Robinhood Chain, DEX competition and DeFi buybacks

Transcript

Zcash is going up, we should probably, you know, long the other, again, not invest in ice. You probably should long the other like privacy tokens in that same sector because they're the next ones to move cuz people rotate capital and they, you know, want to see what else does well. >> The dens have come to the Robin Hood chain. What is going on? Which projects benefit the most? And where is all of this meme frenzy going to take us this time? Hello and welcome to the Milkro Show, the podcast that knows that when the CEOs of AMC and Robin Hood are arguing about lawyers on X, the Djens are the real winners. I'm your host, John Gill, and today is Friday, September 4th, and today we are joined by Katie Totti. Katie is the head of research at ARCA, where she spent years digging into fundamentals about crypto

price action. She puts out a weekly column, literally called, "What is driving token prices?" She also does this on YouTube. So, if anybody can tell us what's actually going on here, she is going to be a great resource for all of us. I'm really excited to talk to her today. If that sounds good to you, make sure you like and subscribe. Share this episode with somebody who's going to enjoy it or somebody who's in the trenches and needs some information. And as a reminder, our podcast today is free and that would not be possible without our wonderful partners at Saber. Money, the stablecoin payments platform built for Asia. So keep an eye out for more information about them later in the episode. But for now, welcome to the Milk Road Show. Katie, how are you?

>> Hey John, thanks for having me. >> I'm really excited to talk to you today. There is a lot of chaos going on and I want someone to help me make sense of some of this. Uh let's start with the Robin Hood chain. Can you just tell us a little bit about what's going on here and what people need to know about the frenzy that's taking off on Robin Hood? >> Sure. So, for people who haven't been following as closely, Robin Hood basically announced last year that they were going to be launching their own L2 and they finally did it July 1st of this year. And I feel like I don't want to call it like the DeFi summer of like 2020, but it was like it's been a bit of a Robin Hood summer in that sense. Um, so, uh, activity was a little slow at

the start. um or not quite slow, but we had a lot of apps migrating on. You saw like all the big DeFi apps saying we're launching instances on Robin Hood chain. But in the last few weeks, you've just seen a huge explosion in onchain activity there. Um particularly in the last couple days, things like DEX trading numbers, new transactions, uh revenue on chain, all of those numbers have spiked and it's gotten a lot of people's attention because the obvious way to, you know, get exposure to that is Robin Hood equity. >> Okay, so Robin Hood is taking off. Robin Hood's stock is taking off. Um, but as far as what's actually on chain, I've heard a lot of attention on the pawns launchpad and the FOMO app, which I believe is chain agnostic, but this is where a lot of this volume on the Robin

Hood chain seems to be coming from. Um, and it seems like a lot of the DJs from, you know, like you said, the prior Salana days have now just started doing this on on the Robin Hood chain. What are you seeing happen here? And and do you see any signs of this slowing down or is this just going to keep accelerating here? >> I mean, it's hard to tell, right? Because the thing is is that usually when you kind of get in these trading environments where you see a lot of excessive trading activity, what happens is that as people kind of make money in one place, they're rolling it over and then they're continuing to use it. So it's not just like so you're kind of growing that overall pie. What I have seen from the data though, we have actually seen that like if you look at

kind of like the drain number of users, number of funds, definitely a lot of those users have taken their money off of places like Salana and they're now putting it on Robin Hood chain, which is interesting to see. A lot of people also hypothesized that it was coming from other sources like Ethereum or it was new retail activity. Not quite. The FOMO app is actually an interesting one though because like social trading has been tried so many times again and again and nobody's really cracked the code on it. I mean does anybody remember like even even just anything with a social following things like fren people have been trying forever to like tokenize Twitter and it hasn't worked. But FOMO seems to have really like cracks that code. Now, I've also heard a lot of actual like professional traders complain that like FOMO charges an

egregious amount of fees. So, you have to imagine that it's very much a retail audience that's willing to pay, you know, like percentage points on their trades, which is maybe what's happening. So, we're seeing a lot of activity from that. And then Pawns, another can I you know, it's been crushing it in terms of numbers and revenue as well. I think like the last few days they've they've been seeing like they were run rating earlier this week like 70 80 million in annualized revenue obviously off of one day of data but they I mean they're basically they're the same as pumpf fun which obviously is just on Salana and has generated a lot of activity and revenue for Salana if people forget pump fund is the second largest revenue generating app ever after hyperlquid so they make a lot of money ponds is also

kind of on that same track right now it's just a much smaller market cap and people can actually see that activity happening. >> Okay. So, let's talk about the the winners and losers on this. Do you think that this was like a a concerted strategy by Robin Hood and Robin Hood chain to try to go for the retail meme market or do you think this sort of happened organically? And then, you know, you mentioned that other people have tried this before. A big name that comes to mind is Coinbase. Um, like what do you think Coinbase is going to do to respond to this? So, yeah, like walk me through that that rivalry of of Robin Hood strategy on this and Coinbase's response and just what are your thoughts on that? Yeah. So, I I won't lie. I don't think Robin Hood set out being

