OpenAI, Hyperliquid, and the Internet's Next Growth Phase | Roundup

Transcript

I would reframe it in terms of like what is the driving force of the internet over the next five to 10 years with open AI with a billion users like that is the driving force of the internet and its adoption and like all the data center capex all the energy stuff like that can come on chain but it's going to be downstream of these like you know new waves of growth within the internet itself. This episode is brought to you by Arkham. Arkham allows crypto traders and investors to look inside the wallets of the best traders, largest funds, and most influential players in the crypto markets. Today, we'll hear more about Arkham later in today's episode. Quick shout out to Permissionless 4 coming this summer to New York June 24th through June 26th. We'll have speakers from all across the industry, including

Hayden Adams, Kyle Sani, Guy Young, and more. Get your tickets today by following the link in today's show notes, and make sure to use code Bell 10 to save 10% on your purchase. See you there. Hey everyone, quick disclaimer before we get into today's episode. Nothing said on Bell Curve is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only and the views expressed by anyone on the show are solely our opinions, not financial advice. Our guests and I may hold positions in the companies, funds, or projects discussed. All right, everyone. Welcome back to another roundup edition of B Curve. You got Michaels one and two, Vance Bells. How we doing?

You know, good, good. Yeah. Up and down. And alive. Hey, I know we talked about it last week. What did you guys think of that Joanie IV uh Sam Alman little bromance video? The little coffee shop in SF. Little me cute. I thought David Sax had the funniest take where he said that Joy I was a media creation. It's a nice take and I think it also is somewhat correct. Um, I mean there is like these intimations that Joanie I've, you know, stole the designs of the iMac and the iPhone from a German industrial designer. The photos do look pretty much the same. So, I don't know if there's like, you know, some or all truth to

that, but I think what Joanie IV has proven himself capable of is becoming great friends with Sam, and that is maybe the most valuable thing of all. I I also I mean look this this will be the first time that he produces a mass market physical product that doesn't have an Apple logo on it. Um there's been other attempts from Love Design and and they've incubated a couple of companies actually, you know, some like camera stuff and some physical hardware. Um it'll be interesting to see what they put out and everybody's been like pontificating on what the format form factor will be. Um is it headphones? Is it a wearable? Is it something you put on your desk and like records everything?

Like this will be kind of in my mind the test of whether or not um it was Johnny steering the ship or Johnny, you know, aboard the ship as it was taking off with iMac, iPhone, iPod, everything. Um but he he is the guy that was the designer of every physical product at Apple basically from 1998 until he left I think in in 2014 or 2015. um big big deal I would say whether or not he was the actual designer or like great artist you know copy or good artist copy great artist steal you whatever whatever that threshold is I'm not sure um but there there is a lot of like

um at least what I know so I I we have friends that work at Apple have worked at Apple I spent a summer at Apple like there there there's some understanding of the industrial design group is basically the ones who like make the product. Um, and at every other physical hardware company, it's sort of like here's all the specs and all the things we need to put in it. At Industrial Design Group, go figure out how to box this up. Whereas it's the opposite at Apple. It's like here's how big it is. Here's the maximum thickness or here's how it's going to work. Here's the form factor, all that, and like go figure out how to put all the stuff that we need to make it work inside of that box. And and so the the the product development process is pretty different at Apple.

And I I I would definitely give, you know, Johnny some credit to to making that happen. Um he definitely had the buyin from Steve when when Steve was alive. Um but it this will be this will be a good test. Yeah, I think um not you know without any facitiousness, I do think the ad was very cool. It showcased San Francisco. It it kind of cemented its place in terms of like this is where the future happens. Um, I think the New York scene is kind of like I don't know there there needs to be a really large outcome out of there for that to be like even close to SF. But if the Open AI IPO is the largest IPO in US history and Anthropic is not far behind and all the robotic stuff is kind of behind that, it's like

there's so much wealth that's going to be created in the city. And you know, Joan IVive making six half billion dollars on like a Tuesday, it's like it's so emblematic of that. And I mean like yeah like obviously like Jon IV did the design of the iPhone and the iMac. Doesn't matter where he got the designs from. Um but you know it's like people were making money here handover fist and it's not real money yet. It's like kind of this like funny money abstraction. Um but at some point that will become real and you know like if if the largest IPO in US history happens is going to be like I I don't know why anybody would live anywhere else other than like Miami. If you're purely optimizing for taxes, probably like the ticket to the future is kind of

the other thing that young people should optimize for. Well, the the previous largest IPO in US history was Facebook in 2012 and that was right that was no in US history. Couldn't have been because it was tiny IPO, right? It was a hundred billion dollars. Well, bullish bullish. You know who's been it's I've seen get some shouts recently is Tony Fidel. I think he was the designer of the iPod and there was a there's a great documentary about General Magic um in the early days bas like scratching at what would eventually become the iPhone just way too early. Um what's also kind of interesting with Sam

at least is like Elon has moved to Texas. Um, and I think that's like viscerally felt in a lot of ways that aren't like kind of obvious just from the outside looking in, but like this is kind of Sam City right now. And like, you know, it's like the the like the Texas stuff and, you know, whatever Cowboys and whatever. It's like that's great, but like this is the city where it's happening and Sam has control over it. Like I think Elon has made like a big mistake leaving and I think he I I could see him coming back at some point.

Yeah. Then the question it be the question who is that person for New York? I mean the rank I mean it's always it's always been kind of finance right? I don't know if there is one guy who controls it at any one point but it's always like the hedge fund guys like Jamie Diamond. It's those sorts of characters. you you'd almost make an argument and this is maybe too far a field but like Adam Newman at his pedro top was one of those um and like there were there are definitely a cast of characters over over time uh but you don't have something you know of of the gargantuan size of you know Mark in 2012 with with the Facebook IPO um doing and remember he hit the button

from Menllo Park he was like I'm not going to New York I'm doing it from Menllo Um, you've got, you know, now Sam at least 350 billion on paper. Um, and and Dario is like a fifth of that. Like there's like there's like there's like multiple, you know, like power law winners in San Francisco and there's like zero in New York even if like RAMP goes public at at 12 billion or whatever its valuation is. Um, and there's a lot more unicorns kind of in the chamber that are waiting to go public. So if you're a young person today, you should either get extremely wealthy and move to Miami or you should be in San Francisco. I think like the LA, New York, it's just getting harder

and harder to justify as like anything but like an in between place. Arkham was created to make blockchains human readable and simplify blockchain data so that it is meaningful and useful to the average crypto user. With their new exchange, users can see what the top traders are buying and selling with Arkham Intel and then trade on that information with Arkham Exchange. To get started, follow the link in the show notes below. This episode is brought to you by Marinade. Marinade is a high performance staking delegation platform that brings both liquidity and security to the Salana network by connecting sole holders with the best staking rates on Salana. Follow the link in today's show notes to learn more. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. Well, New

