The Rollup TV: Monday, June 2nd

Transcript

[Music] You know what? Cool. All right. So, um, Stephen, now that we've kind of addressed this what your landscape is for some of the best yields, what do you think is the most overlooked opportunities in the space as far as yields go? Is it is there something special that you're seeing

that that you can share with us without getting diluted if if you've already been Yeah. So, I I'll give two. One was the the RLUSD loop on Oiler. I mean, it's still good. It's 31% net APR. That's what I'm getting, but I'm not max leverage. You can I think 14. You could technically 20x leverage. That's kind of a secret. if you do it yourself. Uh but if you do it through the through Oiler multiply, you can get 14.27x leverage, 31% to 30 to 40% APR. And again, that's like dedicated dedicated yield from Ripple. They're just giving you more ROSD. So, you don't even have to be exposed to XRP if you don't want to be.

Uh and so I've been farming that. I like that. But another one is the Pendle. I mean, I I think these might be undervalued. The Pendle YTS for USDS. So, and the reason why is because it's really, really hard to understand. So, Spark has these seasons, and they have two pre-seasons before year one. Year one, they're giving out 1.67 billion tokens. Uh, and out of those 1.6 billion tokens, season 1 accounted for 20% of those. Season 2 is going right now. And season 2, the only way to farm it is through Pendle. It's the only way. So either LPing USD the USDS syusds or PTUSDs SYUSDS on Pendle or buying the YTS that's the only way to farm this current second season and if that's 20%

in size uh then you kind of have to estimate what you think the FDV of Spark will be but at any reasonable valuation of Spark uh I think it's it's could be undervalued by like 50%. Uh because my estimates have it between 18% to 36%. I mean, if you could go up to half a billion dollar valuation of Spark, I really don't know how to value Spark because, you know, uh what's the other one? Sky is 1.5 billion. Maker is 1.3 billion. Spark is like the the the bread to Skyy's butter. Um so I'm putting it, you know, mid hundreds of millions. And that means if Pendle really does capture this 20% for season 2, which is the last season before the token launches, then it could be it could be buu money. And

so I don't know if you know Nomadic and Defi Dad, but they've been like in the trenches farming this pretty heavily. I know they're top in the leaderboard, but I like that one. I think in terms of hidden gems, that's one of them. And the reason why it's a hidden gem is because it's so hard to understand. The harder a yield is, the harder point is to value, uh, typically the more bang there is for your buck there. Yep. Absolutely. Stephen, I'm curious what your uh what your greatest yield ever has been. Like what's been your greatest farm ever? What was the setup for for that? I'll give you a couple of my of my home runs from the cycle. I guess like technically we're a cycle past, but I I still think like points bonanza is still the same cycle even though I know technically

that was like 2023 and we're almost 2 years past that. But when LRTs first started, so this is like wrapped ether ETH, Renzo ETH, all of those. There was no liquidity. You like you couldn't enter and exit. You could only go in. And I said, well, these are fully transferable tokens. I'm just going to make the liquidity. So I went on unis swap and and spun up 1% fee tiers for like etherfi ETH Renzo ET ETH Pufferfi ETH and all of these for the first month were printing multiund% APRs because they were the only my liquidity was the only way people could enter or exit and so that to me that was a it was a massive home run uh and I benefited from that tremendously. Also just being early on things like um FFX or FXN uh have been really good. Uh the all the airdrop

campaigns like season 1's were were outstanding. So Ether season 1 was awesome. Uh I did really well on Hyperlid just because they they messaged me really early and they were like hey try out our new decks and I was like you know what I okay I'll use it to hedge your funny rates are pretty good and I was doing like funny arbitrage really heavily back then. So I was like and anyone in the Discord use my ref link and they all did. Of course, me being an idiot, like I I distribute my Ref Link stuff to all my mods and myself. So, I was like, "Okay, let me just sell my hype on day one, like distribute it." And then it like 30xed and I was like, "Oh my god, that that was painful for sure." But that was a lot of fun. I think those were probably my biggest