like, "We're going to make a whole meme chain up." But the the big thing that people still forget, and the reason that memes are still very prevalent in the crypto um you know, community, the crypto culture is just that they're easy. They're easy to understand. They're easy for people to trade and people really see the ROI on investing in these projects. And that's why they still kind of have this like you know, they have sunk their teeth into um the trading kind of fabric of crypto. Um, I'll be honest, as a digital assets investor who's looking for fundamental like great long-term investments. I hate that it's a lot of it is memes because it doesn't really like point to any actual like, you know, investing acumen.

It's really about trading and not necessarily about like, okay, what's a long-term, you know, project that's going to do something. That said, some memes do manage to evolve beyond that. They try to build things. I'm very happy that, you know, some of them try to like actually make something of themselves, but it's not always the case. But I think I don't think Robin Hood chain set out to just be meme coins. I do think they needed to create activity. So they're not going to kind of shut this down because the amount of money that they're making on sequencer fees is, you know, it's it's it's extraordinary. You know, you make that kind of money. Um and you can report that as a whole new line item. That's why the stock is ripping right now because people don't think that, you know, Wall Street has properly um evaluated these

opportunities right now for or this uh this kind of new business line for them. and it'll be a bit of a, you know, surprise at earnings. We'll see. Right now, they're actually subsidizing um fees on their network. And so, you know, we'll have to kind of see when those subsidies drop off in another month. Like, how does that actually work? Are people going to still be paying higher gas prices to like access the chain to push through transactions? And, you know, if they haven't kind of found the new shiny thing, that might still be the case. We'll have to see. >> Hi everyone, this is John. Listen, our Milk Road Pro analysts nailed this AI bull market. They we had dozens of calls pay off in a big way for our community.

If you want to see how our entire team of analysts are positioning for the crypto bull market that's going to come after this bare market finally ends, you can join us now at Milk Road Pro. It's just a dollar. Link is in the description. You'll get access to all of our analyst trades, their watch lists, and see how they're navigating this in their portfolios and get access to ask us questions in Discord anytime, day or night. It's just a dollar. Links in the description. Milk Road Pro. Join now. I'll see you there. >> Okay. So Robin Hood, like you said, the the meme coins they're benefiting from, but they also launched a lot of tokenized stock products, and that's a big part of this whole frenzy, too, is these trading pairs between memes and tokenized stocks. Coinbase also launched tokenized stocks about a week or two

weeks ago. Um, and there seems to be another rivalry between these two brewing here. Talk to me about where the tokenized stocks fit into this this whole frenzy that we're seeing. >> Yeah, I mean, tokenized stocks have really taken off since the beginning of this year. Um, you know, I think the beginning of this year, people were taking a much more thoughtful approach to how do we bring kind of real world assets on chain RWAS. Um, and tokenized stocks though are the easiest um, kind of thing for people to trade, right? Because they represent, you know, in most cases at least price apprecy part or the price match part between what is on and offchain. In some cases, you actually get all the rights and, you know, pieces that go along with owning that stock. It's not just like a synthetic stock. Um, so stock trading

has definitely taken off onchain, which is I mean when I started in crypto eight years ago, like I even said I was like most of the assets that are on chain are just tokenized equities. And um my boss at the time was like, "Yeah, eventually we're going to basically be just trading like tokenized equities on chain and you're just going to become an equity analyst." And I was like, "Oh, okay, cool. I thought that would be maybe like a few more years from now, but we are here now." Um and so I do think this is kind of like the natural evolution of digital assets and it's been more enabled recently by the fact that we've had a more friendly regulatory regime that you know there is a lot of discussions at the levels of the SEC and the CFTC on how to kind of like properly

regulate and offer like guidelines on how these tokenized stock products should look. Um, and it's also clear from you when you look at, you know, what places like ICE, DTCC, NASDAQ, they're all looking at like how do we make markets 247 because they know that even though the to like there's tokenized stocks right now, it's not nearly the entire volume of all the markets in the world, but that is happening and it's going to come soon. So, I think that like that is a huge and growing market and we're definitely going to see that continue to expand. I think right now though, for the most part, we're kind of in a bit more of an experimental stage for most of these companies. They're really just rolling out the initial kind of beta test of like how does this work? What do customers like? Also, what fits for

retail is going to be very different from institutions. Like personally right now like if I want to go buy Coinbase stock, I'm not going to bo buy the tokenized version of it on base like for our, you know, digital assets fund. I'm we're going to go be going to a traditional stock broker and buying it there and holding at a traditional prime broker because that's kind of like what you have to do as an institution. So to bring actual tokenized stocks to institutions, it's like 30 more steps and probably a couple more years down the road. >> Okay. So there's still a long trajectory of adoption and growth and you know migrating from the legacy system to the tokenized one, but that is happening and it's accelerating. Um I want to talk about the DEX wars that this is unlome kind of like the the biggest liquidity

