Live from Digital Asset Summit: London

Transcript

Okay. >> Sorry. >> Yes. >> Very good. >> Are we good? What's up, guys? Welcome back to Zerx Research live from the Digital Asset Summit in London. Today, I'm joined by Paul from Plasma. Paul, how are you doing? doing well. Thanks for having me. >> Thank you for coming on. Um, you must have had probably the busiest like three weeks out of anybody in this venue right now. How's it been?

>> I'm I'm not sure that's true. There's a lot of very busy people here, but uh, no, it's been it's been busy. I mean, leading into launch and then post launch, it's it's been >> it's been it's been busy. >> Um, how would you say it went? Are you are you happy with what you guys have accomplished so far? >> Yes. I mean, I think we we um the the launch went incredibly well. Um and and I mean for us kind of getting USDT flow specifically and and um in particular kind of getting the exchange to exchange our USDT flow and really kind of starting to build like a a massive stable coin ecosystem. I think that that went incredibly well. Um and and um especially on the kind of um just seeing like the scale of capital that that is

being moved that that's been incredibly cool. Well, like we we have those like data dashboards and and um we're averaging between four and six billion in in transfer volume uh a day which is incredible. Um and and so very happy about that. I mean market has been very volatile uh and and uh um that that obviously is is is kind of the the other side of that but um we have a lot of work ahead of us. >> Very good. Um yeah, it's a bit insane how much USDT you guys managed to attract onto the chain. Um, your original thesis was that you were going to be overthrowing Tron. Um, or I guess like fighting against Tron. Um, but it

seems like you actually took over a lot of capital from Ethereum as well just like how has that experience been? Like how do you keep all of these um new DeFi users happy coming into Plasma? >> Yeah, it's a complex question. I think in the end it's more about just winning against Tron. I think um like stable coins are this incredibly kind of expanding pie and and Tron obviously has a like very good chunk of that. Um I do think the kind of net new dollar coming into kind of the stable coin economy overwhelmingly doesn't choose Tron and like our job is to make sure that like the net marginal kind of inflow uh chooses plasma. Um and and that's something we're very focused on. Um on the defense like you do need very deep stable coin liquidity on on the chain um

for that and uh I mean plasma still has the the second largest a instance for example after mainet um and and so I think we've um we've done quite quite well at that um and now kind of just in the process of like productizing all of that but like DeFi is a is a means to an end like you don't build kind of a large DeFi ecosystem as as like a like this is not a a goal in and of itself Well, I think that that is kind of um just a baseline that then unlocks kind of many many many things around it. Um and and uh so like I think that that is um like we now have this ecosystem and then now we need to use it productively basically.

>> That makes sense. I want to get to that productizing bit but um before that so I think like around 3 weeks now since you guys have launched what would you have done differently or what would you have wished you had known before you had launched? >> Sure. I mean, I think um there's so many like variables in this that are like ultimately not fully within your control, right? Um well, like Trump tweets about tariffs and and and all of a sudden kind of uh yeah, >> every altcoin I mean SUI was down 85% intraday. Uh and and and and so um I think like we probably would have done things differently had we known kind of the the the landscape we we launch into.

Um and and and so um I think that that that's very easy to say kind of exposed. Um and and and so um I don't know. I think like overall on like I'm I'm increding on on on on wood but um chain has been incredibly stable uh and and we had our kind of first true stress test obviously on on on Friday um with just incredible demand to to to send transactions and to move collateral around and um everything went flawless again knocking not knocking on wood here um but that's actually been very very gratifying I wish we didn't have this stress test quite as quickly. Um like it's you never want to be in a position to to have the stress test basically. Um

but if you have it, it's it's better to pass it than to not pass it. >> Definitely. >> Definitely. And with the product, I assume that's plasma one, right? Like that's what you guys are building the entire D5 back end for. >> Yes. >> Um >> do you want to talk a bit about what you want plasma 1 to look like and how you wanted to interact with the DeFi? Yeah, I think really the the high level thesis and conction on our side is stable coins are this incredibly nent like emerging economy basically and no one has kind of truly productized that economy well in my opinion where you still and like we've all spent time in in these places where you go to to Al Salvador and and Turkey and and Dubai UAE has a massive stable coin economy and um stable coins

are really kind of something that has emerged in the last four or five years at a meaningful scale and you can see that in in a massive way but like you have these kind of stitched together convoluted um things to actually interact with them and I I do I mean we talk about this on on on Twitter and it's a bit of a meme. I I do truly believe that the stable coins are like money 2.0 and and basically kind of the the the next iteration of money but that requires kind of productizing the usage of that money 2.0 extremely well. And that is kind of the the the the underlying thesis to to to Plasma 1 where I don't think anyone has really figured out a way to do that. I know it's not going to be Deutsche Bank

um or or JP Morgan um who are very good at what they do, but like they won't win the kind of stable coin uh like productizing stable coins for for actual kind of end consumers. And Plasma One is is is our is is our product um that is that is built to basically how do you the the the value proposition of stable coins is incredibly clear and and like I don't think I have to like do the whole like this is why stable coins have value and are interesting. I mean you have a very cryptonative audience, right? Um, but I think that to to an extent hasn't really been unlocked in in in kind of a truly kind of distributed and and and well functioning way. And Plasma 1 is is that basically

productized stable coins that are actually usable in in in kind of the real economy. >> I think that makes sense. Um, with plasma one, I've been I I don't really understand how the I guess like the go to market works on your end. Um, specifically in terms of like banking licenses, it must be a mess to deal with like going to these payment providers in countries like El Salvador, Turkey, etc. How are you guys, I guess how much time are you spending building these relationships, how much time had you already spent and what is like a realistic timeline for I know you probably don't have an engineering work always lasts a bit longer than it should and you never know, but how when can people expect Plasma 1? uh at the end of this year. I mean, we're we're doing a bit of a stage roll out um for it. And

you you touch on a good point where like obviously payments is a like highly jurisdiction specific and and uh and and complex business to to build. Um for us, it's always been clear that like Plasma 1 is basically the kind of poster child distribution wedge customer of like this is what kind of the the new economy of of payment systems looks like. And so for us that that means we're very focused on on kind of >> doing it in in in the in the proper way. Like it's it's very like you can you can go out and just like work with someone who who just does the entire kind of payments back end. Um and that is not the approach we're taking. Um we're very kind of aggressively um um both acquiring regulated entities that that

allow us to to onboard users um directly there. Um building out a compliance function in in in the Netherlands now. um and and and kind of getting getting the licenses in in the kind of appropriate jurisdictions. And it's interesting like some of those businesses are like standalone not actually all that interesting but as a kind of puzzle piece in the larger puzzle that is like plasma and and plasma 1. They have incredible kind of strategic value for us. And and so for us, it's been about how do we how do we kind of verticalize as as as aggressively as as as we can and and as quickly as we can into kind of owning this entire like stable coin payment um um vertical basically and and there's a

lot of things we're working on on on on that. and and um I'm genuinely excited for Plasma One as as a consumer. Like I'm I'm I'm I'm going to be the the the the biggest kind of uh um fan of of using the product. I think the entire team is looking forward to to to using it too. And uh I think it's it's it's very it's very gratifying to to work on something that's very real. Like it's very like it's you can touch it. It's it's it's a >> it's very fun to build. >> No, I can imagine. I'm also very excited for I I signed up for the weight list. Um, one thing I've been thinking about is to me Plasma 1 seems more like a cryptonative product and I guess your integration with centralized exchanges is more of like a emerging markets product. Do you think this like

viewpoint makes sense? I think to to an extent stable coin payments are a cryptonative phenomenon right now. I if you have like a very honest look of like where does stable coin flow actually happen now it is overwhelmingly just dominated by centralized exchanges right and actually interestingly I mean obviously the the big ones are incredibly dominant the Binances and OKXs and and by bits and and um we we have the pleasure of of working with all of them but um you then also have a like very very wide network of of of local players in in in that. But like um today we partnered with Bitup and and they

they have extremely high market share in in Thailand and and most of the kind of stable coin crypto economy in in Thailand is is kind of routed through BitCup. And so for us it's very much about like how do we go to like the key jurisdictions and and partner with with the kind of largest and and most relevant players to kind of truly distribute kind of the the plasma USDT um rails everywhere and and also kind of have direct access to to users. >> I think that makes sense. Um I wanted to bring it back to the DeFi side for one second. So you guys mainly the stable coins on plasma are USDT. We see some USDE. Um how many more stable coins

do you expect to onboard onto plasma? What what is the cuz you guys are not shy about being very pro tether but from what I remember you were also saying this is for everybody. We just want as many stable coins as possible. >> Yeah. I think um we have 13 or 14 different stable coins on on the chain right now. Um, I'm a strong believer in a kind of multi-stable coin world. Um, and I mean it's very topheavy obviously, right? But like as long as like as soon as you drop out of the like top four, five, they become quite small actually, which makes a ton of sense, right?

Because like liquidity begets liquid liquidity and and a a larger, more liquid stable coin is a better product as a function of being larger basically. And so I do think stable coins are going to stay quite topheavy and and and USCT I think is kind of a very logical place to be to be focused given how much of the kind of global kind of non US payment flow they they they they they kind of tr truly command. Um I don't think that changes but I think for us like we we we do have like we we work with a lot of different stable coins and and we're keen to work with anyone.

>> Perfect. Um, one thing I've been thinking about is USD is the most dominant stable coin like the dollar stable coins. How is um are you guys looking to on board like Euro um the pound uh LRA? Is this something that you're actively working towards especially with plasma one? I assume there it's going to be like conversion app. >> Yeah, I think actually LRA is is a really interesting one. Um I mean we we we work very closely with Bera um um which is a exchange and and stable coin issuer in in in Turkey. Yeah. Um and uh and and uh they have a trum stablecoin um that that we now have on plasma too.

I think it it's really it matters a lot for the kind of both first and last mile. Um, especially on on the payment side of things where people that want to use stable coins but have local currency need some way to obviously get into like on on the both on-ramp and and offramp. I think um like local currency stable coins play play a massive role. >> I I I I do think that USD dominance probably goes down because I mean it's 99% right now. Um I I was I was talking to to to Rob Hadock actually actually yesterday on on on the panel uh and I'm quoting him here. 68% of of all kind of global trade is is uh is settled in in in in USD. And so I I do think that stable coins are still going to have a

higher share of of USD denomination just given because so much of the value proposition of stable coins is just access to USD. Yeah. and and like you you like if you are in in in in an economy that has unpredictable central banking and and high inflation, the reason to like use USD stable coins is like you want access to USD and that's the most liquid and and easiest way uh to to to to do that. And so I do think USD stable coins stay extremely dominant.

>> That makes sense. Um, in terms of DeFi, a large portion of Plasma is um, lending and vaults, which seem natural given that it's a stable coin ecosystem. Is there any are you guys planning on boarding more dexes, more per platforms? What is the I guess like developing the DeFi side of Plasma look like? >> Sure. I mean, we've been unusually opinionated on on that, I think, as a as a chain and and that that's a choice I'm personally happy with. I mean, um, I would much rather work with a than with a compound fork. Um, and and and um because like they're just more capable and and very good and they like can do this at scale. Uh, and then and so you like I feel much better having money in

in a than having money in me like >> some like L2 ecosystems forked uh uh whatever lending protocol and and so I think that that choice has made a lot of sense and we will kind of continue doubling down on that obviously. Um, I think for us like step one was getting the the basics right where especially in kind of this kind of larger of complex system of of kind of having having a stable economy, a stable coin economy. Um, I think lending is a very very central part of that just for capital efficiency reasons and and for yield generation. um you have demand for borrow and so for us really the initial

goal has been how do we bootstrap that system very very quickly. Um but then also how do we how do we like basically make the demand for that organic over time right where like we we incentivize pretty heavily. We're now tapering that um pretty aggressively um just because we like needed that kickstart to kind of really have have capital move. >> Um and and um like there is no like the the delta for us right now and having 10 billion versus 15 billion in in in the A instance is pretty marginal. Um and and um so it's also about kind of being thoughtful on on how do you design incentives basically that you can then

very quickly transition into like how do we you want to incentivize as as as as little as as needed basically. >> Yeah. but you still want to incentivize sufficiently to kind of really achieve the goal you you set out to to to to achieve and and so when you mentioned meeting meeting River who's fantastic and incredibly sharp and and uh um we've had very long discussions on on on kind of uh the the complexities and in managing that. >> Yeah, I can imagine. Um incentives are very very difficult especially because you're trying to move stable coins which is which wants to stay where it's but it's it wants to be as safe as possible um to a new chain. Um, but I think a probably helped with that as well

because people can trust a they can trust >> 100%. >> I I feel much better having my money in a than having it elsewhere. >> Yeah. Um, one more thing that I know you guys are working on is PBTC. Do you want to kind of talk a bit about why you guys want to launch your own native version of um, Bitcoin for for your chain? >> Sure. I I do think there's incredible demand to save in Bitcoin but spend in USD denominated assets and rap Bitcoin is flawed for like a very long list of reasons. Um I I don't think I'm like this is obviously a very biased um um view of this. Um, I do think that is pretty widely shared and and I don't think anyone has truly kind of built a fantastic version of a like native

Bitcoin that is on a on an EVM chain and and that is kind of highly composable and and and can be kind of used productively. Um I think that that that is a a massive unlock um for us and and then so that is something we're kind of building right now uh just to kind of figure out how do we I think also from a kind of savings uh and and and payments angle there is just demand to to save in bitcoin right and and but I don't think anyone wants to spend in bitcoin no just looking at the data that that seems >> like very very evident uh that like there's zero demand for people to to truly kind of spend Bitcoin at scale. Um

they want to spend USD. And so it's about like how do you how do you marry those th those two realities >> and that'll be plasma one. I assume you're going to >> like plasma one is going to be a component of >> Yeah. Um one more thing is the UST free transfers. I remember last time we chatted you said it is a very complex thing to solve. Um how are you guys approaching it now? When will it go live? >> It is actually live. Um it's uh um we we have it on a dashboard and we now we have a a bunch of payment partners we're integrating into into that. Um it's actually worked extremely well. I mean it's really hidden away right now. Um we've done 150 million in in transfers

on it now. Um that order of my haven't checked in a couple days. Um but that that kind of sca scale and um especially on the payment partner side of things um where you you do have a lot of those entities that just facilitates so much payment flow and um we're onboarding a bunch of them onto onto onto kind of that that product feature now um and and and that has been uh that that's been a very easy sell um actually to to them which is great to see. Um, how do you think about because to me plasma seems kind of like a two-prong chain. Like you have stable coin defy and then stable coin transfers. How do you think about balancing those two?

