the opportunity to bust it. I mean, okay, uh, many systems around the world use public public key cryptography today and are exposed to a quantum attack. >> Yeah. >> The difference though is with blockchains is most of these systems are some under some kind of centralized authority. Let's take a good example. I think arguably the best example is Swift, right? Swift is, you know, is basically the inter, you know, inter, you know, international payment system and it's run effectively by a group of international financial institutions.

Look, if a quantum attacker were somehow to use a quantum computer to break Swift, which by the way, like it's not even clear exactly how that attack would work. Whereas with Bitcoin, it's very clear. I get your key, I get your private key, I sign for you. That's very It's not It's like you kind of have to like handwave a bunch of how the actual Swift attack works. But even if you do that, guess what? Swift is run by a bunch of international financial institutions. if they see something they didn't approve, whether or not it was a quantum computer, they're just going to >> take their erasers and be like, >> and then it's going to go back to what it was, right? So, and this is true of most systems. Well, two things are true true of most systems is a these central authorities have the ability to roll

back whatever they didn't intend to happen. And and two, they have the ability to coordinate a response more effectively. And I mean the third thing is that the cryptography is one of many layers of security right against a potential hack or something like that. You know again think about if I use a quantum computer to get your bank credentials and man in the middle of your your your connection then I try and log into your bank account and wire all the money up. Well, your bank is probably going to like call you or something or maybe there's some two factor going on like it's not it's just but blockchain none of that's true right >> it's hard to coordinate a response >> if something bad happens bad rolling it back is >> possible but very damaging like think about ETH and ETH classic right that how

controversial that was y >> um you know and and again like if if an attack happens there is no second factor like there's no fall back there's no extra approval if there was it would be no different in a bank Right. And by the way, the maybe the last thing why blockchains are vulnerable is like you you don't really because of all the complexity like I mentioned around these real world attacks, you don't really know what the payoff of that is going to be. But I can tell you right now what the payoff would be for one of Satoshi's wallets, right? I mean, it's just it's right there on the blockchain. There's Bitcoin. I can put a price on that Bitcoin. I know exactly what I'm going to get. And so, look again, does this mean that the first quantum computer, you know, the first entity with a

quantum computer is going to attack Bitcoin? Not necessarily, but I think if if you look at Bitcoin and you are economically or you know digital assets and you're economically rational. >> Yeah. >> You it's probably hard to rule out. >> Yeah. Yeah. >> But then even if that happened, wouldn't that just send the whole thing to to like if the network was able to be altered with and and exploited with because of quantum computing, wouldn't thus then the value of the network just end up not being valuable? Right? like if if if I took my quantum computer and hacked Satoshi's coins, then it would be over.

>> I mean, there's a debate about this. Uh I think it's in my opinion, it's certainly true that if someone was able to sign transactions and it wasn't the original owner, many people would view that as a violation of one of the fundamental principles of blockchain. >> That said, there's a bunch of things, you know, in markets and markets aren't always rational. like it it may not go to zero. And and furthermore, I think in the Bitcoin community specifically like this concept, you know, there's a debate around >> whether or not to um burn Satoshi's coins or to or to just leave them.

>> And uh and the argument for leaving them, and by the way, leaving them means letting a quantum computer steal them. The argument for letting a quantum computer steal them is that like look, we as the community don't have a right to take those coins from whoever owns them, Satoshi, right? And uh you know, so even though a quantum computer might steal them, a maybe Satoshi intended that all along, that's some people's view. Or B, you know, but b like two wrongs don't make a right. Like so just cuz a quantum computer can steal them, us stealing it first doesn't mean stealing is right. Yeah. And so I think there's there's a deep philosophical conflict here, right? Because I mean self-s sovereignty is a key feature that differentiates blockchains from other financial systems. So it's hard and

again what's the upshot here? The upshot is these issues are deep. It's going to take time to come to consensus and then ultimately fix them and we got to start now if we don't want to rush because the rushing is where you're you'll see lots of money lost. The rushing is where you'll see, you know, cryptography fail just either because, you know, the classical cryptography was kind of rushed in implementation or a quantum computer showed up before ready. I mean, waiting and being wrong is the worst case outcome. So, but starting early and potentially being wrong, you say you say you're right and quantum computer never shows up. Okay, whatever. Well, now we know that like it's safe for all time, right? So, like what's the real downside there? And that's sort of my view.

>> Well, we might never know if it's a long time. might just always be maybe coming. >> We the most important words that everyone should take away from the show is we might never know and we don't really know and because of that we should just be conservative and be proactive in protecting these networks that I think we've all come to value. >> Yeah. Yeah. All right. So, switching gears off of Quantum, I wanted to talk to you about uh the Stretch product. I'm sure you have some insight into that from your conversations with friends, whether it be Nick Carter, other Bitcoin maxis friends, etc. They're it. This guy is absolutely cooking right now. Sailor is absolutely firing the ATM. I think a billion yesterday in volume on that

stretch product. Today I woke up this morning and was already at a couple hundred million firing. Um he bought up another billion dollars of Bitcoin using this this preferred credit product. It's just there's just just absolutely financial engineering going on. Is this is this sustainable? What is happening with Stretch? maybe just kind of like educate us a bit on like what this is if you can and kind of your take on it. >> Yeah, so I think I mean I so by the way bread and butter for me is quantum and postquantum blockchains and you know and and and kind of the traditional stuff but I'll give you my quick take. You know, my understanding of this product is effectively like, you know, these are uh you know, coupons where you get like earn 11% interest basically by buying them. And basically this is funded by,

you know, you give you give sailor cash, he buys bitcoin and theoretically the bitcoin goes up and then dividends, you know, are used to basically pay you the interest and, you know, buy more bitcoin potentially. So he's kind of a self-fulfilling prophecy. Um, you know, there's there have been the treasury companies, you know, including Micro Strategy are all variants of this, right? I mean, this one has is kind of differentiated by this interest payment, right? This coupon. Um, but they're all variants of the same theme. So, one on the one hand, I I think it's really I mean, it's honestly surprised me that you haven't seen companies do this before. Like, for example, let's think about two companies that have been in the blockchain space for a long time.