provider and decks on Coinbase and that's the the decks that they're using um for their tokenized stock products. UniS swap is the one that's getting the bulk of the volume from the Robin Hood chain and from the the meme frenzy that's taken off on the Robin Hood chain. Um could you tell us a little bit about some of these differences? Like what I what I see some some data I pulled up unis swap controls about 99% like basically the whole um share of the tokenized stock DEX liquidity on Robin Hood chain. They've processed I think billions of dollars like 20 billion in the last couple of months or so. Um, and Aerome is is uh seen hundred million dollars of inflows in the week that they've been trading these tokenized stocks. So there there's a lot of growth on both of these, but talk to me about

the differences between these two dexes and the sort of rivalry that's emerging there. >> Sure. So if you're not familiar with Uniswap, they've been around since I think they launched in like 2018 or 2019, like very long time ago. they really pioneered the uh automated market maker process of trading on chain essentially the best way we have without you know a centralized limit order book in in process and so for kind of single swaps they've been fantastic they've also been on the cutting edge of you know kind of new technology creating web hooks um you know creating uh all kinds of like workarounds for things like impermanent loss and stuff um so but unis swap been around forever um they were the first to launch on on um Robin Hood chain and that has obviously a huge benefit to them as like the primary like

onchain trading venue as it is for them when they've been you know they're the um you know one of the the first Dex they were basically one of the first dexes on Ethereum and they managed to gain so much you know traction there as well um so first mover advantage is very important in this sense um but unis swap they issued their token in 2021 I think and uh they actually did it after they had a competitor um launch their own token and it managed to take a lot of liquidity from their um from their trading pools. Uh and they finally launched a token in response. The token though for many years has just been a governance token. So it's used for voting. It was used for emissions to incentivize liquidity, but really not much else. And they've only recently um

in this ju just this year managed to do a few things to really finally finally kind of like codify things around the token which is they um they said that you know the token is like the main form of value. their equity, you know, equity in their labs business is not really the main beneficiary. Um, and they have turned on a fee switch. Finally, the fee switch for them is a little complicated, so I won't get into too many of the details here, but basically it takes a fee um an extra fee on each swap in addition to whatever fees that uh LPS take and that is basically used to go and buy back and burn UNI tokens. Now that just started. Part of the reason people are so excited about unis swap right now and why it has how it performed so much is because they did

this and then they launched on Robin Hood chain and their volume on Robin Hood chain has been insane and as a result they have burned a lot of tokens from just that onchain activity. Aerome on the flip side it is the you know same idea as a AMM model but their token acts like slightly differently. So they actually use the um vote escrow model, but you can kind of just think of it as a flywheel that they use for better incentive mechanism when it comes to like getting people to um to provide liquidity, which you can think of as market making if you're not really familiar with all these DeFi terms. What they do is basically instead of giving fees back to liquidity providers in the form of whatever base asset is trading, they give them um uh there's arrow emissions that come out and those

emissions go to the LPS and then um essentially those LPS can choose to lock um those arrow tokens in the vote escrow contract but basically stake them and then they earn all of the trading fees from the protocol that are essentially distributed that way. So what it does is it encourages um and then with those fees you can direct them to individual liquidity pools. Um and so basically what it does is it creates a bit of a loop where you have your liquidity providers acting as kind of like your equity token holders. Um and they are also the ones who are kind of then also directing equity to certain pools. So you can as a you know if you say you've got a new token launch a main point you can say okay I'm going to buy a chunk of

arrow tokens and then I'm going to stake them and then I'm going to direct my emissions to the like to my new pools that I want to do well and as a result you can basically encourage people to provide liquidity by offering like a really good um by really offering extra emissions to those uh liquidity providers. So it provides a really nice feedback loop and as a result what it means is that um the token actually has usage. I mean it's also used in governance as well but it actually has usage. You're actually getting revenue from it as a user and everybody's kind of tied in and aligned in the ecosystem versus unis swap where you know there's not really an incentive to hold the uni token which is why until recently it really you know massively underperformed. The last thing on

