LIVE | Market Dump and Pain Talk | 0xResearch

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>> All right, that's enough. Very good. What's up, Danny? How you doing? Let me do this today. What's up, guys? Welcome back to another episode of Xerox Research. Today I'm joined by the main host, Danny, as his side host, although that might be changing very very soon, but we haven't we haven't disclosed that yet. Um, thank you for joining today, Danny. I

know that your portfolio is hurting. Um, how are you feeling? >> Um, yeah, markets markets are tough out there. It's great bet. Um, yeah, non-alcoholic, just just enjoying a crisp crisp drink in the morning. Um, no. Yeah, personally, I'm doing okay. I've uh been pretty flat most of the year, like holding some I was all in crypto beginning of this year, was out of a lot of things after the Trump trade. That was kind of my riskoff moment. and then um I've held

some BTC for most of the year. So obviously that is down a lot the past two months now, but um doing okay. But yeah, clearly there's a lot of a lot of red in the markets. So how are you feeling, Mr. Picacio? >> I'm feeling good. I'm not drinking at 7 a.m. in the morning like you are. Not many people realize that Danny's in PT as well, so he is just cooking. Um >> yeah, it's 6 a.m. [laughter] >> I'm doing okay. I um I it's the thing is that when you are in dog check very good when you are in the bowl it feels as if nothing can ever go wrong and you are on top of the world

and in crypto I think it's extra extra amplified because I mean stocks have performed better this year but like you know when crypto goes up it really goes up like things go up 30 40x. Um, so when when you start seeing downside action and you're like, "Oh, I imagine a lot of people also got hurt." Like I was talking about this with James Kristoff who might also join the bot today, but um like a lot of people are always they're like, "Oh, like 10% dip bid, 20% dip bid, 30% dip bid." And now I don't know what we're at. We're surely we're not at like 40%, but I think we're at like 35 36%. And then I mean you don't have any money left to bid. And this

idea the idea was so we we had super cycle talk last cycle you know and then a lot of people were like oh that's just a meme. It doesn't happen. And then this cycle we did the exact same thing. We're like four year cycles are [ __ ] dead. Tradfi is here. Um you know passive flows infinite bit into BTC. We're going to go up forever. And then the the cycle bros were right. Like it's it's we're literally following the four-year cycle. I think we're like a month ahead or something or like a month behind or something. One of the two. But uh the original question was how are you feeling? I feel fine.

Feel okay. I feel I definitely should have sold more. Um I caught it very late like the whole thing. actually one of our anal one of our analysts as if he's not like as if I run a fund Luke who is at Blockworks Research Zerx Mever Maver Mever on Twitter I don't know how to say his name it's a weird name anyway he um unironically got upset with me and was like you should sell some I was like yeah [ __ ] it was like 96k so I think I slipped away okay but Um, I don't know. I imagine a lot of people are still hurting. I was also not in a lot of alts. I think you were also not

in a lot of alts. I feel like a lot of people are very heavily in alts still. >> Yeah. I think this is a typical crypto thing though, right? Um, if you're I mean, especially if you're in alts or things with no fundamentals, then yeah, I mean, the retrace could be pretty bad. So yeah, we've got producer our producer here backing us up with some numbers. So 35% down on BTC, 50% on soul, 45% on ETH from like the recent highs of just a few months ago. So yeah, I mean it's a pretty significant pullback especially it basically you know back to kind of where things were so to speak uh in

April this year, right? we're we're we're kind of re-entering those levels like low 80k near 70k for, you know, 70k mark for uh BTC and soul getting back down to the kind of low hundreds and and ETH kind of re-entering the 2000s. It's it it's looking quite similar to how prices did um first couple of months of the year. >> Yeah. Um, so yeah, I mean if if you were expecting, you know, if you're one of those ETH to 10K guys, you're probably a little disappointed. Tom Lee still gave you a nice exit opportunity if you wanted to take it. You know, he shipped yards into the coin for you to let you sell as much as you wanted to him. Um,

so if you didn't do that, that's tough. But I guess maybe the the broader question here would be you you mentioned like the cycle bros ended up being right. But I I don't know that you can say that unless you don't see BTC higher in 2026 2027 right because I guess the hallmark of the kind of cycle theory would be that it we sort of break down for two years or something and we don't see new highs for multiple years to come. But >> talking about that, >> go higher.

>> It's the [ __ ] devil is here. [laughter] >> Hello, boys. Noah Goldberg mode in the building. >> Goldberg mode. I've never seen anybody happier than Noah when [laughter] funny. My goat. >> Yeah, he was airing out Dats in the ZeroX Research Telegram chat last night. So, he's having a great time right now. >> I'm expecting a large bulky post from him probably this weekend. A lot of people want to go out like you know financial markets are down. You want to go out you want to hang out with friends. No Goldberg's we're going to write a hit piece on bats which I think [clears throat] be fun for him.

>> He's going to lock himself in his in his office and get to work on it. >> Yeah, that's good. Um with regard to the long bear, um I don't quite understand the dynamics of that selling that well. Um, and I I think I'm sure there are much much smarter people than me who will be able to help with this. Um, maybe we should have on James and maybe Noah as well. I feel like he would be very angry at this topic and probably really enjoy talking about it. But something I need to understand is that selling and how much that's can sell and how low prices can go because that's like really it right. Um, like that'll affect the the bare market situation. I

also it is a bit concerning that also video earnings came out well and then they still dumped. So I don't know there's just and people are saying like oh like it's because of 10 tenants like well I don't video is dumping because of 10 [laughter] saying there's something wrong. Um it's really like cryp crypto has been not a great investment this past maybe six months. Um except for Eve which was fine for a bit because of that buying. One thing you mentioned was like if you're not buying anything with fundamentals and they dump. I mean people were buying things with fundamentals and they still [ __ ] dump. Like pump is doing one mil

buybacks a day. Um, that's I feel like as fundamentals as you can get within crypto. I I mean we're gonna ignore whatever like secular memecoin industry decline uh that people want to say, but like you know that that nuked. >> Yeah, I feel like we we talked about some of those things. I I just think the bigger point there is like if you're bonk guy, no offense, you know, the thesis is that like more and more people are going to kind of mindlessly long the thing that's just a meme. Um, you know, you're not buying useless coin if you're worried that the entirety of the market is going to zero.

Uh, you got other things to worry about. So like it's like especially more impactful if you're if you're if we're going to like a kind of a riskoff, you know, I'm not I'm not like saying anything particular about I don't know what's going to happen in the market. Nobody does. But it's just how people are. You're not you're not aping useless coin when the entire market dumps 40%. Because it just >> doesn't make sense. It's it's not what people do. So, and you can you can tether yourself to say like, "Oh, Hyperlid is still making, you know, $2 million, therefore maybe I'll I'll even add at these prices or or what have you, right?" Like, it's giving me it's the market's giving me this at a discount actually to what I would pay for it

anyway. >> Whereas with like pick your other, pick anything that that is just like really an attention or like a FOMO kind of thing. And um once the momentum is lost, it's like that was the reason to buy it. >> Yeah, we have a guest coming. Um I'm going to add him on stage. Danny, you have very little context on this. I realize I took the took the stab at this and did it, but we're going to have fun. All right. What's up, Thanos? Wait, let's um Can I call you by another name so it doesn't feel like a Marvel movie, or should we go with Thanos? The whole >> Thanos snapped. Uh you can go with Thanos, but uh up to you.

>> Okay, very good. What's up, Thanos? Um uh Thanos is from Krock. Danny, he is a friend of Are you familiar with Jacob, our [snorts] other analyst, Danny? >> Yeah, Shauna Deans. >> We have Shondaanda Deans. Fan, welcome to the show. Do you want to give a short introduction of yourself and then I'm going to bother you with how Krock manipulated the markets on 1010? >> Are you excited? >> Great. Nice. Um, so [snorts] yeah, uh, I'm I'm Thanos. I I'm part of the Kio commercial team, more more so on the DeFi side. So yeah, I'm a I'm a Don at heart and um try to be in the trenches

as much as possible, although you know, the trenches are not really nice right now. So it is what it is. [snorts] >> That's right. What is your um we were just talking about our reads but what is what is your um I guess like broad view what I I know you can't I know not nobody has like a market you never want to give market thoughts when we're dumping like 40% like I don't know I don't know where we're going anymore but um I guess like what did you see this coming or were you very shocked at like the amount of selling over the past maybe two weeks? Um there's a few things like first of all um it's kind of evoluting because I'm I'm at bonus right now for dev connect and

it seems like mostly everyone is like unfaced by the market which is I would not expect you know like I would expect people to be in pain or at least uh say they're in pain. Um, and it seems like everyone is kind of focused on their lane and just doing their thing and they're fine. Yeah, maybe, you know, they're not buying Lambos or anything like that. Thank Thank God, actually. Uh, but yeah, they're doing their job, I guess. Um, so that's a positive in a way. Uh, now in terms of market conditions, you can ask Jacob as well.

I've been telling him that I think the market is down since the summer privately. Uh I've been out of the market personally for a while. Um so you know like the science you know the thing with the cycle theory is like we always think it's going to change and unfortunately until now it has not and it proves again probably that it may not. I don't know. I'm not a market wizard but the science have been there. Uh so you know like uh everything from like token dilution to you know incentives being thrown out in the market and uh extreme saturation of token isions which counterintuitively is something we are uh like you know

supporting with liquidity but at the same time a lot of a lot of companies protocols and token issuers should not have a token in the first place. >> Yeah. Um, so yeah, I think all of that stuff really impacts the market in a way and then when you add on top uh situations like you know in October and the 1010 doesn't really help any anymore. Um but you you do see at the same time you know trfy uh coming into the market no matter what happens in the actual like bubble that we have within crypto twitter etc. uh like you saw you know Kraken IPO, Kraken investment from

Citadel like you know everything on that side is like massive amount of tickets that we're not even like comprehending at this point right so I guess people are recognizing that in a way and the adoption and it's like you know it's fine uh it's going to be fine as long as you're long-term focused you don't just blow yourself out in purp or anything you're going to be Okay, >> I have I want to follow up with two things off of this. So, first of all, this token dilution thing or like we have too many tokens. I feel like that's something I haven't heard in so long and it's true. Do you still think that's an issue? Like with I guess the meme coins dying out and stuff. Do you think we

still have too many tokens? >> Yeah, for sure. Uh, I would I would argue that sometimes memecoins are more useful than the utility or governance tokens because at least there's a hardcore community that gets created around it at least for a momentarily you know time. Maybe it's not long term but it happens and it creates some type of community and vibe uh for the for the protocols and you know generally token issuers. Yeah, I think sometimes you just don't need a token. uh you need to find product market fit on your protocol, make money as a you know labs entity and uh and deliver products that the users will use and want to use and

create a community around it. Now if they do want the token as a community uh and it has a value grow mechanisms where they want to participate in and almost become like an equity, right? Then fair enough uh then you should do it. But unfortunately until now it was a bit tricky with regulatory, right? >> Yeah. It's kind of ironic because from what I understand like in Trafi we have a lot less public equities. Like a lot of the larger ones are just staying private like Stripe and then in crypto we're like tokenizing everything. I don't know if it's going to work out, but I agree with you. I think a lot of the times these companies should just stay private and just make money for themselves and like investors around

them. Um and like you can at some point IPO or make a lot of it one >> because you can you cannot imagine how uh painful it is for the teams to go through a TGE process and then you know having a token where every day they probably get spammed by all their community like why is the token down why is the token up why is the token whatever right >> and it's it's distraction for them >> yeah yeah I mean I couldn't like I'm stressed out about some of my tokens and I can't imagine how how bad you must feel if like on because on paper I know they probably know that they shouldn't do this but I can't imagine if you're a founder and you own 7% 10% of something and you just like you have that figure

in your head is like oh like this was worth x amount like I can't imagine going through that through a bare market like however long the last one was like that many months I would I would not be able to do it would be tough um the second thing is kind of related to this Daniel I also want to get your thoughts on this base to Jesse's token yesterday. What is the Do you guys have a hot take on this? What do we think? Danny, you can go first if you want. Um, yeah. I just think I don't know poor execution. Like I I don't think that like pre-announce like you know if you're familiar with kind of

the memecoin trenches space then you know if a popular figure pre-announces a coin then snipers are going to be scanning the chain like the block explo even if the name I mean he announced the name of the ticker so it would have been pretty easy to then find it even though sure there's there's going to be people spinning up copies of them fakes whatever um you know th those guys will find a way to like snipe the right contract immediately when it goes live and then dump it on everyone's heads. Um, so I think it was kind of set up to uh for a little bit of failure here. And I don't know, it just doesn't help that like the history of of Bass and Zora and Jesse the past few months has been like,