Blockstream for Bitcoin and uh Consensus for Ethereum, right? You know, I think even even though both Adam Back and Joe Luben have their own DATs now, I think it's it kind of like if you if you go back in time to when those companies were founded, they probably should have been doing this at the beginning, right? And there is I think something smart about financially engineering uh you know these products in order to kind of insulate uh insulate you know whatever company that you or whatever network you fundamentally believe in from this price volatility and basically taking advantage of structurally buying the dip. Uh that seems very smart and it seems like it makes sense for someone like Micro Strategy to do or you know for others you know companies like Consensus and Blockstream like I said you know the

challenge is ultimately in these infinite money machines it works when everything's only going up it works of course >> and then the question is when it starts going down what happens right and you know obviously there are answers that people will give like oh we'll buy more Bitcoin and I think sailor's been on record being like oh we could pay this for x number of years you know look you never really know until it happens Right? [laughter] Like how many times we've seen crypto where it's like like Terra Luna, right? Like this is >> comparing it to Terra Luna. >> And I don't think that's fair, but they're comparing the same concept. Deposit your capital, get this US token, put it into this pool, get the 20%, we're going to use this to just keep funding this Luna buyback. And and they're comparing it to the largest

crypto asset in the world and Micro Strategy, >> you know. Look, and it works. it works until it doesn't you know and so I I think you know this time could be different to be clear and I you know far be it for me to be a markets expert um but you know I think there there is that risk and you know that said Bitcoin is a huge asset very liquid uh and there's a lot of reasons you know like I said I'm very long digital assets and Bitcoin and I think there's a lot of reasons to believe that Bitcoin's value will go up independent of this um you know over time especially if we fix the quantum issue so look it may it may be the right move and it may be different um but uh but yeah it it it's uh you know leverage

is leverage so it can always it can always potentially go the other way. >> Yeah. And on this note you expressed your idea that Ethereum was actually broadly better positioned likely across all the smart contract blockchains in the quantum race even compared to Bitcoin. Has that um has that changed your portfolio allocation or the way that you think about allocating to Ethereum versus Bitcoin? Uh I think a lot of people are like putting the flag in the sand here and saying ETH Bitcoin ratios bottomed like quantum thread is here you know like how much credence do you kind of give to this view and to this idea that Ethereum could sustainably outperform Bitcoin just

because of quantum fears? >> This is great this question you know I'm speaking at a Bitcoin conference OP next on Thursday and whatever I say to this question is definitely teeing up some some very angry commenters or questioners so that's good. But um no look I um like I said uh fundamentally I believe every blockchain structurally has a different set of risks no different than any other. I do believe personally that the Ethereum Foundation uh has been proactive at acknowledging this risk that I'm obviously close to and believe in. And so you know for me personally it definitely made me longer on Ethereum than I was. Um you know another protocol that deserves highlighting is Salana. you know, I mentioned we we maybe I can't remember if I mentioned, but you know, we did some work with them and we implemented some postquantum cryptography on their

test net. Um, you know, and and that and so that that I think shows that they are also interested in solving this problem. And so I want to give them some credit too. So, uh, look, I'm long any blockchain that ultimately I think, you know, has some product market fit today and has a credible path to reaching beyond to to existing beyond Qday. and even Bitcoin I think does and I'm long Bitcoin on a long enough timeline but I definitely think you know if we don't handle it right with Bitcoin there's a there's a lot of choppy waters ahead but yeah I I do think I think Ethereum does deserve credit you know I personally have kind of been longer them as a result of that um you know again words are not deeds and so it could be it could be misplaced but um and and

generally speaking maybe let me just comment on my I think qu the impact of quantum the quantum narrative on the markets I don't necessarily think it's caused anyone to be short any of these But I think it maybe, you know, you've got potentially people that would allocate to these this asset class >> that maybe haven't because there's this uncertainty around ah is quantum going to be a thing and what's that going to how's it going to impact blockchain? Is the price going to go down? So I I again I think like I think if we if we solve that root issue then you know you see maybe prices go up more than they would have than they would. >> You think that's more on the institutional investor class that would have those fears?