Like is there something that you're do you have separate teams working on separate sides or is it like your main goal is to just combine these two eventually? >> I think it's two subcategories of like the same thing, right? Where it's like how do you build the kind of largest network for stable coins? And I think that like just needs to involve both, right? Where you you need sticky capital on on one side and then you do want velocity uh at the same time as well. And and so um those are not separate teams. saying this is like one kind of like in the end those two obviously do impact each other and and and so you can't really view them in in in isolation and and and and so um I do think those are highly connected and and

a kind of one in the same goal which is uh just building a stable coin economy. >> Yeah, I think that makes sense. Last question going forward let's look over the next 6 to 12 months. First thing is for plasma what should everybody expect? What are you most excited about on your personal um as well as like what should people look forward? The second thing is whole conference is basically about tokenization and stable coins. What has um what have you realized or like what what is your hot take or big prediction over the next year about like tokenization, stable coins? What do you think does very well? What do you think doesn't do very well?

>> Yeah. Uh I think I have many many hot takes. um um some of which are probably not in my interest to to uh to to follow these state. But um in in terms of like what to look forward to, I think we we do we do have a lot to prove. I think we're in a in a very good spot where we do have a lot of the kind of USDC flow um and and specifically kind of the the net new flow um um because we do see a lot of that kind of just happening on on on plasma. Now um we will continue pushing that extremely aggressively. Um I do think that there is um like the the plasma one rollout um and and and that is deeply exciting to to to me uh and and I think that that that's going to be a

fantastic product and and um we we have a lot of when you mentioned that like we've been very busy the the last couple of weeks um I don't I don't plan on taking vacation. >> Very good. Very good. Hot take prediction. hot take. >> I think basically no one understands stable coins. Even a lot of people who talk about stable coins as as a living. Um >> I think people like stable coins isn't one product. I think stable coins are probably four somewhat separate products. Um really and I think people don't like I think that that is an underappreciated fact. um where people always kind of lump a lot of things that are wildly different into into one category um because they like generally traded a dollar and I think that is that

is not discussed enough. >> Okay, very good. Paul, thank you so much for coming on. This was a pleasure. Appreciate it. Thank you so much. >> Um guys, we're going to take a five minute break and then we will be back on. Can we We're rolling.

>> What's up, guys? >> Oh, >> okay. >> Should we give the thumbs up? >> We're good. Hey guys, we're back. Today I'm joined well now I'm joined by Karolina from the Blockworks advisory team. >> Hey hey >> Carolina how are you doing? >> All good. How are you? >> Good. Um you gave I'm not going to make you do the whole presentation but >> you gave a hyperlquid bullcase to a lot of asset managers yesterday. Um first of all let's let's do it with this. When do you how do you see Hyperlid play out going from here? not price action wise, but we've had a lot

of things come live. >> So, HIPP3 is live already. I feel like that was the last big one. Where do you see the chain go from here? >> Well, I think definitely that is the big thing happening right now and uh we just need to see what is coming through HIP3. So, uh I remember on test net we could see like a lot of exciting things, a lot of like commodities, stocks, FX options, a lot of things. So really going into global derivatives market which is like so much bigger than crypto assets market. And so that's that's where we're going. I'm excited to see.

>> And when you were doing the presentation, did you end up building out a bullcase barecase >> like with numbers? Uh no, I thought you did that. >> I did do that, but my one is illegal. I'm not allowed to share it. Um, in terms of I guess we're saying like we want to onboard more and more FX. How do you see that play out? You know a lot more about risk than well I know nothing about risk but you know a lot more about risk than anybody else. How do you um we had a lot of like liquidations on Friday let's say. Do you think that's going to be um like going forward? Hyperlid handled it relatively well but do you see that like changing going forward?

What does the team need to do? They had Jelly Jelly. I don't know if you look deeply into that but yeah like any comments on I guess the auto auto deleveraging feature as well as like how they need to handle for billions to come on board or I guess trillions to come on board. >> Well I feel like um it has been grow like risk has been growing alongside uh the product and it like h really good has responded really well to like everything that that's happened and it's just you know growth veins. I I feel like it's something that we know it's going to happen and um Binance for example uh did much worse than Hyperlquid when you consider it just like it stopped and Hyperlid didn't.

>> Yeah. >> And it is um a much bigger exchange handling much bigger volumes and so I think the structure is there to handle uh the money that's coming >> and the out of deleveraging for example I think worked pretty well. Of course it's not ideal. No one really wants their positions to be closed, but the point is it's robust, the platform works, and that's what you want at the end of the day. And um liquidations also like everything is transparent with hyperlquid. Obviously, Binance had much more liquidation. Yeah.

>> Than is actually um out there. Um so yeah, I think it's risk is growing alongside it. It's going well. Not a lot of people know this, but originally the hyperlquid bull for the team uh was you. I guess before you it was an unspoken of third party who onboarded you onto the platform as well. Um how has I guess like your thesis worked out from November 23? Is that it? No, November 24. >> Um >> when was this?

>> It was when I first joined uh it was April 2024. So it was my like take-home assignment during the hiring process. for the um research analyst position and it was then like my my first research piece. I think at the time it was the alpha phase may be closing or no one of the phases. >> Yeah, one of the phases was like about to close. Um, and yeah, it was still uh many months out uh from from TGE. And honestly, at the time it was a bit more of a you know risky thesis like is it really going to be like the next big thing because I remember there there was not really anywhere that you could trade

onchain like perpetuals people were trading in Binance by a bit and and really kind of they were against it but um they had to because you really couldn't do it anywhere else. You had DYDX and I remember at the time I was like, "Okay, but is it going to be able to eat into DYDX's market share?" And now you don't even like think about it anymore. >> No. Why do you think they ended up doing so well? >> Um, well, I think I think Yeah. >> My thesis is the listings. I just wanted to throw it out there. My thesis is like they list >> the speed >> anything they can as quickly like they want to just onboard as much retail as possible at all times. just like come you can click connect and trade whatever asset day of

>> yeah I think in the beginning it was also like the points uh meta was starting and people were like okay I guess I'm going to trade here but then I feel like people were usually impressed with like oh this is actually like doable I don't need to just be farming this for the airrop >> and people really like just stayed after um the points uh ended also and um TGE also you know doing so well being kind of the first project in crypto to not give it all back to VCs to like not spend on liquidity mining incentives. It was really refreshing. People really started trusting and whenever like something a bit wrong happened I feel like the way that that they dealt with it was you know always building more and

more trust and so I think that's what worked. >> Are you a user of the Hyper EVM? >> Um yeah I used Felix. um not like >> my question >> like many broad products but yeah >> my question is going to be do you think hyperlid I guess hyper core needs the hyper EVM or do you view it as like a it's a fine extra to have I'm not sure if it's completely necessary >> um I think it's definitely a nice extra to have and I think it I think it's necessary if we want it to be like something else that's not just like an exchange and um I think if we wanted to also compete with other exchanges that that you know that keep coming lighter

as or you know there are many exchanges that will keep coming on and I think it has like having this dual system and having more products with like an ecosystem lock in I think that will make it really different and so it will I think the importance of the the hypervm will grow. >> I think that makes sense. You mentioned lighter and aster have you used either of those protocols? >> Yes. Do you think that either of them pose a very very significant threat to Hyperlid? >> Um, >> we can speak freely. The podcast is good.

>> We can speak freely. >> Yeah, we can speak freely. >> Um, well, they just don't work as well. And of course, it's it's the beginning stages, so it's fair that they don't uh that they don't work as well. But I think like the the security that that Hyperlid has like the the battle test that that they have encountered until now um it's going to it's I think the competitive modes that Hyperlid has right now it's going to be really difficult for for newcomers to to compete with and from a trading experience no they >> that's what's your bare case for Hyperlid >> um I guess maybe like competition from um

other chains that are new, shiny, mega yeast, monad. Um I know that there are also good projects being launched there. Um I'm I'm really good. I don't have like a very established bare case. >> Very good. >> Um but yeah, how do you see it? >> What's the bare case for you? Um, I think the bare case is that Hyperlquid does what Ethereum did and they get a little lazy and they let like Ethereum to me feels like they got attached to one narrative and they said, well, we can just coast off this for like the rest of our lives. Like it's deflationary and then at some point it

stopped being deflationary and then they went into Dats and whatnot, whatever. >> Um, but like Solana was very clearly like coming to dominate, dominate, dominate. and Ethereum almost like didn't care until it was too late. >> It was too cool to care. Yeah. >> Yeah. That's my bare case for Hyperlid is I don't think to me they seem quite competitive. Um and like they wouldn't let that happen. But you never know, right? Like >> um >> Yeah. I guess the other u like critique I've been hearing is people are worried about like fee competition. Yeah. >> As people as more competitors come on, will all fees be driven to zero and then eventually like buybacks don't matter anymore and and things like that. But what I think about that is with HIPP3 and with like builder codes basically

with hyperlquid being integrated in like a million other things that are not hyperlquid. I think the the reach expands like so much that people will be using hyperlquid without even knowing >> that they are. And so I think it will be very difficult to to compete in fees in that sense. >> I think that makes sense. And like historically we've always been told like oh you want to control as much of the front end as possible versus like hyperlquid is very clearly trying to become >> the back end for phantom meta mask rabby um trade is like units one where you can long and short >> NASDAQ um it's going to be interesting to see so no bare case very good >> um I guess last question here is before

before I um before we end it off what apart from hyper for liquid are you looking forward to over the next year? >> Um I'm not really sure right now. I'm looking forward to the new chains that are launching. I'm mostly like curious. >> Okay. >> Um to see how how they will do. Um but not super bullish on anything else in particular >> apart from hyper. >> What about you? Um, >> HIP free was the last thing that I was like really really excited about.

>> Um, I'm looking forward to this like stable coin thing that they're going to be doing on Hyperlquid like USDH native markets that um I'm curious to see how that's going to turn out. Like they're doing they've already launched some pairs. It's not doing particularly >> but it's very new. It's a new stable coin and stuff. Um, so I'm looking forward to all of that. I'm kind of interested in what Ephina is going to be doing. We're going to talk get to talk to guy today, but >> uh excited about them. It seems like they're completely changing the way that they like >> Yeah, it's true.

>> A structured product. Yeah. >> Now it's like a white labelled stable coin. Um Plasma is a big one. Although I've been hurt by Plasma. I don't want to say this in front of Paul. I'm glad he's >> I love Paul, but I I long to talk Paul. >> Um but I'm excited for Plasma 1. I'm excited for like what they're building over there. I think it's cool. I think stable coins are >> Yeah, stable coins definitely >> definitely are interesting. >> Okay. Um Karolina, before we end things off, do you want to give one thing? Um your Twitter and what you guys do at Blockworks Advisory as a final shill and then we can end it there. No, you don't want to do that.

>> Okay. No, that's fair. Uh should I look into that? No. Why did you >> middle camera? >> Okay. Um so I'm Karolina. Uh I'm a lead analyst at Blockworks Advisory. And Blockworks Advisory is essentially a team that's spun out of Blockworks research. And what we do is use all of our data, all of our knowledge to um instead of only cater that towards capital allocators to actually help protocols. And we're working with a lot of um big names, we're working uh in protocol relations. Uh that's like a big focus of ours and also risk services.

So, we are on the risk committee for Athena, also for Spark, the risk council. Um, so there's a lot of exciting things that we're doing. Uh, check it out. Um, yeah, my Twitter is Karolina. >> Very good. That's not your Twitter, but it's okay. We'll get over that one. Thank you, Karolina, for coming on. This was great. >> Thank you. >> Are we good? Can I put my How should I introduce you guys? What

What would you like your titles to be? What are your titles? Not what would you like it to be? >> Oh, we're both partners. Yeah. Adjust the camera. Adjust the middle camera. Okay. >> Are we good? >> Hey guys, what's up? Welcome back to Xerx Research. I am joined by Samantha and Adam from Rockaway. How are you guys doing? >> We're very good. >> Very good. Uh, how have you been enjoying the conference so far? Did you both have talks? I know you had a talk yesterday, a moderation, intense one.

>> Yeah, it was an intense debate. Um, I enjoyed it. I was lucky to listen to it. >> Very good. Um, >> I have tomorrow, so let's see how it goes. >> Very good. >> So, this is his warm up. >> Very good. Um, >> I don't know. I'm going to start with you. This Friday, we had pretty intense um liquidations um and a lot of market volatility. What What is um I guess like your take on it? What do you think happened? How do you see it play out going forward? >> I mean, there are many speculations on Twitter, right? Uh what happened? It's funny. I think many of their of those was really wrong. like you know I have seen some speculation that somebody dumped uh USD on Binance but if you look at the timeline it actually happened after so it wasn't happened before so I

don't think it was like some organized attack really um the problem was of of course autodveraging everybody today it's expert on autodeveraging I think on Thursday nobody even knew that this exist so it's kind of funny uh but the truth is that most of the market neutral funds they really stayed naked right because when you're market neutral uh as we are you're hedging basically by shorting perpetuals. Uh and the problem is when the exchange uh basically close your hedge, you're kind of running naked on the long position. But the truth is that it actually happens only in really extreme scenarios when there is no any more liquidity in the in the order book.

So actually you get closed at very long point. Uh so most I think market neutral funds actually benefited because when the market bounced back they were able to hedge uh above uh their exits. So I don't know many market neutral funds and I talk here to many of those who actually had some significant losses uh related to auto delever. >> I also think though um like maybe to chime in there I don't think it was an organized attack but I think it exposed but in when you look at it you're like ah it could have been an attack vector.