York's still good for crypto for the most part. I feel like the AI is driving the Renaissance back in SF, which it feels like it's just straight up fully back, but there's still Well, I'm not sure what you guys feel about this, but I've uh it does feel like there's been a real draw of crypto people, especially from abroad, coming back from Lisbon or um Dubai or wherever you might have been, Europe or Middle East. But it doesn't feel like the regulation has moved quite yet. I mean, obviously, it hasn't gotten fully passed yet. And so, yeah, just kind of poking around some of the more institutional players in the space, the infrastructure guys. It's kind of like, yeah, we're opening an office and investing, but it hasn't really moved yet is the general I think if you're so totally agree with that.

Um, and it it seems like from the people that we have talked with who are moving back, you know, who maybe moved out or are thinking of coming to the United States, it's sort of like San Francisco and New York are the two only viable destinations for crypto founders. And and the segmentation is sort of like are you doing something finance related? If so, like being prox having proximity to the finance industry is important. New York, you know, takes takes that. Uh but if you're building infrastructure or anything AI, um it's probably better and more beneficial to be in in San Francisco because you have the engineering base and you have obviously all the AI customers here. Um so that that's I how I would describe the crypto segmentation and but um you know real world assets or anything financial

related New York. Yeah. I I I think with the with like I I would reframe it in terms of like what is the driving force of the internet over the next five to 10 years with open AI with a billion users like that is the driving force of the internet and its adoption and like all the data center capex all the energy stuff like that can come on chain but it's going to be downstream of these like you know new waves of growth within the internet itself and so it's like you know if AI is driving the internet crypto is downstream of AI And in that lens, like yeah, it could make sense to be in New York, but it probably does make on a certain time scale more sense to be closer to where the tailwinds are emanating from. Let me ask you maybe

knitting some of these uh some of these different topics together and then I want to get into these uh treasury vehicles that we're seeing in crypto and get your guys take there. But you know, the general magic thing, what that reminds that was basically the iPhone before the iPhone. It was just too early. And I've been think going back to some of these 2017 2018 ICO ideas and wondering maybe some of these were just too early and we didn't have the infrastructure in place and some of these weren't bad ideas, they were just too early. Um, one of those that consistently captured people's attention was kind of the Filecoin Arweave idea of storing data. And I want I'm wondering if that combines with AI in an interesting way. And this is like an open-ended question to you guys about like that makes a lot cuz I'm talking to

chat GBT a lot. I I've actually sometimes stopped listening to podcasts and I just have conversations with Chat GBT when I'm like walking to pick up groceries. Like I'm starting to tell it some personal you know? Uh and and because it's helpful, it's useful. It's like really good advice. The the equivalent is like when people were oversharing at the start of social media whereas like you really want those pictures online forever. You really want that question in the hands of OpenAI forever. Um yeah, a fit for crypto in some sense, right?

Yeah. Yes. The the platform is called space and time and disclosure. We are investors. Um ah okay. I think that there's Scott on here at some point. Yeah, totally. Um I mean he he would be the best person to to literally talk about this uh the intersection of data technology and AI and how blockchains will be able to not only provide verifiable um understanding that is like ZKTLS uh secure but also being able to store it onchain in a database that isn't owned you know by um people who are taking over the world. Um, and I I think that there's a lot of value in that in general. Um, but but yeah, I literally have been having this thought as like

thinking about where we are in the arc of um, consumer adoption and sort of like where AI will be. And there there's um, Ben Thompson is this kind of he writes a blog post called Strateecery and um, over the years he's kind of put out these frameworks of how you think about you know tech adoption or or different platforms. Um and one thing that he always talks about is the ability to understand kind of like where we are in the arc of consumer adoption of these different new tech platforms. And um basically the consumer adoption waves have been uh PC in you know 90s 80s 90s um then you had the internet uh and then you had mobile and now AI. Um some people would they used to say okay

well SAS is going to be you know a tech no like SAS is an enterprise uh technology. Um, just like I think at least as it currently stands and we'll see if I eat my words in in years from now, blockchains are not a consumer application technology. They are an enterprise application technology. And what I think AI will provide, especially as we're seeing with chat GPD adoption, is that you're going to have new consumer applications that are built on top of AI, be the next wave of how consumer appeal, you know, basically like what's the iPhone moment, what's the Uber moment, all of those things from the mobile revolution are going to happen uh via AI. Um, and as more people get on boarded, there's just going to be way so much information that is stored

that everybody is asking questions about. And um I saw some uh really interesting analysis. Uh actually I think Sam said this on stage. He said um uh the the uh what is it? Weird. We're we're millennials. Whatever the older generation above us looks at chatbt as a Google search bar. We look at, you know, our generation looks at chatbt as basically like a on demand, you know, like Wikipedia or on demand like therapist or basically someone at converse with as you're describing Mike and like the younger generation below us looks at chat GPT as they're like 247 assistant or like the person who's doing all the work for them and they set up

friend or friend. Exactly. And it's just like the perception of what this tool becomes changes one generation to the next. Um but yeah, there there's the downstream ramifications of all that are are going to be pretty fundamental from a data perspective, but also a private privacy perspective. Um, and the like the I I'm I'm probably more open to consumer happening on chain or like you know broadly defining what consumer is on chain like are the five million people that are slinging meme coins on you know pump fun you know is that consumer like it depends and consumer moments like it's oftentimes like an overnight success that was like years in the making and so like if that growth