"Hey, we're launching another memecoin or like now we're memecoining every post." Um, and they like kind of they hype it up for a week or two and the metrics run up. Um, and then it kind of loses steam. People forget about it. They get mad about it. They forget about it. Hypes up the next thing. People forget about it. Um, and I think we've just kind of seen this play out over and over again. And this just feels kind of the same. I don't know. I think people are are a little tired of it. And I would guess that's probably like the general feel. And it doesn't really help that like the broader market is down going into doing um like a stunt like this. I guess if you want to call it that or a test I think he called it a test. So, uh, yeah, I don't know. Wrong

wrong wrong place, wrong time is my feel. Poor like poor execution, not not reading the room. I don't know. A couple of things. >> Is it tested that they're doing just farming sequence surface at the end for Coinbase? [sighs] >> I mean, >> I can um Yeah, I don't know. I felt like it was like nine months late, 10 months late maybe of a thing. Like I think if you had done this like pre-Trump or maybe even post Trump, January, February, you would have done better. It would have been more interesting.

>> I think they've been trying. Here's the thing is like I'll give it to them that like they've been >> trying like they're kind of late to the memecoin thing in general than like the Salana ecosystem. Like I don't No, I feel like Bass and the EVM side of things, they were pretty slow to accept and then were like, "Okay, no, actually we we should do memecoin trading." And then they went all in on like everything should actually just be a coin. Like, let's just trade all of it. And um I don't know. I think after like a few efforts to like really pump that up, it just like was clear that there wasn't like enough interest in it right at this time. Like maybe there'll be a different time in the future or a different format where it will be more interesting, but I

don't know. it it feels like they're trying to force something that the market is like not just doesn't want to play. >> But again like you know like we end up in the same topic like saturation right and if the industry or the space doesn't grow in terms of like total users total retail then we're just circling you know gains and losses between each other and it's really like not healthy actually. Where do you where do you I guess like one thing you brought up is that the external capital isn't actually not interested like with Citadel investing in or like I guess the Kraken IPO in general. Is that like the next liquidity

um flow coming in from? Because it was meant to be the ETFs and I feel like the ETFs have and then it was meant to be the DATs and then I felt like the DATs have just not in my from what I understand they just haven't helped as much as in fact they've been kind of a hindrance. Um is that the the the next step is just like external capital gets more and more interested and just starts investing more in privately into crypto. I think it would be like a domino effect in a way where um uh let's say external capital trafi and you know like anything that is not cryptonative uh either tries to go aggressively by

themselves into crypto and invest a lot of resources infra you know and etc. Um or they just go big with crazy tickets to you know like uh exchanges, institutions, anything that is essentially already there in terms of crypto. Uh they have the infrastructure, they have the connections, they have everything and they just become major shareholders shareholders of um those you know uh companies within crypto and they are kind of facilitating the in a way the entry to the space.

um for for those type of institutions uh cuz I mean to be fair you know let's say I don't know like Citadel right or JP Morgan like okay maybe they they'll try like have a the private blockchain or something to settle transactions but at the end of the day it's a nightmare for them to go on Solana Ethereum or anywhere else and and do like public trades you know trade on chain and go through that process so at the end of the day they'll probably end up trusting in the institutions that are already here in crypto.

>> Yeah, this to me one thing is like from what I understand these large market makers can't trade on chain because there's too much elicit flow, right? Or like they can't get too involved in it. Is this correct? >> They don't know probably how to in the first place. Uh like forging about the Trafy ones. Uh yeah, I don't think they they they they want to yet. They make already too much money, right? on the on their on their own business, so they don't care. And sometimes it's just easier to throw your balance it to someone than doing it yourself. Uh >> so yeah, >> let's let's talk about less depressing

stuff. Foss, what are you interested in in crypto these days? I'm going to guess [snorts] per stuff and AMMs, but that's also because I was kind of told by Yako. But you can tell me what you're interested in, what's like cool to you. >> Um, to be fair, right now, not much. But I think we are we are getting there at least on the tokenized security stuff. uh everyone is pushing the boundaries uh for once uh and trying their best and uh you know like I feel like per on on on stocks is a good instrument but as long as you uh

don't have the the let's say the collateralization behind it with the spot asset it becomes just painful forever right so I think we need to reach a point where we sincerely are cross margining you know uh equity spurs with the actual like stock uh which means you need you know a lot of like uh equity uh sensitively on money markets uh good risk management LTVs and etc. uh although you know with lower volatility it's relatively easier to do uh but then still you need to implement it and I think you know especially with hyperlquid probably that's going to happen sooner than anywhere else uh and that will probably help have more uh

like retail actually coming on chain because I mean it's nice trading on Robin Hood but what if you can make extra yield on your spot asset um by doing let's say a casting carrier trade right on on Tesla. Uh so I think uh that is very interesting. Then in general like I still believe that the yield markets are the the fixed yield markets are underrated and they don't have enough like flow trading activity and you know in general attention because you know in transfillion dollar industry um and here we're I mean we're still struggling with like pendle and in other

like chains with smaller protocols. Um so yeah there needs to be more of that. Yeah, and on all of the other chains, it hasn't really become particularly relevant. Like, it's really only relevant on Ethereum and the EVM. Um, with pers, per equities, stock pers, um, how the hell are they going to figure out uh, weekends and holidays? Because I assume you guys have considered or are providing liquidity into these stock bs at Rock. like how how do you how do you price that um or like how how do you expect them to price it? It >> it's all about risk management but it also depends on how the you know the

protocol itself uses oracles etc to to price it. Uh but you know at the end of the day it's all about being very very prudent on on managing risk and you know doing a lot of math behind it and you know back testing etc. Um and uh usually what you'll see happen is on the weekends uh you probably have still like liquidity being coded on both sides but as the weekend goes on and maybe you know let's say there's some type of directional move on on an asset you probably see of course lighting lighter um uh bead or ask depending on what's the direction

uh until you know Monday comes uh the market's open etc. Uh but you know there's so many instruments out there that you can use to like help to hedge your weekend exposure already in TR fire. So um I'm not really worried about that. Um as long as you know it's done prudently it will be will be scalable. >> Yeah. Interesting. I I imagine a lot of them I don't know how familiar with the landscape. I'm discovering it's like best markets they do 1% fees on the weekends which to me like it's a fine way to deal with it but it's like it's not great. Um I imagine like a lot of the HIPP ones are just going to

like have lower liquidity and like higher spreads over the weekends just to like make sure that not a lot of people trade to keep it as low as possible. I'm just curious if it will ever come to that point um where it's like actually very because after hours now trading is not like it's less liquid than during regular hours but it's it's still relatively liquid but like weekends I don't know when it's going to get to after hours. I don't know if crypto is going to help it get to after hours or if like I don't know Robin Hood needs to adopt it instead or interactive brokers etc.

I mean there is like over the last few years especially with the rise of electronic trading uh the you know the after hours liquidity ony has increased quite a lot. It's just about take takes time, right? Um you will see probably some type of you know as you mentioned like uh matching between the crypto space and the trady space where uh suddenly you know actually they help each other in terms of the equities liquidity after hours and weekends. uh cuz at the end of the day there's probably going to be some type of edge between those hours and anyone that has any type of like system trading system uh that is good enough they would

definitely want to be there right so I think uh it will grow it just needs time and of course more collaboration between those two let's say sectors >> that makes sense um and with tokenized stocks not equity per I can see the equity per pitch very clearly. Options are complicated. Slide the leverage to the right, you know, retail magnet. Tokenized stocks bit less of a bit less of a pitch. Like I I don't quite get Danny. Do you get that tokenized stocks pitch? I I assume you get it better than me because you're smarter than me. But >> I guess here's here's where my intuition leads me is that I don't know that I see

it in the US per se, but everywhere else than the US basically opening up access for anybody to bid stocks via the tokenized product seems like a good way to kind of arb various legal jurisdictions and just like offer a streamlined product. I don't know. What are your thoughts there, Thanos? >> Yeah, 100%. It's like you know until recently I'm I'm I'm based in Europe. Until recently uh the only like uh broker that's out there was like interactive brokers and like you know some more like commission free or whatever uh platforms but nothing like Robin Hood experience right like Robin Hood is beautiful like you want to open the app every day and like do whatever.

Um and uh I feel like uh that is a massive space you know LATAM APAC etc. accessing stocks. But then the other part is the cross margin I mentioned when you start being able to use your collateral for relatively simple trading strategies that can be also just tokenizing you know in terms of like a vault uh strategy. Uh so you don't even need to do anything then um you know like what I would love to hold Tesla and u earn like I don't know 5% extra annualized yield just because of a funding rate strategy. So, uh I think that will be massive. Uh but it takes a lot of infrastructure on the back end,

of course. >> That does make sense. All right. Uh Danny, I want to ask about mod and mega e unless you have something else you want to ask about. >> No, let's do it. >> I'm I'm curious because you seem to have a correct in my opinion, but a slightly negative opinion about tokens constantly launching. I'm curious if you feel the same way about new chains. >> Um, depends. I would say chains more chains would be useful, but we we do have too many. Uh but you know new chains coming in if they come in they need to really be

differentiated and have that either massive community like monot has uh or like you know let's say the product market fit or at least until we see it on mainet the of of meg and the speed and etc. Um so and it's hard to be differentiated because I mean most people have already tried a lot of stuff right uh so it's kind of a question of what can you make different and um at the end of the day the the difference that you probably can make is just sustainable like yield on the chain. uh all the diirm type of products available from you know money makers to trading platforms to fixed yield um and you know consistent liquidity.