Um yeah. >> So, so kind of, you know, that peg based on the order book and kind of some of those Oracle issues that were exposed make you sort of breathe a sigh of, wow, we're almost lucky it wasn't a deliberate attack because it exposed a lot of flaws. >> Um, one thing people have been chatting about is like sexes versus Dexes and how they've handled it. Do you guys have a take on either of those? >> Sure. I think Dex has handled it really well. uh I mean the really decentralized exis um you know they also have uh auto de leverage so many people also got liquidated on hyperlquid as well uh what I would more highlight is that there are many uh lending protocols uh which handled the liquidations really well so we haven't seen really a lot of bad

depth across defy which I think is uh really unbelievable given you know how um the conditions were bad uh I actually expected some but it worked really well worked really much better than CFI in this case especially for lending protocols. >> Very good. Um >> have um I'm I'm chipping in as moderator in this case. Have any of you kind of heard of I guess how the across private credit? I mean obviously we're involved with Pareto. I know you've connected with them. Uh we don't right now we're not active on Maple but yeah I think those are where I would I would want to look in this moment right where >> there's more vulnerability. Yeah, I mean we reach out basically to all our borrowers because we have also centralized borrowers and it seems like

they all handle the situation pretty well. It's also true that they all have like really robust balance sheet. So even if something would happen, they're able to cover it from their own equity. Um but I think we will see still corpses coming out maybe this week and next week. >> Um of course nobody is going to tell you I have huge hole in my balance sheet. Um but uh >> you walk around here and everyone says you know it's the craziest thing. It was our best. It's our best day ever. And I thought, "Oh my, everyone had the best day ever." Like, and then there's $20 billion in liquidations, right? So, you're like, "Okay, it's it doesn't >> I had a really bad day, but everyone else had a major."

>> Yeah. >> I uh I wonder when we'll start seeing I mean, you said this week, next week maybe. Um after FDX, it like almost surfaced once or twice a month for like three months. >> Yeah. Um, Samantha, with regards to uh, venture investments, how how are you guys thinking about it right now? >> Yeah. So, sometimes I think my job is kind of easier as a venture investor because we have a very narrow focus. Um, and I've I've had past venture gigs where it was sort of we look at everything. It just, you know, founders compelling, ideas, good, target market.

It kind of overwhelmed me. Um, so I like that at Rockaway we have a pretty simple prompt and for DeFi it's like would we put money in the product today right these we're funding things that are protocols that are usually onchain yield sources it's very intuitive like do we want to be the liquidity provider do we think it complements the portfolio on chain does it have a different risk return profile maybe some kind of superior investing experience if it doesn't meet those and we wouldn't kind of be a first-time user or customer. It's it's a it's a kind of then it's a a not hell yes equals a no. Um so that's one side of the house and then the other we were seed investors in Salana. We especially on Friday, you know, we still

have a lot of confidence in that platform to underly a lot of what we see of like finance coming on chain, the performance, the kind of commercial attitudes, um the just the founder community that's there today and the caliber it attracts. So that's that's a lot of our book is like Salana and where we see the gaps in that onchain finance sphere in Salana and then DeFi protocols that we want to boost up liquidity and participate in. >> And would you say that the landscape has changed significantly over the past year year and a half in terms of like I imagine post FDX salon investments were very different than what you guys are getting pitched now right >> valuations are higher.

Yeah. Um, yeah. Now you get an expensive deck. >> They almost want you you pay now to open the deck. Actually, >> you send a transaction on Salana. Um, no, I think I I think, you know, part of why we've liked Salana isn't as much this um dogmatic or like, you know, evangelical. Yeah. Like the this is it, you know, like I'm that's never that's on me. I don't think that's the firm. we lend to projects that are in a lot of different ecosystems. Um, with Salana, it's really the ability to pivot and be opportunistic and I said kind of the commercial chops. So the kind of how we've seen it change is it kind of moves where the puck hopefully

is going but definitely has gone right and so like right now the puck is kind of onchain trading use cases these kind of new perplexes clobs a bit of you know kind of stuff for trading infrastructure and new structured products on chain um and we see a lot of that on Salana that's being funded right now >> perfect I mean if I can add I just think that Salana one of one of the was one of the first layer one which understand which understood that it's not all about technology even though their tech is great but they're really good on the BD side you know we have seen many layers one which basically have no BD even until today >> or their BD really sucks and I think uh Salana was really good early on uh you know with their conferences with hacker

houses you know we supported many of those so I think >> 200 hacker houses >> so I think that that's quite important part of Salana which people usually don't see they only highlight the tech but I think actually Salana is pretty strong on the BD side as well. >> Very good. Last question. Um, do you guys have a prediction or a hot take for the next 6 to 12 months? Like something that you think will upset people? >> I'm actually curious like um how the market will develop after Friday because if you have seen $20 billion in liquidation and basically there wasn't any any um you know hedge fund which is uh leverage long like which wouldn't be liquidated. I cannot imagine because like all the altcoins and token they went down 70%. So even if you had only

two edge 2x leverage, you got liquidated, right? There wasn't time to react, especially if you had your uh you know hedges for example on Binance, the API didn't work, you know, so you got liquidated. So if this was if you know use case for crypto it's kind of trading then I'm like wondering who will be trading now like if these if this speculative capital is or not already wiped out from the market. So I'll be definitely watching volumes in upcoming weeks. I'll be watching uh leverage in the system if people are getting leverage again. And so I think this will be very very important to watch going forward.

>> I don't have one great singer so I have like two fleeting ones. One I think um I think a lot of venture funds from 2020 2020 2021 um are now looking at 5 years in and sitting on a bunch of dogs. I think it's undertalked about how many are never going to raise another fund and already know, you know. So, I think there's going to be a bit of like begging on hands and knees for some other guy to mark you up so you can get a job somewhere else because you're your dogs ain't going to pay. So, I think that is something there like a lot of these are fund and name only but not active and not raising.

>> Um, yeah. And then I I think the privacy thing it like it ain't a thing. No, people being like it's a privacy moment. I've lived I >> like invest in a lot of privacy things. I think it's such a hard sale. Um, I think that's what I why I don't think it's a moment because I know the sale is really hard and there's nothing that's changed about the sale, which is if you're not saying I'm going to make you money, save you money, or save you time, it's really hard. None of that has shifted. So, I think it's like an engineered or something thing, but fleeting.

>> That's a good point. No one cares about privacy, unfortunately. To the point >> it's a really hard sale. I think maybe there there is a wave of like maybe darkpool stuff. So, we invest in one on Hyperlid, but that's not really privacy. It's protect your alpha thing and it's kind of a feature for trades maybe, but just privacy generally. No, I think it's hard. >> I think that makes sense. Guys, thank you so much for coming on. This was really, really fun. >> Thank you for having us. Was it silhouette? Hello. Does that sound good?

>> Testing. >> It's too close. >> All right. >> Like this close. >> No, it's too close. >> Right. Right around here. >> Like this. Yeah. >> All right. >> Are we all right? Real casual. >> What's up, guys? Welcome back to Zerx Research. I am joined by Westy Capital from Blockworks Research and Teddy Sterban from Cyros Research. Did I say that correctly? >> Oster Osterban. >> Very good. Thank you very much. Now, >> how are you guys doing? >> Doing pretty good.

>> Doing good. >> Yeah. D has been great. >> Having a good time. >> Very good. >> I'm doing well. London's been awesome, too. It's my first time here. Oh, can't believe you guys had me on the podcast in person. >> Very excited. >> Honored. >> Um, one fun fact is that Teddy hasn't been able to fit into any form of public transportation. >> Yes. >> Only the tube. Um, everything else has been fine. There's only like one the Jubilee line I think is not built for me, but everything else has been pretty nice. >> Okay. Very good. Um, how's the Did you do any speeches? Any talks?

>> No, I'm talk free. >> No. very lucky. >> No, not that I don't love doing the talks but >> No, I'd love to do one. >> Yeah. >> Teddy, how's it been for you? >> I'd say it's been great. I mean, again, I this is my first thing that anyone's asked me to do, but uh I it >> hopefully not the last. >> Black Block Works has never paid me, but this has been the best conference I've been to. Um so that's a sincere statement. Uh I feel like >> the 20 now. >> Yeah, very good. >> Every panel I've been to has been interesting and like captivating. Yeah, that's that's what we go for. Huge shout out to Bennett who does all of these things as well as >> everybody else but Bennett mostly. Um, we had a very stressful weekend. Were you flying while the everything

happened? >> No, I flew in on Sunday. >> I was I was AFK though on Friday. >> What were you doing? >> I was just logging off. >> Oh, very >> just enjoying life, you know, away from crypto and I Yeah, I didn't have any lever positions open. simplified book and yeah, all of a sudden I got messages on Saturday. I'm like, "No way that those prices are real." But yeah, >> Teddy, any pain? >> A little bit of pain, but it will be okay. Um, it seems to happen every time I go to a conference, too. It's been like once a year for the past four years. The the like I'm supposed to get on a flight and I get liquidated.

Get liquidated once a year. It's always right before flying. So then I get a few hours with no Wi-Fi just to think about my actions. just focus up. >> Yeah. >> Um, no, Friday was pretty insane. I mean, like you were flying. We have a guy Luke on the research team and he was out hunting >> like all week. >> What was he hunting? >> Uh, bull elk is what he said. I don't know what it is. Some American thing. Um, and I think he came back on Monday and he was like, "What? Like, did Adam go to 0.01?" And we're like, "Yeah, it did, buddy. Like, best of luck going forward."

>> Like, it's crazy. Everything dumped? >> It's insane. >> Um, >> how are you doing? >> I'm good. I I I I can't do per. I have a very addictive personality, so I try to stay away from whatever I can get addicted to. >> So, you're more of like you're a hype holder, but not not a user. >> No, I use it to buy more hype on spot, >> less so on purpose. I I generally can't do per like actually I um you know, other people can generate the fees for Hyperlid. I just want to benefit off of the fees by my time. >> Um they made $20 million. That's a significant amount of money for one day.

Okay. I mean, if you annualize that, and we should, should we annualize it? >> Uh, I mean, but how much of that came from, you know, traders, you know? >> Yeah. >> How do you think HLP vault milking traders? >> Well, it's not really milking, is it? Like you >> if other traders can't take on the position, it goes to the HL. I'm doing auto deleveraging talk on camera. That's not a good thing. But we're going to take a risk. Yeah. So, >> traders, if traders, if the order book doesn't work out, go to HLP. HLP can't cover everything then auto deleveraging that's fair. No, >> that's pretty fair.

>> Yeah, I think it's fair and it's the state of the market but I don't think it's a good thing for hyper. >> No, definitely not a good thing. >> Like even the amount of money they made that day. It's like okay, how much have they not made since that event because that happened like I >> Yeah, >> it just feels weird that prices go down to a point where they're not going to stay for more than five minutes, so they probably shouldn't go down there in like a healthy market. Um, I say I'm coping from um, but yeah, it just seems like it's not a great event in order to keep perp trading sustainable.

>> Yeah, I mean, I'm just regurgitating what I saw on X after the fact. People comparing, you know, HLP to lighter. >> Yeah. And yeah, there's been, I guess, some talk on the sort of trade-off between uh traders winning and losing ADL and the benefit of this like back stop liquidity providing. >> Yeah. I mean, you never want the protocol to acrew bad debt, right? >> Yeah. >> Like that to me is very basic. So if if the HLP is designed such that the protocol can never acrew bad debt. To me, that doesn't seem like a bad thing.

Like no one would be like, "Oh no, a uh >> it's a trade-off." >> Yeah. It's like, but if you're prioritizing the protocol, you might hurt the traders or get less traders because they don't feel as comfortable. >> Yeah, that makes sense. It definitely hurts because Teddy was like, "Oh, I got liquidated." And I was like, "Oh, wow. Hyperlid made $20 million. This is fantastic." >> Yeah. But yeah, I I think it's much better than things would have been three years ago or four years ago. So, it's it's definitely trending the right direction. Um, and nothing broke. Um, >> I like that we say this every time something bad happens. were like, "Oh, like three years ago, you know, everything would have gone to zero. Now we're doing okay. Defi, it just works, you know."

>> Yeah. Yeah. I think there's some truth behind that. I don't think that means we should quit, not do anything from from now on, but I I think that there are massive improvements and like I'd still like to use I mean Hyperlid faraired better than Binance did. And that's speaks to >> like there's a lot >> they shut down Binance which is insane. like it's the largest exchange in the world and they you couldn't get orders for it apparently. I just talked to Adam from Rockaway X and he mentioned that they were like surely a lot of people got liquidated just because they had like naked long left because um a lot of them hedged through Binance and Binance API just was down completely. That that's a ridiculous thing to have as Binance. Like can you imagine?

>> It definitely felt like your like CFI frontends didn't hold up very well. like a lot of the stuff that people use that like are run by centralized companies, but DeFi held up just fine as a whole. That's what it it feels like to me at least. >> Okay, let's um let's move away from the very depressing topics and say what are you guys looking forward to over the next six months? >> Um monad cards being worth 100k? No, >> I think they got announced it's worth minimum 100k. >> Really?

>> Yeah. >> No, you can retire if you got a mod card. Uh, I don't know. Nothing really comes to mind. Uh, yeah, I guess Monad and Mega ETH finally going live. Hopefully seeing mainet and seeing the rubber hit the road because yeah, I mean it's been a bunch of hype for a long time. So, I want to see innovation and cool stuff happening. So, that's like the first thing that comes to mind. >> Are you going to be a big Monad guy? >> I mean, depends how much they give to Monad cards, I guess. I don't know. And how much there is to do. I'm also, yeah, I'm a mega ETH fan as well.