Aerodrome is that Aerodrome is currently only issued on bass and Veladrome, their sister Dex is issued on Arbitrum. Basically, what they're doing though is that they've actually got a um a big upgrade coming I believe in the next few months and they're going to be going crosschain. They're planning on launching on every EVM chain. Um so that would that would include Robin Hood, that would include Ethereum, that would include um you know any L2 out there. And they also have kind of some updates to their engine and how they kind of make more of the emission process a bit more um I would say smooth or uh smoothed over. Um but basically the two of them have been kind of at odds with each other because for a while a drum has been the dominant decks on base which for a while did have a lot of

retail activity a lot of meme activity since the launch of Robin Hood chain a lot of that has migrated over. Um Coinbase is trying to bring tokenized stocks back. Aer Drrome is, you know, kind of their premier trading partner for those tokenized stocks. Um, which is great to see, you know, kind of that alignment and good to see Coinbase, you know, supporting uh homegrown projects from their own ecosystem. Uh, so we we will see. I mean, the the wars are just starting in my opinion. I think like kind of after this launch gets going, we're going to see more. And, uh, I think I alluded to before the call. I mean, we have another L2 launching in like another two weeks here that could also end up being, you know, a big boon for more onchain activity. We'll just have to see.

Okay. Well, I want to talk about that, too, but I want to kind of stay on this rivalry that's heating up and like you said, it is still in the early stages even though it's been going for a long time. Um, I want to talk a little bit more about the the admissions the emissions thing and the buybacks because this has been something that's gotten a lot of attention. UniS swap as you said for a long time was trying to turn on this token buyback switch. Um, they finally got it in place. Um, and it's now driving real revenue to the UNI token holders. But Aerodrome, I had the CEO of Droos Labs behind this, the project behind um the team behind Aerodrome rather. Uh the CEO, Alex Cutler, was on this show earlier this week and I asked him a lot of questions about this too. But he says that that um

skimming liquidity from the liquidity providers and using that to buy back the tokens is exactly the the opportunity that he sees for Airdome to exploit to outperform and to like attract capital away from Uniswap. What do you think of that take here? Is UniS swap vulnerable or is this going to be another one of these things of like everyone says they're going to dethrone the incumbent but nobody's ever going to actually displace unis swap? >> It's a good question. I it's hard to say because honestly the uh the the dynamics for Aerog are so different from unis swap and because unis swap just changed up their whole fee structure. It is hard to tell too like what is going to be the user behavior. And when I say user behavior in this sense it's actually liquidity providers. Those are the ones who are most impacted by this. Um I

actually I had a different conversation kind of concerning um really what the fee switch means for liquidity providers and for users. So the big thing is that you know what uh the CEO of Aerodrome or what of Dromos Lab said is that they're skimming off the top. What does that actually mean? So what it means is that so just as an example so unis swap right now say you go trade you're going to trade ETH for USDC. Okay so in the past you would pay um maybe you're paying like a 30 basis point fee that's being taken by the liquidity providers. They cap that they take that off. That's great. Liquidity providers. Now, what happens though is I go in and my fee is say 32 BIPS. Okay, that two basis points that is now going to the unis swap. It's it's I have a weird name for it like

something jar, but it's like they're it's going to this going to this like this pot and then they're using out of that pot to do this programmatic buy and burn of uni. So, that's what's happening there. Now what the concern is is that for liquidity providers in automated automated market maker products their main way of hedging against impermanent loss which is basically the idea is that like as you trade in a pool the two pools become like imbalanced. Um the way they kind of hedge against that is that they go to centralized exchanges like Coinbase, Binance, um HTX by whatever and they are arbitrageing to what the actual rate or the actual price is over there. Because basically as these pools become imbalanced onchain the pre that that's what's determining the price of

the asset. So if say your you know your ETH price ends up being 5% off in these onchain pools they just go and they orbit it out and make their money on the centralized venues. Now what happens is that when you introduce extra fees they're they have a margin of error where they can basically trade and be profitable. when you introduce extra fees, whether it's going to the you whether it's, you know, assessed to the user or it's even though the user is paying it, what happens is is that their their margin for error and their margin to make money decreases just slightly. And as a result, it changes how those arbitrage models work for these market makers, these liquidity providers. And that's really the kind of the the setback there is the problem. The other thing is like you have to think okay

it's 2026 we have had okay seven years of unis swap eight seven eight years of unis swap being live before they introduced different fee structures which were never there before and that's why kind of that there's that concern of like oh my god are we going to really change this entire fee structure. So that is really the difference there is that you're eating into liquidity provider you're cutting into their bottom line and as a result you're you're you're going to have them change behavior. Now the question is are the switching costs low enough that they're going to say forget unis swap I'm going to pick up and go provide liquidity on aer drrome where you know I'm earning I can direct you know I I have more say in kind of the protocol I get more uh direct fees I'm getting arrow and becoming kind of like an equity holder

as well I'm more aligned with the project TV um you know the market makers and liquidity providers that have these setups where they are providing liquidity these are very complex undertakings they have lots of models lots of bots running to do these arbitrage between different chains. What it more likely means, yes, that liquidity could dry up on unis swap in certain pools. We'll have to kind of see. I think it's going to be several months though before we see that shift in behavior, especially because we are seeing already a new shift in behavior going onto Robin Hood chain. >> Gotcha. Okay. Yeah, there's a lot in that answer. Um there's a lot for people to know about this. I've been trying to learn about this stuff, too. A lot of this stuff has changed very quickly cuz like you said, a lot of this stuff is