wins. Also, I did a ton of arbitrage on what was it? Mantra. Mantra chain. There was uh stone. So stone is like a form of wrapped ETH, but you could uh one I was lping at 1% on like Aperture Swap, which was really really good. I was also arbiting it because it was under peg since it was a lock campaign. You couldn't exit yet. And so I just like, okay, well, I know it's going to be unlocked on X date. If I just buy it under PEG and then unwrap it uh at that date, I'm making an implied 40% APR. And if I LP it until then, I'm getting that 4% implied APR plus, you know, 100% APY and LPing. So, uh, for those in the trenches, there have been some really, really good yields.

It's incredible. And Stephen, before before we let you go, quick question on this kind of gets back to the two wolves here. One is obviously fighting for the best APR and the best rate of return. And then you kind of have the other that is, you know, trying to have a more balanced approach and and, you know, it sounds like a lot of the strategies here are to maximize yield on stable coins. So, you're not really taking any risk of depreciation on these assets. maybe some some DEG risk, but there is, you know, some smart contract risk going into experimental D5 protocols. How do you balance, you know, the token variables going up and down with some smart contract risk? You know, if you're going in on stables, you're thinking, okay,

these are going to be stable, but going into smart contracts has some element of risk. How do you assess that? And generally, do you ever price that in to your expected return so that you can kind of, you know, take into account how that may affect your yield? Yeah, I mean, I'm sure you guys are in the same position where you probably get a thousand Telegram DMs or or Twitter messages a week saying like, "Check out my stable coin. Check out my and so many of them are too exotic for for me." Like, if I'm in a stable coin yield, it's got to be like, for example, Open Eden, they they already run like a billion dollar offchain fund with Treasury bills. So them coming on chains like okay I I trust you guys and if something bad happens you'll probably do a compensation program. Uh other

protocols who are like brand new stable coin we're using a novel mechanism. I'm like that's fantastic. I love it. I love that for you guys. Wait until you guys get Lindy. Let me see this. Let me see the audits. Uh but but a lot of the time I'm looking at oracles. So when I'm going into a strategy oracles are king. I need an NAV or fundamental oracle which basically means I can't get liquidated if there's a market price fluctuation. This means uh that the borrow and lending protocol or the curator of that market is taking on the risk while while giving me all the benefit. I love that. I'm happy with those. Uh my only liquidations this cycle have been because of market rate oracles. I was leveraging wrap staked ETH ETH one of the one of the time-tested leverage strategies for ETH

yield. Still fantastic. By the way, here's some alpha. Uh a prime. Oh my my my LPs are going to get mad at me. A prime wrapstaked ETH looping is the most profitable form of of looping wrapstaked ETH on A. It's like you have to go around and click and navigate to it. The A main market is a little bit worse because the ETH bar rate is typically like 30 bips higher. Uh so if you want to get like a 15 to 20% yield, you can literally set and forget for years, a prime is is the best place to do that. Um but oracles, yeah, definitely like you look at your oracle risk, always know what stable cocoin you're dealing with. I think people if they really looked under the hood of USD uh 0++ Usual USDA the one that DPEG because everyone was like oh this is a four year

bond it's not a stable coin uh they would have been able to mitigate that risk. Um also like if you're on frack chain shout out to Sam he's amazing. Uh but like they have FXBS and they have a they have a 30-year bond and so if someone bought that thinking it was a stable coin it fluctuates by like 5 to 10% daily uh just because you know there's so much premium on it. you have to really know what the underlying stable coin is and then yes it's a totally different degree of of uh analysis and time. Um, but luckily, right, you can you can look for like where's the most TVL, what's on Pendle, uh, where are the places to deposit, what are my oracles. Okay, mitigated a lot of the risk. Let's go Ape. Yeah.