>> Very good. Just whoever gives him more money. >> I mean, just whoever's got more motion, you know, more more cool stuff happening. >> How do you think about those two? Cuz like I know you are against this spot specifically, but like the L1 premium versus L2 premium. Do you think like inherently Monat is going to command a higher valuation because it's just a layer one while Mega E benefits off being an L2? I think in the short term it might be priced higher, but I think in the long term you should not have like one premium should not exist and it's been compressing over time because it's all just chains and bridges and your chain should be optimizing for rev or if you have like an entranted

application revenue and everything else like your tech stack or if you're posting data somewhere is irrelevant. >> I have a question for you. >> Go ahead. Is staking actually would you say it is like a a black hole for tokens like just having staken which staking which is obviously not necessarily like a good thing for your token long a token sync. >> Yeah. Like does that get rid of a lot of the supply at the launch of these things that can kind of command the premium? Um, I think with liquid staking it's like been dramatically reduced to like what it could have been. Like if you could What was What did the Cosmos do where

they would like you could you can unlock it and then you have to wait 3 weeks to get your token back. >> It's the 21day unlock. >> Yeah, the 21day unlock. Yeah, like that. That's a token sync, right? Like that actually is. >> Yeah, I was going to say the same thing. >> Like soul is like is it two epochs? I think it's like three days. That's native. Obviously, everybody uses JO. Yeah. >> And then Jetto will have its own soul reserves to like I imagine fulfill immediate demand of like >> unstaking. So I guess not. >> Is that does this answer? >> No, I think it does. I mean I'm always curious if just like giving people something to do with the token like throwing it out arbitrary number and being like 7% APR >> if you stake it. Um, I think that that

gets enough people to be like, "Ah, maybe maybe I'll do that rather than sell it." I mean, if you add a third option into buying and selling and it's people already have tokens, then maybe staking rather than selling kind of happens here and there. Yeah, >> I think people overindex on the token sync stuff because now people would talk about pump fund launches and like oh it's yes they're like they're getting soul but soul is also being locked in LPS but when you actually look at the numbers it's like not that much soul actually ends up in LPS over time. So I think people just overindex on supply syncs in general. It's more so like are people bullish on this asset? Will they hold it? Like the sinks themselves largely are relevant.

>> Yeah, I can agree with that. I I I saw a few of these tweets today and it's like um like Pump is still making a million dollars a year. I mean it's revenue is declining. Um >> a million a year. >> A million a day. Sorry. >> Yeah. >> Um revenue is declining but I mean a million a day at what is it 3.5 bill market cap? FTV whatever it is. >> FTV. >> FTV. Like that's quite cheap. Um but I mean the argument here is like do people want to buy it apart from it buying back its own token and it seems to be no like do you think that also like okay staking you can give utility but even if you have your like buyback some form of value acrruel unless you can command

enough attention such that people are like okay I actually want to buy this token it doesn't really matter like we saw with roll bit as well there was probably some crime there as well but you know it's like if if people don't want the token you can buy it back as much as you want they're just not going to buy back like they're just not going to buy your token. >> Yeah, I that's true. But at what point do people run out of tokens to sell? I mean, if they're able to buy this much back every single day for the next two years, like at some point it's going to hit a wall where it will have enough price impact. Um like they can't just mint infinite tokens to sell. Um so my opinion is like on a long enough time horizon, if you think that pump will

continue this amount of activity, you should probably own it. like out of everything in crypto then it it's attractive. But again, like I think there's worries that if they start making more money, they can cut buybacks back to 25% of revenue. Like I think that there's a lot of unanswered questions and like they've done a good job to show that they are willing to support the token, but that people don't know that they're two billion in cash might be do token holders get any part of that or is it going to be used to build the protocol? I mean, I don't think there's been anything officially or legally said that >> many people know that.

>> I also wonder how much of it being cheap is is relevant to how ephemeral the revenue might be just in the nature of you need new token launches constantly. We saw what happened with Bonk. It took a good amount of market share at one point of new launches. So I think there's maybe some concern on the sustainability of the pump sort of revenue model as a whole. >> Are you concerned? Are you a pump holder? >> I I mean I was concerned. I before you know Bonaf fun and and radium's launchpad I figured Yeah. I mean just the nature of pump fun is you need constant new token launches. Um, and so

as a result, I I figured it's pretty ripe for market share to be stolen. And I still think that's probably the case. Um, and I think we'll see some back and forth. Maybe a new launchpad comes out. Maybe a new chain becomes the place people trade. I don't know. It's a hard thing to like look five years into the future and think, "Oh, this is the thing going to continue to be the thing that people trade." >> Yeah. Can you imagine looking back five years ago and thinking, "Oh, this has to keep going." >> Exactly. Um Teddy, what are you what are you excited about over the next six to 12 months?

>> Uh I think based on your earlier conversation with Paul, I am excited about um Plasma 1 and we're investors in Plasma, so I should say that. But um I'm also on the wait list for Plasma 1, right? Um I think all these cards are generally interesting to me. I just know kind of how the offboard offboarding process goes and it's kind of painful and I think that there's a lot of people that would like to make that simpler. Like you try to withdraw through Coinbase and they try to auto stick you with the instant withdrawals with like a 3% fee on your money. Like every time I have to like go back and like exit out of that, it's like no, I'm not paying 3% to get one day shorter into my bank account. Um, so I think that there's a lot of things that are interesting

happening over there. I think that the DeFi ecosystem has been impressively built out so far. You can probably >> shout out River. >> Yeah. Attribute a lot of that to the incentives program, but I also think that they had a lot of things to do and like USD AI, like whatever you want to say about it. I I think that there's questions to be asked there, but like they're building a kind of interesting novel product that there's like demand for. Um >> GPU powered stable coins. >> Um yes. And I think of it more as like a vault too rather than a stable like similar to Athena. It's like >> strategy backed.

>> Yeah. >> You don't want to hold your life savings in it, but it's worth getting the extra yield if you have to. You can mix and match a little. Would you agree? >> Uh somewhat agree. I mean, you're you're you should be confiscated compensated for the amount of risk you're taking on with this kind of thing. And I'm not sure like the reason why I'm not participating is I don't think it's sort of worth it. Um although maybe in the short term it's worth farming but that's just the way I see it. Yeah. >> Sorry. Finish up. >> I was gonna say I have no idea how well the collateral holds up. Like if you use GPUs for six months are the are they worth 80% of what they were when you bought them? Are they worth 30%? Like does it and who's using them and how

they're taking care. Like I just don't know that. So I think that's the right question. But I know that like you see Sam Alman going on podcast saying GPU financing is like a completely underserved market and it needs to be done and I think crypto is a great spot to uh kind of just serve as a base for allocating capital and pooling capital. So it's cool to see it in the credit markets as well as just random tokens and memecoin launches as well. >> I think that makes sense. Um to be fair they are like 98% backed by stables but but then they they announced their first loan last week and I have a few friends who were like oh no like I thought this was going to be fully stable coming back. I didn't actually think they were going to get

any GPU loans yet. >> Yeah, they're firming the token the USDA token but like at the same point the token could be worth something if this loan like is interesting. It's $500 million. Like I don't know who the borrower is. I should probably look into that. I don't have any money there. Um, but I think that's interesting. I think like if Plasma can become a place where you have like a a bunch of different options on the credit side and like tokenized asset side as well, it's like okay, it's coming together. It's like a not only a payments chain, but like a place you want to hold. Stable coins are like real value in crypto.

>> Yeah. >> Um, so I think that's just like an interesting concept that >> we haven't quite tapped into yet. No, I definitely agree and I think USCI is pretty cool because like you said like we need some new um interesting things coming on chain as opposed to like what we've been seeing. Wes, you're not really a big yield farmer, I realize. And you also don't lend or borrow a lot. You kind of just buy and sell. >> Yeah. >> Yeah. >> It's kind of >> Have you been burnt before? >> No. I just don't think you're being adequately compensated for the risk you're taking on. In most cases in DeFi, people I think get too comfortable placing their money somewhere on chain and like yeah just like don't appreciate smart contract risk and whatnot. So I'd rather not like pick up pennies in front

of a steamroller and getting 13% yield. I'd rather, you know, trade assets that I feel like I have, you know, good alpha on or a good judgment on. Yeah. >> Rather just sell calls. I mean, not that. I mean, I'm not maybe covered calls, but but yeah. No, I'd rather not like chase yield. I'd rather rather trade. >> I think that's >> Yeah, I I very rarely I don't even stake anything to be fair. I'm not a big staking guy as well. Um I get nervous. I get very very nervous. My another thing is that I like immediate liquidity. I feel like I can make a lot more money if I'm just like if I have cash to put in at the right time as opposed to like if I'm just infinite farming a like 4%.

>> Yeah. I mean I think these assets are volatile enough where 5% on your money a year in like dilutive tokens is not enough for you to be like I want to be locked for a month. Um, no, I think at some point in time maybe that's true and it's not just dilutive yield and the assets become less volatile. But >> one thing I feel like we don't talk about enough is that soul talking about dilution is like soul has hit its 2021 market cap way like months and months ago and now it's like double it. Um, if you are thinking about like how you want to allocate to these things, are you actively considering market caps and

in the way that you trade, in the way that you buy and sell or are you still mostly thinking of like direct comps? Because this is something I was thinking about like when you think of ETH, it's actually not hit all-time highs. Um, no, it has, but not to the point that Solana has. Is what I'm saying making any sense? I know I'm asking very horribly, but >> I think it makes sense. I think it depends on your time horizon completely. Um because yeah, I'll have trades that are a day long or a week long, but if I'm holding something for a very long period of time, I'd certainly take into account changes in issuance and supply and I'd mostly go off of FTV um versus market cap. I think it yeah, entirely depends on the time horizon of your

trade or investment. >> I think with something like Soul, it's different than like Lido as well. If you look at the Lido like FDV chart and it's like >> you watch Lido just get billions and billions and billions in deposits and like the price never >> No, it's always $1. >> Yeah, the market cap chart looks great. You look at the price, it's been the same. Um, so I think that one's a different one where it's like token holders aren't getting any of that inflation. So it is all delilution. I think that with soul like again maybe we don't want to stake but you can stake and I think with the staking ETFs that will hopefully be approved like then it shouldn't matter as much but I think it's definitely tough for like

an investor to want to own something that they're going to be diluted in and they don't want to necessarily have to stake. So like I think it's something that chains need to think about and it's like do we need to be paying this much and the valid validator commissions need to be this high. Um, >> yeah, I think that's a great point. Like where the issuance is coming from is super important because if it's a proof ofstake chain like you as a token holder have the right to the new issuance versus if the issuance is being used for farming incentives or the issuance is just unlock tokens completely different.

Um, and that certainly changes. Yeah, like the investment perspective of the thing. To end things off, I already asked my typical ending things off question, like the six to 12 month thing, so I have another one. Um, if you could only bet on one chain going forward, and Teddy, I'm going to ban you from saying plasma because you're an investor. You already said it. Um, which chain would you bet on? >> What's the time horizon? >> 12 months to 24 months. And I'm betting on the the native token.

>> You're betting on a native token. >> That's a good question. Probably Salana. >> Maybe Hyperlid. >> Yeah, >> I'd say Salana and Hyperlid are >> you have to pick one >> out of all my live chains. I don't know. I'd say it's definitely like the way that Salana feels like they're making improvements and kind of targeting the right things compared to ETH. It's not like a big gap between Hyperlid and Salana, but it does it does feel like Hyperlid has a lot of momentum right now. Um, so I wouldn't bet against them. Um,

>> very good. But >> very good. I would also >> That's the right answer. >> I think that's the right answer. Wesie, we're going to be having a chat later on. Um, guys, I really appreciate you coming on. This was really fun. >> I agree. Thanks for having us. >> I appreciate it. >> All right. structure.

How do we supplement the incentives even higher where we're not taking any incremental risk uh but actually they're just offering more of their native tokens. So we do that calculus but it's very much you know when I was in Singapore I was thinking I was going in for many conversations around liquid alpha but actually say 50% turned into oh we're actually launching vaults. Is there something that you can do there? It was eye opening. Um people that again standard charter and all these guys that you wouldn't think we would even think about doing it. Um but that's amazing because it started at the genesis of a brainstorming idea about a year ago, year and a half ago. Um but now it's grown to one of the biggest parts of the business.

>> By the way, Lewis, I love how casually you dropped a billion dollars as a yard. I think when I grow up, I want to be I want to be that cool and nonchalant. Um very cool. Um Ryan, Ryan, can we talk please about where we are in the um SEC regulatory adoption cycle? We've talked a little about the upcoming We had the Clarity Act first of all in um in in July and now we have the the next uh broader uh uh act coming up to regulate the rest of of everything in in digital assets. I think this will really bring in the next wave of money and we already see over 100 ETFs lined up, right? You have any insight to share there about what to expect, where we see the flows,

etc. >> Yeah, so the past 12 months really in the regulatory and legislative space in the US has been phenomenal. It's been just the most incredible amount of traction and activity and a long-term tailwind as one could possibly imagine. And we've been at Bitwise just working day and night to file for as many ETPs as we can to bring these products to market to think about how are investors going to want to gain exposure to stable coins as they grow from 300 billion to three trillion and they want to express their interest in that allocation. Does a publicly traded equities ETP that has companies like Circle or Coinbase makes sense or do you want to provide some kind of thematic stable coin crypto

asset ETP something like that? All of those things have been happening and then it went on pause when the government shut down. So, we've had a bit had a bit of this this kind of sprinting and then stopping. But what we believe is going to happen is once the government shuts opens back up, there's just going to be an onslaught of ETPs launched and there's going to be something like 25 of the largest crypto assets will meet the generic listing standards that the SEC rolled out, which means that it's a much easier path to listing as an NTP in the US than historically it's been. you won't have this 240day waiting period that you've had for the Bitcoin ETPs and for the Ethereum ETPs. So, we're really excited about that. I think investors will all of a sudden have this big menu that they can choose from. Now, most of the

investors that we speak to, these financial adviserss and RAS don't know that much about crypto or they're early on in their journey and so they're excited about Bitcoin. They've maybe heard about Ethereum because they hear about stable coins and tokenization. Maybe they've heard about Salana. But once you get past those assets, we really don't get a lot of questions. maybe XRP, maybe the Cardano question every once in a while. So, I think it's going to take time before flows go into those assets. Certainly, I do think there will be more crypto enthusiast investors who do want to go out down the risk curve and they want to choose the lower cap assets.