>> I think so. Yeah. But that's what moves the needle right at this point. Right. Blockchains have been adopted. I mean, we've won in many ways, right? Like, I I got in the space over 10 years ago. At the time, >> Bitcoin's only use case was crime. Uh they legitimately talked about banning it. Now, you have Black Rockck issuing ETFs. You have stable coins in the tens of millions of dollars. I mean, we won in many ways, right? And so, and and the instit institutional adoption is is a indicator of that. But once because we won and we're at the scale now, then we have to consider what the marginal next institution is doing. Are they waiting? Are they going in? And I think quantum is certainly a factor affecting at least some of those conversations. All right, Alex, last thing from me. What is the

kind of primary focus for Project 11? I mean, it sounds silly. It's like, okay, solve quantum, but like what are you guys doing, right? Week by week, month over month. What does Q2, Q3, Q4 look like for your company? >> Yeah. So, uh, you know, post futurep proofing digital assets is is first and foremost our priority. So, what does that look like? Um, we've released some products, uh, for Bitcoin. one called yellow pages where you know it's basically like a you can think of it as like a quasi migration tool where you can get ready to kind of migrate your Bitcoin. It doesn't let you migrate yet because there's got to be a lot of protocol work but it's a first step. So we we launched that. It's the only postquantum tool for Bitcoin in production. It's been audited using postquantum cryptography that's stat standardized by N. Uh we've got some

other products that are building on that that are actually help you secure digital assets uh against the quantum risk on other networks. Um so those are two products we've been building. Um, and we've got some institutional stuff too that we're working on because I mean you can imagine this has a huge impact on digital asset custodians on, you know, all kinds of institutions, exchanges, right, that rely on, you know, these underlying blockchains that have to change ultimately to survive. Um, so that's that's another big focus. Um, you know, we also have some fun initiatives. Uh, one I'll talk about is uh is the QA prize. So Qday prize was a was an initiative we ran uh last year that's getting ready to wrap up. We're getting ready to announce the results, but basically it was a challenge for uh people around the world to use existing

quantum computers to try and break the biggest keys that they could. And um you know, and in the future iteration of this, I think what we're looking to do is not only uh let people use AI in addition to quantum computers to try and see how big of a key they could break to kind of, you know, inform what the state of progress is, but also use AI to build new and potentially better postquantum crypto systems that have some of the features that we that we already like. uh in ECC that are a little more performant in terms of size or scale because you know we talked about AI earlier as being like this another one of these doomsday weapons but you know as everyone who probably watches this show who's used AI knows it's it's an amazing tool right and we can use it for

good too and so I you know that's something that we're we're very interested in doing >> and then I guess maybe on the optimistic side too I I maybe I'll end by saying this quantum is not just a tool to break cryptography it can be the basis for new forms of cryptography Right? There's ways to exchange keys in a in a completely secure manner without ever touching a classical channel that could never be broken based on the physics underlying the universe. Right? Like that's what we kind of so we kind of say if at project 11 future proofing and future building the quantum computer is going to get QA is going to happen. We got to future proof everything. But beyond that point there's a whole world of opportunity uh to basically leverage quantum computing and quantum mechanics to build a whole new better blockchain

uh or better blockchains. And so that's really ultimately the long-term vision of Project 11. And that's a little bit of what we got going on today. >> I still can't tell if I'm just absolutely smoothrained. I just don't know if Qday is going to come. Like I just like I'm just I I I'm not a believer. I think everything's going to be okay. Perpetual optimist over here. >> Hey, well there's nothing wrong with optimism. So, you know, I I like to >> misguided optimism can be dangerous. >> I like to take my I like to take my optimism with a dose of preparedness, but you know, there's nothing there's nothing wrong with being optimistic. [snorts] you know, at the end of the day, uh it's it's just too miserable to live life otherwise.

>> I think somebody asked if the uh submissions are still being reviewed for the uh prize. >> Yeah. So, we're uh they the submissions have just been reviewed and so we have actually some winners. So, someone maybe someone who's watching this is like, I submitted something. Yeah, we're going to we're going to announce in the next couple weeks uh I think either during or right before Bitcoin Vegas. >> Awesome. Alex, thanks for joining us. Great conversation, guys. We'll be right back with our next guest. Last one of the show. Thanks for watching. We're live here in the Empire State Building in New York City. Be right back. You know me.

Heat. Heat. Heat. Heat.

Hell yeah. Hey, Heat. Heat. N.

Yeah. Hallelujah. Hey, are you ready?

Hell yeah. Yes sir.

All righty. Cow. What's going on, Rob? Welcome back to Welcome back to the show man. >> Takeaways from Alex Prudin. >> I don't know, man. I tried to tell him that Qday isn't gonna happen, but he uh he wouldn't he he wouldn't buy that. I mean, I was >> I was being perpetually optimistic as usual. He was super bullish on Ethereum. Um saying that Ethereum is far best prepared for Qday compared to other blockchains. Even went as far as to say that Ethereum has shifted to a larger part of his personal portfolio. Um, also Zcash being more quantum resistant than Bitcoin is a myth. Doesn't really apply. There's so many deprecated shielded pools. Um, and yeah, there's

Zcash is not as relevant. I asked him about Algarand because it was in the paper also kind of said that yes, there is some work there, but with any and all quantum resistant solutions, it's heavier, it's more clunky, it's not as fast and easy. Basically, if Qday happens, the entire smart contract ecosystem is going to need need complete re-updating, revamping entirely. So, h pretty wild. [snorts] >> Interesting to hear that you are a Q-day non-believer.