>> Interesting. That makes sense. I guess like my very basic take is that I I'm kind of against a lot of new general chains. I want like very app specific chains. Like I think the I was wrong about this but at the or at least like wrong now but at the time when plasma launched I was very excited because I was excited about like a neoang chain. I thought that it could be very cool. Um I've had been proven wrong now. We don't know what the future holds but right now I was wrong. Um, but so yeah, like when like Mega E is cool because it's very like they're they're sticking like a massive computer

into the sequence and they're like just you're just going to go fast and we're going to build a bunch of cool apps around it. Monad, no disrespect to the Monad team, I've always said it, but it seems like a a more general chain that like doesn't have a specific focus. Um, and it has a community like you said. I'm just like I'm curious how long a community lasts when we're at like 60k BTC and everybody wants to kill themselves. Does that make sense? >> Yeah, I think uh uh well, I hope nobody kills themselves first of all, but uh um yeah, it's it's hard. The general general chains nowadays are just competing against the the the water, you

know, uh flow. Do you have a strong view on like you know you could look at hyper hyperlquid is probably the leading example of this of hyper I would say hyper liquid I don't know why leading example of this where it's like you build the per exchange it's sure it's a chain it's not really a chain it it's a per stex right and then it you expand out and offer other services like mega in their case they're going to have you know USDM they're going to have their own kind of ingrained stable coin um I don't know that monad it has any like app that they're sort of like ingraining into the the chain itself. I guess you guys talked you I feel like you guys talked around this a little bit about like

generalize versus like an app specific chain, but I guess maybe my question is like is the future here really just build apps and like this concept of what of a chain just goes away and um you're just really a platform offering services? >> I think so. Yeah, cuz uh you've seen uh I mean a announced their application uh this week. uh everyone is trying to go the application like mobile application route where you just don't even know what's going on on the back end which I think uh in a way probably now everyone is trying to do it at the same time and it's probably going to be a failure for for the short term but uh long term I think that's that's definitely the way

uh I would love to have a better UX experience uh uh on on the DeFi sides uh and that's how you on board the next you know like another billion users uh uh in in uh in crypto. They need they don't need to know that they're in crypto actually. They just need to know that I don't know they're using this on-ramp. Uh they'll get 5% USDC yield and they'll be paying their you know their their groceries every day and but in the meantime it will be earning like yield. Um so you know in in in a way the the aification I guess of of crypto uh will take some time. Uh probably you see a lot of acquisitions as well I guess.

>> Yeah. [clears throat] >> And a lot of synergies uh but uh yeah it just needs you know like look at Revolute like Revolute has you can do anything you want there. It has from just banking to points to crypto to effects. Um we need that. >> Have you used their crypto side? Uh, no, because I don't want to get uh ragged on on the fees and the pricing, but uh >> that's what I was going to say. Yeah, it's I I have a friend who I think pulled out not not a lot of money like couple hundred um and he they just blocked his account.

So like I never and this is why I had like I first of all I completely agree with your take like I think mobile is the way to go especially for um apps like a eerfi um like things that want to act as a savings product. Now EFI we can discuss because they their cash back is with squirrel tokens. I don't know if you noticed I just found out about this and I don't know how that can like how how that makes sense. Um [laughter] but um like these kinds of products I think to to me make a lot of sense but and that's why I was excited about um plasma as well and I've already mentioned that I was wrong so we don't have to talk about it again but I have a

I have a important question asked me actually by Jacob Jacob um his his question is when will you be bidding uh hype What is what is our but [snorts] okay in a general in a more general thing I guess like the fouryear cycle thoughts um how you think crypto evolves over the next like let's say six months and you it doesn't have to be a very professional opinion it doesn't have to be a key rock stamped opinion just like how you view the market going forward and for Jacob as well specifically how you view hype going forward >> yeah um so I feel like we would be caught off guard with the

bare market cycle. Uh meaning suddenly now you know in the next probably 3 months everyone will be like oh you know the cycle is still happening so then we need to wait another two years and then that's probably when you start beating etc. I think it will be shorter and that's where probably get off cycle in a way in terms of pace. Uh but it's like a consistent like let's say review like I I think of this now but like maybe in two days I change my opinion. I don't know right. Uh it depends on everything. So uh but generally speaking if I had to take a concentrated bet I would say that I would be preparing around late summer into Q4 next year of

buying everything and forgetting about it probably for like two or three years. Um, now he has a lot of dependencies, right? And there's a crazy US president at the same time on the line uh that can change anything. So it's not as predictable as it could be, but uh in terms of hype uh if I think it could be the Solan of of the of the cycle for the next cycle. I mean or already has been in some way or form, but I think we're underestimating their their their capability to execute and capture the audience. Um, so when uh you got my answer where it's I'm not going to say

cuz I want to actually buy it there. >> Okay, that makes sense. Um, okay, Danny, you got any more questions or I'm going to let Final Scope so we can switch to the other segment? >> No, I think that was great. Um, >> lead him. >> Wait, actually, let's do this last thing. Dev connect takes and then I'm gonna I'm gonna let you go, Pas. >> That's a good one. >> How's the first of all, how's the food and then we can go this. >> Honestly, Buenosirus is amazing. Uh, I did not expect it to be that good. Uh, food is awesome. Sometimes they tend to overcook the steaks in some restaurants, but uh which I did not expect, but uh yeah, it's it's it's pretty good. Uh Dev

Connect, as I said in the beginning, it's feels like everyone is kind of like doing their thing unbothered from the market. Um and there is there was a lot of privacy uh like uh privacy booths, privacy talks, you know, which I mean good luck but uh not not my thing personally but uh and I don't know much about it but uh yeah I think uh the Ethereum crowd has kind of rejuvenated in a way from the previous like two years. >> That makes me happy. I um Block Works gets a bad rep with Ethereum, but I'm like I've always been I like the Ethereum aesthetics is how I would like to put it now. Like I like the Ethereum

style. I the token I don't love right now, but maybe they'll the rejuvenation will help out and things will get better. >> Yeah, definitely. >> Okay, Fos, I appreciate you taking the time to come on and sharing your thoughts, even though you didn't tell us when you would buy Hype, which is which is okay. We we'll get it out of you. >> That's too much alpha. >> That's too much alpha. All right. Um, have a nice day. Enjoy the Buenosirus weekend. I hope you have a good one. >> Thank you. >> Thanks for coming on. >> Fantastic.

>> I That was the first time I met Thanos and he told me that he sold in the summer which makes me feel like I should have started talking to him a lot earlier as a person. Does that make sense? [snorts] >> Yeah, that's a [laughter] that's a a nice way of putting it. I think >> I wish I [laughter] wish I would have met him so that he could have told me in the summer that I should >> I wish I would have met him so I could have talked to him sooner. Um before we I think we have another we have more guests coming on in a bit.

Before we chat with our next guest, I want to do a quick shout out to our sponsor for today, Katana. Uh, this episode sponsored by Katana. Katana is an L2 built for DeFi and is pioneering the ecosystem category of productive TVL, believing that chain should be graded on how efficiently assets are put to work in DeFi rather than just total value locked. From now until the end of November, users that bridge to Katana can earn boosted yield from cat incentive campaigns, added vault bridge yield, and other chain revenues. Follow the link at today's show notes to get started. Thanks so much to Katana. Uh, who do we got coming on next, Buck? >> We have uh a thief office from Ethereal to chat about per. But before we do that,

what what are what's on the shopping list? What are we buying? Not today, but at some point. Wait, I need to close. >> What are you buying? And then he walks away. >> What are we buying? Um, and I mean I like I like BTC. I think um [laughter] I I like I liked what Thanos said um kind of about how like I don't know you sort of had Ethereum 2021, you've had Salana 2024, you've had kind of so far hype 2025.

we we kind of find like a new thing that is like the outperformer um in like each kind of subsequent you know upward period for crypto. So I guess what I would say is I'm not 100% convicted on anything at the moment. I my mind could be changed. Uh something I do like shout out to no Goldberg. Uh I I think Metadau is interesting. I will say I'm not I don't own any and I'm not buying any right here, but um I like the idea of unruggable ICOs and this concept of like tokens

converging towards traditional equity models with like more more token holder rights. Like I I think that's an inevitability and we've seen it from like the better project stewards in the space and what we've seen from the worse project leads is like complete disregard for token holders and uh a lot of disappointment. So I think naturally the market is like converging to that because people are are done being you know kind of [ __ ] on when uh let's say if they're the product associated with their token gets bought out and then the coin goes to zero that's a pretty unfortunate outcome.

So I I do think solutions like that like you know maybe it'll be metad it'll be something else you know I don't have a clear answer on that today. I can't predict the future but I think that direction is positive. So I I'll be keeping my eyes on that space. >> I think that makes sense. The thing with I think we have an event every month or so now that like proves that metad would have been very relevant. I I mean I don't know if you mentioned this but I assume you were thinking of uh the tensor base thing and >> maybe I can give a short background on it.

>> Yeah. >> Um Coinbase announced Whoa, that's loud. Coinbase announced that they will be buying out um the uh what is it called? Vector.f fun. Vector fun product which was previously under tensor. Um now tensor used to be an NFT marketplace and then they built out vector.com. We've chatted about vector.fund on the pod a year ago, maybe a year and a half ago. I thought it was always a bit over complicated, but it was objectively like an interesting product in that it was a mobile app that allowed you to buy, sell, and trade crypto tokens. Um, like 1% fee, one of that like X um I feel like these popped up in like

January as well where they were just like like one two two% fees and just made a shitload of money. Um anyway, Coinbase acquired it, but what this meant was that the Tensor NFT marketplace product moved under TensorFlow. So like the Tensor token now only represents um the Tensor NFD marketplace, which is not as useful as the memecoin token terminal, which Coinbase has just bought. And it's like brings up that question of like why ownership tokens like do people owe us anything? Um or like how do you like what's the difference between these these different entities? It is very

difficult. Um I don't blame the tensor guys like imagine Coinbase comes up to you and is like yeah we want to buy this specific product you know and like we want to bring your entire team with it. You can't really blame them. But also on the other hand, it's kind of a shitty thing to do to people who hold your token. Um, especially if they bought because of vectorf fun. It's it's a tough situation. I don't know how Metad can the issue here is I think token launchpads are difficult because you can never own the entire thing, right? Like it's the same thing with Echo and Soner. like you can never own all of

raises and the same thing with meta like you can't own all of token launches as meta. So it's like inevitably they're going to like inevitably there's going to be some slips for the cracks and some tokens will not launch from metadata. So I don't know how it fixes the whole thing but as an idea it's a very good idea and I'm very excited about it. I just I I don't know if large VCs will use it, but what I've seen on Twitter and on like discussions around is that the gut reaction for venture capital investors is that oh this is useless like it's not really particularly important. um which is like if you're raising a f if you're

raising for a protocol Danny like will you accept investment from multicoin and dragonfly or will you accept investment from 30,000 addresses generated by the same account who does like a $500 check from each account you know like it's the idea is very cool um it's just like a tough I don't think I'm saying anything relatively new here is why I think everybody who's invested in Meta now thinks of the same I don't think it means it's a bad product. I just think like it'll have people who pick and choose. Um, which is natural.

>> I agree. Um, I think I mean to the one point to the tensor thing, it's like I guess if you were holding that coin, it pumped 10x maybe partially on insider trading. So, you did technically get a payout um on a coin that looked like it was going to literal zero. Um, so if you were in the thing, like that was your sell opportunity, I guess. Um, I think to the point like [laughter] VC saying they're not interested in a product that gives people that aren't VC access to do sales or participate in raises that they otherwise wouldn't have. Like, yeah, I mean, of course, they would say that, I guess, is is my thought there. Um I think maybe the push back that the

criticism that I would expect here is that um and I think we've seen this generally with like doing an like an ICO or an IPO whatever on Pump or you know Believe Launchcoin like all these like ICM platforms is that kind of the key push back is maybe that you get you're sort of getting the um a negative a negative selection factor here where you know only the projects who don't have enough um founder credibility or like a strong enough brand to raise from a meaningful cast of VCs are going to go this route because they otherwise can't get the funding. Um so maybe there's like some negative

selection towards the projects that like end up on these platforms. I think that's that's maybe one argument you could make, but um I don't know. I don't really see a reason to be against a protocol that's about adding more transparency and rights to the token holders over um the protocols that we're building here. I think all I think that is a win and probably objectively like for VCs as well, they should want some of the token holder rights pieces even if they don't necessarily want even if they don't necessarily like care about a particular protocol doing a raise like on a platform like this. I'm sure you would still love to have like a

guarantee that oh my tokens have you know some rights to the to the cash flows for example. >> Yeah. I just I don't quite understand how the dynamic for equity versus token works for VCs. Like do they get two things to sell or do they just get to sell the equity before as well if they have to? Like so I I don't know if that affects them. But also a lot of this like the thing is a lot of these projects are positioning themselves as like anti-VC sometimes.