But I also think what's going to happen is you're going to see more thematic and more index funds come to market, which is another element of these generic listing standards that's going to be a huge unlock for asset managers like us at Bitwise is we can now offer more interesting and and compelling and kind of um you know own the market with a basket of assets rather than having to bolt on your own kind of portfolio. So I think that will be where a lot of capital flows. Certainly, if you think about the ETP market today, it's like a 20 trillion market. It's a huge market. And right now, Bitcoin ETFs and Ethereum ETFs are like 1% of that market. And I think that will grow to 10% or more of the ETP market once we have more ETPs, once we have index ETSs, and once we

have much more options for investors and now that we have that regulatory clarity and we have the the lack of an attack on the industry from regulators and from the administration, investors are sighing a bit of relief. they feel like they can start allocating. They feel like they can go tell their clients they own crypto. And I think that's also a huge a huge unlock. And I think a lot of people are actually missing how big of a catalyst that is and how many years that's going to push continue pushing the industry forward. Just really quickly, it's interesting thinking about the reverse of that. So I just had a notification saying uh you know the S&P putting sort of stable coin data or risk ratings on chain through chain link.

Point being is that obviously there's a lot of um sort of real world data that could be plugged into web 3. So one of the things from a vault infrastructure standpoint that we're exploring is um indices onchain indices and kind of reviving that old chestnut that we saw a couple years ago. Um but you could conceivably do it over anything. So we've been experimenting back in the day with AI agents. Was there any appetite there? But you know there's a huge design space. Um, and if we're able to do it in an efficient way and, you know, collapse the cost of of managing it in a vault setup, then that's pretty intriguing. So, it's almost like the reverse of what you guys are doing and seeing what the opportunities would be from that. you know, um Ryan, you mentioned a few times like the benchmark, and I think what's underlying

all of this is that right now we're uh a lot of the service providers, um and index providers are almost in a war to figure out who is going to be the S&P 500 of crypto because once you identify what it is, whether it's an equal weighted, top 10, equal weighted 100, asset weighted, whenever we find this out and people really start to benchmark that, we get the passive flows and we get everything that's kind of index to that and you know and look no further remember um Coinbase was um introduced into the S&P 500 in May um and then by June all the catch-up that had to happen it was the best performing single stock out of 500 it was up like 40 or 50% and that's exactly what we will see but

right now I see you know so my my role dayto day is to cover um crypto managers and I see almost every other manager has a different benchmark and of course the game is for them to um produce a benchmark that they that they look better against, that they're producing higher returns, higher alpha against. But um you know, it's it'll be interesting to see how this shakes out because eventually eventually we will come to some consensus that this is the you know, this is the S&P 500 of crypto. Maybe it will simply be Bitcoin itself or or maybe it will be some kind of index of all of it. But really, it's all over the place. And and that's why there's so many opportunities. There's no standardization yet.

>> Yeah, I think we're very early on in in the journey to be completely honest. I think Bitcoin is broadly looked at by the investors that we speak to as the market or as the benchmark. Of course, at Bitwise, we're biased that we believe the Bitwise 10 large cap crypto index will be the S&P 500 of crypto. So, of course, I'm a little biased to that. But what we've found is that investors like the idea of, hey, I can just buy this one fund. I can own 80% of the market and I know that it's managed by people that spend 100% of their time thinking about the crypto market, right? Because most of the institutional investors who are allocating to crypto 1 to 3 to 5% are spending even less of their time than that on the crypto market. They're thinking about bonds and equities and

tariffs and trade wars and fiat debates, like all of these different things. And so what they want is just one-stop shop. And that could come through things like DATs or or like for instance we have an index of DATs. So if they want exposure to that theme or they want exposure to a bunch of companies that are out trying to outperform the index and they can get that exposure through an index fund or they can go through a vault for instance and kind of try to outperform the benchmark. But I think the benchmark is Bitcoin. I think like I said before indexing is going to be a huge a huge part of that and ultimately the benchmark will transition to something like the Bitwise 10 large cap crypto index.

>> Yeah, I hope so for for your sake. Um, one cute analogy I've heard which I I'm quite partial to is that bench Bitcoin is the benchmark for almost the equity like benchmark and the ETH staking yield is like the risk-free rate. Like if you can't beat 3%. Because remember like if you invest in the risk-free rate, you don't get appreciation. But with investing in Ethereum, you get the hope hopefully price appreciation and your risk-free rate. You kind of win in two ways. So, like that's exactly what you want to own is the risk-free rate with asymmetric upside. Um, but I kind of like that. That's kind of like the the cost of capital is you should at least be getting that kind of risk-free free free rate of return. Um, we have a few minutes left. Um, I think this weekend

was such a shock for the whole in fact it was a shock in one sense, but it wasn't. We knew that we would have a big liquidity crisis coming someday. We didn't know it was going to be this weekend, per se. Um, but I think we were all kind of expecting that eventually this is what crypto does. It has crises, it recovers, it grows stronger, and it gets better. Um, but main any any takeaways from any of you guys about how we how we performed, how the industry performed, how where we go from here? >> I'll go first. I mean, I was fortunate to look at the whole developments with a pretty level head because we don't take leverage in the fund, thank God. Um, takeaways and we're talking about it backstage actually, very briefly. Um, for me it's really understanding how

things work, especially on the per side. Um, and hearing of large entities that have positions on, let's say, Hyperlquid and not realizing that they could be liquidated even if they're on the right side of the market sometimes on the bets. Um, I think it's just a bit of a wakeup call to really understand that there's no system that is perfect. Educate yourself on how it it works. Um, that's definitely the the highest level takeaway. And I think from a market structure standpoint, you know, we're still pretty constructive overall. I think market right now in the short term is trying to find its footing. So there's a a bit of a recalibration period I would say right now. Um but from a macro standpoint nothing's changed despite the sort of liquidation event that we did see. So I think for us zoomed out um we still think a lot of

these kind of fractalss have been respected so far. Um but we're really going to be taking it week by week, day by day. >> Do we think this was a flash crash or the beginning of something more uh long-term? >> I'll jump in. I I think that this past weekend it's it's fortuitous timing for this panel cuz it actually captures everything we were talking about. So, first active versus passive, the people that were passively just holding spot, especially the the index type crypto assets, Bitcoin and ETH, they didn't really sell off that much. I mean, it really honestly wasn't that noticeable um if you're just passively holding spot. So, it shows that people that start to mess around in more active strategies with 100x leverage in tokens

that don't really have that much liquidity or or honestly are have an inflated market cap, those are the ones that got absolutely destroyed. And that's where um do-it-yourself active may be a little bit tougher and maybe this the call to action is let's concentrate on a few blue chips and um like like Bitcoin and ETH and then use a much smaller portfolio size for alts. So, that was one takeaway. Does it happen again? We flushed out a lot of leverage. So I mean it was almost this felt more like a flash crash that we bounced back from than a structural issue. Um and the structural issues were exchanges were very quickly um uh identified and then we'll get past them.

But I think I think we're going to resume our our uptrend very shortly. Yeah, to be honest, for me the reminder um was the power and importance of diversification um in your portfolio like not just from from strategy but also counterparty, right? Like which exchange are you on? Which instruments are you trading? There was so much going on and you know over these last few years I've been pitched by so many of these different funds and different trading different SMA strategies and to see 1.6 6 million uh accounts um be delivered automatically was such a shock. Like some of these had pitched me how great their risk management were and I'm finding out where all the bodies are

buried, how many of them are worth zero like gone from 100 cents on the dollar all the way to zero and you can't recover from zero. Um so for me having this like diversified approach really uh is just was just reinforced u by this crisis we had this weekend. Um and I think we are basically out of time. I want to thank my panelists and thank you all. [Applause] Thanks so much. So, moving on from our investor track, we've had the first two panels that have touched on the uh quest for onchain yield and outperformance versus some benchmark. Next up, we have a discussion to go a bit deeper on both

of those, the quest for onchain yield and durable outperformance. Please welcome to the stage uh Blockworks co-founder Michael Ipalito and Ray Hindi from L1D. [Music] >> Ray, how are you my friend? >> Great. How are you? Congrats on all the success. >> Thank you very much. I appreciate it. Um, all right. We've got only 20 minutes here and we've got a lot of ground that I want to cover with you. But before we get into it, can you just give a quick 30 second intro to you and uh L1D?

>> So, my name is Ray Hindi. I'm one of the founders of L1D. L1D is a crypto fund based out of uh Switzerland. Uh, we've been in business since 2018. And the way we invest is uh we invest in funds on the liquid side and we invest in direct venture as well. Uh so guys, Rey is too humble to say this for himself, but he is one of the sharpest allocators in the space. Uh and he has a very interesting ground view into what's going on on the manager side of things as well. So that's where I kind of want to start this year, right? Like just give me the TLDDR, the kind of year-to- date postmortem, like how are our funds doing out there? And if you could kind of separate kind of the liquid funds from the, you know, delta neutrals from the equity only, like how are our fund

managers doing out there? [Laughter] So uh funds on the liquid side are not doing great. Um this year is is probably on average one of their uh one of their worst years. Um you know the biggest challenge has been uh beating uh Bitcoin and as you know we become more institutional I think some of the alpha came from not being institutional. uh having the fle the operational flexibility of operating on chains that you've never heard of uh two days ago etc. And so um they've been constrained.

Um having said that uh there are a few specialists. So for example equities have done well. So specialists on the equity side which a few months ago was a restricted universe have done better. Um so the liquid side is um uh is suffering. Uh now having said that we have to assume and be realistic um over you know a five 6 7 8ear cycle most of the liquid funds out there whether it's in liquid venture etc won't generate any alpha. Um alpha is very very scarce. Um the problem is that this year the ones that did didn't compensate for the ones that didn't. uh and this is something

that we need to see uh going forward and I'm pretty sure that we will >> and you know obviously don't reveal any uh state secrets here but you know I'm curious on the liquid side of things are the managers that are doing best you know you mentioned flexibility right so being able to maybe uh maybe be a little bit more um risk on in terms of experimenting taking on technical risk moving on to new chains but I'm also curious on who what types of strategies are performing on the liquid side to the extent that they are is it kind of like what are the sort holding periods is it more trading oriented you know what is what is working out there >> yeah so I I would say that there's um the few managers that are really performing uh form a sort of a of a

barbell so I can describe it by looking at you know emerging managers out there so small size um so you've got I've got one manager in mind who um they've started their business in 22 or 23. Um they've started pretty aggressively by build building their brand. They're fundamental in nature, but based on the fact that they run roughly $30 million or were at $30 million at the beginning of the year, 25 $30 million, they were able to get into situations that are less liquid um still in a diversified way um by you know capitalizing on that true fundamental

meta that we've seen. So looking at cash flow being very active with the projects themselves to create catalyst for um you know positive price action etc. So you can think of you know early to uh so you might guess who I'm talking about but early to um you know maybe um Camino early to syrup early to Metadau etc. So a name that you wouldn't have heard of two years ago that today you hear >> all the time >> all the time. Uh so that gradual uh brand buildup while staying very nimble and small served them really well. Um you know a team that is very hungry, very small team. So that's really really

important because you know it's easy a lot of allocators uh always prefer to invest in emerging managers with you know smaller aums. The assumption is that everyone's hungry, everyone has the capacity to generate alpha. The reality is that this is not the case. uh but if you are and it's an advantage to be smaller. Now there are uh you know funds from the past cycle that have done extremely well uh but unfortunately even if you've had a fund that has generated alpha in the last 5 to 6 years uh there's no guarantee for alpha going forward. Uh in fact in most cases you can guarantee that they'll generate negative alpha. Um and that has to do with the unfortunate um curse of the

wealth effect in crypto whether it's uh whether you look at founders uh you know you can name how many founders uh that became wealthy keep on going and pushing their projects forward they're pretty scarce you can apply the same with a GP out there a GP that was very successful from 2018 to 2022 etc today is in most cases you've got three scenarios. One, um, they give up on they they close down the fund and manage their family office. Um, two, they soft drug, which means that hey, you know, uh, we're all human beings. We have different interests at different

levels of wealth and they start uh, but they want to keep uh, their business going and so the way they manage their business shifts in a major way and some of the the signs are very uh, very apparent. So for example uh the major risk taker will start hiring more people and delegate a lot of functions and you'll notice that the major risk taker is no longer involved in um analyzing a deal or uh in discussions with the founder because those roles were delegated. um what they want to do in terms of running their GP if they want to you know have a better life better quality of life etc and be less involved they need to collapse the

volatility of their revenues the the GP's revenue and the way they do that is um they start delegating to other team members and um get become instead of being risktakers uh they actually become risk managers so they've got ideas that are pitched to them And naturally uh and and and that's in line with the fact that they want to compress the vault. They become over diversified. So diversified portfolios this year underperformed heavily and generated negative alpha. The only ones that did well were portfolios that were heavily concentrated uh i.e. the re the original risk taker um kept the keyman risk in

play and pushed for the deals that they know best u and so this is the this is the only format that actually works so the barbell of emerging managers that are more nimble uh that are you know still hungry and you know your extremely wealthy GP that has that is still hungry for some reason and still pushing and expressing their conviction accordingly What percentage do you think fall into that second category? >> I'm not sure how many funds we have out there, but I don't know, maybe 0.1%.