Yeah. I mean, I we also recently saw that that that um, uh, Chainlink was getting under fire by some of the Chaos Labs people because of that of that thing where they were blaming chain link for not having the proper uh, functioning price updating tool u effectively. But chain link was like it's not our fault. It's not the oracle's problem, but you can just constantly see that that's like that that is uh where the you know that's why a uses chain link. That's why you have to trust your Oracle more than anything. You know what I mean? So Oracle extractable value is an entirely different conversation that you guys should talk to uh Brian from Compound Alpha Growth. Yeah. Yeah. It's a it's a wild uh it's it's the wild wild west

still in that landscape. Absolutely it is. Last thing I got for you, Stephen. Um if if someone new is listening to our channel wanting to do you know participate in DeFi get active what would you say is the minimum starting amount and uh how much how much time and kind of like where do they go to start? Totally depends on what the thesis is. So the the important thing about DeFi is like know what your thesis is. Are you are you looking to turn a thousand bucks into like a million bucks? If so, you're going to be in the memecoin trenches. It's basically the only way uh to to start with something small and go crazy with it. you altcoins, memecoins, um not, you know, just get lucky on some of those and do a ton of work. If you're looking to get passive income, then I

think even 10K is reasonable. Now, I know that's like a high benchmark for a lot of people, but it's better than a savings account. If you're going to have a savings account anyways, you might as well be getting, I don't know, 8% to 15% on Pendle. Fixed rate, fixed date, low risk. Just set it and forget it. Unbond put it back in the next bond. Uh that's super super simple and probably more approachable for most people than T bills. And if you want to use the value of your underlying PT, you can throw that PT on Moro and borrow against it. So you have also the composability. I think that's probably pretty approachable for most new people. And of course, if you want to like really get passive income uh that scales, I think like there's that really really good scene from the gambler uh with Jeff

Goodman. Is that his name? Yeah. Yeah. It was like any fool with who makes $2.5 million with a brain knows, you know, and then you put it in a low interest savings account and uh and you do that and if you can do that on on Pendle, if you can do that on Morpho, even the like the Morpho gauntlet vaults are really good. They're 7% for for months on end. There's so many highly liquid places you can beat T-Bills. And I think if you can beat T-balls and maintain your liquidity, uh that's huge. It's massive. And that's probably the lowest barrier of entry for most people. If you're, you know, if you're looking for delta, if you're looking for those huge wins, you're looking to double, triple, like quintuple, 10x your initial investment, you have to be able to find value. And that takes fundamental analysis. And to

do good fundamental analysis, uh, I don't know, like open up your favorite um, LLM and just start asking them questions. Uh, just like take a very tiny amount of money and start looking at all coins and investing in them. And remember, it's going to go up and it's going to go down. Your your bet is that it's going to go up more than it's going to go down over a long time horizon. Don't try to day trade. You'll get torn to shreds. Stephen, thanks for joining us, man. Shout out to DeFi Dojo. Absolutely crushing it. You guys have been doing great work. So, I appreciate you coming on. And uh I mean, we'll we'll come find you in the dojo in the dojo discord, man. It's been a pleasure. Thanks, Steve. Cheers, man. See you next time.

That's where every single possible good yield is. I'll tell you what, if I'm a if I'm look if I'm a hungry yield farmer, I'm going to the DeFi dojo. Absolutely. I mean, I I feel like that kind of gets lost lost in the sauce a little bit when when you see everything that's happening on on chain. It does kind of feel like, hey, I've got to get into memecoins if I want to make any significant return. Meanwhile, the real the real alpha here is in the yield that you can get passively on chain. And it does take a little bit more of a capital base, but I think, you know, to Stephen's point, you can start to couple some of these, right? And and okay, yeah, maybe I, you know, am only going

into this vault to try to, you know, beat T bills, but if I can couple that with getting an airdrop because I'm early into a protocol, you end up in the next hyperlid. Yeah. I mean, that's why I feel like there's a lot of the DeFi alpha is actually in positioning into things that drive yield and then set you up for uh future tokens basically. I mean, that's like a lot of his strategy that that's why his biggest wins were those LRTs, right? And for so for so long, you know, it it was that the protocols themselves were the product. Now we've gotten into, okay, the tokens are the product, but I I think we're starting to get back to real product market fit and finding real protocols that drive real value and and that's where that's where the hunt is.