rate compounds and it gets to 100 million people like I guess you can call that consumer. I do think kind of one thing that I noticed with Coinbase wallet just playing around with it is um they've really taken a bet on consumer being what people want and like you open the Coinbase wallet now if you've ever played with it and like it's like a direct forecaster feed and like you know it's kind of all the bells and whistles that come with like a typical news feed and it's just like a bet that that's what people want. Um I'm not sure about that versus like what's happening on you know like pump fun is the consumer nature like forecaster is very different than like the speculative you know like kind of quasi consumer use case it's more so like Twitter on blockchain um and I

would say I'm probably less bullish on on that and kind of like the forecaster ecosystem you know I I I like maybe it works in the fullness of time but I I think it's a bad bet for now it's not a consumer platform until it is. I agree. Uh but there's there's basically no, you know, evidence to suggest that it has consumer adoption curve uh you know, metrics at this point. Um speculation is is potentially the only thing that you can put in the consumer adoption camp. Um but but that's not like a single app or a single platform. That's just more of like the nature of the asset. Um yeah, I agree with I agree with Vance your take there. I think uh here I actually just by way of actually putting some numbers around this I did a thread

earlier this week but just tried to find it and can't but um basically if you look at all of the revenue which is being generated by apps on chain today um that's something like uh in the last quarter um 2.1 billion. Uh but if you were to only look at if you were to look at the amount of that that's being generated basically by trading um that's like 1.5 billion of that. Oh, and I'll include wallets because that's just that's also just uh trading as well. So it's 1.7. So it's like the vast vast vast amount of what people are paying for is still trading on chain today. Yeah. Yeah. So, keep in mind there's basically two types of consumer

apps. There's free to use and content based where you're paying a service fee. And free to use monetizes based on advertising. Advertising can only work if you have massive massive scale. We've talked about this with like yeah, chat being a subscale advertiser. The there there's nothing that reaches you know advertising scale at this point on chain like period full stop. And if you have a subscription service, um, you know, if you're paying for Netflix, if you're paying for Catch GBT, like those are consumer apps, but you're paying for content. And and that's kind of how you have to look at the lens of, you know, what the consumer appeal is. What is it that people are willing to, you know, pay for on on chain right now as a as a service or

like as a content, you know, subscription? I I don't think there's really anything. And maybe it's just the payment of subscription is the speculation on memecoins and maybe it's entertainment. Like you you can kind of like end around into that argument. Um but but this is how like at least I break down the consumer world. Yeah. It's just it's like it it also feels like there's kind of like this war in Coinbase right now where half of the company is kind of like Jesse Pilled and like wants to just coin it and do Farcaster as the wallet and kind of like just aggressively push consumer. Um I think there's actual tangible risk to that because like a lot of these like just coin it ephemeral coins like go up in a straight line and then go down and

like you just torch those people forever from any other understanding of crypto. And then I think there's kind of another team in Coinbase which is just like just list the DeFi coins, just list things with fundamentals, just list things that are backed by reputable investors. And like I think there's also some some truth to that. Um I do think it's just weird because like the amount of people that were torching with tokens that are broken and uh Felipe from Thea did a good talk on this I think last week. Yeah, there's a video of it on the internet if people want to watch it, but I'll link it. It's from definitely link it. But like, you know, the more we lean into consumer uh as the paradigm before it's ready, it feels like the more people we're going to torch and confuse.

That that's at least my perspective. Not saying that consumer won't ever happen. I'm I'm, you know, again, more positive on it than probably Michael, but there's just a lot of stuff that needs to happen first. Like I think we will get there in time, but like it's not tomorrow. And telling people it is is is not helpful. Yeah, there's a there's definitely I mean it's tough. There's there's such a repeated behavior around this. I mean, this is the famous quote around, you know, the future is here. It just looks like a toy today. I think that's the Paul Graham quote, right? And this this habit of people wanting to speculate on things like memecoins. I'd still put NFTs in this bucket. It's so persistent in crypto. It's just hard for at least me to ignore. Um because I think the you

look at this and you say this is a perversion of finance. This is a waste of time. There's people punting. But it's so persistent in crypto specifically. Um, and and I do see I think I get what Jess I don't want to put words in Jesse's mouth, but there does a lot of people are approaching this from the perspective of trading and financial assets. I don't have to squint too hard to see I can see a media uh, you know, looking at this through a media lens. I think there's there's legs here. U, but yeah, I I don't think we figured out the the form factor. Um, and I think that's going to take some time.

And unfortunately, unlike in other form factors, when you're trying to figure that out at with a consumer app, people will lose money along the way. So, you have to be a little bit sensitive. I don't really know what the right balance is to be honest. The thing that's different with most consumer apps is that there's no risk. You know, speculation isn't, you know, native to the experience. Here it is. And, um, I mean, companies are obviously like a reflection of the people that are inside them. Uh, and you can just like feel this viscerally playing out. And then kind of on the other side and and maybe we can talk about Hyperlquid, but like Jeff does one podcast a month. The product is the product. He's shipping more of the product. It is the same product. There's like a very concentrated but very loyal group of

users. Like maybe that is is kind of a better frame. Hyperl is dominate, by the way. I mean, in terms of what they've been able to put up with volume and revenue like Yeah, it's pretty stunning. Yeah, it's pretty stunning. Um, all right. Let's talk about Hyperlid here for a little bit because I I think there are a couple So, Jeff came on the podcast a couple of weeks ago. I think, you know, he's done something. He's making a play at an L1. Um, and he's building it in reverse order as opposed to, you know, Ethereum and Salana started with the general purpose smart contract platform. He's starting with the killer app, which is the purpose stex, and then building up an L1 around it. And so far he's been I I'll pull up

some charts we can look at but been really really dominant um in that space is absolutely trouncing all the other uh dexes out there and it seems like the ambition is to be onchain Binance or onchain Coinbase and to compete with the big dogs the centralized exchanges. I I would have to say it's even bigger than that. I'd say the the goal is to be, you know, have an app that does the same. And right now, like the the amount I think of open interest is like 25% or maybe it hit 25%, maybe it's back down of Binance. Some days it's doing more volume than Binance. Like it it already is the it is decentralized Binance, but that's an application. I think that the goal is to say this is um you know something akin to Ethereum or Salana as

an L1 where many apps and many app builders are building uh with an application at the core which is doing the same volume as Binance. Um because also remember Binance tried to do the same thing with BNB and BNB chain and it was at least for a while in mostly the 2021 era uh it was sort of like where is geographically located teams in Asia were building and there was a lot more kind of speculation and there it was DeFi summer so it was a hard prompt to to compare it to today but there was a period of time where it was like B&B chain is going to be the place where you launch if you want you know Asian users.