>> So, pretty scarce. >> I can think of one. >> Okay. Very scarce. Um, okay. Let's talk a little bit about the allocator side of things. So, you know, one hallmark, uh, I'm just thinking about the quantum of capital that I see show up in venture deal sizes. And when I'm thinking back to 2021 and 2022, massive, you know, 100,200, $400 million rounds, you see far less of that today. And I think some of the funds that raise these mega fund, again, 400,500 million, in some cases, billion dollar funds have struggled to raise at the same size. And I'm just curious, you know, from the allocator standpoint, how have the preferences shifted both in terms of

willingness to allocate capital, but also, you know, maybe away from some of these mega funds that, to your point, might have gotten a little tired or maybe took their eyes off the ball uh into smaller funds. >> Um, yeah, I would say that the So, I mean, in 2021, 2022, we created a crypto VC bubble that we've we've been paying the price for it uh ever since. Um but of course uh fact is is that most um cryptovc funds out there are unable to raise the equal amount of capital that they used to raise and those are the good ones the reputable ones and most of the others are not raising anything and many are shutting down and that's a good thing. So which means that you know the system is um is being cleansed um and

you've got you've got less competition going forward. Um I think there's again I think the opportunity set is around those barbells where you're going to have uh there's a few big names out there that are heavily respect respected. can think of maybe three of them. Uh that What's up, guys? Welcome back to Zerox

Research. Today, now I'm joined by Guy from Infina. Guy, how are you doing? >> I'm all right. Yourself? >> Very good. Um, as well as David, I'm good. Carolina. Yes. Thank you guys for joining. >> Thank you. >> Um, guy, very busy weekend and a very busy Friday. What did you guys see on your end with all of the volatility across markets? Yeah, I was actually stuck on a flight coming back from New York uh with Wi-Fi that was cutting in and out, which was not the funnest experience I've ever been through. Um yeah, I'm not sure where to start. I think it was just obviously a pretty insane the scale, speed, depth of how everything sort of collapsed. I think um pretty eye opening experience I think for me where I thought just generally had a bit more liquidity than it appeared and it just feel felt like the

floor sort of like fell beneath the entire market. So um I do have some concerns like longerterm ramifications. Does anyone sort of in drive look at this market now and think it's like an investable >> space when the floor can just fall below your feet and like - 60 - 80% in 5 minutes. Um so I think there's going to be a slow sort of rebuilding trust building exercise that we need to go through sort of an entire space. Um so yeah sounds like a pretty negative comment but it was a pretty eye opening I think experience. >> Yeah. One thing I wanted to bring up is we talked about this last time you were on the pod hardcoded dollar one. I think you were kind of proven right. Right.

What would you say on the Friday thing? >> Yeah, I mean it wasn't um we obviously don't set the oracles on ourselves. We uh did support that idea. I think the basic idea and I put a thread out on this on Twitter this week was kind of you're really asking a question of what are we trying to solve for with oracles which is a temporary dislocation of price? Are you scared about that or are you scared about a permanent impairment behind the collateral? And I think the point that I was making was that actually in most scenarios are wanting to actually just stop people getting liquidated for an unnecessary reason which is actually what DeFi achieved I think in the last weekend. But then you can always have something that actually flips to like a proof of reserves which is saying we we demand Athena to prove

like how much is actually sitting within the collateral and if there is actually a full impairment then you can adjust the oracle to reflect that. So, it's one piece that I think Chaos Lab is doing pretty uh pretty good job on, which is actually allowing that toggle uh to exist. And I think that's sort of direction where we need to go with these things. >> Yeah, I think that makes sense. You guys have anything you want to add? Since they're the risk people, I'm less risky. >> Less risky. Um no, I just wanted to add that actually it would also probably be fine onchain. Um Athena's price, well, yes, price was pretty good and it would still probably have um holding up. Yeah, I think that that was one piece of misinformation spreading around the market, which is like if a hadn't done this, D5 was a zero. Actually, Ave was

completely fine like literally DAG less than USDC did in curve >> with n like nine figures of liquidity sitting in there. So even if a had just tracked the curve right sitting in there nothing would have happened on chain. >> I do think that I correct me if wrong you probably know better than me but I think chaos labs had also mentioned that currently they obviously have the P or O or O or O or O or O or O or O or O or O or O or Oracle but it's not embedded into A's infrastructure but I do think that they're planning on iterating on the current Oracle infrastructure. So it's no longer hard pegged to one but it actually will be you know primarily using the P then maybe have a fallback mechanism after that. So that is >> yeah it's correct. I think you should

sort of view this hard coding piece as more of like a temporary stop gap temporary thing with the view of getting towards proof of reserves and in many senses I think that's where every single RWA uh asset issuer who's doing anything which isn't fully verifiable on chain you need some sort of uh verification meth method forms >> how did um how do you like during this 10 sigma event like how obviously you guys handed over $2 billion redemptions within like a 24 36 hour period which is obviously really impressive um was there anything that you were not obviously didn't expect the event to happen, but was there anything that I guess happened that you maybe weren't expecting giving given the ramifications of like all that kind of unfoiled in on Friday?

>> Yeah, I think it was just kind of market structure breaking down on venue specific places. So, um there's alo pretty wide dislocations in pricing between curve and then a bunch of different exchanges that around it. Yeah, I think that's one piece that we just want to work with different platforms that we're working with now to actually just make sure have we actually aligned the right oracle decision here because at the moment everyone's actually applying something that's slightly different across every venue, >> right? >> Uh so I think the disparity that we saw with like dispersion between different venues was a pretty shocking like thing to see and you kind of see it in the data um as well. Um but yeah, I think from our perspective, uh people sort of forget a little bit that actually Athena is pretty well positioned going into these events because when people are

getting liquidated, the per tend to trade at a massive discount to spot. And so in many senses, the only thing that we're actually doing when the market is imploding is just trying to close those positions as quickly as possible to capture P&L. And it's just I don't know, people freak out every time the market crashes and we're sort of sitting there and like we're actually in a better position than we were in like yesterday while it's happening. Uh, but it's I've guessed the trigger. But >> yeah. Um, one thing I wanted to bring up is I'm noticing more and more that you guys are getting the white labelled stable coins like the Mega E one was one. Um, with Jupiter as well, if I'm not if I'm not mistaken, is this something that you're going to be more and more focused on going forward? Like

with um I guess fiat backed stable coins launching over different protocols and chains. >> Yeah, for sure. I think um the week where we came out with uh mega USDM and that was a week that coincided with hyperlquids USDH proposal. I do think that there was a very sort of a shift in like the Everton window for the industry on that that week where everyone sort of woke up and said if we have distribution if we have users on our platform how are we not thinking about sort of trying to capture some of this value and I think there's been a very noticeable shift as well I think even with like infrastructure projects now when everyone's focusing on the revenue meta which uh obviously isn't the meta it's just kind of like >> capitalism >> corporate finance um but uh the revenue

meta itself uh chains are sort of asking the question of like what happens when me as a percentage of like transaction volumes is like trending towards zero what else can we do to actually generate revenue as a as an layer of infrastructure the easiest answer is like if you've got billions of dollars of stable coins there's nine figures of uh interest income that's actually sitting within those balances so what I can say is like we really only launched this product two and a half weeks ago we've got mega sui uh Jupiter and I'd say four of a similar level coming out within the next sort of two to three weeks Uh I I honestly think within the next month you'll have 50% of every single app, wallet, and chain uh producing one of these in the market. It was probably the busiest two weeks we've ever had in

terms of like inbound BDS after that whole hyperlquid proposal. >> Um I think there is a question of like is this the correct user outcome because like do we really want a thousand stable coins with like everyone's got their own little branded thing creates friction. It creates all these different pieces that are suboptimal. But unfortunately I think that is where we're going. I say unfortunate for like the users users perspective because like I think the great thing the real outcome that everyone wants here is actually we all just agree on one token and you share the economics with everyone basically but unfortunately I think people's sort of egos and own uh economic interests drive us away from that outcome.

>> Yeah, I think that makes sense. Can I actually lean on what is um >> what do you think this means like what's the long-term implications for Athena's business model with like the stable coin as a service offering >> in terms distribution? We make slightly more on the stable coins as a service than we do on just USD and USDTB. >> Um, and you can really think about it as >> if a project is starting with USDTB within the white label offering, they've always got the option to switch to USD in the backing if they want to. And the view that we have is that people will start with USDTB, which is obviously lower margin to start with, but as interest rates start to decline and everyone gets more comfortable with us as a partner, they go, okay, well, maybe I can get 10 instead of three in a

year's time. And so really it's a way of us distributing USD in a multi phased process. Um but yeah we make more money on those products than we do on like the underlying themselves. And uh so it's yeah I wouldn't sort of say it's like us disrupting ourselves. It's more us undercutting the margins of competitors. >> Makes sense. >> One last thing I wanted to ask is about HIP free. Is that something that you guys are focused on like hyperlquid integrations? Yeah, I think uh we spoke about it publicly within that USDH proposal. There is going to be a front end that's launched uh with USD collateral redenominating the whole exchange. Um I think from my perspective that's two of like the killer products within crypto jammed together in the same place which is like dollar with a

return plus per trading and when you put them together it's a pretty cool uh user experience. So there is a team that's picking that up and building a front end there and obviously Hip 3 came out yesterday so um should be pretty soon. Yeah. >> Very good. Um I'm gonna do you want to ask something? >> Um yeah just I had a question and we were talking about um money uh making money with the underlying. I feel like there has been a shift like right now there's a lot of liquid stable backing in USC. Is that like a broader move to to have like backing assets on chain or is it just like uh it's just happened because yield is better there? Yeah, it was just a great driision. I think um market's been in a funny place, I think, in the last six months where you have a

bit of a spot-driven rally with like Tom Lee and Sailor buying and then everyone's like, "All right, they've stopped buying." So then the market crashes and it's just this sort of like endless loop where I think no one has the confidence to be fully levered long in the same way that they were when Trump was sort of coming in and key fall last year. That's kind of like the perfect scenario which is um everyone saw this this sort of great tailwind that was there which is like Trump's coming in and there's going to be deregulation all these different pieces. let's frontr run those spot flows via derivatives and we could sort of like benefit from that. It's almost been the opposite now which is like sporadic spot flows come into the market. Everyone's like all right well when this runs out do I really want to be long e ETH above

5k? Like I'm not so sure about that. Um it just makes that a challenging environment for a consistently like frothy rate environment within per. So if if we had capacity to do 15 bill which is where we were sitting last week in pers I'd like to be 95% in per but um the market didn't have capacity for that. Makes >> sense that makes sense. Um guy last question next 6 to 12 months what are you most looking forward to within crypto? >> Within crypto? >> Yeah or any it can be personal as well if you want to go to 100 billion USD.

Sorry I thought you meant saying invest in crypto personal life. Um, uh, I think equity perhaps are probably the most exciting product that isn't scaled, but it's like the opportunity size is like bigger than the market cap of Robin Hood. I think it might be. Um, so I think someone's going to make a uh, incredible business out of something attached to that. And I think um, it just feels like one of the most obvious opportunities where retail flow on options doesn't really make sense as like the instrument of choice to express leverage. Um, >> they're not really there to price a Greek or price V. They just want leverage. And I think crypto has shown that people prefer perhaps over options when you're given the choice. So you've got a asset base which is 30 times the size of crypto i.e. US equities and a

superior instrument we think and uh yeah I think someone's going to do very well in that space. Yeah >> I think that's that makes a lot of sense. Yeah, like I guess briefly, have you guys shifted your attention towards like this white label stable coin service product and also maybe like the HIP 3 maybe it's a separate team that's building um the Athena based uh hyperlquid market but um any thoughts on what's going on with converge? Is that taking a step back? Are you guys >> Yeah, I'd say slightly dep prioritized versus the things that we've been uh talking through here. >> You have a lot going on so I get that. >> Yeah. And slightly small lean team and I think um there's obviously been a lot going on with DATs. I even think uh DATs as a potential consumer of our product is also an interesting avenue which we

haven't spoken about as much which is a lot of these DATs are going to be competing on the axes of how much money can we raise from trady to deploy into stuff like USD on chain. Uh there's a bunch of them who are beginning to work with us now and I think that that's actually one of the most interesting conduits for tradi money to actually come in at scale on chain because it's almost like an open-ended format where they're just like here's my money go and take as much risk as you can to like generate return. It's kind of what the mandate of most of these things are. And so I think uh for the first time you could have like real connective tissue from trad basically for them to come into there.

So I think yeah um they're changing sort of priorities through time. >> Makes sense. >> Guy, thank you so much for coming on. This was a lot of fun. >> Appreciate it. Thank you. You're welcome. Guys, base the crypto ecosystem more broadly.

This year we're seeing the stars align. And what does that mean? It means we're seeing founders and owners of businesses more interested in transacting um and more open to to coming to market. We're seeing regulatory shifts in the US and globally, which is making the space more attractive for fintech and traditional financial institutions. And we're seeing more crypto businesses go public. And what does that mean? It means more businesses that are able to deliver liquid currency into deals. So fundamentally we're seeing a lot more M&A activity both in terms of um sellers who are interested in coming to market and buyers who are able to one deliver

meaningful valuations and two deliver interesting uh transaction structures for sellers. So it it's been busy on our side but I'll hand over to others too to share their perspectives. >> Yeah. Oh, maybe before we ask Casper about his year, who in this room, quick show of hands, has been involved in a M&A transaction or IPO in in their career to level set. Okay, so we have a room of experts out of that group who has been involved in a crypto M&A transaction or IPO. Okay, so that's almost 100% uh we have a crypto M&A expert crew here. So, let's go a bit deeper maybe. Casper, what do you think makes crypto M&A unique um even within let's say the more traditional M&A

context and and yeah tell us a bit about the differentiating factors that you see in crypto deals why for example so is a advis is an advisor with crypto expertise uh better positioned to work on crypto deals or or what is needed really um when you take on the Spartan Yeah, sure. So, I worked for a long time in traditional M&A at uh at Goldman Sachs where um you know we would have industry teams. I sat in the natural resources industry. I covered power in form of coal, gas, nuclear, renewables, chemicals upstream, downstream, midstream, oil and gas, upstream,

downstream mid-stream infrastructure. So obviously in each of those segments I was not an expert but I was running these billion-dollar M&A deals um and could kind of get by because these were like very late stage companies. The deals were $500 million and up. I think crypto is still because we're still quite early. I mean there have been up to3 billion dollar kind of transaction sizes with a derbit deal but generally the deals are earlier stage companies um which requires more work from the adviser as part of the transaction to kind of just get the company ready and a deeper understanding of the industry.