>> Yeah, >> I heard him say that he likes his optimism with a dose of preparedness, which I >> felt was a really really solid quote. Uh the state of affairs right now is that um AI is currently digging into uh some of that smart contract landscape and so uh we aren't quite at Qday but uh we are starting to see more and more exploits. I wonder if it is part of AI. I feeling it that it is. >> Yeah. Uh and so right now cow swap uh which look I think was one of the best tools out there in terms of uh you know being able to aggregate different price uh uh different price routes. Um they're working to resolve it. Uh the backend

and the APIs were not impacted. >> It seems like it was just the front end. >> Uh but go ahead, revoke your approvals anyway. Just a little PSA out there to the crypto crowd. Uh, let's see what else you got. Before >> Somebody said, "Imagine getting drained for all your money and hearing moo." >> It's a pretty funny noise every time you make a song. >> It's not good, man. It's not good. >> Let's go ahead and cycle through, see what else we got here before we bring up uh Tom Dunlevy, our resident VC. >> So, did you um did you uh cancel all your approvals on Cal Swap? Yeah, I feel like, you know, better better safe than sorry. And I have used Cow Swap in the

past. >> I have too. Um I've not checked my wallets at all today, though. But um yeah, wouldn't be wouldn't be great. >> Yeah. So, you know, uh just uh I I haven't heard anything about, you know, funds being drained. The DNS hijacking. I don't even really like >> I think that's just the front end, right? So, >> if your wallets are connected to the front end, maybe uh you just don't sign anything new and you're okay. >> Uh tough to tell, but uh but yeah, obviously better to be safe than sorry.

You can always reconnect once you know that things are free and clear. >> Insane. Insane. [snorts] Okay, I think we have Tom uh ready to join the show. Um so looking forward to getting him on and uh talking about some of the VC side. In the meantime, I think we had a friend uh Mike from Block Works saying that he doesn't expect a Bitcoin all-time high for three to five years. >> Yeah, this comes after Bitcoin's trading at that 75K mark today. I wonder why he thinks this.

>> Yeah, that was my question as well. It seems like if uh we get some sort of tokenization super cycle, maybe that occurs off of Bitcoin and we could see the onchain applications like we're talking about, you know, all these chain, all these assets end up on chain, they end up in these D5 protocols, Bitcoin may not stand to benefit from that. But you got to think that these things are so correlated. uh even if the rising tide happens away from Bitcoin, maybe Bitcoin lags a little bit, but 3 to 5 years.

>> I don't know. That's a weird take, but maybe he's right. You know, you you always have to be of the understanding that Mike may be privy to information that we are not to that we are not. But I don't think that's what that is. I think this is just a a contrarian bare take at the time when a lot of people are bullish at resistance. a lot of people are like really bullish right now and it's no it's no surprise that we're, you know, hovering around a large resistance level. So, >> anyway, without further ado, guys, we've got Tom Dunlevy, a the head of venture at Varys Capital coming up. Uh Tom is a friend of the show and put out a viral tweet about

the crypto VC reset in funding and in uh interest. And this comes at a time where people are saying that he has spurred the VC market back into shape and back into interest. Uh I saw many quote tweets from this his post talking about uh different types of funds that are actually allocating right now and uh people kind of got fired up about this. So why don't we bring Tom up um friend of the show. I think it's been about a year since we had him on. Tom welcome back. Um good to have you man.

>> Hey Jud, thanks for having me. >> Yeah man, quite the post. I'm not sure you expected that uh your VC reset take to spur to where it has today. I've put a version of this out publicly and privately probably like five or 10 times even and for some reason folks uh resonated with this one. Hit a nerve. So I'm excited to chat about it. It seems like it shook a lot of folks out of the woodwork. So um I think a lot of the data speaks for itself though. So excited to dig into the numbers here. So could you could you kind of set the scene for us? you know, we most of us have seen the post, but for anyone who hasn't, tell us a little bit about what your uh you know, what the background is and ultimately, you know, what what was

sort of the the core message that you were getting across here? >> Yeah, so I've been investing either on the angel side or on the fund side, uh, in preede and seed for almost five years now in this market environment. Um, as we're actively looking at deals, you know, we're one of the few funds that are still deploying. We write checks from 250K all the way to a million in early stage projects. And you could just feel the amount of consolidation not only in projects but also in investors. So >> in 22 23 you had this mad rush to try to close deals, right? It was let's close this in a week, two weeks and if you didn't have an answer by the end of the second or third week you probably weren't getting in the deal. Now all of a sudden you have two or three months

and then you know firms will actually come back to you. Projects will come back to you and say hey you guys still interested. are still trying to fill out this round and you're seeing it even for the most attractive projects. Now, that does differentiate from series A and beyond where it still is uber competitive. There's still a lot of firms and they're also competing against competing with web 2 and web 2.5 type firms. You know, the Sequoas and other big guys of the world. You know, crypto VCs are really battling it out there if you're in the lead position. But if you are early stage preede seed, the number of firms deploying has really really shrunk and that has an effect all the way downstream as you know we need to fund those guys before they get to series A and scale and really grow into

this bigger valuation. So you're sort of seeing a freezing of that market and that's really the genesis of the tweet. >> Yeah. And it's less capital and less number of deals being done. So it's like both quantity um of dollars and quantity of deals being done. Yeah, and you can see this. So, Galaxy publishes a report at the end of every quarter. It's lagged by a month or two after the quarter. And the number of deals has sharply decreased on the venture side. And this sort of mirrors what you're seeing in traditional venture as well. I think the stat was 80% of deals in the last quarter on traditional venture were in specifically AI and later stage, right? You're looking at those big big deals, a lot of secondary transactions and not really primary early stage funding. So, the

numbers in crypto VC are even more stark. In 2022, we had 5,300 firms, angels, and other investor types deploying. In the last, you know, four months of this year or so, we have under 400 net total investors. And this data is from the Avalanche guys who are really, really plugged in uh across the investor base. Talking with my peers and just gauging the reaction to this tweet, I think it's even worse than that, right? People have put together lists based on the folks who replied or yelled at me or or did whatever, right? Um and we got to a name a number of names that's somewhere in like the 50 to 70ish range in the preede seed uh deployment category. Not many of those firms lead.