just from the last month. Um, if you had to bet on on one horse in this race between Aerodrome and Uniswap for the next year, let's say, who do you think is the faster horse? Who do you think is is going to just outperform here? >> Oh gosh. Okay. So, not investment advice to start. My my compliance team will be very happy with this uh with this like little disclaimer here. Uh, not investment advice, but um, you know, we really like Aerodrome just because their token model makes a lot more sense. it and like I said it really locks in people in terms of you know actually being uh part of you know part of their community part of their to like one of their token holders. ARCA has long been you know very proto token holder rights very you know we really want you know

tokens that issue to not just be these governance tokens that weren't aren't worth anything while you know labs divisions or you know that are or foundations that are behind these projects you know just sit on giant treasuries. So we're we're very pro anybody who has like a token that works. Now unis swap has managed to change that recently which very happy about. I think what it really means though is that um what I want to see with unis swap is that this kind of um activity on Robin Hood chain isn't just a flash in the pan right because everyone like I joked earlier is like we're annualizing one day revenues for the whole year which is insane like you need to actually have you know you you have to actually have a history. So I think if I see like six months from now that unis swap is still

continuing to dominate Robin Hood chain that Robin Hood chain itself activity is really high and it's leading to like this increased burn then I would probably you know have a more favorable opinion on unis swap but I think from the data right now it's too early to tell because like I said I don't know if this onchain activity this onchain re renaissance we're seeing on Robin Hood is going to be like here to stay or if it's going to fade in a few months. You know, one thing we've talked about a lot on this show is that crypto is quickly becoming a huge part of the global payments infrastructure. And nowhere is that more obvious than in Asia. But if you're actually running a remittance company or a payment business, you know that the hard part isn't moving the stable coins. It's dealing with local

banking partners, compliance, liquidity, and all of the operational headaches that come with sending money into places like India and Southeast Asia. That's why today's partner is Saber. They give payment companies stable coinpowered infrastructure to collect and make payouts across Asia without having to build all of that complexity themselves. They've already processed more than $3 billion in transactions across 40 different countries. So, this isn't just a concept. These guys are actually doing this for real. If you're building payment infrastructure or expanding into Asia, make sure you check out saber.money. Okay, so you want to see some track record. You want to see some of these things last and not just be cool for a couple of days. Um, I think that makes a lot of sense. I think yes, not financial advice. Do your own research. Anything you say can and will be used against you

in a court of law. Uh, yeah, all that goes here. Um, but for myself personally, I think they're both going to do incredible and I'm really excited about both of these things. So, um, yeah, we'll see how that plays out. I want to ask you about something else that has been a huge performer in in this this bull market or actually in this bare market really, but Zcash is up over I think over a,000% year-over-year. They just got a Grayscale ETF listed which a lot of people weren't expecting that this might bring some more institutional adoption, access to new pools of capital. Um, and the price I think got almost to a,000. um seems like it's going to keep going maybe. But um could you tell me a little bit about this craze around Zcash? Like is this just a privacy narrative like catching the wind uh you know uh in in a bare

market? Do you think this is a project that's here to stay? Why is everyone so um why is there such a frenzy around Zcash right now? >> This is a great question and I'm constantly asking myself that because I am like why Zcash what like these are one of these legacy projects that I personally never you know got that excited about. Um, I understand the privacy narrative, but I've always been the person of like privacy is a feature, not like the main attraction. Um, what does that mean? I think it's great when L2 say, hey, we're going to have built-in privacy features. We're going to use ZK technology to, you know, shield transactions. And so, I think from that aspect, it's great. Why is privacy, why do people care about privacy right now, though? Why so much right now? So, there's actually two sides to this argument. The first is

that with institutional adoption of digital assets, which it is here, like it wasn't three years ago, but two years ago, a year and a half ago, everyone was very much like, okay, institutions are coming in. They're going to use crypto. But people don't realize is that being able to see assets move on chain. It's a blessing and a curse because, you know, half the time we see wallet movements on chain and we're like, "Oh no, there's a Bitcoin whale and they're selling all their Bitcoin and the market's going to tank." It can cause a lot of fear. Now, what happens when we can tag a wallet and say, "Oh my god, that is Black Rockck's wallet and they're moving Bitcoin and they're going to sell it in a tank market." So, it's a huge problem for institutions because they don't want people to know what is going on with