It's also um a lot of the companies have relatively young founders um who maybe this is like their first job or they haven't done that many other things and they're very passionate about crypto. So I think to get a um a good outcome of a crypto M&A deal, you need three things. You need M&A product expertise, which you only get by doing it for 5, 10, 15, 20 years. It's not like a fundraising round. You can you can pitch to 100 investors, you have a good pitch, you're a strong founder, you can get it done on your own. Like I think there's value to an adviser, but M&A transaction, I do not recommend a founder undertake that by themselves. The second is um you need

a crypto network. You need a network of people that have an idea of who's a red acquirer for this asset. It's not like a fundraising round where you just hit a hundred names and just you know you have this funnel that you go through. It's much more bespoke. And then you also need an understanding and passion for the industry and the business so that you can position the the company right. Um, so just to make a a small plug on that point, I would say we're starting to see what I would call non-cryptonative advisory firms come into the space. So the three of us, um, Galaxy, Ara, and Spartan were all cryptonative. Uh, we're starting to see other like midsize banks come in, uh, and some fintech, uh, banks come in also, um, and take some some market

share from us. But I I do think that from if if I'm a founder, I would want, you know, by all means, you know, have have people pitch for the the work and and then select your best adviser. But I think being cryptonative is very important to get a good outcome on an M&A deal. >> Yeah, I mean I I will pick up on that point because I would say it does not just apply to your M&A advisor. Um, something that we're very thoughtful about when we're working with our clients is making sure they have the right support across the transaction. Whether that is council, whether that is accounting, whether that is audit, um, you need the right people around the deal who understand a how to get deals done, but b understand the nuances of

crypto and what that means for your transaction. Because what you don't want to be doing is paying people to learn. uh fundamentally you need people who are able to come and deliver meaningful advice and get a deal over the line for you. >> Yeah. And that's I I think even leaving aside the fact that we may see more and more deals actually involving tokens and uh having unique structures that obviously outside of crypto would have been unthinkable. And so yeah, there is a new paradigm I think evolving in the crypto M&A space which we're all very excited about driving. And yeah, I think we're seeing an early really early innings also on the onchain and and token M&A um spectrum. Lauron, how how have you seen this year really? Um also

X investment banking background um you probably have a very nuanced view as well. Uh especially maybe around token M&A, anything you see in the onchain world that you think is worth sharing? >> Yeah. Um at the difference to my colleagues which are more on the M&A side and the early stage uh of any deals uh with MV Capital we will come more at the late stage. So once the project is live you you need a liquidity bootstrapper or vault curator to really like to to bootstrap to foster uh what my colleagues uh first invest in. Uh the year has been busy, not to take back your term, positively busy. Uh we saw of

course more institutionalization not only uh in crypto but more specifically on the DeFi sector. Uh I remember like a couple of years ago we were just between a a small scene of a crypto bros as we used to say uh to now a more regulatory compliant uh sector that uh basically make a huge metamorphosis of what we were doing like 3 years two years ago. Now I see a real change of the industry that become way more institutionalized.

Uh, regarding the M&A like as a whole or token M&A if I may say this way, well the the market is extremely f fragmented yet. Um, but thanks to some like u would it be mika compliance rules or more clear uh genius act um regulation um it allows us to uh yeah to go to the next step on on on DeFi. And it's true like I think those last those next six to eight months we will see a bridge between like traditional finance uh to more DeFi and I'm really happy to work with you guys to to help the the sector to to go this way.

awesome take and I mean we are obviously in the largest or hottest M&A window we've ever had in the industry but let's maybe discuss a bit and we haven't even talked about it between us but where do we stand in that cycle like are we seeing the top are we nearing the top um there is so many good conversations now happening which um at least in the history of Arita which has been basically one cycle uh we've been yeah I mean just amazed to see also the new interest coming and then uh spent some time actually yesterday with buyside funds, mid-market PE funds now looking at crypto assets which is just an amazing uh dynamic to see and as as X Blackstone private equity professional uh obviously want to see more and more

of our like-minded um financial investors come into the uh space and instit help institutionalizing what are already great businesses. Um what else what are the trends that you're seeing Casper? Um are there I don't know uh traditional buyers coming in uh what are the dynamics you're seeing on the ground that may lead to us thinking we're more advanced in the cycle and or or yeah just share a bit of your thinking on where we stand. >> Yeah sure. Um, we started Spartan in 2017. So, I've been through a a few crypto cycles already and and um I'd say we're definitely at a very strong point in the cycle since uh or still this weekend this massive draw down that

happened and bit of shock to the market. I didn't it's early days. I mean, it's only a couple days since that happened, but in in past cycles, I've seen something like that really jolt um M&A deals. Um, even though M&A deals should be long-term and strategic, they're actually very susceptible to market moves also. And this time around, I didn't really feel any of the buyers were on the sell side flinch. Um, so that's very positive. Um, at the same time, to your point, I am starting to see some more traditional buyers and not just like buyout funds, but also strategics, like if it's a data company, maybe like traditional data company. if it's a regulated exchange, maybe you know more traditional fintech buyer

poking around. Um, and that to me is if you think of the market in cortiles is typically comes from my experience in the third quartile of the market and then you got to get a deal done with them before you hit the middle end or the fourth quartile because those players will disappear immediately um if the market becomes a little bit um fragile. >> I love that answer. So we still have one quartile to go. How are your capital? >> I'd say one and a half. One and a half. Okay. >> What do you think, Alvin? >> Um, look, if I could call the top, I'd be on a beach somewhere sipping my ties.

Um, from completely honest, and I see some familiar faces who have heard me say that before. Um I would say though that this is you know as people in the room who are thinking about undertaking strategic M&A and that's the word that Casper used there strategy and strategic thinking is the right way to think about this from a seller perspective. Um of course in the moment within a particular process you want to uh obtain the best deal possible but there are multiple different ways to construct the right deal and that doesn't just necessarily mean top ticking the headline valuation. Um, it might mean how do you get the right amount of liquidity up front. It might mean how do you make sure that you participate in the equity upside for the

long term. It might mean how do you make sure that you are able to if you're thinking about moving on to do something new able to exit the business within the right time. What's up, guys? I am here together with two millennials trying to figure out how to retweet a live stream. How you guys doing?

>> We're great, Bach. How are you? >> I'm very good as well. Um, how's Das been for both of you? >> It's been great. D is honestly my favorite Blockworks conference. >> Not permissionless. >> Uh, nothing is permissionless. I just like DS a little more. Um, ticket prices are higher for D. >> Yeah, it's good for I love D. No, I think the uh the quality content is good. I think that the natural evolution of crypto is that's going to mature as an asset class and like this is this is the future of crypto whether or not crypto natives like to hear it or not. And I think that there's this probably the highest signal conference to noise ratio out of everything else out there out out there in the industry. And yeah, >> anything you want to add?

>> Say that again. >> Anything you want to add? >> No, I think that's about right. Um I think that you know having now been to a few DASES um the um you know you it's very much like teaching moment for our team um whereas like in permissionless like we're learning but I would say that this is like the most educated educated crowd that we've had which is pretty cool. Yeah, I agree with that. >> And I feel like we actually have the opportunity, it's educational for us because we're absorbing try best practices and lessons learned and and language. And I think they're also we have the opportunity to educate them as well.

>> So we're I I like see Blockworks as like a bridging a brand. It's like bridging and crypto. And I think like we're able to put our best stuff out there in moments like this. Although I will say I feel like at DS New York um I felt a lot more like I was teaching people versus now I feel like everybody already knows like everyone's caught up and that like I guess that learning curve that I would have expected to be much longer was not as long as I would have hoped for it to be. >> Well if you bring up Hyperlid on every podcast eventually everyone will hear >> figure it out eventually that's good. >> He even figured out a way to mention Hyperl on the Athena podcast. Well, no, but to be fair, HIPP3 and Hyperlquid and Ephina is very relevant.

>> It's going to be a movie. >> It's going to be a movie. Um, lot of volatility on Friday. Tough weekend. Do either of you care where either of you liquidated? What are your thoughts? >> Uh, I remain bullish. I think that it's a great time to own risk assets. I think that um any volatility along the way should be welcomed. We don't get enough of it and it makes entries really hard. Um, you know, I think Friday was useful in that one. It exposed a lot of the problems that we still have and still need to fix. And, um, for investors, it was a short but much needed entry into a lot of things. And frankly, a lot of tokens that stayed where they are, >> there's they they kind of deserve it.

>> Um, >> yeah. So, it was just like a nice harsh >> a nice repricing for some assets and um and then um a nice entry for um things that were, you know, thrown out with a baby out with bathwater. >> Yeah, I think a couple things. No. One, I was not levered long or short. Uh, >> because you like leverage. Like I I asked I knew he wasn't levered on, but I I imagined you might have been. >> Yeah. Picacio's uh I guess shedding light on my gambling problem live on on live stream, >> but that was that was David of old. Not anymore. Um spot it's a spot only meta from here on out.

>> Uh I think you're going to see a flight to quality hopefully because I do think that there's a lot of like under undervalued assets especially after the move that happened on Friday. Um the one thing I'm thinking about the most is how does Binance's market share change from here. Um other exchanges did have some issues but Binance clearly was like the lead the driver of the dislocation of the market and is because of like their own issues with um with their pricing oracle for some assets and ultimately exchanges just like banks. It's like a trust and brand thing and a lot of people lost a lot of money on Friday and maybe this is be you know good for hyperlid maybe this is good for OK you

even saw like OKX and some of the other like major centralized exchange founders like kind of going after the 900 pound gorilla in the room that is uh is Binance so I'm really curious to see like how I guess market share changes uh from here because obviously like the market structure we have now where most price discovery is happening happening on Binance uh and you know they own I don't know how much market share something crazy probably 70 80% of all market share I I have to imagine um is obviously not good for the industry >> that's fair I um I think a few people I talked to today said similar things like one was um that actually like like you said Binance was the one that had issues and I mean onchain was working well DeFi held up well lending held up

surprisingly well if you think about it >> yeah when you hardcode things one it's simple right >> don't get you should have gotten smart 20 minutes ago. Not now, buddy. I would have liked some of that fire over there. What? >> We're all front here. >> Very good. Very good. Um, >> I'm just kidding. >> No, it held up quite well. Like everything held up quite well. I'm not going to do the hardcoded thing again, but what he's saying is correct in that. >> We won't do this now. Uh, >> no, no, hold on. We should because I do think like I'm not saying what a did was right or wrong, but what I think in the moment it was >> we're gonna lose Ryan.

>> No, in the deserve. in the moment it was the right thing but I think a proof of reserves a twap based like delayed oracle the industry is learning how to do proper risk management proper oracle procedures and like this is just another learning lesson yes it was a very expensive learning lesson but a learning lesson nonetheless if anything this is going to make crypto more antifragile moving forward >> I agree with that um >> sorry Ryan I'm here >> very very one thing is like that I always kind of tune out is all the that talk.

Like I'm not a big digital asset treasury guy. Um but it seems to be like very very popular almost like yesterday I imagine Felix talked about it for like half of the time of his life. Do you are you guys still very very excited about digital asset treasure companies? >> I think that there's a lot to talk about. Um you know I kind of ignored it. I mean I definitely ignored it when it first started. It did seem silly like you're just wrapping assets the other way. But I do think that it raises really interesting questions about, you know, power in these systems. Um especially now that these DATs own a lot of tokens and have a lot of influence and um are um incentivized differently

than you know the you know the institutions that were stewarding these ecosystems before. >> He really wants me to ask about it. What do you think? No, that that's what that's what's interesting about them. Like the premiums were interesting because they were ridiculous and now they're less ridiculous. And so what are the interesting things to consider on a forward-looking basis? It's it's leadership of ecosystems. >> Do you think Tom Lee will actually start demanding that certain things go different ways for Ethereum? >> Uh it's there's a nonzero chance. I don't think this is just like a Ethereum and it's also for like >> it's all right.

>> It's a non-zero chance. Yeah, of course. >> But is that like 30 or is that like five? >> Um >> like how involved can you get? That's >> the average of 30 and five. Yeah. >> Very good. >> Okay. >> So something Yeah, it's a it's a non-zero chance. Look, I mean, you have um I mean, you already saw it in the Salani ecosystem where, you know, we used to be we used to want to kill the inflation rate and now we're like okay with the inflation rate because it has it adds income for DATs. And if the DAT has income, it's eligible to be included in an index. Whereas, if it didn't have net income, it would not be eligible to be included in an index. And getting the DAT in an index would further the um further things for the DAT and

potentially for the ecosystem. So, you're already seeing it. I mean, Tom Lee showed up and ETH went from 1,800 to 4700. Like, the influence has all is already there. >> You'd have to be you have to, you know, have your eyes closed to to to think for sure. >> I didn't I used to >> I don't want to say I didn't understand dats >> similar to like when they first came out. I was like I was probably on a Zerx Research podcast and I thought that I would never touch an asset that had a DAT behind it because I was worried about the the key man risk tied to them.

I was tied about worried about potential like hidden leverage risks tied to them. But ultimately what it is, it's just an actively managed fund that has a base denominator instead of USD. It's basically the native asset of that ecosystem. They're trying to get as much native asset per share. uh fund is trying to get as much USD per you know under its AUM and try to you know generate uh you know uh alpha or generate returns for their their LPS. So it's the exact same thing. Um I don't really know what's going to happen moving forward. I think it's pretty clear though that DATs are going to be moving on chain which I'm really excited about. Um I think it's be really interesting how DATs that are these crypto equity companies but they're going to have a material portion of their business live on chain. You're

obviously seeing a lot of, you know, other the Coinbases of the world, the Robin Hoods of the world, a lot of other tradey firms starting to move on chain. This be really interesting like in quarterly shareholder letters, what have you, like how they represent their onchain business in a way that tradi can understand and digest because right now it's a foreign language to them. But I'm really interested to see like how that verbiage and like how that how they structure I guess like the their business forward uh forward looking. >> I think that makes sense. I similarly um my main thing was I guess I didn't understand why it makes a lot of sense because a lot of these assets now have ETFs right so like if you are an institution you can buy or get exposure for the ETF or like I honestly don't

also don't think it's that difficult for some of them to just buy stuff through like Fireblocks copper um what are the other ones etc like these these providers um >> who buy who buy you're talking about yeah No, for them not to buy like why would you have to buy at that as opposed I mean we're talking about this like three and a we're talking about this like three and a half months way too late though like so I'm right >> I would like to Yeah. It would it would be cool if something else was happening. >> Yeah. >> Yeah. >> Yeah. But >> I mean there's a few things happening but you don't you don't like them.

>> Example free yesterday >> next. I'm just going to snooze. Well, I'm going that we've known about that for some time as well. >> Live they launched equity pers. That's pretty cool. >> That is cool. >> Yeah. >> I was talking to guy said equity purpose is the biggest unlock over the next 6 to 12 months. I mean he's also probably they're probably also going to do equity pers on there and so he's like >> equity ps is a new product. Yeah. you know, um, we saw the explosion in popularity of, uh, zero zero day options on Robin Hood because that was a new product for retail and per have been wildly popular and now that you could do it on Nvidia, that's a new product. It's yeah, it is definitely very exciting.