So the way it generally works is you know you'll have a great conversation with a startup. Um you need someone to set the terms, set the valuation, do a lot of the heavy lifting on the underwriting. You know those follow-on firms will do their own GD, but the the ownerous part really is that lead investor. And so I said 50 to 70 firms are kind of following on writing checks. The actual leads, there's probably 10 to 15 right now because the firms that survive the last cycle are actually moving up to series A and beyond and looking at a lot of different things that maybe aren't even in crypto anymore.

>> And and what's the the the rationale for why those you know previously early stage preed seed investment firms are now moving up the stack series A and beyond? So I think one it's the interest and the exit opportunities right the exit opportunities in let's call it crypto adjacent things like AI or maybe equity-like businesses or verticals that have really hit it out of the park in prediction markets or stable coins etc etc have really derisked the portfolios for these guys. So the ability to just transact in more sure things is is much easier. uh the firms that have raised bigger funds right the dragonflies of the world the A16Z's the pantas the

paradigms who are working with 500 million plus you know frankly it's really hard to write a5 10 million check just because you got to write almost hundred of those things to get your phone deployed and then that's a lot of work because you're really deploying over three or four years so just the opportunities of scale really aren't there and then three you had the folks who were did decent or um you know may have returned some capital to investors you know, the funding market has really just dried up for those kind of mediocre to somewhat successful firms. So, either you really knocked it out of the park and then you raised a crap ton of money and you had to move up the stack or you did okay to really bad and you weren't able to raise any money and then no one's investing in in sort of those uh

preed seed areas because it just doesn't make any sense in the opportunities of scale. >> Yeah. Yeah. And there's also only a handful of those funds that are even able to manage those series A sizes now too. like there's only five to six you mentioned like four of them I think there's like framework and maybe Han um in in addition to that list that are going to be writing series A checks now um so that's also happening um put out an interesting post in response to yours I'm curious your take crypto is harder because it's winning um there are way more mature companies and products at scale today this makes incumbents harder to unseat Coinbase Binance Salana base, Hyperliquid, Tether, Circle, they're all

bigger and better and more entrenched than they were just a few years ago, right? And it, you know, kind of goes on to say that there was a big blue ocean. The blue ocean has shifted. There's still opportunity, but the leaders of the market have been set. We're in this kind of maturing market evolution. This also comes as something that I think you'll find interesting. When we were at ECC and KN a couple weeks back, you speak to founders who have raised the series A pre-token or even a non-token project, they have hope. They have activity. They have plenty of capital.

They have a mindset of kind of like we're just going to get through this. Actually, this bare market's not that bad compared to previous, especially if they've been around for 2020 2022. the more preedec seed stage uh investors or or sorry founders who raised maybe a couple million bucks, they have a look in their eye of kind of like I'm struggling to raise series A because I'm not getting that much traction and like you can kind of feel the worry and and and that was my read on the ground speaking to a ton of of different founders for like five to six days in France. So kind of these two things happening where like there's these series A companies that are, you know, getting through this bear in a much stronger and resilient and perhaps experienced way than previous. You've

got the early stage preede seed guys struggling to raise their next round and also kind of looking looking at a dark tunnel. And then you've got like these major winners who everyone is obviously trying to invest and find that next kind of incumbent for an upcoming category. That's kind of like the context that I wanted to provide some of that coming from Hib just curious your takes on this. >> So I generally agree with Hib that there are a lot of winners which is fantastic for us as investors. We need exit opportunities and we want the space to grow. So fantastic. A lot of those winners are concentrated almost uniformly in the US. There are a few winners outside of the US, but the capital markets in the US have allowed

those companies to grow to the likes of things that could be compared to S&P 500 type companies. So, the opportunities are not as easy to his point. You know, you can't just kind of go to the local meetup in SF or some happy hour in New York and likely find the next startup, right? You got to travel to the off thebeaten paths. You got to have unique and interesting thesis that other people aren't underwriting. You have to look at different verticals, find different founders that are coming out and you know the the talent crunch is certainly real in the space. Before now, you know, before there was this huge amount of riches and opportunity you saw mostly through tokens and folks were attracted to that, right? Like kids out of Harvard were thinking about, you know, writing

the next DeFi protocol because it's, hey, we can make a ton of money doing it. Now there's a bit of a stigma that contracts the talent pool. Then you have this big incumbent in AI where a lot of venture dollars are going across the board and it's much easier to just go do that. So talent certainly contracted. There's a lot of opportunities but you really really have to go out of your way to find new and interesting projects, founders verticals. Um but I think it's more of a right sizing than a uh you know reckoning on the industry. It's coming back to the amount of investable capital that should be here for an industry that still is, you know, a very small asset class in the grand scheme of things when you compare us to equities,

bonds, real estate, commodities, whatever, right? There shouldn't be trillions or even hundreds of billions of venture dollars for the space that's only x bitcoin, you know, $1 and a half trillion dollars. So, I think it's a right size more than anything else. We had uh someone comment here just just live as as you were explaining that that last uh that last answer there where uh this this person says that they have a few friends they're they're putting out teasers uh for some of the products that they're building uh but you know haven't really gotten the the sort of traction with VCs that they might be looking for.