Up next, we got Jackie. I met Jackie in the city a couple months ago, maybe like one or two months ago. She runs an awesome podcast. Was just in uh uh London, I think, at the Avalanche Summit. And um yeah, let's get her up here. Hey Jackie, what's up? How are you? Hey, how are you? I'm good. Yeah, it was good seeing you in New York. I was in London and now I'm back. I'm staying in New York. Uh, no more conferences for right now. So, I don't know if you guys feel the same, but I'm I'm good. Yeah, every week in New York is a conference, it feels like. Yes. Yes. Luckily, now everything is stateside local, so pretty good. But, yeah. So, how was London? Did you guys have a good event? I saw from

the photos it looked quite nice and you had some pretty awesome interviews as well. Yeah. So it was the Avalanche Summit and we work with them at Token Relations and Crypto in America was also there, the other company that I run. Uh and so we were able to do some, you know, fireside chats, live podcast recordings, get to talk with people in the ecosystem, and it was always a great event. They always host really good events. It's like festivals, honestly. I feel like to do a good crypto conference, it really it needs to be viby and web 3 themed and cool, not like a big auditorium with bright lights, you know? So, they killed it. Definitely.

That that's uh that's how you know crypto breaks out of its echo chamber. And I think you did a great job of that, you know, with your most recent episode with Vlad from Robin Hood. I wanted to ask, you know, what what was it like? How did you end up, you know, having Vlad on the show? and why why do you think it's important to sort of pull in some of these uh what we call mammoth founders, these people that have crossed the chasm? Yeah, so bringing Vlad on the show was kind of like a interesting full circle moment maybe cuz like we had the conversation in early in May and we recorded the day after Robin Hood's Q1 earnings, which was not intentional. I'm not going to act like we are like geniuses on scheduling. We were just like, "Oh shoot, like they had their

earnings yesterday. Let's talk about it." Uh, but it was great timing and awesome that Vlad was willing to come on a day after that. But honestly for us, um, the reason I said full circle is because Robin Hood was one of the first apps that I used to buy crypto like years ago. And if you remember, and you've been in the space for a long time, there was a moment where they removed a lot of assets due to like an SEC Wells notice that they got. Um, I mean, we spoke about that on the episode and like what was it like at the time to do that? Do you have any regrets on that front? the lessons learned there. Same with the the GameStop craze and everything that was going on. But then we also talked a lot about tokenization and like what the future of that looks

like and the role that Robin Hood and also on tokenization um and they have been really hammering that home. And so like if you see a huge push from them on this front, I would imagine you're going to see the same with other exchanges. You know, I think there's they are actually gearing up to launch or to do a big announcement around a chain um and like their big push in crypto. I think it's going to be around like ECC and CAN. I I don't I don't know if you have any more information about that, but but there's definitely been some rumors circulating around their chain and like who they're choosing and all that kind

of stuff. So, just good to see them getting more involved. Yeah, 100%. I don't know anything on the front of those rumors. He was pretty uh tight- lipped when it came to anything future based. We kept asking like, "Okay, well, what's next? What are you guys going to do?" And he's like, "We'll see." You know? So, but yeah, in in general, this is sort of starting this integration of tradi as we see, you know, Robin Hood and Kraken, some of these guys are are starting to launch their own chain and go deeper into DeFi. And then we see from the DeFi frontier, they're pushing further into tradi. Ultimately, these two worlds are becoming more and more integrated. A as you talk to policy makers, people that you know are kind of overseeing finance in general. What has been the temperature like? What is what

is the sentiment like? Do they see these as industries as one and the same or are they really kind of trying to build them out in parallel? That's a good question. For policy makers, I think there's uh two sides to the coin. They're looking at digital assets and then blockchain technology. I think they are probably separate in terms of the way they will approach them and the frameworks that will come. Obviously, we have you know the genius act which is focused on stable coins and then market structure bill uh that's being discussed right now with both of them have ideal August deadlines. So like hopefully that actually happens. Uh TBD people seem optimistic. It's June right now. We still got like what two months. So um on that front that's kind of what we're seeing. And then in terms of like policy makers understanding this, I think a lot