their transactions. So, Zcash does solve that. Um, most people think Zcash is actually kind of like the privacy light token of all of the original privacy tokens because it's a you can basic it's like opt-in privacy. So, some transactions are viewable, but some are called some are shielded, which means that you can't see the tokens, you can't see where they're moving. Um, and so, but it that is kind of an opt-in feature. So, they've always touted that, you know, it's great because when you need to keep you, you know, you need to work with regul uh regulators and stuff, they're they're going to be happier with Zcash because there's like this opt-in privacy. Most people use the privacy features on Zcash because they want it to be private. But that is kind of where that narrative started, which is, you know, institutions are going to want

privacy. Now the flip side, the original kind of I would say maybe DGEN community or even just like the OG crypto community, they have watched Bitcoin become this very institutionalized product in the last three years. They've watched it go from being, you know, this cipher punk movement, this, you know, not everyone owns Bitcoin to Bitcoin is talked about every day on CNBC and they're like, "What the heck? There's now like 50 ETF products for Bitcoin. Like everyone owns it. You know, you're everyone owns it. Everyone's talking about it. Black Rockck is constantly, you know, on on, you know, touting it, which I love. I've been waiting for this adoption for so long. I'm so glad we're finally here. But for a lot of people who have been in the space early, they really feel like Bitcoin Bitcoin itself has become too institutionalized. And

that's why it trades much more now actually based on ETF flows and a lot less on things like minor flows, um, on, you know, TA on even kind of wallet or whale wallet movements. It's, you know, much more ETF dominated. Um, a lot of people have been attracted to Zcash because it still has that kind of grassroots cipher funk community and it offers that extra layer of privacy. So, that's kind of where it initially kind of caught that bid I would say last year. I was actually looking at the chart on it like it had before this last runup. It ran up a,000% between like last fall and this and and August of this year. Um, 1,000%. That is a huge amount of money before this latest move.

It's probably up now like 1500% in the last, you know, 365 days. And considering, like you said, it's a bare market, quote unquote, like we that's a huge move. So, um, that's kind of like what has been happening with Zcash. Now, more recently, um, the ETF was definitely a surprise, but not totally unheard of. Like, we have a way more friendly regulatory regime. And, you know, from what I've heard actually is that the SEC doesn't isn't as fully staffed as it was prior to this current administration. And so as a result, even you know, products and stuff, they're they're just they're being a little bit easier with kind of getting these filings approved. Um, and so I'm not like I wasn't that surprised to see that ETF come through in terms of, you know, there's enough interest in it. Uh,

because it was the only token that was up so much. And at the end of the day, when anybody sees a,000% return, they're like, well, why am I going to make another thousand% return if I invest in it? So the ETF has definitely been a nice um a nice little surprise to the upside, but not completely unheard of. I mean, we've been seeing ETF products now come out for pretty much all of the top 20 tokens um and have no, you know, real issue with getting approved on the regulatory front. Grayscale, though, they have been they've been long in Zcash and they've long had a Zcash uh trust product, which was um their product that was a precursor kind of to the ETFs, if people recall, they had their Bitcoin trust, their ETH trust.

Um, and those were kind of like the only way actually in a public market to get access to Bitcoin and Ethereum before they were made into ETFs um, a couple years ago. So, that's kind of what's been happening with Zcash narrative. And I I can talk I can talk a lot more about it, but I don't know how how how excited people are about just privacy by itself. Well, I think it's it's a a narrative that's gotten a lot of attention. And I think, you know, because of that, you know, like you said, that insane performance we've seen from this asset, people are kind of wondering why an asset that was just flatlining sideways for many, many years has suddenly blown up like this. Um, what do you think happens for, like you said, privacy is not exclusive to Zcash. There are a lot of other projects that have privacy as a

feature or as an option. There's Monero, there's uh Mimblewimble on Litecoin, there's the Midnight Side Chain, Ethereum is working to have privacy on the native L1 by next year. So, it's not like exclusive to Zcash. Do you think we're going to see like a follow-on pump in a lot of these other privacy assets? Do you think this stays localized in Zcash or or how do you think about that playing out? >> I mean, this is kind of what happens in all markets, right? It's like people do get excited about like what is kind of the next trade and what is the next narrative? And as an investor, that's what you have to think of as well. Like that's what I'm, you know, trained to do is like, okay, man, you know, Zcash is going up. we should probably, you know, long the other uh again, not invest in

ice, you probably should long the other like privacy tokens in that same sector because they're the next ones to move because people rotate capital and they, you know, want to see what else does well. Do I think that those should do well or are going to do well? Uh I'm again, I'm not sold on the only privacy narrative, which is why, you know, Zcash is a really interesting thing to look at and an interesting case study. Do can I can I sit down and write a fundamental, you know, investment thesis around its long-term viability? Not really. Like to me it has definitely been more of a trade in that long in that kind of like versus like a longer term okay it's got a real business it's got real cash flows that said Zcash has been trying to develop more things on chain but it's