Um, and we saw this with memecoins a lot as well, very early days. Like they just position themselves as anti-BC and it's like it cuts out one very important participant of I mean you can argue how much you like them, how beneficial they are. They're very important participant nevertheless. So you cut out like and if I don't think Metadal does this and I don't think a lot of the more serious ones do it, but there are some projects that like try and antagonize VCs sometimes. To me, that seems not like a very good idea. And I think, yeah, I mean, I can definitely see a way for them to work together. Like I said, I don't understand the incentives on the VC side at all. I have no experience in venture capital. I've written two angel

checks in my entire life, both of them down. So >> yeah, I guess maybe what I would say I agree with your like I don't I don't think MetaT now as a platform is like particularly anti-VC in any way. VCs are, you know, there's there there are very little restrictions on who can participate in the sales, right? Like you can fund a wallet with 50 million and shove it into every single one of these deals if you want to and get an outsized allocation. Um and it seems to be what people are doing. like they're absolutely blasting these sales to get their like pro rout.

Um I guess maybe the point I would make is is to your question about like I don't understand what their equity plus token arrangement looks like. If we're in a situation where the status quo is basically such that tokens are kind of like a cherry on top for VCs and it's like you know when their startups that they're investing in like get acquired and they get all the value out of that equity purchase and then like maybe the token goes to zero but who cares because they were just sort of like selling the vesting the past two years or whatever.

Um, I don't know. That's not very I don't see that as very positive outcome for the rest of the market. So, like in my opinion, forcing that to change is is probably a net good. Like it doesn't make sense to just give like one preferential group like a little bonus Sunday topper and then everyone else just kind of like has to eat the leftovers. That's that sounds kind of awful. >> Yeah. And it is changing slightly, right? like very clearly um last cycle there were these people that was like oh like paradigm invested in this therefore it must make money or like x invested and therefore must like go up or like therefore they must win airdrop versus now in crypto we love

overcorrecting so so so much we'll we'll do this talk afterwards as well but just want to invite let's put this on the proper view there we go hey a how you Hey guys, how are you doing? >> Good, good. Um, we were just talking about if venture capitalists are evil or not, but now we're [clears throat] going to talk about Ethereal. Um, do you want to give a short introduction of yourself and then we can get started? >> Yeah, for sure. Uh, so yeah, thanks for having me on. Um, I'm AI. I'm the founder of Ethereal. Um, background, I spent a lot of our community members know me from my synthetics days. because I spent a number of years there a while back like starting like five years ago.

Um we've been building Ethereal uh in the Athena ecosystem for like a little over a year now. Um trying to build kind of like the best everything app around USD which you know we think is the best onchain money. I have I I guess like one question that I want to start off with was what does it look like to build on the Ephina? Because when I think of Ethe, um the stable coin. What does it mean to build on top of that? Is that just you guys are using USD as the quote asset?

What does it look like? >> Yeah, it's basically like it's [clears throat] building on top of, you know, using USDE alongside other builders using USD, right? Like you could go and just plug USD in into your app anywhere. Um we're sort of building like Ethereal to be like the hot the ultimate hot spot of activity around USD. So other builders building on USD. Um and then you sort of get like you know shared economics from like the underlying um you know yield from from SUSD and like yeah but for the most part yeah it's building with like sound internet money. Okay. And what are some interesting things you can do

because you're building on top of USD? >> Uh, I mean, I think the most obvious is right that like you kind of when you trade on Ethereal, it's the only place where you're getting the the underlying carry from from the from your collateral, right? Like I don't think anywhere else um onchain really offers that. Um, I think there's some other second order synergies where like USCE is kind of unique as a as a synthetic dollar in that it um has a bunch of like derivative inventory sitting behind it in the backing. Um and so there's also some um possibility [clears throat] for some of those flows to move into USD

native trading venues uh over time that can help bootstrap you know like liquidity and and provide a consistent source of of sticky trading flows as well. >> I think that makes sense. Um and you mentioned that you were at synthetics before. Can you so synthetics I I don't want to take up too much time with this just because I I want a background and you don't have to answer if you don't want to but in my mind synthetics has moved from the original product there's one synthetics still going on and then now there is ethereal um you and then there's also an infinex arm can you give me like a is that a good basic understanding of it >> I mean there's no relationship between

ethereal and synthetics at all uh I was just giving my background in the phase. I got into the space building onchain derivatives at Synthetics. Um, and then after I left Synthetics, I started building Ethereal. Um, I think Infinex and Synthetics is like a they have a close relationship because Kane is the founder of both, but yeah, they're not involved with either of those anymore. >> Yeah, that makes sense. Um, I guess I I phrase that incorrectly, but I'm happy to understand that. um in terms of I guess okay so one big thing that has been going on is um onchain versus off-chain clubs um can you describe a bit like what tradeoffs you guys are doing in building out Ethereal um and like what are some architectural

decisions that you guys are making that you think will make it extremely performant and very good to trade off >> yeah for sure um I think ultimately like it's I think as the some of the tools for builders have have evolved over the last few years. The onchain versus off-chain um binary has become much more of a spectrum. Like there's a lot more flexibility of like what you can do. And it sort of just is a ends up being a function of where do you want to sit in the trade-off space of what can be verified, what is explicitly required on chain, and what is just transparent and visible. and like which of those do you want to assign to each you know

component of the product right so I think in Ethereal's case um everything that alters state is going through smart contracts on our arbitum stack EVM chain um so like every every like deposit withdrawal funding update liquidation match trade everything that can sort of change a user's balance in the system is being explicitly enforced inside EVM smart contracts um and there's some other nice benefits of that where you could have other smart contracts deployed alongside the core the core exchange smart contracts and like allow them to compose much more easily than if you go and build some kind of like bespoke system that is not it doesn't inherit all the network effects of the EVM and all of like the existing

protocols with like many years of Lindy that you can just deploy and you know that they've worked for a long time and they they'll continue work and they can scale very fast. Um so for Ethereal that's kind of like it the if the goal is to like build this full USD focused ecosystem of trading products we want the EVM compatibility like equivalency you know compatibility right from day one and then we have our own kind of custom um sequencer that handles um that operates alongside the EVM validators that handles all of the high performance you know order matching that's that's kind of that was what we felt was like the right set of trade-offs to make. Over time, you can kind of move towards layering on more

verifiability if users kind of really want that. I mean, transparency is easy. You can just publish everything and you can see it, but then you can also layer on more verifiability on top of it for some of the more high performance components of the system. But yeah, I think that overall that kind of summarizes some of the design choices we made. >> Perfect. Um, and why arbitrum I guess is like because there's other competitors out there, right, as well like did they what did you guys find that was very very useful on their side?

>> Uh, it just kind of offered some of the nicest uh trade-offs of like flexibility while still inheriting like the full EVM ecosystem uh with it, right? So, like I think there's some nice features that like we use USD as a gas token on Ethereal. That's a lot easier to do with Arbitum. We have some other like um custom features we're working on around like transaction ordering and and how how how exactly gas is handled because we do things a little bit differently on Ethereal than a normal general purpose chain. Um so there was just a lot of nice customizability features uh with arbitrum that made a lot of sense where you can still kind of like have your cake and eat it too.

Is there anything from um like I don't know like a risk standpoint of of building everything on top of USD like I guess within lending markets for example this has been a topic of kind of debate of whether or not to like hardcode USD to one for example I know in that case that's a little different right because you're talking about like a borrow lend marketplace and if you're going to everything is just going to operate on on USD maybe that's a little different but I don't know in any of the design decisions does like kind of risk of USD as the underlying become a a question Yeah, I mean we try to incorporate um at many levels the notion that users are accepting that everything is we're just redenominating everything in USD and so I think as you layer on more products

and you know more different collateral and risk and onboard other assets um it starts to become more of like a proper risk management and not just like users are implicitly agreeing that USDE is the settlement asset um which I mean a lot of dexes do this with USDC right and we I think we saw in like March 2020 was it 2023 um or 2024 I don't remember but when USDC traded at 85 cents uh everybody was wondering like does this break everything like but like users are all just agreeing like one USDC is what we're trading here uh and so there's a lot of similar assumptions like that where it gets tricky is like with lending markets and um and when you have like portfolio margin or anything like

that it starts to at like an order of magnitude hairrier and like we're obviously going to implement all of the like I think Athena has spent like the last year working with like a and now Binance and everybody kind of improving the the risk management around USD and like how do you price it and like they've got great like transparency dashboards with like chaos and all of their risk partners and so I think like it's it's improving a lot like just in terms of like um just the data that's available that kind of makes its way into the market for users Um, I think like us as builders, um, we don't have any we don't have any, uh, reservations about building on top of USD. I'm like fully bought in on the model. Um, but I think it's more more

just around nuance of like how do you communicate things to users and how do you make sure that you're incorporating the proper risk management inside your products? >> That makes sense. Um, I have uh, Daniel, unless you have a follow-up, I have two things I want to ask. Um, one is will you be focusing on products building on top of you as well? I think per stacks naturally lend themselves to being built on a little bit and you mentioned this with the EVM. Um, and the second thing is how what I guess like markets will be live day one. Are you guys focused on these equity pers that everybody else seems to be focused on this past month?

Um, what is like some markets that you definitely want to be live with? let's say end of month one, end of month two. >> Yeah. So, we I I guess I should have said in the introduction like we are live right now um with a very limited mainet alpha with like one or two hundred users mostly to just kind of technically start battle testing the system with real money. Um and we have like about a dozen markets. Um but yeah, as I said, it's very very limited I think. Um okay, I guess there was a bunch of questions in there. Um but like so on the on the like EVM side like we we have a money market kind of already built that we will roll out when the you know when it feels like um things are

starting to to grow on that side there may be some demand. Um we're also working with another team that has built like a pretty novel and interesting prediction market product. Um, and so I think ultimately like Ethereal, we just want to like users in our discord are like, "Oh, this is going to be like a like a DGEN's paradise, right?" Like you kind of have everything there. So like we want to give users like spot, perp, money market, prediction. Like these are all the killer apps of of crypto, right? Initially it was just stable coins and then I and then it was like, you know, now we have spot on chain also. Uh, and then we have money markets on chain also and then now we have prediction markets on chain and pers, right? So like these are all the things that have clear PMF

and like I think the one thing that you don't have is doing them all in one place where it's like one vertically integrated product. Um I think a lot of people now are like I think it's very clear that like if you're a pers product you need to have a prediction market strategy in your roadmap and a lot of people are kind of just defaulting to like um poly market or call sheet. Um but we also see a lot of value in sort of collaborating and building the stack ourselves to offer like features that we think you know users really want that you can't get anywhere else. So like for instance we're going to offer like parlays on prediction markets on Ethereum through our partners. Um so yeah, we just want and it's all built around USD. There's a lot of like like again like the if you if you're creative

with how you sort of um you know are allocating the the the native yield that you're getting through USD, there's a lot you could do, right? So like with a prediction market, you could do free bets with USD like instead of instead of uh just like distributing a few percent. And it makes longtail markets much more viable where you have like a year expiration. You're getting like 5 to 10% on your collateral while it's locked in a trade. So you can price you know 100 to1 market at like 200 to1 instead or something like that. Um so yeah we see a lot of ultimately like we're just like we've always been kind of like really out there builders like we like to build weird [ __ ] and we think that like users like to try bunch who are on chain

already. they like to try it and we think it's going to be a really great product overall. Um on the equity per side like I think like every again it's another thing that like just like prediction markets every per stacks needs to have a strategy on right now. Um we're not there yet because we're still kind of testing the core infrastructure more. Um but it's something that we've given a lot of thought around the kind of like um economic design and like I think we have a few ideas as well about how to improve on what's already out there um in a way that can kind of help the help those kinds of things scale a little bit more be more capital efficient, lower risk, that sort of thing.