Um things have changed a bit since but they're still they tried to be an L1 as well. Um it is not necessarily a very easy path to start one way and and expand uh other ways like you know Salana obviously started as an L1 and has has been building applications core to Salana um ever since similar path as as Ethereum but um we it'll be interesting to see if they can get there but the and I think you know it it's looking promising so far but the goal is to become Salana and Ethereum with an application the size of Binance on top.

Yep. And I think the, you know, the fees being so robust and we were trying to do the math the other day. I don't know if we ever actually like fully finished this exercise, but you know, Hyperlquid has like 2 million, three million of buybacks a day and you know that's kind of like all the revenue and that converts directly into that. Um, I think Salana is basically like what what did we end up kind of calling it? It it was hard to compare and contrast because a lot of it goes to the stakers versus actual buyback and burn. Um but it was something akin to a couple hundred thousand as the equivalent. Yeah. I I think like our perspective just on like observing the chain is like Hyperlid probably has you know anywhere from like

five to 10x as much fees that go to the kind of enduser stakeholders in terms of a buyback. Um, and that's kind of without the Hyper EVM. And a lot of the builder codes that have been shipped recently are are pretty interesting in the sense that like, you know, if you buy a ticker, you own 50% of the spot market uh fees and that will only kind of increase that. Um, and so like, you know, we did a lot of stuff uh in Salana kind of like in 2022 and and 2023. Uh, but like we didn't buy nearly enough soul. Um, and like watching that asset go up in a straight line, uh, was like excruciating. And it kind of feels like that same thing is happening with

Hyperlid where there's a lot of people who, you know, obviously there was no VC rounds. Um, obviously like the dip whenever that happened was pretty shallow, but like you can kind of feel the same thing happening and you you can tell by just like there's people I think other than I don't think on ETH is fashionable at this point, but like calling the top on Hyperlid certainly seems to be. Um, and it's just that same feeling of like, oh, like will this please just go away or will this please just like off and, you know, stop existing? And I think, you know, our what what we've learned over time is like if you're ever upset about a coin, you should just buy a bunch of it and then see how you feel because there is this kind of ownership mentality where you're like, "Okay, well, it doesn't

it's not that great and it's probably not that bad and maybe I'll buy more." But, um, just being on the outside looking in is really tough. And I think just like judging by CT, like the race seems to be like hyperlid flipping soul. Um, and it'll be interesting to see if that plays out. Uh, and the cap table is obviously a lot different. So I don't think like you know the 40% or whatever that goes to the team and the 20% that's allocated to grants like that's not going to be float in the same way that Salana has. So I think it could be like a real horse race and you know Hyperlid probably gets pretty close to Salana's total market cap at some point based on the fees that they generate.

Yeah. Um and by the way uh even in the last couple of weeks um Hyperlid has really pulled ahead in terms of what it's doing revenue-wise. Um, so this is again this is app revenue and I'm just mostly looking at different exchanges here. Uniswap's not included here because technically it doesn't generate revenue otherwise it would be roughly within this ballpark. But I mean you can see they started to compete going back to you know October like December of last year is when they started to take a meaningful share. Um, and now just even within the last week you know they're doing roughly twice what Pump is doing.

Um, so super super impressive numbers from Hyperlid and you know you can you can tell when speaking to Jeff um you know that he approached this from I mean his background is Hudson River trading um and I think he was frustrated with uh he was frustrated with the some of the offshore exchanges that I think he was forced to trade on um in the early days. And there were a couple of threads that you can go back and look at him going back and forth with the CEO of BitGet um that type of stuff around, you know, their ordering and placement policies and stuff like that. And yeah, it's uh I mean kind of the story of great founders is they're sitting around waiting for someone to fix the problem that they see

and then no one does it and so they just do it. So I it's like I think going back to that chart you just showed like that is definitely the app to app comparison but like to our earlier discussion like hyperlquid is an L1 and so like I think the real comparison is like basically like you know fees paid to soul validators uh from transactions versus whatever hyperl's doing. And I think the numbers that we got from DeFi Llama at least, and I think people know that at least I've had my issues with I was gonna say the carousel of correct numbers. Is it better to have no numbers or incorrect numbers? It's like I really don't know. Um but like you know the chain revenue which is defined as the

subset of the fees that the chain collects for itself is 149,000. the chain REV, which I think is kind of like what you just showed, is 2.8 million, but like the chain revenue is the fees and and it's like 150 grand of Salana fees versus $2 million of Hyperlid fees. So like we're we're almost like 10 to 15x higher on Hyperlid and all of that goes into a buyback versus for Hyperlid versus, you know, the fees on Soul go to the the validators, which like I think you can argue like that that may actually be the same thing. Um, but you know I like there is like this situational awareness thing where like this stuff happens and it happens so

fast and then like it takes you time to actually grock it and like obviously the OI has gone up a lot. But like last or I get whenever the Trump tariff tantrum stuff happened, it was kind of like when we first really understood this. Um, and I think the only path forward if this continues is that more people realize it. I think I think there's also a dynamic as well. Imagine if you're a liquid fund and you've been I mean I don't I'm not 100% sure that everyone's benchmarked this but Bitcoin has been trouncing everything right so it's been really tough to be especially like a liquid only fund over the course of the last couple years and so one dynamic as well is they're kind of like okay what can I buy here what can I own and when you have a story that's as powerful as

hyperlquid you have a sense that all right there's all these buybacks and like real revenue and real adoption happening plus there's kind of a you know that all the other liquid funds are in the same position as you and we got to buy something that outperforms Bitcoin here. I mean, Hyperliquid looks like a pretty fast force at this point, too. Um, and it's, you know, yeah, depending on where you, you know, how you're comping it, uh, to an L1 versus an exchange. Over the years, we have seen a multitude of hacks, rugs, and bundled launches. The number one way that crypto traders can protect themselves and the wider community is through onchain analysis, knowing who is moving funds and where those funds are going. Paired with their new exchange, users can see what the top traders are buying and selling with Arkham Intel and