>> Do you think we're seeing a prediction market top with like the recent Koshi and Poly market raises? >> I really don't think so. I think we're going to get I think first of all I think you can't just have two of them dominate. I think what we'll probably see is like um a lot more competitors come in maybe smaller competitors >> that'll actually eat into material market share >> historically speaking like there's always a Coke and a Pepsi but there's usually never like there's a huge drop off between the third like the Dr. peppers right? >> See, see the thing with crypto is that in crypto, everybody wants to be early.

>> Hershey's and Reese's and Twix. >> Yeah. Kit Kats are my Coca-Cola, but Twix are a little under the Pepsi brand. >> But um like in crypto, everybody wants to be early, right? Like nobody really need needed AVAC or Luna, but they came in like it could have just been if you're in Salana, but it doesn't work that way. So people want to be early and Founders Fund was already early to Poly Market like six rounds ago, you know, like people want to get exposure to these new primitives. Um, so I I imagine some will at least make a valiant effort and let's not like pretend like Kali is and or Poly Market is like at their final form. They're there's going to be

I think there's going to V2 is always better than V1, right? like there's going to be incumbents coming in um that calcium poly market probably steal features from but like those are still going to capture maybe not 40% maybe not 60% but they'll capture 10%. I I I wouldn't I wouldn't like per I do you have >> So you're saying Hyperliquid's going to lose significant market share soon? >> I think there's a chance that they could lose significant market like I I >> I never thought I heard you have an objective opinion about Hyperlid. No, I I I always talk about I was talking about this with Carolina today um on the pod and I mentioned my bare case for Hyperlid is it it goes the Ethereum way like the team get lazy and they say we already have such a massive leap and

then some underdog like lighter um or like in Ethereum space Salana just comes in and like just does everything at the same level but um just like much more focused much because they have something to lose which is not winning Um, >> to your point going back to the prediction market thing, I think it's interesting. Koshi partnered with Robin Hood to like launch prediction markets on Robin Hood's UI. And I'm pretty sure like two weeks ago or three weeks ago, there was a rumor going around that Robin Hood's not thinking launching their own prediction market. Not I don't think it's part of call sheet. I could I could be wrong, but I'm pretty sure I saw that. So like there is there is credibility behind the fact like >> yeah, >> these two leaders right now are market leaders today. It doesn't necessarily mean they're market leaders tomorrow.

And if Robin Hood comes in with the distribution that they have and decides to create their own product offering and they now have the data to know like our users do like prediction markets or they don't like prediction market how they like it now they can pretty much use Khi as a guinea pig and then come in their own prediction market but they >> Khi versus Poly Market with sports book. Kelshi is 70% without the sports book Poly Market is 85% of volume between the two. It's ridiculous how much. First of all, distribution like Robin Hood distribute. Second of all, betting on sports.

>> Is it all through Robin Hood? Do I? I have no idea. >> I think Kelsey's Yeah, I think it must be like it's on college sports, which is which I don't know anything about, but apparently it's very popular. >> Yeah, they have a partnership with Robin Hood um distribution. Um >> yeah, I mean I think there's validity both ways. It's pretty early. The volumes are still very low. Um but I don't know. poly market deal with with intercontinental intercontinental exchange and I think it's always a distribution game.

>> Yeah. >> Um and it seems like they're really like they're putting you know they're getting >> distribution in a few different ways now and it's going to be really hard to compete with that. So it's like how do you wedge into the market? You offer markets that they don't offer. Um, I don't know who's doing that. >> Yeah, >> Poly Market has an edge there, right? Because you can permissionless create pools or is it the other one? Which one allows you to permissionless create pools? >> I have no idea. >> Very good. >> I've never trai I am a normie.

>> It But I agree with you on that. Like listings is I've always said listings >> listings velocity listings velocity is all that matters. Like you want to be the first and you want to have the most interesting markets. You know, yeah, you know who's very well positioned to do a prediction market is is X. >> X is very well positioned. >> I would like it if they fix their application first and then focused on the prediction market. >> They're like syncing drafts between devices. They're actually rolling that out soon. But no, they're like, yeah, I think that they're really well positioned for uh for prediction market. I think a lot could be going on with X and crypto. I think maybe over the next 12 months you're going to see that. I they've been a little slow like with like literally nothing. Um but the cool

thing is that Elon has for a long time had a financial super app vision. So I wouldn't like count them out. I think prediction markets very naturally fit in that UI and with those creators you have like all the intellectual capital there is there and everyone's arguing about what's going to happen next. Like I should be able to reply to that tweet >> and go short that opinion. Like I want to do that so bad. I want everyone to short Ryan. Can you imagine Ryan's opinion? >> It would settle a lot of a lot of debates and then you retweet when you won it and then you know it's >> well the issue there is the oracles, right? Like how the hell they solve that? We can get into >> Yeah. just some guy at X. He's like one guy in his job of clicking yes and no on

who won and he literally hands you paper money after the bet is settled. >> I I do think at the Saratoga racetrack >> I do think X is probably the dark horse on like fintech. It's dark. It's like the dark horse for still becoming like the largest social media platform. Um I mean Elon's a mad man, so you never know what he's thinking. But I agree. I think that I use I use all of us. We're all like addicted to it pretty much. We use it day in and day out. I use it more than any other social media platform. The thing is like I don't know if that's normal though. Like my wife doesn't use X at all. I don't know if your guys' like significant others use X, right?

>> Probably like 500 million monthly activives I think. So pretty. Yeah. So what is like Instagram is 34 billion? >> I don't know. >> Sorry. Instagram's two billion. The total like house of apps on beta is 34 billion. >> You don't have an X account. >> It's a lie. >> All right. In other news outside of Poly Market, what about Monad? They uh announced air drop claim window. I didn't check >> but I saw >> Did you get a card? >> Yeah, I did. >> Did you claim it? >> Wait, were you wave one or wave two? >> I don't know. >> It was >> I don't know. I don't understand these games.

Just take the free money and shut >> I don't get it. >> Oh, don't worry. >> Where where do I click? >> Where do I click? >> I didn't check it. But did you check? >> I did not check. So it's free guys who didn't check talking about the >> check. I mean I heard you could sell at OTC for >> that was a lie. >> That was a lie. Oh, they were trying to steal my NT. >> No, what I don't understand is I didn't read all the details. I literally like looked at it for two seconds before I came on to the spot. Um, I'm pretty sure I saw that like Monaded's airdropping a portion of their supply to like Moonbird holders and every other NFT holder under the sun.

That's a major NFT collection. And I don't understand that. I don't understand that. Like that that irks me and it's nothing against the Monad team. >> Uh, it's pretty common. Yeah, it is pretty. >> But I don't get it. I don't get it. >> The thing is if you're users, >> if you're an L1, you have to airdrop tokens somehow, right? Sure. >> And like I guess like I'm thinking of two recent examples like Plasma did I would say probably the most productive way which is like pre-eposit vault move all that capital over there and then you instantly have a capital base to say like okay look you know what like >> trillions.

>> Yeah. >> Um the alternative there is like you launch the chain without a token I guess but that >> that's like hyper liquid air dropping to DYDX holders. >> I don't think it makes a lot of sense. Um, like it's not a good like it's not a good strategy. Those aren't your users. Those aren't even they could be potential users. But let's be honest, the people that they air dropped to the monad card holders. Think of the amount of overlap between the monad card holders and the moon book bird holders. You're telling me it's not nearly one to one. >> I would say it's probably not one to one. I would say it's pretty close.

>> The van diagram is like I don't know how you do like a 40% thing, but I would do like 40%. >> It's um >> logically makes sense. It's a high customer acquisition cost. >> Yeah. >> And Sixman did a study on this like a year ago that just like everyone sells their airdrop. >> Everyone, >> not me. I always hold it. I stake it. >> Like I I hope I mean look for for my own internal or my my personal benefit. I hope they don't make me do anything. I hope I can just claim and get it and I probably will sell it. But >> I'm >> Don't give it to him, Monad. I'm hoping, no, I'm truly hoping.

>> Give us the money. I won't sell it. >> I really hope that >> he hasn't claimed it yet. There's still time. >> But no, like I I hope that you force people to when they claim they have to auto deposit into like a lending platform or something like that to like create a strong capital base for your ecosystem and I can generate yield off my holdings by like people borrowing against it. But like force me to become a user. You're not gonna you're forcing me to become a token holder. You're not forcing me to become a user and it's a completely different thing. >> Yeah. Put your deposit in the vault, I think, is the way to go for a new holder. >> I agree. I like it. I will say that um Manad the one thing that they did that was really cool that no one else did was

they cultivated a very like intense community way before the token. I thought that that was really cool. That's like Harvard Business Review study worthy on how you make people excited about your product before you even have one. >> I um I agree. >> I disagree. >> Really? >> Well, it's just all bought it. No, look, I have nothing against Monet. I always say this on every pod. I say Monet is really cool because they have designed this entire thing from scratch, right? Like they're not taking it from XY Z. >> I think people really like Monet.

>> Um maybe we're on different parts of like we're always on different parts of Twitter, right? Like you're on the >> you're in the deep darkness of Twitter. >> I don't think there's a single human PFP on your Twitter. Like no one's face is on your Twitter. It's just it's just it's just NFT PFP. Yeah, it's nice. >> Yeah. >> You don't think it's nice? >> I like to know kind of a woman. >> Yeah. How good has that been for you? >> All right. Before we end it seemed personal. >> What What do you think? Uh do we know when Mega Eats? Uh like >> I don't know. Going live.

>> No idea. I think be a movie though for my portfolio between Monad and Fluff. >> You got a fluffle? >> I got a fluffle. >> Do you have a fluffle? What the is a fluffle? Yeah. No clue what >> movie. >> It's like a bunny but >> NFD. >> It's a cute It's a cute bunny. >> I don't know. I wouldn't say it's a cute bunny. >> It's cute as long as I get. >> Did I have to go get it myself or was it >> pay for it? So David paid >> right. It's like I had to >> Yeah, that's I I think that makes a lot of sense. I don't think >> proof of capital. >> Proof of capital as in the team gets more money. Um guys, before I end things off, last question. What are you most excited about over the next 6 to 12

months? I also wait I have a second question that I also ask if you guys want this one rather. Um if you could long one chain apart from Salana apart from Hyperlquid >> apart from Salana >> what would it be? >> That's easy. It's base. >> That's fair. It has to be B. like they have the best distribution in the industry. I mean, you could even argue BSC too, but I think Okay. Or maybe they have the best brand. They have a strong brand between Trifi and Cryptonatives. I think it has to be Bass. Um, but what am what am I excited about over the next what you said six to 12 months?

>> Yeah. >> Um, I'm really excited to see Tradfi continue to tap into DeFi protocols. Um, so I think the Coinbase Morpho integration is just like the tip of the iceberg. Um, obviously Coinbase is also like routing their front-end user flow to decentralized exchanges in the back end. Um, we're finally starting to see the DeFi mullet actually come to life. You know, the DeFi mullet that we talked about in like the last cycle or two. Um, I'm waiting for like a JP Morgan or like a Goldman Sachs and I don't know how far we are from that world. Is it six to 12 months out? Probably not. you're really going to have these like fintexs that are already like tech forward uh as you can start to tap into DeFi liquidity.

But I don't know like I I think I'm really excited about that coming to fruition and I'd like to one day be able to take a mortgage out onchain but and like have like one of these front ends like underwrite my credit risk but >> we'll see. >> That makes sense. I was going to say nothing. Let's continue. Just such a high risk with the mortgage thing. No, >> it's really not. >> I don't know. You're already starting to see under collateralized lending with like three Jane Wildcat does some under collateralized lending. Like that's all it's literally that, >> right? So >> you mean none, >> Ryan?

>> Well, I think that the thing that's so I think that prediction markets are going to very obviously be a big deal given the distribution and the land grab that's going on right there and the um the cultural moment um that they're having. Um but it's hard to get exposure to that. So, I would just say generally like um from the commentary that we get from both asset managers and that you see on the timeline, there's incredible amounts of bearishness around valuations and risk assets. And I would just say like I'm totally on the on the opposite side of that. I think if you just want to just like make easy money for the next six months, just be long risk assets like like the the warnings of of um you know a market that's overvalued are

objectively false. Um it's it's like very selective um metrics that you could do to paint equity markets as expensive. And uh rates are going to come in and that's going to you know markets are near all-time high. that's going to cause a flurry of economic activity. There's already a big wealth effect and risk asset AI is um you know ushering in a manufacturing renaissance in the United States and uh risk assets are going to do fantastic. >> Kind of says I've never >> crazy how I left the energy industry to go into crypto right before like data center build out thing. I literally sold the bottom of mechanical of my mechanical engineering degree.

>> That's all right. >> No, it's not all right. >> No, it's okay. It's okay. >> Sold the bottom. >> It'll be fine. I will say one thing. I've never heard >> it's the most valuable profession right now. >> What? Mechanical engineer. >> Yeah. Like I could have literally been building out >> a data data center and >> same thing happened to me. But >> and now I'm over here talking to Picacio about >> fluffles. Fluffles. >> Um to be fair, I've never heard Ryan Connor. I was going to say >> he's never been bearish. >> I've never heard him bearish. >> Perpetual. >> It's crazy. Like you're perpetually you I mean I like it. You bow me But to be fair, he also joined at the bottom of the like I've I've known him since the bottom of the like >> he's been right every time. Every single

time the market had like a 10 to 20% decline. He's like buy >> and I'm like no like this might be it. And he's like just buy >> the thing that's different is AI. >> It's like it makes all the bare posts irrelevant. All the bearish data points are relevant. They're not relevant. All that matters is that you know SAS is a $300 billion market and SAS is coming for labor and labor is a $15 trillion market and that's all that matters and crypto's great too. Buy Bitcoin not financial advice. All right guys, thank you so much for coming on. This was very very good.

>> Thanks for having us. Thank you.