>> Yeah, I um I have two follow-ups. One is um with prediction markets, I'm very happy you guys are considering it. I was actually chatting with somebody who said um almost all of the perexes will have prediction markets which to me makes sense. Um I'm curious like how you think about you don't have to share everything because it's not live and you don't know what the end product is going to be like but what is that implementation that you were talking about that is like um very very interesting that it's like are you going to be able to build it as an orderbook product or how's it going to work? I guess it has to be built as an order book project. Yeah, we could do a whole episode just on this because like we've we've been thinking we've been

working on this for like like even like I feel like the kind of popularity around prediction markets has exploded in the last few months and we've been working on this like well before that just thinking that like this is a great product to have and so like we've yeah so I think like we've kind of given a lot of thought to like specifically around the market structure for prediction markets and what makes the most sense um of how to kind of like graduate markets on different levels of liquidity. Like I think one of the reasons people are really excited about prediction markets is because it can be so many um so many different products rolled into one unified thing, right?

Like I think like it could be like if you look at poly market, you can go and you can bet on crypto prices, right? And so it's sort of like an you know options or or like it's got similar care similar overlap with like per traders who just want leveraged exposure to crypto and like prices of anything else. And then you've you've also got like people betting on geopolitical stuff. You could create like insurance products around specific things. And so it's all of these things jammed into one. And I think one of the things that I people are not really considering enough is how you may not want the exact same market structure for all these different types of markets. Um, and it actually makes sense to sort of have like a graduation process to move things through like maybe you just like through uh

mechanisms that are better for very longtail markets with no flow and very active markets like elections that you would want to have an order book. Not everything makes sense to throw like straight inside Ethereum's order book. So, we're going to we're going to have both um where we have all these longtail markets. They don't all have because it there comes a lot of overhead comes with like if you're building a perpstax order book. Uh it's a different type of thing than like how Poly Market's order book works right now where it's like pure spot. Um so there's a lot of overhead that comes with trying to jam all those things in there and like it's not even the best user experience for users or or liquidity providers. Um so it was a little bit of a tangent there but yes

we've given a ton of thought to that. The general idea is there's a graduation process and the most liquid markets are inside Ethereal Zorda book. >> That makes sense. >> You you mentioned um earlier like you know a lot of teams just thinking let's just go ahead and integrate vanilla poly market culture straight into the app. Um and I guess you you sort of gave a reason there about maybe differences or challenges in how the order book is is designed. I guess is is that the key reason that would push you to sort of maybe build this up a little little bit uniquely or from the ground up so to speak?

>> I mean I think there's a lot of reasons like one like I it's a lot easier to kind of curate what markets you want when you can list them yourselves on your own timeline. So that's obviously beneficial but I think another thing is just like coordination of capital and liquidity. It's a lot easier to do on Ethereal if you have like, you know, a vault that's providing liquidity to a bunch of markets. You could do that with USD. On Ethereum, you can kind of drive everything yourself. Um, but then also like again like I think just having the flexibility to have the product do what you want. So I think I I I hear all the time people like, "Oh, parlays on Poly Markets would be a great product. Um, users would love this." I mean, I don't know. I guess like out I think they have

a different name outside of the US, right? Like combination bets or whatever you want to call them. uh but that still doesn't really exist anywhere. And I think if if I'm going to give a prediction market products to onchain perex traders who are arguably like some of the most risk-hungry users in in the entire space, I I want to give them parlays when they when they want to give them the option to do that if they want. Um and and like I don't think you can do that if you just build with, you know, somebody else's tech stack. Um, and so we like to build the product exactly the way we want to build it. And so like that's kind of why we we do things the way we do.

>> Okay. So that would be your you mentioned a bunch of different products that like are kind of, you know, on the radar longer term roadmap. Like that would be your general lean is we think, you know, equity purps are cool. Let's let's kind of build them out exactly how we think they should fit into the product rather than like, hey, let's just go directly integrate, you know, this top name that's doing it today. >> Yeah. Exactly. And I mean it's not even really long-term like equity per we could do today. Prediction markets we're testing on mainet right now. The money market is already built. Like I we've been doing all of this in parallel like over the last year. Um and we're now just starting. We just rolled out the first thing which is like per trading on mainet very tight alpha like but like I

think the pace at which we're going to expand all of these offerings to users going to be very quick over the next few months. I um I have one thing about equity purpose I want to ask and I know kind of putting you on the spot um but like it's just something I've been thinking a lot about is how are you going to do weekend and holidays on equity verbs like with oracles I just asked this to Thanos who was on before you but like is this something you guys have spent thinking about?

>> I mean I think the ultimately like you kind of have to rep Pricing it is not the hard part. It's how you in my view it's how you manage risk around it. Um I think pricing like what people are doing is like the contract when there's no external market. becomes se self se self se self se self se self se self se self se self se self se self se self self-refferential right like you kind of just use the market's own but then it becomes a question of like if you're going to do that how do you how do you process what the market is actually trading at and turn that into a mark price right I think you see like with hypers on on hyperlquid a lot or generally pre-launch markets they're self-referential but then it becomes sort of just like a battle of

which side of the market has more money to throw at you know manipulating the price and liquidate the other side. So, it's I think that's the obvious. If you want to do 247 until you have like 247 spot markets, uh it has to be something like that. It just becomes a question of of more of like risk management and how do you mark the contract more than like what are you going to use as the data source. >> Okay. >> And that's another thing I could probably do an entire episode on talking about. >> Very good. It sounds like we're going to have to have you on for two more episodes. one where we discuss prediction market.

>> Yeah, I'd love to come back on when we launch the prediction market product and talk about it because it's really cool. [laughter] >> Um, one uh I I also you brought up hyperl um there's also lighter is very very popular. I mean you know there's a lot of equity there's a lot of purpose X's out there that are very very popular. Now what is um what's the game plan? Um you go live you have USD collateral. What's the like push that um gets Ethereal more users than everybody else? I know you guys had a very successful um pre-eposit campaign as well right?

>> Yeah. I mean, I think the pre-eposit campaign kind of showed the that's like another going back to the beginning of the call when you say like what's the value of building in the Athena ecosystem like is it just using USD? I I do think like the capital coordination element of it is like really really powerful. Like there is no like USDC ecosystem. there is no USDT ecosystem as much where you kind of have this network of like liquidity providers and power users a lot of them who also trade a lot like we've had inbounds from um users who are like you know like top 10 in Athena points earning USD whales and they're like I just want to move all my perp trading to Ethereal when can I do that um like even like even a few extra percent on my margin will greatly

improve like the the riskreward of some of the arbs I'm running right now because I just don't get that anywhere else. So, I think like there's a lot of these intangibles of the the USDE Athena ecosystem that are very underappreciated that as I said like the cap like the cap and as you said for the pre-eposit kind of just showed like the capital coordination is very very strong. Um, so like when we roll out the community liquidity provider vault, we think that we have a really we have a fast track to kind of like scaling the TVL and that and having a really strong uh like immediately on the same level as like lighter or hyperl liquid in terms of like how much is how much liquidity is there actually that is like backstopping the thing. Um, and then just like the

network of users who already have tons of USD who would want to move it to a DEX that is settling in USD that doesn't exist anywhere else. Like you can use your USDE as portfolio margin collateral on buy bit or Binance but it's haircut you know if you have if you have unrealized P&L you've got to pay interest on it you don't have the same capital efficiency you take more risks if they're not like what would happen on Binance if they're not marking it correctly um it's a very different value proposition from if you just have a DEX that is everything is settled and dominated in USD um so I think like that's kind of like that's the reason why we're building this on USD and the Athena ecosystem because we think it kind of can help turbocharge the the the growth in the go to market in a lot of

ways. I >> think that makes sense. Um one more question I had Danny um before you ask um with Ephina how how close are you guys working um how much support do they give you? Because uh to me it seems like this is um one of their like two new growth strategies. One being like white labelled stable coins, the other one being Ethereal. Um, are you guys getting a lot of help? Are you are you very closely in contact with them? What does the relationship look like? >> Yeah, we work really closely with the Athena team. Like they've they've been like day one product and design partners on this. Um, and yeah, we they they give us a lot of input. They provide us, you

know, a lot of uh give us a lot of help with like connections in their network and that sort of thing. And like I think probably like the ecosystem is getting big for Athena, right? And so I'm sure they support all of their builders. uh we were one of I think one of the first to actually say like we're just going to build exclusively in the Athena ecosystem and so like we obviously have a close relationship uh because of that but yeah I mean I think the Athena team and just Athena community in general is it's a great place to build. >> Very good. >> Yeah, maybe just as um a final question here for me is what's kind of the the short-term expectations users should have? I know that I think what mainet alpha I think you're calling it is live.

So like maybe as a prospective user what you know getting on there and like what should I be looking forward to here over the next couple of months? >> Yeah, I mean I'd say like the hardest part for us has been trying to just sit on our hands and I think you have kind of the opposite problem. Normally, you know, you build and then you want to try to find as many users as possible to use it. And like we've kind of like since we've launched, it's been the inverse where it's really hard to just tell people like please don't like yes, just wait like a few more weeks like we just want to test you know the architecture a little bit more. It would be really bad if like we had this huge influx of users and you know what wasn't weren't prepared to handle the load and that

sort of thing. Um so it's been great having tons of inbound users. I think we're kind of at the point uh now where like we're I think we're probably going to be like doubling every week or two or something like that. Like I think just today like with the 100 or 200 or so users we had we made a new all-time high in volume which is nice. Um and like everything is performing flawlessly, right? So I think from from a perspective user hop in the Discord, you know, a lot of the time we just give people access if they seem like they really want to try it. um or just like or like obviously there's the wait list but like yeah I think I would say the access is going to expand a lot in the next few weeks and so if anybody is interested like just come hop in the

discord jump on the wait list you'll get access very soon. >> Very good. I have one last question and then we're going to um let you go a but well actually two questions. One is what is so you guys have been building this for some time now. What is something that you would have done differently over the past like seven months that you're kind of like it doesn't have to be a bad thing but something that you realize now like oh I would have rather have done it this way. Um and the second question will be um where do you want people to go which I assume is the discord but if there's any other resources that you want to point people to please let let them know.

>> Um I'll take the second one first. Uh these are the most recent. Uh Discord. Yes. I mean, you can another thing you can do is deposits are open even if you don't have trading. So, if you want to deposit that into the app, um you'll probably be able to trade faster. Um so, if you want to if and you and you get yield and points on your deposit in the meantime. Um so, yeah, I think like either just deposit into the app and join the wait list or come to Discord if you want to get more involved. Those would be my my main two CTAs. Um, things I wish I'd done differently. That's a really good question because so far like I don't know if we've got like we've just gotten to the point where we built

the thing exactly as we want it. Haven't really had much time for regrets yet. Uh because like it's like okay it's done. This is exactly what we wanted to build. And like I I don't I don't know if there's necessarily anything I'd say at this point like I wish we had really done this differently. Um, I would say yeah, I mean I I guess I don't have anything for you at the moment, unfortunately. >> No worries at all. We will just have to have you on when you guys go live with the prediction markets and then I will ask you the question and then you can tell me if there's anything you regret or not.

