Road to $80k ETH: TradFi, Treasuries, and Trump

Transcript

Thanks everyone for coming. Hopefully one of those keywords in the title attracted you guys to come. So uh quick background. My name is Tim. I lead global strategy at Mantle. I spent the last 15 years mix of buy side sell side on Wall Street and also the last five years partner at a multi-billion dollar venture capital fund backed by sovereign wealth funds. We did a lot of web two companies like CLA, New Bank, Palanteer, etc. We're also uh started Bitcoin mining operations at that fund and then transition to leading global strategy at Mantle. So there's some seats up here. So uh for most of you guys, you probably know what mantle

is as an L2. We also have a couple other products. For example, we've built ME liquid staking protocol as well as function BDC wrap Bitcoin instrument. Both of which about billion plus TVL. And more recently, we announced the launch of Mantle Index 4, an index basket of majors that's close to about 200 million TVL, as well as the launch of UR, our unified crypto and fiat neo banking product recently. So, why is that important? That's important because the vision for us at Mantle is to bring crypto to your everyday. The two metrics that I look at on the scoreboard are how do we enable the next billion users into crypto and how do we enable the next trillion dollars of capital to flow into crypto. This is relevant because all

that ties into how do we get to 80k ETH. So without further ado, all right, so let's take a step back. Um did we all forget where we came from? Where ETH came from last cycle, right? Sure a 10x you know seems like nothing these days but the road to 4K was very glorious in the sense that it left behind a tremendous amount of innovation right today we can look at players like unis swap compound the invention of things like farming staking airdrops a lot of this was coded in the last cycle we also had some products that you know were good shots on goal but uh still have yet to find clear product market

fit and longevity such as play to earn. Uh we're I'm sure folks are innovating on the gaming model as well as who remembers 5,000 first days sold for 69 million now worth something less than 100 NFTs right there are different instances being reborn every single time. And what I want to take here is that look the innovation that happened on ETH last cycle had rippling effects into where we are today. So let's not forget that. All right. So what does this mean? Right?

What this means is look at the end of the day we all know that price action is the value everyone looks for notably upwards price action. And price action begets interest speculation and innovation. Right? This all came from the fact that ETH pumped to 4,000. Anything was possible. Right? So where are we today? Not so good guys. So in the last 12 months, ETH is down 30%. We all know that. So it then begs the question, okay, if ETH is not doing so well, where's the party?

The party's moved off chain. If we look at some of the comparables that trade in the public equity markets today, namely Coinbase, Micro Strategy, and Circle, you'll see that there's outsized demand for these products. Coinbase is up 75%. Micro Strategy 165% and Circle oversubscribed on its IPO pumped 5 to 67x since IPO. That tells me there is a significant amount of sidelined institutional capital waiting to be deployed into crypto. The only challenge is it has to be in products and rappers that are regulatory kosher for the SEC.

Now, I only focus on the US markets because it is the largest and most liquid market in the world. All right. So, what does this mean for ETH and onchain? Well, look, uh, the institutions are coming. It's just not onchain yet. If we look at DeFi Lama today, DeFi is about 110 billion TVL, have about 250 billion in stables. That's neat. But, Bitcoin ETFs alone have about 135 billion in AUM, which is impressive. noting that IBIT, which is Black Rockck's ETF, garnered 70 billion in just under one year, making it the fastest growing ETF in history. Now, most of you guys probably don't care

about ETFs. You probably don't even know how to buy one, which is fine. But what's important here is that the global AUM of ETFs about 14 trillion and this is less than 1% of that penetration. Now, as someone who had launched ETFs in the past, non-cryptoreated, I can tell you the thinking that goes into allocation. You start at 2% if you want to dabble and you can go all the way up to 10% if you want to put size on to something that's not primary to your investment portfolio. So that means there's anywhere from a 2 to 10x more upside in capital flowing into the space. By the way, Ethereum is only onetenth the size of Bitcoin ETFs. So we're expecting a lot more upside once the staked ETFs come.

All right. So what does that tell us? Okay, cool. Price action begets interest. We all know that. And in order to have the price uh action, we need net new capital to come into the space. Most likely that net new capital will be primed in coming from Tradfi. Cool. So, what is Tradfi preoccupied with today? I don't know how many of you guys are Trafi background, but when we had DeFi summer a couple years ago on chain, Tradfi is experiencing a DAT summer. What is a DAT? Well, if you look at some of the returns, they look like onchain returns, 5,000 some percent, 3,000%. But these are public equities trading on the US stock exchange. So, first one top is uh my buddies at UTXO

did MetaPlanet out in Japan. It's a micro strategy competitor. They ar the tax uh arbitrage out there. It's about 30% I think to if you if you sell crypto, it's 18% long-term cap gains. and they took a 20 to $25 million market cap real estate company into a $7 billion Bitcoin accumulator. You have other players like DFTV who is doing this for Salana, right? They're adding a yield component to their staking. You also have our champions for ETH, Joe Luben and ESBET which is further down. So there's a lot of players doing this in the market today. Now the question is why is this hot? Why is this interesting?