then trade on that information with Arkham Exchange. Arkham's exchange provides traders with the tooling and liquidity to take action in crypto markets based upon their onchain observations, bringing them the world's first exchange powered by crypto intelligence. To get started, follow the link in the show notes below. Hey everyone, quick shout out to today's sponsor, Marinade. Since launching in 2021, Marinade has expanded their suite of products to provide solutions for both DeFi users and Tradfi, including liquid and native staking, as well as direct enterprise integrations. Marinade's platform is optimized for institutions to securely expand their exposure to Salana. Whether through the provisioning of custodial or non-custodial yield, integrating staking rewards into Salana financial products,

or leveraging Marinad's best and market rewards rate for revenue and treasury management. Whether you're in DeFi, Tradfi, or somewhere in between, Marinade has something for you. To learn more about Marinade, follow the link in today's show notes. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. I'm curious how you guys would think about like BMBB as a comp here. Um because B&B actually has been a I mean it's kind of associated with Binance but it's been very strong as an asset even outside of that like it has. Do do you remember if they've changed um the fee base? Because I I remember at least originally it was like 20% of the profits of Binance goes to buyback BMV. That that that that's changed, right? It's now a more complex

I I would maybe say offiscated calculation about like you know for a while and I remember when Larry from the block was like on his uh jihad against Binance or BNB about being like you're not burning the tokens. you're taking tokens that are in your treasury already and you're sending them to the burn address, which is not obviously the same thing than buying and burning them. So, I think like, you know, TBD, I would I would kind of like reevaluate that. I think I I think the things that are similar with Hyperlquid and BNB is actually the float. Um, where the float of BNB is pretty concentrated amongst BNB, Binance insiders. Uh, and I think that same dynamic is playing out with Hyperlid.

Nobody thinks of BNB as a hundred billion dollar asset that's achieved as much as Salana. And I think the reason it's probably the same size is because the float is much more concentrated in BNB than it is for Soul. And I would also say the same for Hyperlid. The the other thing I would add about B&B independent of whatever the feebase or the the buyback burn whatever mechanism I I just haven't kept up on that point. But what I do know is the main use case of buy bit or of uh of BMB right now is um users who are like VIP tier or alpha users on Binance stake their BMB in Binance which gives them early access to all tokens and airdrops that are being received for tokens that launch on Binance. And it's this whole kind of

like thing of if and we've kind of mentioned this a little bit, but like uh on previous pods, but there is a fee to get listed on Binance. Whatever that fee is is negotiated between you and the team. But where that fee usually goes is it's an airdrop to B&B stakers on Binance Alpha users or or I can't remember the other pools, but basically uh and someone did some analysis of this and I saw it on Twitter like months ago, but they said if you were to just stake your BNB and take all the assets that you receive on Binance for your staked BNB on Binance and just sell those tokens immediately, BNB independent of whatever the price of the token is has

been delivering. 75% a year returns just in the assets that are being delivered to your state to BMBB. And so I think that it's not really like a fair comp of like what is hype used for? Like BMBB is a staking asset within Binance that gets you free tokens that you can sell immediately. Yeah. Okay. I'm with you on that. I you know I Iron I actually was speaking to Guy uh from Athena. He tweeted out a little while ago that BNB nailed their uh token design and I just pinged him. I was like what do you mean about that? and he I didn't realize that you could get something like 75% APY because of this exact mechanism. And you know, it's it's a little funny to me that the other, you know, who else tried this?

Um, I layer in a sense kind of tried there was like a little bit of a thought to this. Celestia, Cosmos, this was the original Cosmos Atom thesis as well. You could be like an index for airdrops in the Cosmos ecosystem. And the one that actually kind of quietly pulled it off uh to know no loud applause or anything has been Binance. Um well I I mean look there there nobody has decided whether or not hype could do this or or will or will not do this eventually as well. I I think one of the path forward paths forward for hype and one of the things that I think would be a great kind of um positioning in the market would be if they become another launchpad. And I know that there's been assets that have tried to launch on hype. I think frankly they've been launching um maybe a little

bit too prematurely. Like there isn't the retail adoption. You don't have the users yet. uh it's really hard to access. It's not even like traded on centralized exchanges. Although I did see Coinbase just announced the hype per is going to start trading on Coinbase pretty soon. Um assuming that there'll be centralized asset adoption soon, you could have the same mechanism for hype where if you're staking your hype, one of the assets that you get is any Launchpad assets uh that are that are being listed on hype. Y benefit of that is is that you would have transparency in what these deals are, which is phenomenal.

one thing that we're, you know, very much missing in this industry. Okay, I got a question for you guys. Um, would you Okay, so one of the uh this this is kind of the Ethereum value proposition and I think Salana has largely followed in the footsteps here. The the the value proposition of it's like neutral, right? So, Ethereum is not going to compete with the apps in its ecosystem. And but on the other side of that um you know the way that I do think that the value acrruel of hype the token is just really clear and easy to understand. I generate a bunch of revenue I buy back the token.

I like there's no none of this debate that you get with the other L1's. Is it money? Is it not? It's just very clear and easy to understand. Would you guys like to see do you think it would be bullish if I could make an argument that okay if hype wants to be valued as an L1 it should let other borrow lend protocols stable coin protocols like stable coins come in and build around it be an ecosystem or I can make the argument that actually like exchanges basically uh like Coinbase extracts its pound of flesh from um circle right with USDC and that could actually be another source of revenue for hype.

So, you know, do you think it's bullish from an investing standpoint? If it did start to vertically integrate some of these things, would you like to see it remain totally neutral? How would you look at that from an investor standpoint? I think it has integrated, you know, like there are third party money markets that exist on Hyperlid today. Um, third party stable coins, USDC, USDT. Um, and so I do think like they are building this like permissionless ecosystem, which I guess is like a precursor to being like a real L1. Um, but I think the thing like that makes you an L1 or not is basically the moneyiness of your asset in terms of like the classical description of L1's in crypto, those are the things that people denominate in and and can kind of

like that denomination builds an ecosystem around it of people that want to access that capital for, you know, various different financial services. So I think they're already basically um you know they are probably tied with ETH in terms of the fees that are being created. Obviously they're being created in much different ways like block space versus trading fees but at the end of the day I don't think it matters as long as people denominate in your asset and consider it you know permissionless and unseasable. Um, and I think that's kind of like maybe like the crypto anarchist, crypto punk idea of why something would be an L1 asset as money. The the reason why Hyperlid the app has been so