kind of the same way Bitcoin had ordinals. Bitcoin was trying to do Bitcoin DeFi. We're going to kind of see the thing that Zcash might be successful at is that they have like more of a centralized um development system in terms of like pushing out features and like new upgrades. So you might see that. Um what I do think though people will be or what people should focus on besides change that are chains that are solely privacy focused are which because like I said I think the bigger narrative here is the fact that institutions need privacy and I think if you want to focus on something you should look at like which chains have actual privacy tech right now that can be instituted. So Ethereum is definitely one of them. Um, another one is like uh layer zero has their upcoming zero chain that is going

to have um you know they're using they've managed to figure out they said like ZK privacy that can shield transactions in you know kind of a regulatory compliant way that works for some of their like launch partners who are you know they are the institutions they have to abide by certain regulatory um requirements. There's obviously like some of the L2s I don't think you mentioned things like uh well there's ZKYNC um there's oh what's the other one? Um, >> Aztec Network. There's a lot of them. >> Yeah, Aztec Network. Um, I'm thinking the one that starts with an S. Uh, anyway, but there's like so many of them. Oh, Starknet. Stark. And they all use like the different either ZK's or ZK snarks to like, you know, shield and mask transactions. Um, and the reason also that like some of those privacy

texts in my opinion are a little more interesting is that a lot of the zero knowledge stuff, it's not just that it it works in a way where like you're not just like shielding transactions, but you're able to shield transactions and then essentially like attest to, okay, this information is true. So like you can kind of trust it on chain without having to like actually see the data within the block. So to me, those those those are a bit more interesting in terms of like actual privacy versus like, hey, you go to the Zcash block explorer and you can see blocks being sent back and forth and you can't really see anything in there. Um, and you don't necessarily know for sure because also Zcash had its fair share of problems.

Like I'm not, you know, they've managed to patch it, but like they basically found a bug over the summer um where they figured out that somebody within who had of all the shielded transactions basically somebody could go in and mint more tokens. And because they shielded so much of the Zcash supply in general, you you didn't really know who had minted a lot of tokens. And it it led to a huge panic actually. Zcash dropped a ton at the time. They managed to patch it and they made everyone kind of migrate their tokens over to like a new shielding technology which should in theory like cap the supply and all these other things. But you know there are these there's there are unintended consequences of having privacy which is basically somebody could exploit the chain and you wouldn't know.

>> All right. We've talked a lot about a lot of different assets. I want to ask you about something you've been following a lot in the content that you're making, which is this buyback mania that we've seen. As you mentioned, Pump Fun and Hyperlid had huge success with this and now we're seeing like almost every token under the sun trying to launch their own buyback program. Uh the most recent ones, Layer Zero, Kinetic, and now Lido is is instituting a buyback program. What should investors know about this? Is this just like everybody trying to copy something that worked for someone else? Are these things going to actually move the needle? uh like what is your your take on this whole buyback narrative that's this kind of like going crazy in crypto right now?

>> So I think what people forget especially with crypto is that we had a huge regulatory regime change like less than two years ago and that has actually made people way more comfortable with this buyback and with having buyback and burn mechanics. So that's the first thing that's kind of pushing a lot more people towards this path. But at the end of the day, Hyperliquid's absolute runaway success. Like, let's call it for what it is. Like, the fact that they are using 97% of their revenues to buy back and burn their tokens. And their token has just been insanely strong in the face of like serious headwinds in the market. And again, it has kind of continued to just plow through, you know, volume all-time highs on all of their products.

And they've still managed to do well in a bare market where assets are depressed because they've got, you know, excess business lines that focus not on just crypto trading. that has led a lot of projects to say, "Well, we have to do something similar because look at them. They've done it." So, I think that's I think buyback the buybacks and the kind of this return to fundamentals. It's been a long long time coming. I've been pounding the table for it for years and I'm glad to see projects finally doing it. In many cases, I there's a there's also a few other caveats to why I think some projects haven't done it yet and they've just started now. So, first of is that in a lot of cases, the projects you just mentioned, I think mine is kinetic.

They're they're the new the newest one in that batch, but most of them didn't have enough of their token supply on market for onchain votes to pass these these um these these buyback and burns first of all. Second is the regulatory regime shift. And then third is yes that success of hyperlquid. So I think it's like I said this big confluence of factors. Um but the buybacks are not all perfect. A lot of them have become um programmatic which is good. We like to see programmatic. We don't like discretionary but in many cases the buybacks are dependent on how much revenue they have. Leto is a great example. They are a great product. They have billions and millions of TVL.