um what are you looking for when it comes to deploying uh and and some of the other guys that are doing preede seed you know what what is it that is catching interest and traction >> yeah so in part of this post is you know because there's so many less VCs you have the ability to be more picky so there are firms that underwrite pitch decks founders ideas um and that used to be far more prevalent in previous cycles because you suddenly could get with just a basic basic idea and some wireframes and a few smart devs to product really quickly and be differentiated and launch a token and all of a sudden you were 50 100x before you even knew it. Now that is a very long path and you have these

more traditional-minded folks coming in and underwriting on traditional business metrics which is exciting for someone like me, right? It kind of the DeFi mall thesis, right? We're kind of doing all the cool backend stuff with crypto and the boring fun things that consumer people like to have on the front end like that build a great user experience like no one has to know that it's crypto on that side um of the table and that's really where the businesses are winning today and to win there you have to have traditional metrics like hey user acquisition what are my user acquisition costs how many users am I getting what's the air what is my mode you know what is my runway just like very traditional business um metrics you'd find in, you know, underwriting any investment you'd

make personally, but things that we just didn't look at previously because it was more like, hey, can this token 100x? Hey, can I get my investment back before everyone else? Hey, what's the vesting period? Which was really the underwriting criteria of 2022. And if you look at a lot of the projects from there, right, they had these huge candles up and straight down 95%. Um, but the folks that were investing in that cycle had a huge amount of success doing that for a very concentrated period of time. That's all they knew. And now those folks are out the door. >> And and Tom, is it is it accurate to say that you're looking now for founders that have already a product in the wild getting some traction that you could kind of apply a venture scale math or forecasting to a like a a a early set of

traction? like how how much is the interest in from your perspective in the folks that you've talked to for pre-product versus like I have a product it's kind of working we're getting some traction here's how we're going to you know 10 20x this where is your head at as far as the pre-product versus product with some with some traction >> so one of the reasons and I'll get to your question but just kind of walk folks through here one of the reasons that funds are having a hard time raising is institutional capital is still a bit slow and And then the folks who funded were the LPs for the last cycle in these venture funds are really high netw worth investors. And folks who made a lot of money in DeFi, made a lot of early investments in crypto, maybe early Bitcoin investors, etc., etc.

Those folks lost a ton of money um and they weren't able to underwrite these venture funds. And now that extends to these projects as well if some venture investors are a little less likely to take that risk because they understand there's career risk involved or fund risk involved. Now in terms of projects those guys were also funding those projects and they were also early users of those projects. So as they have stepped back there's this huge risk in preed and seed now because you know you don't have that kind of battle tested ability and the bar is higher for projects to get funded. So there are firms that are writing kind of checks based on a pitch deck based on just the founder background and some of those are fantastic based on who the founder is and what vertical they're attacking. Um

but the bar is certainly higher right if we primarily invest in in seed less so in preed and the things we want to see are you know some level of traction some level of user adoption someone actually paying for the product um and why do you have the right to win in the category that you're actually attacking is it distribution is it you as the founder is it some novel or interesting idea or technology you have usually less so there um you know differentiation points are are enormously important a level of traction and and um you know sort of user user adoption are front and center now more than they ever were.

>> Yeah. And and Tom, how much of your emphasis is on revenue versus other metrics, right? Like is it really a purely revenue game or is it a a metrics of other kind of focal points that you guys are really optimizing for? revenue for let's call it nondefi related protocols is generally hard to fake you know right if you're doing a bunch of copy trading on train onchain or just watch trading whatever um there's a lot of ability to manipulate there but if you're a more consumer f focused application it's pretty hard to fake revenue pretty hard to fake user growth pretty hard to fake uh you know adoption and pretty hard to fake the actual product right I mean one of the key things that we talk to founders about is

hey I want to see test and use your product myself before I do anything else because if I don't like it, if I'm not interested in it, then why would anybody else be? And maybe I'm not the perfect consumer, but I can at least have a sense of like this is interesting enough. This is well built enough. I understand the direction you guys are going with this. And um you know, in in the past, I think there was a lot more aspirational look of where these things could be 6 12 months, you know, starting from a baseline of zero. And now it's hey you got to get to you know level three four before you even have a real conversation with a interested investor just because of the dynamics I mentioned.

>> Yeah. Um, a as we're thinking through where kind of the net next underwriter comes from for some of these funds, you know, I'm I'm curious a as we're kind of thinking through like, you know, there there was sort of this era of this uh, you know, low float, high FDV, which you know, granted was a bit extractive, but did help to return capital and keep this VC complex going. Um and then you have hyperlquid which you know was a massive win for those involved but again didn't have you know a VC return. Um and then you know had the liquid market decline.

All of these things sort of lead to you know kind of the the collapse of who might be underwriting the the new funds that are that are raising. And so as you're thinking through who the net next underwriter is, are you going to like you go one level up the stack? Is it sovereign funds? You know, institutional investors that might not be so cryptonative, you know, where where does that next investor in these funds come from? >> Yeah, there's two levels of incremental dollar we have to worry about in the venture space. It's incremental dollars to actually buy the liquid tokens and protocols to support the ecosystem more broadly and then the incremental v dollars for the venture space that sort

of start that whole flywheel that get those tokens actually out into the wild. So the incremental dollar on the retail side I still think is coming through the RAA and investment advisor channel as they start to roll these things out. You guys have talked about this ad nauseium, right? Vanguard's now on board, Bank of America saying 1 to 3% uh allocation for crypto in your portfolios, obviously the ETFs, etc., etc. So, I think we're getting there. And I think folks underappreciate how much time that takes. It's quarterly meetings with like middle-aged old people that are slow to act. So, it just takes a while. So, whatever.