successful so far is because of the initial airdrop of I believe 30% given to um people who are using the platform, market makers, traders, whatever. and and you can assume that these are uh there's a points program and they've all been kind of conditioned to know that points can convert to tokens eventually, but these are also very um I would say uh power law distributed uh traders who at least in the ones that we've talked to are very much looking at hyperlid as a better place, a better venue to trade per and and um with high volume. And so you can assume that these are your prime customers and you've just given them a bunch of hype which they can use as

collateral to trade more on your exchange and that's what the airdrop presented them with. If you were to want if you were to look at the exact same and they still have more airdrops to go. There's still more that's allocated to the community and in addition to the allocation to the team. But if you were to assume that part of that community airdrop in their transition to becoming an L1 is going to be for maybe applications or users of applications that are more DeFi in nature, third party in nature. Um you think about lending money markets, think about stable coins, think about um uh AMMs, whatever other kind of uh use cases you could look to in DeFi. I think that that incentivization model is a really interesting one for how you can expand from just a really successful app, a

really successful purpose exchange into a really successful L1. So, what do you think about the launchpad for Hyperlid? You think that's an interesting opportunity? It could be with retail adoption and and once again I think we haven't gotten to the retail adoption moment yet because it has been I don't know if you guys have played around with it but uh and obviously haven't been able to given that we're based in the United States but if you were to bridge over to arbitrum uh and and utilize it that way you know it's it's not like a seamless experience it's not for the fan of heart and it's definitely a little bit more like advanced level defi um and so to do it you have to be an expert and uh or or at least it it It hasn't been as simple as

like signing up for a Binance account and staking some B&B to get free tokens. All right. Should we transition to um I would love to get your guys' thoughts on I don't know what to call these things. Public acquisition vehicles, treasury vehicle, like whatever companies that are buying crypto assets obviously. So, do you have a good name that you like for these things yet? Each of them kind of differ in certain ways. Yeah. So there's um there's one called Metaplanet which is the Japanese version and it was the most traded stock in Japan last week and uh there's also an Indian one which I found with a really crazy founder and it's kind of like this thing where it's like you know the coins are in the background and then you like superimpose the founder in front and like you kind of give like you can kind of like

animate the coins with the founder and and that's kind of like how it all works from like a retail adoption perspective. The financial mechanisms are such that like you usually do an equity raise then you know the thing that you bought goes up so then you go raise debt and you know like the liquidation of the debt is super low and and like you know if you look at sailor's liquidation it's like 30 grand or something but it needs to stay there for like four years to kick in. So you know like I'm not fully understanding how people are saying that you know he is going to collapse. I think the uh mechanisms that the other ones are designed around are probably less robust and so more risky. But um can put that aside for a second. I think, you know, I wrote these off

personally um as just like a sideeshow and uh one of our LPs who runs sovereign wealth fund um was just like I was at the Micro Strategy VIP uh reception and you know these are like these things are real like these things are cults and they're like big and they're like spreading and there's going to be one in every country and the Empire podcast that I think uh Yano did with I think one of the old Parfy guys but like they're they are like incubating these they're investing ing in them. They're like getting them out the door. Like these things are just going to buy a ton of digital assets. Yes, one of them will blow up or multiple, but that's going to be a long time away. And like look at the ETF flows yesterday.

Like ETH got almost 100. Bitcoin is knocking on the door of a billion. you also got these treasury companies buying these things like like it's like kind of like you need to multiply your expectations for inflows by by kind of like two if your baseline is just the ETFs because there's now like this other thing that's happening that um really just to square the circle is like you can give people who invest in bonds for a living access to crypto-like returns and that's just like the real kind of rubber meets the road why these things are popular is because The whole bond investing audience obviously can't just ape coins. Well, it's even more nuanced than just like giving them access to crypto like returns. It's literally

giving them access to crypto which is historically there aren't any bond or or debt products that are publicly traded access vehicles. Even Coinbase, which had like a a negligible amount of yield uh on their their corporate bonds, have paid that all back. And it's like, okay, well, they don't have any corporate bonds to be able to buy. So like how do you get access to the industry if the industry is you know going full full trap right now and these you know acquisition vehicles or treasury products are are the only way that the bond um the bond market which um you know corporate high yield uh sovereign bond like all of that municipal there's there are tens of uh let's see there are trillions of dollars of capital that are

out there that are looking to put capital in this this ecosystem are looking for new places to deploy and be diverse ified just in the same way same way that an equity investor is looking to be diversified as you know they're looking to make equity investments if if crypto is a real industry as we all assume that it is and know that it is like there is no other place to buy these assets for the people who are controlling bond capital assume crypto is a real industry let's work backwards from there well it's like the and bond investors I mean there there's all these jokes about like equity investors are like the younger guys and like faster moving and the bond investors are more of the like oh you know old school kind of like uh underwriting um capabilities

versus like what if capabilities like equity investors are are thinking about this in terms of like well what could happen to make this successful bond investors are thinking about things of like what could go wrong for this to not work like that's the mentality shift and uh so you know skew is a little bit older skew is a little bit more like chromogyny um and and there's a lot of people who are you know in in the promotion camp who have definitely still questioned whether crypto is industry. Mhm. Do you guys think that I mean uh advance to your point? I had similar thoughts. Um just on I still think the risk here is Yeah. So just backing up for a second, Michael Sailor really structured these in a really interesting way. Um uh where I mean a lot of this is just straight up equity issuance that

he's uh that's how he's raising the capital to buy this Bitcoin. But then also a lot of the debt is actually converts. So really the risk there is to the stock um not to like collateral risk that he might have to liquidate his Bitcoin holdings. It's you know investors um if there's some kind of uh uh you know if their covenants don't get met or whatever they can convert to equity and then dump it. So Micro Strategy the stock could get crushed but it's not much liquidation risk. I actually looked at um some of the other issuance. So Soul Strategies and DeFi Development Corp are the two Salana ones. Um there's the Caner Fitzgerald one which I believe is 2.5 billion. Uh Trump um also just announced DJT the media holding company for Truth Social