>> You'll be the first to know. >> Very good. Okay. Um, AI, thank you so much for coming on. This was fantastic. Um, enjoy your Friday and your weekend. >> Yeah. Thanks for having me on, guys. And yeah, you too. >> Thanks for coming on. >> Great stuff. >> We have a free That was good. That was good. I um Fur is one I'm looking forward to. one of the smarter people that I know um within crypto like the type of person that doesn't tweet a lot but is like very active everywhere else um had mentioned Ethereal maybe like three four months ago with their pre-eposit. So it's something that I'm looking forward to. Also Westy

>> Westy was very excited about Ethereal. >> West is very excited. And the thing with Westy is that if he is excited and it does well, he will not let you forget about it. But if he's excited doesn't do well, he will he will just never bring it up as well. And to me, Ethereal feels like the kind of one that will do well and he will not let me forget about it. So, I am trying to I'm very excited to see what they're building. Um, see how they're doing. It is interesting to see how much they're thinking about the future right now. Like prediction markets in per is something that no other has attempted yet. We don't have any announcements about it. like we have a and Mr. Velvet Milkman will come on and maybe he'll have some takes on this but per markets is something that hasn't

been explored but like is like explored in the research circles and not in the not in the product circles yet. So it is interesting to see that they're already thinking about it's a cool thing to cool thing to hear about. Yeah, I think this is something that probably we've been expecting like I don't know I think you look it around at some of the sort of platforms that exist even terminal products and it's kind of like you know when are you just going to integrate more of these things right let's say you're already doing like Axiom for example is doing memes and has hyperl like when are they going to integrate a prediction market kind of terminal piece of that as well I I agree it's I think it makes a lot of sense I think he made a lot of great points about like kind of

an inevitability here in terms of like the platform approach of just everybody's gonna want all these marketplaces all in one all in one product. So racing to that seems to make sense. >> Yeah. >> Um before we have the milkman on, I do want to give one last shout out to our sponsor for today's stream, Katana. Katana is an L2 built for DeFi and is pioneering the ecosystem category of productive TVL. In just two months, Katana has surpassed 500 million in TVL with over 90% of that being productive in ecosystem apps like Sushi and Morpho. From now until the end of November, users at Bridge to Katana can earn boosted yield from cat incentive campaigns, added vault bridge yield, and other chain revenue. Follow the link in today's show notes to get

started. Thank you so much, Sucatana, our sponsor for today's stream. >> Let's get back to it. We're waiting on the milkman to >> [ __ ] velvet milkman and he just won't come on. He just messaged me saying, "How do I get on?" which doesn't inspire a lot of confidence. You know, I saw that he just had a podcast released yesterday and he was also on Unchained like two months ago. I mean, he's a very public figure. He clearly does a lot of talk. So, I'm I don't know if he's just egging us on.

What is um Yeah, I didn't know the I didn't know the Milkman was going around on a podcast tour. That's uh >> Milkman's on a podcast tour. Figment Capital needs needs to let him speak more and more because let >> anything like if it's anything like slots. There we go. >> Please speak freely. >> Hello Jim. >> Hey, what's going on? How's it going? >> Good. How you doing? >> Welcome on. >> Welcome. Welcome. We're um we're already live just FYI, just in case. >> Jim, do you want to give a short intro and then we can dive in and I can bug you with some questions.

>> Yeah. I don't even know what we're talk What are we talking about today? >> We're gonna It's gonna be fun. >> Okay, cool. Awesome. Yeah. So, I'm Jim. I'm not a debt developer. Um I'm actually uh the managing partner at Figment Capital. Uh we're an early stage venture fund. We're focused on like DeFi infrastructure. um been around since 2021. We're pretty small team. There's Rob in the background. Dougy's [snorts] over there. Three guys in a room >> trying to make things happen. Um >> other than that, I'm also an active participant in the Zerx Research Telegram chat. I don't know whether I'm on the left curve, the right curve, or the middle of the curve.

I presumably on the downs slope of the left if I had to guess. Uh but there's like a lot of smart people in there, so I don't take it personally. No, I'm I'm I'm happy you're in there as well. I appreciate your your takes um and your slot um sendins. Jim, I I I purposefully didn't send you the questions for today because I I kind of want to take some risks today. Um number one is [laughter] >> Let's take some risks. [laughter] >> Amazing.

>> First of all, I'm very like I'm aware that as a fund you can't chat about everything. So you can just tell me. I can't chat about that and it's completely fine. It's happened before. Um I guess like just to start us off, I I read um your uh hyperlquid HIP free um not HIPPree you one of the hyperlquid um articles you wrote for BedLim with Bedlim Research. I'm I'm curious like one of my takes was and I talked about this with Crane as well is that like a lot of intellectual capital is moving towards this like per space and this hyperlquid space. Do do you think this is a take? Do you think this is a correct take or do you think we're still like um not there yet?

>> Like you mean just because of all the HIPP3 like kind of launches and stuff like that? >> Yeah. I I feel like a lot of more people are spending time thinking about like oh oracle design for equity pers or like um how can you deploy perpetuals more like um prediction pers on per staxes on a hyperlquid etc. >> Yeah, I've talked to Kane about this as well as early as like this morning when I told him I was going on. Um so I think like the article that we wrote was like man I don't even know when it was. It was probably like four months ago or more, right? And at the time like I I I read I mean the the spec or whatever you want to call it in like the git book for what HIPP 3 was going to be was pretty

small. It was like two paragraphs or something like that, right? And I read it and like I was like, "Oh, this is like oh this is interesting. Like this is really cool." And um uh I asked a few of my friends like I was like, "Hey, have you have you read this?" Like like because like there were a bunch of takes on Twitter and there were a bunch of artic like Twitter articles and it was like no offense to those people but like it was very surface level. It's like this is going to change finance and crypto forever. And like nobody really looked at looked at it and like I most people had not read the paragraphs. Like literally nobody. I would ask a bunch of people. No offense crane. Crane included, right? And then Crane read it and was like uh oh this is interesting.

And so the the reason we wrote the article honestly was because and like we wrote it because like we didn't think that there was anything good written about HIPP 3 yet. Um, and then nobody really actually like kind of looked into it a little bit deeper and said like what is this and like how can this be like what what is interesting about what what is actually interesting about it and like also where does this go from here? Um, and like what what do we think could potentially be interesting about like projects that launch hit three markets? And so it got a lot of views, it got a lot of reads, it got a lot of like looks and like some some some attention and uh that's on common for things I write. So like that was that was nice. Um and

we actually became really bullish like as a team like so we don't like you know Hyperlid didn't take any venture capital right we're not investors in Hyperlids like uh but but like I hold hype myself. I'm a very terrible per trader um as many people probably are this morning. And uh I think uh what we started to think about was like I we had like an idea of what what Hyperlids like EVM ecosystem should look like um or or could look like and it's a lot different than I think other EVM ecosystems that are like general purpose. And so the products that we think should exist on Hyperlquid or could be could exist on Hyperlquid are slightly different and nuanced than like the products that could like list and launch on like uh a

general purpose smart contract like L1 or L2 um on day one. And they should essentially like I I'll try to be really quick with this, but like um you have this like flagship product in the middle of this L1, right? [snorts] And generally speaking, there isn't a flagship product in the middle of an L1. And so what how when L1's like launch, what do you have? you have like AMM lending protocol, LST, uh maybe an NFT marketplace, I don't still today, right? I don't know. But those are like the foundational like kind of like building blocks of like building an economy, right? Like like stable coins. And here we have this like flagship product like the kind of like the uh Burj Khalifa just like in the middle of the city. And it's like, hey, like rather than try to build don't really make sense or benefit at all from

this like huge product that's right in the middle, like why don't you build like more of a pyramid? Like sure, eventually AMMs and lending protocols and all these things like they should also exist, but like there's actually a bunch of products that could be built alongside the the flagship product that like start to like kind of benefit from and like contribute to like like more adoption of per. And so we kind of were like trying to push people to think a little bit more outside the box and like like building another lending protocol and building another you know another NFT marketplace like build something where you have like you know billions of dollars of of of volume that like are are complimementaryary to the flagship product and like that's actually more interesting.

>> So in my mind this is like a prime brokerage. Um, I I honestly like now you're making me feel dumb, but like six months ago when HyperVm launched, I was like, you don't really need anything on the Hyper EVM, but lending markets just because I think people are just going to want to like borrow on something and then bring it onto the chain. Um, but you think that's not a good take. You think it's not >> Well, like people want to like I mean I don't know if you've been on the lending markets, but it's like really tricky, right? Like the yield's really high. Um like the the interest rates are really high. Um like sure people want to borrow their hype to gamble more right on perks and like then I don't know how they're paying back their loans but like even USDC was like there was no bridge

between hyper core and like hyper EVM. So like if you wanted to trade per on hyperlquid on hyper core, right? You'd go to hype, you you convert your hype over to hyper EVM, you deposit it into like you're going to do LST, right? So like you deposit it into like Hyper Lend or something like that. You borrow Hype, then you deposit that into Felix, then you borrow USDT, then you transfer USDT over to Hyper Core, then you swap it into USDC, and congratulations, you can now trade Perzy. Oh my god. Like what year are we in? Like it's crazy. It's like that's so many clicks, right? And part of it's due to the fact that like USDC just like wasn't native on on Hyper EVM initially because like you'd be

like, "Hey, how do I transfer my hyper my USDC over to Hyper EVM?" And like there's like you don't you don't you transfer hype over. And so like there's just like all of these like headaches that exist. Um, and so I do think lending is like a so yes, people do want to borrow against their hype, right? Um, but like products like uh risk finance is like one of those types of products which is like kind of interesting. It's like it's like you know it's options uh put options on your on your on some some of the spot assets. Um, uh, you know, obviously like unit is building a bunch of different things, but like at for one point in time at least, they looked like they were going to be like the spot markets for for

hyper core. Um, now they're kind of also building hip 3 markets. I haven't seen anything meaning [clears throat] to ask like I haven't seen anything about man like uh spot like have they have they already minted that? I I I saw I saw they minted it. I think they either minted mon or mega but not both of them is what I remember. But >> and then there's a couple other products we think are also interesting. So there's this one called like bounce, right? Like we invested in them, so I'll just start with that. But like they're building like leverage tokens that like rebalance. So like there's like no liquidation. So like if you're like directionally been correct on every single move but you keep getting like

blown out like on like a a quick like you know 10 or 5% move or 2% 1% move depending on how much like how much like leverage you're taking on like this is a way to like you know you can stay in that position and it just like rebalances to the upside or the downside um to give you like either like protection. We think that's like a good product. We think that should exist. Like pair protocol is building um like pair trading for for like really simple like design for for pair trading on on hyperlquid. Like that seems like a good product like that that should exist. And I think there's just going to be a few more of these products that like can kind of like leverage all the liquidity and all the activity on Hyper Core and maybe can actually provide like better

retail um solutions that it can be very successful products and generate a lot of revenue and be like a little different than just like your next AMM or something like that. >> Yeah. And you make a lot like you make a lot more money on it as well on Hyperlid because of the way that they set up builder code. So it's like it's not like if I'm pair now I know pair is an existing product that has like it's been out for some time but they're going through some form of change. I don't know if they have yet. Right.