How many of you guys know what dis dro treasury is? Okay, cool. All right, so let me simplify for you guys. A DAT is when you take a crypto token, wrap it in a Trafy wrapper that's regulatory compliant and you sell to the capital markets. It's a wrapped asset for, you know, EI5 for people in crypto. Now, what's interesting here is the road to creating a DAT is rather straightforward, but there a lot of devils in the details. First you raise capital from investors. It could be either equity or debt, mix of both. Then you acquire a publicly issued vehicle.

So this can be done via a spa, an RTO, PIPE, various ways. I won't get into the details here. Lastly, your sole job is to accumulate that one coin in your treasury because the sole purpose of a digital asset treasury vehicle is to create a financial instrument to the capital markets that Trafi can buy as a pure play. If someone wants to put on a pure play exposure to Salana, Bitcoin, Ethereum, they can buy DFTV, Micro Strategy, Espec. All right. So, what are the keys for success? Uh, really there's only three.

The first is asset selection, right? If you pick something that's on second, third page of Coin Market Cap, probably not going to make it. Second, deal structure. This is highly crucial because again, you guys aren't trified, but if you're scrutinizing the documents that come out, the filings when these guys go public, you'll notice that in the past couple months, there have been a flood of these putting the in, you know, Bitcoin Treasury at play. When you dig in, these guys are getting their faces ripped off by banker fees, um, warrant overhangs, etc. Long story short, this is the equivalent of looking at a token's TGE and realizing everybody's going to unlock before you.

So lastly, what's important is you need to have the right backers and right marketing team behind you. Why is Sailor so successful? He never talks about Micro Strategy. He only talks about Bitcoin. He promotes the asset. He educates the market and he gets people excited about it. He's built a cult. So, in order for ESPE, for example, to do the same thing, Joe Luben needs to take a page out of Sailor's Playbook. All right. So, for those of you who are familiar or I've heard of DAT, there's a lot of FUD in the market as to, oh no, these guys can trade at a discount MNAV like GPTC. We're all going to blow up.

Uh, incorrect because these are publicly traded vehicles. You can sell in and out anytime you like. They're fully liquid. Second, folks will say, "Oh, it's like the spa bubble, right? uh in 21 where you took all these companies public and they are only down down only. The difference is those were actually um tech companies with no real revenue, no real mo some outright frauds that went public. Here there's actually real market tangible value. For example, if you launch a spa with a treasury of Ethereum at $und00 million, chances are you know you're going to trade close to that if not at a premium sometimes at discount. Lastly, a lot of folks will say, "Oh, there's too much leverage in the system. Uh, eventually that debt

will unwind and you know, we'll go kaboom." It's it it's not unwarranted, but most of these are done via equity investments and so you're not as levered as you'd think. All right. Oh, cool. So, why? So, I was talking to Eric Bchunis. Um, he's a big Bloomberg media personality on ETFs. I believe that DATs are better than ETFs for crypto adoption. Right? So now this is getting a little technical, but the key focus areas are look today's day in world, everyone operates on an internet hive mind. Everybody's information is synchronized and for you to make a purchase decision, it's one click on Robin Hood or whatever broker your choice. What that means is people are

looking for leverage, right? Why are memecoins all the rage? So the key key components of DAT is why I think it's superior too. One, it is an inherently leveraged vehicle. These things sometimes trade at two times the book value, sometimes up to 10 times. Whereas as an ETF, you're generally always going to trade at one time NAV. Furthermore, they the DATs lock supply, right? If you go out to the market and you launch a Bitcoin treasury and then one month later you start selling your Bitcoin treasury, you're going to get punished.