and his other media enterprises announced uh announced 2.5 as well. Um Vince there was those those are like so this is where I think we should separate. There's like the Caner Fitzgerald is not an existing business. It's getting it's going public through Caner Equity. Yeah. Caner equity something a special purpose vehicle specifically for Bitcoin purchasing. The one that got announced and I think closes today on the 29th is SBET, which is the Joe Luben takeover. And that's like a it's a publicly traded company that was worth like a a few million dollars or like $10 million prior to this whole thing and they just kind of like took this publicly traded handle and like all right, let's cram $425

million worth of ETH into it. Like that's the other model of doing this where you take a pre-existing company like Micro Strategy for instance which at I think the time when they started buying Bitcoin was making like a hundred million in revenue a year and uh it was not a very you know sustainable business and not something that would be able to sustain this and they kind of used that as a vehicle to run this like basically corporate finance strategy. Um and and I think some of the original bonds with Sailor and Micro Strategy had like recall covenants that and he since paid those off. Um but yeah, the new the new thing I think is equity issuance to buy crypto or if you can get there successful bond issu convertible bond issuance to buy crypto. It's it's uh it's trady crime. They're doing crime.

Do you guys It's not It's not a crime necessarily. It's crime adjacent. Do you guys think that this is a failure of regulation? This feels like Do you think this is a failure of regulation or an arbitrage? in a world where it was perfectly accessible to buy name one success of regulation. Like I think we're so far gone on that path that like it's like it's like it's like Swiss cheese regulation. It's like well you can do that but yeah we never thought about that. Like we asked somebody like how like if you wanted to do one of these things how would you do it? He's like, "Oh, yeah. So, you just basically buy a bunch of validators and you put them in a company and that way you can avoid being a uh qualified investment

corporation or or or whatever it's called there. There there's like uh you have to keep the assets as active assets as opposed to passive investments." And there's a question as to like okay if you just take all the soul or ETH and have it be actively validating is that an active participation versus like like yes there's there's definitely some like let's figure out our way to navigate this whole like investment company act question. There's obviously ways of you know making it happen successfully with micro strategy. um assume that this is uh a bit of a a regulatory arb uh a bit of like a loophole that I I think is you know open for the time being but I think the biggest thing is there's just so much latent demand for crypto that this

is showcasing how much capital is out there and looking for differentiated ways of like getting diversified or or differentiated ways of getting yield and you know one of the reasons why it's like crime or people kind of joke about this is it's it's basically the way that Michael Sailor is doing it is he's pricing the bonds kind of below their delta and so there's like a who is the primary buyer and then then who is the secondary buyer and like each one of them is making money along the way like that that type of a model just kind of further incentivizes this flywheel to keep spinning and for the time being it's spinning it may stop eventually but I I I think you know there's a lot of people who are much closer tied to these markets than we are that um with all

these issuances suggest that there's a lot more coming. Yeah. And it's it's not um it's not crime. It's like that's just being facitious. But I think what really is apparent is like especially for the bond guys like how are they supposed to make money? Like what like are is anyone bullish on bonds on on like because like the long bond is kind of where people like speculate and make a ton of money because like that swings the hardest. But like if that's just going to be down only forever like these guys need to get into like converts. They need to get into like different types of creator like almost like kind of like Apollo like private credit but in a public sense. And what Sailor does really well is he just like a has the cult of personality but b he slices and dices

Bitcoin volatility really well. Like he's got three different types of bonds you can buy depending on what your risk tolerance is. Like AAA corporate I I don't know like let's what would be Apple bond yield? Uh, anyone take a guess? I think it's lower than the US Treasury. That That would be my guess. It it has it's slightly higher, but it's but it's literally a bond that matures in 2060. Um, and it's a 5.49% yield. So, you're talking about I I guess that is a 25-y year. So it it it might be right at I can't remember the where the 30-year is, but it it is probably 2060. So it's 35. It's like that's a 35

year point. 35 years, but yeah. So there's not like a direct comp, but like right in line with the US government. Yeah. So, do you want to buy the risk-free rate, which is the US government, or do you want to buy Apple credit, like which is maybe you're getting a couple bips here or there, or like there's not many places to get exposure to other industries um in the bond market, uh especially with higher yield. And yeah, it's just a lot more capital coming, I think, is the overarching sentiment. And the the other thing I would say about bonds is like I feel like there was this like end of history moment for the bond universe where it was just like the rates keep going down and we keep making money and the government keeps buying the bonds and we have someone to sell them to

forever and now it's like that is gone. And yesterday I was checking Microsoft bonds. Microsoft was trading I forget I don't know where it is today but it was below the US Treasury yield and so it's like wait Microsoft is more creditw worthy than the US government. And so like you know you kind of like look at that and then you do like a really big zoom out which is um like at a certain point like if you're selling 10 trillion dollars of US debt per year uh like Scott Bess needs to do this year and then Sam Alman is trying to figure out how he can get a trillion dollars into a compute cluster like like the quantum of capital like actually like starts to like push up against each other. Um, and like I don't know, do you do the Stargate cluster bond or do you do you

do the US Treasury bond? Like I think it's like a legitimate tough call, especially if there's any like kind of like funny, you know, interesting convert stuff on the Stargate, you know, Sam Alman side. Um, so like, you know, stable coins are going to buy bonds, but like there's going to be all these other things that kind of manifest and the bond market is probably more interesting than it has been in quite some time. Yeah. Okay. So last question on this is I I'm curious what you guys I mean it's obviously not perfect but the maybe closest analog to uh to these things would be like the grayscale trusts from last cycle. Um obviously one of those didn't I mean diff completely different

structure. There was real liquidation risk there. I I think the big open question to me is how are these things going to be structured? Um if the financing for these uh crypto purchases are equity or converts that feels not super risky to me. The risk would be right if everyone just say hey Micro Strategy ran this playbook and that's totally fine. Uh and then they you know as you get longer and longer in the tooth on this trend uh you know you get stricter covenants that would I think um and and we're not investors in any of these products um nor backers or you know anything official. we're we're we're just fans. Um but the what I would say is the major difference between you know these products micro strategy

especi strategies is that uh versus any of the grayscale products is um the first Grayscale products that had retail adoption capabilities were were the Bitcoin and ETH ETFs once they converted and you had to basically be an accredited investor. you had to have an account at UBS to be able to get access to GBTC prior to actually being able to like have an ETF in your brokerage account. And so it's like a higher bar. And so that's just limiting in terms of like who has access to these products. Um but I I think you can trade, you know, all the other listed names on Robin Hood. Um, and so this is going to give sort of like a a levered asset perspective to a retail audience that um probably isn't going to be looking at