>> Yeah. >> Um I assume they're using builder codes and that's like you can immediately start monetizing it if you if you can get the users versus I feel like to build a product out like that like just building out a pair trading product. It's >> it's it would be impossible almost like without a builder codes type of thing where you can make actual money on fees because it would just take you months and maybe even years to get the >> Yeah. And so Bounce is going to be another example of this, right? like they're going to be able to use builder codes. have uh the team actually came from uh like they built the same product previously on uh synthetics when synthe when synthetics had an L1 PES exchange um and they were acquired back then and

then um now they're building they like left and like they're building building this product and like I'm excited to use like 5x leverage like leverage tokens which like if you look we want up when we're doing our diligence we looked at like the FTX estate and we looked at like all the assets that were listed um on the FTX estate and the one thing that like because when Hip 3 first came out we were like super excited about it and this is probably a different story but like we we're like okay what isn't being traded right now that could be a market and it you know like what isn't being traded that's like really interesting and we talked to like market makers turns out market makers don't have an opinion on like what assets like are are interesting they just want organic flow of like you know$25 to $50

million or $100 million and they'll they'll show up for free and they don't have you don't have to pay them. Um, but like they had no opinions and then we started thinking more and more like this is like back in during like before ETH ECC we were we were having these conversations and like like forex equities we were pretty felt like it pretty early on that like unit was going to try to own the equities purpose market. Um, so that's like sort of not an option like like there's nothing really to back there and we just like there aren't that maybe maybe we're wrong but like the the amount of like volume that you're looking at it's like pretty hard like when you look at actually Hyperlid's volume and you look at the assets that are trading like on

just like the regular per there's like less than 10 assets that have over a hundred million dollars of daily volume >> like >> and so you're like, "Okay, so are people really going to trade like silver pers? >> People really going to trade like >> preipo stock pers in size where like the company is actually going to be generating like real revenue?" Like I mean we wound up like kind of walking away and going like after all after after that article after all the research we kind of were like [snorts] oh like uh maybe it's not as big of an opportunity today um as as one thinks.

Um and like I think unit's done a really good job. I think I think like the the equity perks have actually done quite well. um >> surprisingly well almost s >> I would say surprise like for me as an individual like surprisingly well today's a bad day to like look at them but like yesterday I think there was like over hund00 million in like uh oh no today's a good day to look at it uh like I mean the XYZ 100 has like over $und00 million of daily volume like $140 million like uh Nvidia has over 50 like that's that's really good like 140 is like that puts it over like Farcoin right now and puts it in the top like seven I

think if I'm looking at this correct like really quickly like seven or seven or eight per market's trading on hyperlid right now it's that's >> that's impressive that's awesome >> yeah per sexes are super topheavy I I guess like perpetual volumes are like it's mostly BTC Even doesn't really um I'm kind of sad about your take but I also I guess I kind of agree is that like pre IPO markets doesn't probably want. It's a very cool idea technically like but I guess like you don't care about the cool idea because you're investing in a business and the business has to make some form of money.

>> I mean Noah would tell you yes. Uh like I think you know everybody falls in love with ideas a lot of time and like we wind up consistently having to like check ourselves and like we we fall like I think everybody falls for it a little bit, right? Like the dream. Um I guess the question is like how is how is like the preipo like markets like designed like is who are the market makers here like do they own inventory of like the under where they can actually like hedge like like you know like um it's really tough for a purps or even like even like a spot asset to trade on a sing like if a spot asset trades on like a single exchange

like >> market makers are supposed to be, you know, delta neutral and like how do you get how are you delta neutral if there's only like one one market for something? Um, it's very hard and and so like I think for and I'm I'm uninformed on like you know equity stuff to begin with. So like I'm consider me retail in this example right in this conversation when we start talking about like this type of stuff but um I like hyper and they're using hypers right and I think like there's been a lot of problems with like the the asset is the like the assets price is the oracle price um and with volume this like low I I was I've been

trying to look into I know there's been some there's some protections on weekends and like on like uh some of the equity verbs and I actually haven't read it. I've been meaning to read it because I had a feeling we'd be talking about this and I haven't read it. Uh but like it's pretty there's not a lot to read about it also. It's like kind of hard to to find the the information and so there is like some protection over the weekends on like liquidations and things like that. Um, but I don't know like how are we what is really the price of like Stripe's like shares and why are we gambling and like betting with leverage on something that like doesn't have a price that like like a tradable price like I who's taking the

other side of the bet and like you just you worry about liquid what I worry about is like liquidations, right? and like the actual like the market itself not being like uh a proper reflection of like what the value of something like presumably if it was trading today. Yeah, I'm I'm glad you brought this up because the previous two guests I had to bring it up so you brought this up so I don't have to bring it up, but I completely agree with you. And equity pers are the like public equity pers are the exact same thing in the weekend. Like yes, it's better than preipos. Um because there's actually like some form of a market you can attach to or like multiple markets you can attach to or anchor to, but it's also very difficult to do and I don't

know how they're going to do it, but like you said, they have some weekend stuff. Um, some of them are just charging like 1% fee on the weekend for any trade. >> Yeah, >> I I that's something, right? Like I guess you should close your positions over the weekends. Like I mean it was cool that the Nvidia, right? Like so it's like also there's some cool aspects of this, right? Like the fact that you could take a bet on like that Nvidia was going to be earnings and you could be long and you could see that market like post post close and you could be long, right? And sure, the price did rip up like on like the news and you could make money on that. Um, I also saw a lot of people getting liquidated on the on the long like 14 minutes later, you know? Uh, but

like um but it's a it's a it's nice. It's it's cool to have this like ability to to take that type of bet um and to make that type of like investment or wager trade, take that trade. But um beyond those types of events like there's a lot of I think risk involved and like I think like the liquidations are are concerning like like the risk of liquidation is like people are getting liquidated enough. >> Yeah. >> Danny, I I realize I'm kind of dominating so and I saw you on mute twice and I have to mute again. So, please, >> uh, we're well past some of the questions I had. Maybe on the preipo

thing, though. Uh, Jim, I think you have like I think you have a good point there. Like, it's interesting to skip straight to a purpose product for something that doesn't have a spot market. Um, to your point, like I don't know. I would just be so concerned about being liquidated by basically nothing like people just pushing the price up or down and like nothing material has happened. the price maybe the underlying like price of the thing in private markets hasn't changed at all like you know no fundamentals there so it's like I don't know you're just at risk of like waiting around for three years long paying funding to hope you don't get uh wicked by uh somebody trying to close you out of that position before

>> technore revenant right someone like I mean what is the difference between trading >> uh Like, yeah, I'll just keep using Stripe is not a good example because it's not one of them, but like maybe it's a good example because it's not one of the ones that's like listed, right? But like what's the difference between trading Stripe preo uh pers and like jelly jelly [laughter] ps, you know what I mean? Like what are we doing here? Like [laughter] >> that's such a funny comparison.

>> Well, because the markets are as manipulatable, if not more. >> Yeah. Like if you had a million dollars right now and you threw it into the into the uh which one is it? Space X per and you threw it into like the SpaceX per >> or even the Open AI per like what's happening right the open interest is like $300,000. >> Yeah. A million dollars after that. But it'll be your million dollars, right? Like essentially. And I I could be wrong here. If you're if I'm wrong, chat, like don't at me, but like I don't think I am. I think like >> I think that the interesting thing here is like it is something of interest.

Like we've seen um Vlad at Robin Hood talk about they want to do preipo stock tokens and um I mean there's plenty of platforms who've like kind of tried to do this to some extent like Republic has some of their like you know our SpaceX and our OpenAI tokens and it's kind of a similar thing and I think they you know they're not liquid and you can only invest so much and it's pretty pretty small market relative to what's going on there. So I do you think do you expect that that's something like kind of the regulation regulatory landscape has been changing. Do you think that that is something that might change in the future and like maybe spot markets do pop up and then at that point it's like okay per like let's throw the pers on

top or >> I don't I'm not going to we're a team of three and so the regulatory like uh aspect of like preipo equities trading is like not something I spend my time on um to be perfectly honest with you. like could I see it like yeah I think so right I think it's like but it's already sort of happening like there's like OTC I don't know if you guys are in any of these like Telegram OTC like notification chats and stuff like that but like there are people buying Kraken shares last like maybe even earlier this year at like $2 billion or $3 billion right um so like these markets exist and like bringing it to Robin Hood or something like that I think is interesting I think price

discovery is it's valuable it's valuable for employees it's valuable for people who want to for for shareholders. It's it's valuable for retail to get like earlier access to these these markets if they want exposure. So like and I I guess like my answer would be like yeah I think that's probably the way it works is that like once those markets start to exist um then then you can have pers and options I guess like u maybe but like um but that makes more sense to me. They're also just like ri like insider trading.

Um, like which is like another thing that seems obvious like if you were if you knew the results of like the uh if like the president was going to announce something about like the Bitcoin reserve um or if you knew what the results of the Nvidia like you know if you work at like an audit like a audit firm or whatever like I don't know like you could put on a per and on a on chain that like no one's really going to know you did it. Um versus like trying to buy the shares like which people would absolutely know right away that you did it. So there's like >> yeah I don't know

>> we've once again come to the conclusion that crypto is very very useful for people who are trying to insider trade which I'm very happy we've we've decided. Um, Jim, I I realize we've talked a lot about PERPS, um, but I never got to ask you my like quintessential VC question, which is what are you guys most excited about apart from PERS in this case? Like, what are you looking forward to? Um, whatever you This is like I think the VC's dream, which is you can shill whatever you want for the next five minutes and no one's going to be upset.

>> Yeah. I mean, I think um like going forward or like what's in our portfolio or or >> going forward like where where >> where are you looking right now? What are you looking for? >> Yeah. So, I'll give you like one example of something we're looking into. Um we haven't invested in either of the two major uh prediction markets um KHI or um Poly Market. Um, congratulations to both teams on massive valuations and raises. Um, but we have been using them and trying them out a little bit and testing them and man, the liquidity is bad. Um, like Douggee specifically is like in a

prediction market right now where he has like a $500 position and like if you wanted to put $3,000 into like this position which has like generally good volume like um he'd take on slippage of like you know 25% or something like that and he wanted to close the position because he was up and he would have taken like 40 or 80% like like slippage right so he would have lost he was up 80% he would have lost lost 10% or something silly like that if you sold it. Um, so like clearly liquidity is a problem on these like on these these exchanges. Um, and so one of the things we've been looking into is like whether there's some solution like Koshi is offchain at least for now and like um they market make their own book

and so it's a little bit different but like um but for like poly market which is onchain like my understanding is that they they don't quite like market makers get paid like to take the opposite side of like informed flow um which is like a pretty bad deal for the market makers um and or for poly markets business because they just wind up paying a lot of money. So, like we've been trying to figure out if there's like ways, especially for the onchain, like if there's like ways to solutions for market makers to be more profitable. Um, and if there's projects that are like able to like enhance or to like provide more liquidity and inject more liquidity into the markets without being like super exposed to like

directionally directional moves in the market. Um, and we think we found a team who's like maybe maybe building in that direction. That's pretty exciting. Um, so we've been spending a lot of time on that. Um, I've also, so that's that's like one thing that we've spent like probably the last like month or so on. Um, beyond that, I mean, we were, uh, we led the preede in a company called Euphoria. And so, uh, people are kind of familiar with that. Um, we're really excited about the product. Um, it's actually really interesting in times of volatility. like I've got the beta version of it. I think people have mostly seen the alpha early on and now they're seeing the beta version and that team is like just

shipping something really really complex that looks really really simple and like left curve and like that's so hard to do I think and very few people have actually built a good UX for anything in crypto I would argue um or I would make the point and so I'm really excited to see where Euphoria goes and like whether people and how people are going to use it and when they're going to use it. Um, like I'm already kind of like trading my own mental model of like when I should be opening Euphoria. Probably when like people are really sad, it's like a good time to open Euphoria and like try to trade on the volatility, the little little alpha there. Um, and the other thing we've been looking at a little bit more is like and there's been a bunch of articles like this week on it. Um, but

like we're looking at options uh options and it feels like now is a good time maybe for options to exist in crypto. uh both so that you could buy puts and like uh like maybe hedge like some of like your individual personal like you know positions but it just feels like a good time and like maybe that tech is like kind of there um and institutions are sort of here a little bit more than they were in the past and like you know it's like one of those things where you go oh like you know what was bu trying to be built in 2018 and 2019 and just like never made it and like didn't have like product market fit and like I think options might be close to being ready.