>> A lot of education, too. >> Yeah. And the more volatility that happens, it slows down the conversation. Again, education, etc. Yeah. Um, then on the venture. So, I think we're getting there on that side. Great. Um, now on the venture side, there's less large LPs, high net worth individuals who are really super curious. There still are some because they kind of recognize, hey, this asset class is not dying. It is probably going to bounce back. I mean, that's the the one of the most interesting things about crypto. It always seems to bounce back to alltime highs again, and folks recognize that after 10 years plus. So, you know, the conversations we're having on the ground across the world here as we're traveling and talking to folks is, hey, I know this thing's going to come back, but how do I get involved? And that's when you

start the education journey is okay, here's the liquid side, here's the venture side. So they're getting there, but you know, for us, we're funded as our lead LP for the first one with sovereign dollars out of the the Middle East. And there's a lot of interested investors there because there's a huge amount of capital. And the risk for those guys really is even if I put half a percent of my huge portfolio in crypto adjacent stuff or one or two% whatever, that kind of solves the problem. if this stuff really takes off and becomes the backbone of the internet economy, like I have exposure. >> The risk for them is if whatever if it goes to zero, it's a rounding error for them. But if it goes to the entire backbone of everything we do, they just missed, you know, the new internet, which is cliche, but really that's how

they're thinking about it. So, you know, a lot of these guys are just making smart allocations right now. Certainly wars and other things have have their attention right now, but certainly a lot of the capital out of the Middle East, a lot of high net worth capital in in Europe and in family offices and things like that is are still very interested in crypto. Those folks have long sales cycles, takes time, but as you can tell from some of the big successful fundraises. Um, depending on your track record, you can certainly still get those dollars in the door. >> Yeah. >> Is uh is the war in the Middle East bottlenecking or slowing any of the the flow of funds coming from some of those sovereign funds in the Middle East?

It's effectively dried up meetings which has stopped the fundraising conversations. It's a very So the Middle East culture um is very in-person. You know, you'll sit down and you'll have coffee for hours. You'll get to know someone. You'll get to know their family. You'll talk about everything else with business for your first few meetings and then you know all of a sudden you'll kind of circle back to hey here's what we're doing, why and how it fits with your business. It's a very different way of doing business here than we do in the west which is you know we have a lot of that but it's much more transactional right. What's your IR? What's your track record? Who do you know? Why? How are you going to outperform? Fantastic. It's very much more of a trustbased relationship there.

So, you can't really do that over Zoom. You can't do that over Google Meet. You have to be in person. You got to sit down and you got to meet everyone and their family and all that other good stuff. So, that's really what slowed things down is, hey, if there's drones flying around Dubai and Kuwait and Qar and all this stuff. It's exploding. People are not sitting down to have a a coffee or a beer with you. So, uh that's really where the the slowdown's been. >> Yeah. Tom, I actually quote tweeted your post with a um graphic from Blockworks and it shows the total crypto deal count right now as of April 2026 about at 50 deals per month. As far as fundraising goes, down from over 200 at the peak, as you mentioned in 2021,

2022, the decline has decelerated, but is consistently declining. It's not quite as low as the 2018 to 2020 market, about double that. So about 25 to 50. Do you anticipate this to to to turn around here or to stop? I mean I I put is the cryptovc funding bottom finally in this is in terms of quantity of deals. What do you anticipate from here throughout the you know rest of the year?

>> I anticipate this being pretty steady because just looking at the pipeline of my peers I know who so everything the first starting point is everything in venture is dramatically lagged. We've made, you know, one or two investments a month since I joined almost a year ago. And I don't even know if half of those been posted on Crypto Rank or wherever public platforms are just because >> yeah, >> firms don't there's not really like a need to post it unless you're doing it for some marketing purposes or, you know, you're trying to gain incremental dollars for next round or whatever. >> Um, so there's a huge lag in that data. That being said, right now there are almost no funds that are being raised.

maybe a handful that haven't announced yet. So, the level of capital that's already there, which which is a decent amount, right? Um, and you've heard the names that have announced, you know, Dragonfly, DBA, um, uh, Escape Velocity, you know, a bunch of these guys have a good amount of capital. Dragonfly. Yeah, exactly. So, they'll all be deploying. We still have capital. We're still deploying, but that's not going to be a sharp inflection because of new funds that are coming into the space or new funds that have raised these mega funds. So I expect the current level of deals and dollar amount to continue and if anything to continue to concentrate in the later stages because that derisks a lot of these investor portfolios and that's really where they have to invest.