the convertible bonds of Micro Strategy, but maybe buying, you know, strategy shares in Robin Hood and and looking at this as they raise a billion dollars and and buy a billion worth of Bitcoin. Maybe that adds 1.7 billion to the market cap. Um, because it has been trading a premium to NAV. Um, and based off of the way the financial engineering works, it is more beneficial to own that um, historically than than just the underlying asset. All right. Well, definitely interesting um, to see how it plays out here. I I think we've seen um you know we've seen these vehicles for obviously Bitcoin now Ethereum between consensus and I'm blanking on the name um that Japanese uh sharp link sharplink gaming um and then

a couple of Salana ones D5 development corp soul strategies and yeah I mean maybe only a matter of time until we start to see uh hyperlquid or some of these other assets as well but um we shall see. Uh all right we probably got time for one more story. Do you guys want to talk about uh stable coins and this uh banks exploring a joint venture? Um or do you want to talk about uh shoot what was the we can call it there? Banks getting into stable coins like all right it's like when when Goldman was launching their Bitcoin trading desk and it was like you guys still doing that?

No. the uh the only thing worth noting I'd say is uh Black Rockck is interested in buying 10% of Circle um upon the IPO at the IPO. Um which I'm sure that there's some structuring to it. Um I I think that it'll be really interesting to see where Circle Price is. The rumors are much higher than basically like expected. Um maybe that showcases some of the demand for this industry just as we were talking about. Um but it'll be it'll be very interesting to see and you know there were a lot of rumors about acquisition versus IPO and um uh bankers will tell you day one you know first thing you do is run a parallel process.

Um I I wouldn't be surprised that there's an 11th hour kind of like all right we've sold announce it. I think I think the tell on that is they're going public on the New York Stock Exchange, right? The very wellrespected New York Stock Exchange, not the NASDAQ. Yep. I don't know. I think I think the NASDAQ was like, "We're not going to be your negotiating tool." No. I've got a question for you guys. What do you think about um Kobe's new ICO platform, Sonar? So, it looks like Plasma is the first. So, obviously Kobe's been building this crowdfunding platform, Echo. There have been a lot of, you know, interesting private deals.

There's a little bit of a uh, you know, you can follow your favorite, you know, sort of angel investors, a little bit, I don't know if gamified is the right word, but the idea is to democratize access. Um, and some some protocols like Mega ETH, I think, have used Echo, um, you know, very effectively and community building, you know, getting your asset in the the hands of your early users, all that stuff. Um, so, uh, Kobe also launched, uh, Sonar, which is the ICO, um, you know, sort of launchpad, uh, maybe a slightly competitive product, Jesus, project with like Coin List or something like that. Um, and it looks like Plasma is the first one, uh, first one to go. So, curious what you guys think about this. Is this the beginning of a longer trend? I I think it is.

Um, like I think they probably originally set out to disrupt venture capitalists, but I think what they've really disrupted is like airdrops. And I've found that like the more and more evidence that we have is like airdrops are kind of cancerous. And it's not about, you know, like you know, giving the community less than 50% uh or whatever. It's more about like having people with zero cost basis is a real issue. Yeah. Um, and liquid tokens. With liquid tokens. So like I'm all for having more distribution albeit with people putting more skin in the game. Um so I think it's a fundamentally positive trajectory for the industry and you know I'm super excited for the plasma ICO and yeah I mean it's just cool to see some

of the best teams coming together to to launch something that you know hopefully the distribution is is a little bit more egalitarian than it usually is. And just to uh piggy back, I mean, we've had this conversation with a bunch of our founders recently, but then also over the last few months is like 90% of the people that you airdrop tokens to will sell within two to three days all their tokens. And you know, like making the community upset. It's like the the random non-escript anonymous person on Discord who is mad that they didn't get as big of an airdrop because they were early to something is who are just there with the 100% purpose of just airdrop farming. and then selling is not the community that you need to build. You need to have people who are seen in the

game who are locked up and I think that the the world is shifting towards that. Um whether that means that you're participating as a stator or a validator or contributing to the network and that's how you earn tokens or whether you're putting up a little bit of capital and in the case of plasma it's the same terms as the the last round from founders fund. So you you're investing alongside of the same terms. Um and I I think that model um will probably become a dominant model uh in lie of airdrops. Totally agree. Yeah, I agree. You can't give stuff to people for free and expect them to value it.

That is uh you the symbolist. It's like Aquam's razor. Yeah, totally. It's just giving tokens away for free. Yeah. when Jason and I first started do it like in the super early days of Blockworks. We were trying to figure out how to price tickets. Um, and we started off charging people nothing. This, but this was when they were afterwork happy hours when we, you know, dude, I remember the Chicago one in 2019. Michael and I were there. We didn't know each other yet, but we were I think that was free. I don't think we paid. Yeah. I So, we So, we started really cheap. Uh, literally $25 or $50. Yeah. Yeah. Yeah. I I actually do remember buying that. And actually the the inspiration was we listened to

how I built this on what's that like DTC uh glasses uh company Orbee Parker uh where they initially wanted to charge something like $30 for glasses and a marketing professor said no one's going to believe that they're quality. So for years we just doubled the price of the tickets until we actually found the equilibrium at the top. It it was not it wasn't even um more slightly more difficult to sell or neutral. It actually became easier to sell tickets at a certain point because it's like if you ever been on Instagram and you get ads for clothes and it's way cheaper than you think it should be and you're like I'm not trusting that. This may be fake. Yeah. Yeah. It's probably fake. Uh right. And there's a lot of interesting studies about how people value education in countries that give it away for free.

Um, so I just think in general you can't I can't remember the exact term in economics, but it's like a Vlinin good or a gifin good. Uh, one of them is like this van goes up as price goes up. The other one is like perceived quality goes up as price goes up. Um, is uh, you know, price goes up and gets more valuable, right? Um, and so that I think is uh, yeah, it's true. There there's a curve to it. Too expensive is still too expensive. Yeah, totally. Yeah, you'll max out at some point. All right, fellas. I appreciate you. This was a fun one. See you next week. Bye, guys.