the market will start selling your stock. So these guys are inherently incentivized to lock up and take supply off the market. Lastly, memeable and cultish, right? The winners are going to be the ones who have the right personalities and come into market. Why was Pompoliano able to launch a $700 million spack on Bitcoin? Because he has a right follower base that otherwise uh would not buy other BDC treasuries. Cool. So, let me get into some nitty-gritty and just simplify for you. We we talked about this multiple called MNAV. What is MNAV? Why is it the king multiple and why is coin per share the metric? Basically, TLDDR is like you've probably seen on your feed everyone is

doomsaying micro strategy will eventually blow up. The MNAP will trade down yada yada. And I think they kind of missed the point. So, my buddy Cosmos, a partner at Panta, elucidates this quite easily. So today, if you buy one Bitcoin and you hold it for a year, you're going to have one Bitcoin, right? However, if you buy Micro Strategy, it's trading at two times book value. You're essentially buying half a Bitcoin. But because these are capital market vehicles and Micro Strategy can raise capital via issuing more debt or selling stock against it, he can increase his Bitcoin per share and therefore he can grow his Bitcoin holdings on a per share

basis. So if you buy one share macro strate and he's able to raise capital increase BDC per share by 50%. Then you have 75 BTC represented by one micro strategy share and that is how financial alchemy is made. So case in point last 12 months, Bitcoin is up 75%, market strategy is up 155%. All right. So what does that tell us? That tells us, all right, net new capital has to come into the space via the form of traditional institutions. How are they going to do it? They do it via the hottest kid on the block, which is a digital asset treasury. That's the Trojan horse to drive adoption.

All right. So what does that mean for Ethereum? Well, like we saw said, Joe Luben is coming in as chairman for ESP. They raised about 425 million for an Ethereum treasury vehicle. But that in of itself is not differentiated enough. There's a reason why ETH ETF AUM is a tenth the size of bitcoins, right? The differentiator as we all know is the yield is a native stake yield. What is it like 4% that can go back to holders? So there's some interesting developments in the works. For example, there's a publicly traded company that announced that they will put me on their balance sheet. Furthermore, MI4 fund announced that with their index basket, the differentiator is it's not just a basket of Bitcoin, ETH, soul.

It's a basket of Bitcoin staked ETH, staked soul, and a yield bearing stable. Because by adding in a yield component, you're targeting a whole different set of investors who are looking for yield. So yield I believe is the next evolution in digital asset treasuries, right? The two key things that you have to take away from why is yield better than a non-yielding treasury. The first staking yield augments your coin per share. This makes sense, right? If you hold Bitcoin, it's unproductive today. Uh if you hold Ethereum, you can stake that, get the yield, use that to buy more Ethereum on your balance sheet. Second thing you can do with that is how to hedge against the risk when people say, "Oh, you're going

to trade at a discount to your book value." Right? If you're holding Bitcoin and you trade at below book value, if you hold any digital asset treasury, you trade below book value. The logical thing to do is buy shares in your company because it's undervalued. But how do you do that if you have no cash on your balance sheet because you're holding an unproductive treasury asset? That problem is mitigated if you hold something like Ethereum because you're generating staking yield. And if you manage your treasury well, hopefully you have some cash on a balance sheet for a rainy day and you can buy back your shares if whenever you ever trade at a discounted MNAV.

All right, so I know this is a lot of technical jargon. Hopefully not too big brain, not too difficult to understand. So I want to move into something that we can all appreciate as I'm a connoisseur of memes. So the next Ethereum narrative, what does it need to be? Guys, we can't keep pitching the next ZK permissionless L2s, L3, other alphabet soup. That's not going to get people to adopt Ethereum. It needs to be treasury asset with yield, a DAT. So, why is this important? It's important because Wall Street today now understands how to value a DAT. Their army of analysts know how to plug these

into their DCF models, throw an IRRa, and tell the bosses up top, hey, we can expect XYZ IR. Cool. Now, why don't we give them a better asset that generates yield to make their models look even better? So, you can't go against the grain. You have to go with what they already understand and go with the path of least resistance. So, to sell into tradi, you have to sell a story of treasury asset with yield. So, what do we learn? DAT is a Trojan horse for adoption. Treasury asset with yield has to be the next narrative for Ethereum to garner uh meaningful capital as a DAT.

Where are we? We're still early. Uh we have Ethereum has not been adopted by large institutions and pension funds to my knowledge and so we have a long ways to go. Let me just straight into what happens if we believe Ethereum is a treasury asset with yield. What does it unlock in the mind of Wall Street? So this is put together by my good friend Rebec at Etherealize. They put out a great report called ETH digital oil. Look, today gold is 22 trillion. But with yield, we can start thinking about ETH as a global bond market or the global M2 supply. If you can't see, those are $140 trillion markets. So if you just do high level math, oh, and oil, right? I think there's an argument

to be made that ETH is much more similar to oil because it's a productive asset. uh share similar scarcity and supply dynamics and that's $85 trillion asset class. So when you take the average, that's 85 trillion. Now, I'm not that bullish, so let's tap our expectations. Medium-term, I think we can get to a 10 trillion market cap, and that's how we get the road to 80,000 ETH. Cool. So, if we believe that ETH's next narrative is treasury asset, there's a bull case to be made that ETH can ultimately reach $80,000 per ETH. Uh, it's a tie that lifts all boats.