So um for preede and seed I would say you know the takeaways here are really really value test what you want to do establish some level of product market fit and once you do there are interested investors but the bar is certainly much higher than it used to be. Tom, la last thing I got for you is, you know, it feels as if they might be relaxing some of these accredited investor laws. This is something that uh the CFTC sort of pointed to is one of the you know, as they're kind of going through the rule book, this is one of the things that they they might clear up. Um I guess the question here is do you think anyone can be a VC? like does, you know, I if everyone's got, you know, the power of AI and the internet, you know, knowledge at their fingertips, do they have what

it takes to, you know, do some due diligence and research and and properly allocate their own capital? >> We're not that special. VCs are not that special. And [laughter] no, I Well, so I think this is actually a problem. This is a weird problem, right? So, everyone was a VC in 21 and 22, and everyone wants to be a VC until they realize that VC timelines are are a decade or, >> yeah, >> seven to 10 years. Now if you select if you have a selection bias for projects or um you know other types of firms that have a short exit path to liquidity which is what we were self- selecting for for a long time right like what's my vesting schedule what you know when can I get my tokens how quickly can I dump that sets up a poisonous investment

environment and a and a poisonous uh environment for these firms to actually grow right the whole reason that you have this one-year cliff plus threeear vest as the standard is that you need these companies to have some light of sight into capital planning and to actually have time to hit the runway to accelerate. Now, does it have to be four years? I think that's probably too long. It is two years fine, three years fine, probably. Um, right? Is 18 months fine? I don't know. Maybe. But it's not three months, which is what, you know, a lot of these unlocks used to be. So, I think everyone can be a VC. They probably have the tools and interest if you've built been in the space and you've built a deep network. And that's why we have a lot of angel investors in the space. And if you go to San Fran, you throw a rocky

hill an angel investor for AI pretty quickly. So it's it's you know anyone could be an investor if you have the capital. It's just do you have the patience. Um and that's really the advantage of VC and these these vehicles that we put these things in, right? Is because you know you need the patience to actually see the the companies through. >> Yeah. Yeah. And I also think that like you're right on that the types of allocators coming in now are not operating on the 3 to 5 year horizon as much as previous allocators have been. It's more of the 10 plus year horizon, the 5 to 10 year horizon.

>> It's crazy. I mean, I remember pitch from like 2122 where these funds were saying, "We're going to get you your capital back in one year and then everything else is going to give you an upside." And it's like, okay, that's that's like that's not that's crazy, right? Um, but that's that's, you know, 5,000 investors raised on like a thesis like that. So, um, who are the crazy ones, the LPS or the funds? I don't know. >> Well, Tom, I think you kind of uh reignited CryptoVC in some way. Uh, I I've seen some solid decks. I've seen some interest from friends asking me this week if I have any any deals on my table, you know, what I'm looking at, etc. So whether it's just a little bit of a market balance or kind of conversation, um you know, we're looking, we haven't done very many deals

at all in the last six months and I think we're kind of part part of the same situation here. So wishing you the best and it seems like a good opportunity to be an investor if you have capital, if you have the ability to find good deals, um and to actually recognize what a good deal is. though actually seems positive for most of the space who is still around and I think that was kind of what you were really trying to get at. >> Yeah, I think this is going to be you know we're talking fund vintages which is the year that uh you know you starter investing in your fund and you know I think this year and last year are going to be really historic vintages on on par with you know some of the earlier crypto funds. So yeah we're actively investing

happy to share deals with our with our peers happy to uh chat to new and interesting founders. Um you know just from this post alone we got over 150 or so decks this week. So, hey, there's a lot of people still still making things, which is awesome. So, I love to see it. >> There you go. >> Tom, what is that above your shoulder? Is that a golf course? What What golf course is that? >> It is. It's uh I'm up here in Boston. It's a golf course called Charles River. Um they play the amter between the country club and then there most times. So, >> beautiful. >> Lucky enough to uh to be able to shoot 110 there every few uh weeks. >> Tom, I just sent you a deal, man. Thanks for coming on.

>> We got to get around. Yes. Let me know. Thanks, Tom. >> All right. Cheers, buddy. >> Yeah. >> All righty, guys. That was that was sombering, but that was the reality, man. I mean, it is a good time to be allocating if you have some money left. I mean, it is. It's just the combination of the business metric kind of evolution of looking at teams and founders from that lens, the market dynamics, the token dynamics, the time frame, all of these factors coming together just makes it tough to be a early stage founder right now. I mean that's the real I mean you know you know I always thought like oh man should have just launched a token man would have been great you know like

and and and then it's just like dude like why like a lot of the I don't know a lot of the token projects are in a tough spot right now but this happens every bare market tokens are bad >> it's not a bare market anymore um >> no I think the winter's over >> I think that's right a lot of them a lot of them are over struggling with runway haven't heard from a lot the roll up port project in a little while. I'm gonna have to make the rounds. [laughter] >> Yeah. No, I you know, just closing thought on on Tom is um >> you know, the nature of VC is that it's supply and demand, right? So, if if founders are having a bit of a tough time to raise capital, it means that VCs can be a bit more selective and can

usually squeeze a better deal. Um tokens have come down and sort of had a reality check in terms of the valuation that they're raising at. Um, I did a deal recently. I think I was telling you about it. It's like very small 15 mil FTV, you know, in terms of the the round that they're raising. They've already got some traction. So, uh, that was pretty cool to see. I'm excited about that one. And >> this thing would have been 50 plus, >> you know, six to 12 months ago and filled instantly, right? Yeah. >> So, >> no, I think uh I think this is just like you said, it's sobering. It's a reality check, but I think it is uh I think it's the new reality that that we're going to be headed for in the next few months.

Maybe we get a raging bull. VC complex comes back. Uh new founders uh you know, raise much higher. But I think this is this is where we're at here for for the next bit. >> Ladies and gentlemen, thanks for being a part of the show today. Big show tomorrow, big show Thursday, big show Friday. See you guys tomorrow. The winter's over. Hang on to your hats. >> Cheers to you. 80° in a sour. >> Cheers. All righty, guys. [music]