Um we might we might as an industry be close to getting ready for options which is kind of cool and we're looking into that a lot honestly. >> Do do you think that um like we're at a point now where IBIT ETH like some of these ETFs are large enough and they have like openly publicly traded options on those products themselves? Like are we at a point now where options on changes make sense because you can kind of look to those markets as kind of the the existing kind of pricing of them and previously we just you know you just didn't really have that and there wasn't enough interest otherwise.

>> Yeah. I mean it's still going to come down to what the premiums are right. think and like everything that I've whenever I've ever looked on chain for like an options market or exchange like the the that's just like crazy, right? And then like if you talk to some of these teams that like we we've talked to a lot of teams about it, right? We've like really kind of tried to do quite a bit of diligence and so we talked to market makers about them and they're like, "Oh, we offer options, you know, we offer like options." Oh, really? Like what do they look like? And so we we've we've just to like get a sense of like what the pricing looks like and it doesn't look like anything that it's like onchain like onchain is like way more expensive. Um and and then you have like you said these ETFs right

where there's options on price on the ETFs and so my guess is is that like maybe the infrastructure is like maybe the chains are fast enough now. Uh maybe that's part of it. Maybe they're cheap enough now. Um, and maybe there's a way to use PERPS as like a hedge where like these market makers can actually just kind of go and just use the perp. And like the question is like whether there's like enough sophisticated users or whether like pers are a better product. Um, Douggee would tell you that like per retail product. Um, like fundamentally a retail product. They're not like an institutional product. Um, and I think I tend to agree with him that it's like much easier for the retail user to like say, "Oh, I'm up I'm I'm gonna make 3x if this goes up,

you know, 100%." Um, it's harder for them to like kind of gro the the options. But I think institutional players like like sophistic I don't know. I I I maybe it's maybe it's not a good time for options. Maybe I'm talking myself out of it right now. Um, but like I think there's a lot of people who got blown up on 1010 and would like some sort of like liquidation um uh protection. And like one one way you can have liquidation protection is entering into an option, a call option or like a a put option. Um because like it expires when it expires um versus sorry it moved on you and like you're you're blown out now. So like like you

were correct on like the longer you thought in three months like it was going to be here and like it actually got to that price but like unfortunately the road to get there wasn't like a straight line. It was like a pretty pretty volatile like trip to that to that ultimate number. I um I agree with Douggee in the NU in the re like pera retail thing the now I really really like I fell down a big option because I thought they were very very cool um last like in the bare market 22 um and back then everybody just wanted AMM so like or like 21 everybody like we didn't think order books were possible so we were kept

building out like AMM style opt options now. I think we have the order books and everyone's super comfortable admitting that AMMs are not great for trading a lot of assets. Um, but like I from what I understand institutions in crypto have access to options already and like that's what you're saying as well. Like and not just institutions but if you're a protocol team member, if you're a founder, like anybody who is able to go and talk to a market maker um on a regular basis or like on a one-off is able to get these options. And if institutional flow wants options, I feel like they would want it hidden away by a market maker as opposed to like putting them on chain is is my

thing. I like for context, I don't understand options very well. This is like the first time I thought about options in a really long time. But like just off of that, I would really like options as well because sometimes I want to just hedge um and I don't think pers are like it just doesn't work. It's it's not a viable way to hedge. It's it's always if you take on a per trade, it always feels like a directional bet as opposed to like oh I'm just trying to reduce exposure. It doesn't make sense. >> Yeah. Like so I think and so interestingly enough like you know I'm not I don't think I'm giving away any like secret sauce here but like when you look at Euphoria right very simple product uh like when you look at it it's squares and you tap on the square. These

are options. This is options right? the very shortterm duration options that are like um both long and like you have like some like upside and some downside like uh price that you're like targeting. And so the question like that we've like kind of pushed Euphoria for like like quietly has been like okay cool like you guys have like that means that like in the back on the back end there's like an options exchange you know and like that's really cool and like do can you do like a protail version of this like right like so you got the left curve can you get the right curve or can you offer like other other sort of like scenarios where like people can price like what

the I mean because like The crazy thing about it is like you're just showing them the multiple on on Euphoria, right? And like I was there's like a couple of conversations we've had around like what maybe other versions or other like other opportunities exist like using that same like kind of front end or maybe a slightly different front end and like making it retail friendly and kind of being like, yeah, I want some sort of downside protection. I want some sort of upside protection here. Um if I'm short, I guess. Um, and so it's like a matter of just like how do you make it easy enough for people to gro that like they feel they feel like they've [snorts] that they can like learn learn like options are hard to learn, right? Like there's a lot that goes into them and

it's it's hard to learn on like the most liquid markets like in in traditional finance and like in crypto like it barely makes any sense for anything that's been like available to the public. I think it's a little easier when it's like on the private side. We we haven't bought any options or sold any options or anything like that, just to be clear. Um it's like not in our mandate. Um we don't hedge or anything like that. Like that's just not it's not what we do. But um but it's like but we've been asking for like prices to just understand like what it looks like and like what the price of these things look like and like for for the private investors u because like not everybody has exposure to that and I think a lot of people would have liked some option optionality uh over the last

couple months like my guess is like people are like oh that would have been nice. Yeah, there's a lot of vault pro I know we're going over time, Danny, so I apologize, but there's a lot of to do. It's all good. >> There's a lot of vault products that got built out. Like I think a lot of people tried to simplify it um to some extent and it just never worked out. I I would like for it to work out, but I think the euphoria approach is cool because you're kind of taking this thing that is um I I think crypto retail doesn't like options. Like clearly it likes per >> and you're trying to make it something that is like okay well what if we repackage it into this format and it's like very dynamic. I've only seen the

alpha version on Twitter like three times so I'm just I'm going off the boxes. >> Yeah, I chased you down. I chased you down at uh uh the conference and >> yes, it is cool. Um >> yeah, I don't know how it's I'm don't want to speak out of my ass about options. >> It's just like sort of like you can almost set it and forget it, right? I mean, so if we talk a little bit more about PEPS, right? Like like let's like compare it to per a little bit. The thing about per is like you are you are glued to your screen when you open a per, right? Like nobody's nobody buys like a 5x long or short per like and is like okay let me go to the movies and let me go out to dinner with my partner and like let me go away for the weekend

like that's not the exper and like let me let me turn off my phone you know like this is not the experience that anyone has like people are glued to their phones they're like oh my god like it's just this like set like this like sense of dread that like the worst is right around the corner um and like [clears throat] One of the cool things about Euphoria is like actually the time like people are like, "Hey, these are like short duration. It's not very but like the great thing about it and I think like what we could do is we could maybe extrapolate this to like options just in general is like you open up your phone, you play it when you're done, you're done and like, okay, that was good. Like I don't have to work. I can now put my phone down and

I can go have dinner, right? And go out to dinner and have a nice time." And like I think if we just kind of like extrapolate that to options in general, it's like yeah, I'm like hedge here. If the price goes down, I'm gonna like buy here. I'm like I guess I'm a I'm a forced buyer maybe at this price or I'm like a forced seller at this price. Um but like that's okay. That's what I want. Um and I think it's just I think we'll see more experimentation around that like over the like if anyone's building an options platform like particularly if you're like using per on the back end on Hyperlid like let us know. please reach out. Um, but just in general, I think like we're we're interested to like learn more and see what people are what people are experimenting with right now.

>> Yeah. And maybe I'll just add to what you're saying because I I think I agree with a lot of it is like the the top heaviness that we discussed with per like the same exists for options even in the equities world. It's like if you go to a smaller stock way out on the expiration date, it's like yeah, there's not going to be a lot of volume there. Um, same goes like if you wanted to have an option on Jelly Jelly like that no one's going to be no one's going to be trading that. But I'm sure the the BTC book could be quite full. So I think it's just one of those things where it's like this is something that I mean the industry has talked about a lot and it's like yeah, you know, options for like probably BTC, ETH, like some of these

core majors could um could be pretty meaningful. And um I don't know, maybe there's just a disconnect when these products like try to position it or sell it to retail. It's like where's the, you know, where's the the option for, you know, next June on Bonk? Like I want to have a bunch of liquidity on that. like it might just be tough to like fill that particular spot in the market, but uh there's probably plenty of capital that like you're saying would be interested enough to you know hedge or get you know asymmetric upside maybe on like BTC or something based on their view of the next 12 18 months or next three months or something along those lines and then not get liquidated.

>> Yeah. Yeah, I mean we have to ask ourselves like what are the market makers doing that are offering these options like on the other side, right? To the private side and like my guess is is that they're in per, >> right? Like my guess is they're on they're in the per like they're they're hedging it and pers and charging you like a flat fee and it's like up to them to like figure out the the math um and the calculations. But like if they're doing it offchain then like my guess is there's like a way to do it or not. Yeah. My guess is there's a way to do it onchain and like it's going to take some some like ingenuity, but like my guess is it's probably doable.

>> Yeah. Okay. Um Jim, thank you so much for coming on. This was very fun to the point that I'm going to ask you probably again. And >> dude, let's Yeah, let's do it. I mean, I've literally been hitting the slots literally waiting for this invite. It took forever. In case you're wondering how long it takes to get invited to the Xerox research, >> it's around like 800 slot stickers for context but >> it takes 800 times. You have to send 800 times. So, if anyone's in the chat, please hit the slot machine 800 times in a row right now and you are the next guest on your fun. I appreciate you coming on and I appreciate you coming on despite me not sending you questions. There is a reason for that and the reason for that is that

I think it's much better if I already have the questions in my mind. I think it much makes much more sense if we're doing onetoone conversationally. So I hope you didn't mind it too much. >> The the reason is that he didn't prepare anything. So we just >> not questions. I didn't know what the topic of conversation [laughter] going to be. Kind of fun. >> Yeah. He didn't think about it until he shut up. That's why [laughter] >> I pulled it all up. >> Well, thanks for having me guys. I appreciate it. Big fan. >> The chat is one of the best chats like I've ever been in. So it's amazing. Um, I spent too much time in it, but like that's just >> Okay, outsource outsource all work to Douggee. [snorts] Just send in the slot stickers. That's it.

>> Get to work. No, he's not even there. Uh [laughter] yeah. Thanks a lot. >> Awesome. >> Thanks for coming on, Jim. >> See you guys. >> Big day for us today. >> All right. >> We said we were going to take some risks. I don't know if we took enough risks, so we'll have to have them on again. I that's just kind of what I do to stress people out. I did um I can't make this joke live, but I'll tell you about it in private, but >> I promise you guys it's going to be really funny. >> This is related to something completely. Um okay. Uh Danny, shall I close us out?

We should also let Will go because I'm pretty sure he wants to It's Friday night. I'm pretty sure he just >> Yeah. Producer wants to get out on the streets. He doesn't want to be hearing about crypto options. It's He's [ __ ] bored of that. >> Yeah. Close it up. Say what you want to say. >> Guys, thank you so much for Oh, that's you. [laughter] >> Wait, [snorts] can you can you just mimic me? No. No. Danny, go back. >> Guys, thank you so much for coming on today. This was extremely fun. Um, to all of our listeners, thank you so much for listening to us. We will see you live again on Monday. Um, we have a big episode with Alana Lavine from Variant which will be super fun. Um, once again,

thank you so much for listening and have a nice weekend. Peace. You have to do