They're the largest Ethereum staker, but they've been losing market share for a few years. And um they don't actually have enough in the part of the reason they didn't do buyback and burn for so many years is because they wanted to reinvest any of their earnings into growth. And the second thing is that they actually don't make that much money because you have to remember like staking rate on Ethereum is like what 2% and they're taking like a tiny sliver of that. So even though they are making money each year, it's not that much to run a whole Dow Foundation operation. And so for them, the biggest push back for years of like you need to do a buyback and burn was that uh like we could but then we wouldn't have money to run. And so that that was kind of like the big uh push and pull there. They

just passed their buyback though. It is contingent on how much money they make. Um and in their case it's also contingent on the price of ETH because as ETH goes up and down that affects their revenue. So um you can go and look I can't remember the numbers for them but basically they said you know if we make x amount of revenue above that we'll start buying back with like 50% of our earnings um you know tokens from the market and we'll put it into treasury or we'll burn it. Um like I said can't remember the specifics. So that's what they've you know kind of set in stone. Kinetic I believe is you know theirs is more programmatic. I believe there's closer to hyperlid where they're doing more like the 90 percentile range of you know buying back their revenue and they're currently doing that. Layer Zero

hasn't actually passed their full fee switch yet. Right now, they just have um buyback and burn happening on Stargate, which is their crosschain decks. Um crosschain activity's kind of been down. So, that's kind of gone down with it. Um however, with the launch of Zero that I mentioned, their new L1, that is going to have um economics a little bit more like hyperlid tied to kind of like the, you know, part of the trading that goes through or trading that goes through on that chain is going to go back to buyback and burn. Um it's a very simplified version of how it works, but um so that should be coming soon. Um and then actually another really notable one we didn't talk about is Athena. They just passed uh day before yesterday their vote um passed to turn on the fee switch for ENA buyback and burn. That

has also been a long time coming. Also important to note though, it is contingent on the supply of their stable coin. It is not now happening the buyback and burn. It's going to happen when they reach 7.5 billion dollar of supply of USDE. And for context, last I looked, their supply of USD is just above four billion. So they could get there, you know, if we have more bull market activity and supply expands massively, but we're not there yet. So even though there is a fee switch that's been turned on, there's buybacks. Again, it's contingent on something. >> Yeah. So not all these are created equal. You are so full of information about crypto. I could talk to you all day, but we got to start wrapping this up. Katie, I want to end with a couple questions here. What are you going to be

researching next? Obviously, you do tons of deep dives into crypto and you're you're full of alpha and all these things, but what are you working on right now? What are you researching next and and what's on the horizon for you here? >> Okay. Um, I mean, I guess the the big thing right now is definitely been like you said like a lot of the stuff we talked on um Robin Hood chain, tokenized stocks. I mean, I'm very interested about how, you know, kind of DeFi is evolving right now as it's being brought more on chain. You know, we've gone from okay, people are trading on chain, people are doing simple borrow loan um products to now we've got vaults, right? we've got the rise of projects like Morpho and uh you know the other like modular uh lend borrow protocols. So I've been spending a lot of time in that

area and looking at like how do these how do these projects interact? How do we kind of grow um onchain assets that are not digital asset native? What does that mean? Like I said tokenized stocks, RWAS in general, how do those kind of grow on chain? How does that economy start to kick off? And then what are the what is the infrastructure that's going to be supporting that? Um because for me that's like that's the real long term the the long term get here. >> All right. I have a very specific ask for you guys. Somebody listening to this knows the person running marketing at a crypto or AI company that should be advertising with Milk Road. We reach more than half a million investors across everything we do and Q4 is filling up. So don't be the brand that waited too long. And the cool part about

sponsoring the show is this episode is still going to be getting plays months from now. So send this to them. Look like a genius and tell them to go to milkroad.com/sponsor. >> Yeah. And even though there's a bunch of shiny objects in the short term, the long term is still what's most exciting about crypto to me as well. So I agree with you on that. Uh Katie, where can we send people to find more of you and your work online? >> Okay. Um you can follow me on Twitter. Uh it's right at the bottom here, Katie. Pretty easy. Um you can also go to Arca's Twitter, also pretty easy, Arca. Um and we also have a YouTube page. That's where you can find um all my weekly recap videos. I try to talk about the market, the most exciting things that's going on um every week. And yeah,

that's how that's how you can learn more. Katie Totti, head of research at Arca. Thank you so much for being on the Milk Road Show. I really enjoyed this conversation. I know our audience will too. Thank you for being here. >> Thanks for having me, John. >> And thank you all for joining us. I hope you all learned something today. There's a lot in this one, so take it slow. But until next time, stay safe, stay educated, stay bullish, and we will see you all on the next episode of the Milkro Show. Thanks for being here, everyone. Bye. Thanks for listening to Milk Grow. If you enjoyed the show, make sure you like and subscribe. And if you're struggling to find winners in the market, that's exactly what Milk Gro Pro is built for. Our analysts have called some of the biggest winners early and

Pro lets you see what they're buying next, every trade they make, and the research behind every position. Check out Milk Road Pro at the link below. Everything you hear on Milkroad is forformational purposes only. These are our personal opinions, not financial advice, and we may own some of the investments we talk about. Always do your own research and make the decisions that are right for you. See you next time.