When we play together, we win together, everyone wins. Here's some catalyst for repricing ETH. The most important one is the elephant in the room which is like Fed rate cuts. Guys, T bills are 4%. ETH native6 4%. President Powell has immense pressure to cut rates another 250 bips. When that happens, you're telling me a lot of capital won't flow into ETH? I bet it will. And when that happens, we'll see a large repricing on ETH price. Lastly, now you guys are probably wondering where Trump comes in all this. So Trump is a businessman has a great nose for what makes money. So what makes money in crypto? Tether as a stable coin, Binance and exchange, memecoins, Bitcoin miners, Bitcoin tats. So

naturally, what has he done? He's copied every single one of them. So as a proxy for success to know that whether or not Ethereum has made it is if Trump starts bull tweeting Ethereum and if he starts creating an Ethereum digital asset treasury. All right. So what did we learn ultimately? Look we all need price action to get the cycle moving again. Price action comes from net new capital into the space largely primed today from trad for them to come into the space. The best Trojan horse today is a digital asset treasury. In order for us to sell that narrative, it has to be treasury with yield for Ethereum. And if we can believe in that, we can believe there's a path to $80,000 ETH as a bullcase. And

then lastly, cherry on top is if Trump copies it. So if I if there's one takeaway I can give you guys from this, it's let's believe again, right? Ethereum is a treasury asset with yield. Thank you. [Applause] We have time for one or two questions. Um so Micro Strategy also offers um STRK and STRF which also pays a perpetual where is that coming from Bitcoin and Micro Strategy is basically just losing money with their business. Um, and could this also be potentially in

Yeah, yeah, you're talking about strike and strife and stride. So, essentially they've recreated what is essentially a perpetual in the capital markets. And by doing that, they're able to target new buyers, right? Yield investors, right? If you're bullish and you want a junk bond, you can buy I forget which one. If you're more conservative, you buy the other one. He's a financial alchemist. And more importantly, this shows you the road map of where this can go. Today, a digital asset treasury is mostly equity. You buy the spot, you try on MNAV. In the future, you move into credit which is a much larger capital which is a much market larger market. So can Ethereum get there? Yes. But we have to start with for example the guys like ESB and get them up and going first.

I think yeah so the question is uh how much adoption matter if most of the value today is captured by L2s I assume you're talking about liquidity being fragmented look onchain as you saw we've probably come back to where the all-time high is on D5 but it's really left pocket right pocket everyone's just rehypothecating the same capital left and right and generating new memes narratives for people to move the hot ball of money you still need net new capital to come into the ecosystem even if it's not onchain a good first step is to at least buy Ethereum or Bitcoin or any digital asset uh from folks who previously had not had that exposure.

Do you think that the ultrasound still make any sense? Look, if you talk to any traffic guys like myself have experience, I have no idea what that means. Yes. Yes. But it could be. Yes. Yes, I understand. But you talk to traffic guy, they're thinking, okay, how do I make money off this? What does that even mean? But if you tell them, hey, I'm looking at what's making money on NASDAQ today. Who's the best return? It's Micro Strategy. What is that? Oh, it's a digital treasury. Well, what if you could do the same but with Ethereum that generates yield? That makes sense to them. So, um, I think ultrasound money is a good narrative for cryptonatives, but for tradi adoption like Wall Street guys, it has to be something much more

on the nose. Does Wall Street look further than that? Like as it looks now, Solana ETF is also coming at the same ETF coming ETF has a higher nominal Ethereum a higher real look into that look into that if Salana is just issuing more or are they just as as we are so there's a different asset for different uh allocators at different risk profiles right so if you guys don't know there's an ETP called ASOL out in Europe it's about a billion dollars in stake Solana as an ETP down in Europe um that already exists today before the likes of DFTV

and UPUPEXi created the digital asset treasury for Salana. Now, for example, DFTV started at 50 mil uh market cap and it pumped to maybe 600 at its peak. So, there's definitely demand. It's just more the question is more like who's going to buy into that story? Well, I can tell you Trfy has much more magnitudes of capital than onchain and so there's plenty of depth. Question from your perspective, when do you think we're going to The last question because we have to move on. Yep. Yep.

Oh, can can I answer this? Okay. Okay. Sure. All right. [Applause]