of them want it to be bipartisan now, which is great for the industry. And I've always said like when it comes to technology, it's not really supposed to be biased. Like tech is exactly what it operates as. It's not a person. It doesn't have feelings. The way people use it can be misused, of course, but like the same with the internet. And when the internet was first created, people acted like it was going to like ruin the future of, I don't know, newspapers, radio, whatever it is. And it sounds so silly now saying that out loud, but I think, you know, tech enables innovations and for people to operate in the future. And I think the policy makers are seeing the same.

Yeah, it certainly seems that way. Especially this administration has been opening their arms to crypto and and bringing it further into the Overton window of acceptable finance and and stable coins are a big big part of that. Is there any overarching themes that you've noticed any through lines here generally as you've spoken to quite a few founders and decision makers in the space? you know, what has been some of the more impactful and influential things that you've heard from these founders and and from these policy makers? Is there anything that sticks out? Yeah, I think it goes back to like it's about technology and getting the policy right. It's not meant to be a partisan issue. Um, and we actually just

had Anthony Scary Mucci on to record the episode comes out on Wednesday, but he was joking about how Elizabeth Warren likes to present there's like this anti-crypto army, but like nobody is an anti-crypto voter. No one feels that passionately about hating crypto so much that that is their one issue vote. Whereas on the flip side, there are people who are fully crypto voters. We saw that with uh President Trump's election and you know win in the end. And I think that's something that's uh really tapped into right now. And um I think some of the most interesting insights in the conversations I've had from our guests have been like the funny little anecdotes we hear about these people cuz a lot of times like you think

of like Gary Gensler or you know SEC uh commissioner Hester Pur as like just you know these faces we see them come on TV they say their little lines and they get off but like what are they actually like behind closed doors, right? What about the new CFTC commissioner? How do we think about that? What about these people making the laws? And so a lot of times our guests come on, you know, they get comfortable and on the show Crypto in America and they talk to us about like what it really is like to get to know them behind closed doors like Patrick Mckenry told us that like Gary Gendler actually didn't hate crypto and we were like, you know, like he was actually advocating for it at MIT. Yeah, he was. Yeah. And so it's like when you hear these things and they're validated

be like behind closed doors and like you get these anecdotes of like what they're really like, it kind of changes your perspective on things. Jackie, I I have one more followup on this note because I'm I'm really curious about the Elizabeth Warren example. You you mentioned that there's no there's no anti- crypto voters. No one no one hates it that passionately. Okay. But you you see Elizabeth Warren vehemently hate crypto and advocate against it in a voter. She is a voter. She is a voter. And and like who do you think she's representing? Like where does that anti-crypto cabal come from?

Is there anyone if it's not her constituents? Is there other cabal behind the scenes that are pushing her in in this anti-crypto direction? We got to get her on and ask. But uh I I would joke people who got rugpulled and lost everything. Like maybe you hate crypto that much. But in all seriousness, the reality would probably be just people who don't understand it. But like again, ignorance doesn't really make me vote towards something against crypto. Like there's things in life that I don't fully understand. Like I'm not wellversed in certain topics, but that wouldn't make me go out and vote against them, right? So I don't know is the answer. I don't think there is an anti-crypto voter unless it's someone who just lost their all all their money in crypto. But again, like, you know,

it's part of the game. Yeah. Yeah, it certainly seems that way. I mean, she's she's just I mean, yeah, we don't even need to get too deep into she's leader of a cabal that doesn't exist. Yeah. Her own in her own mind. Uh kind of zooming out from the policy here, Jackie. Um, obviously you have a really cool business in token relations. That's why you're in in London and you guys have basically been trying to solve about solve and reason about this third bucket of information. Um, I'm curious like what were the gaps in communication that led you to founding Token Relations.

You're working on it with Pomp. Would love to like know the story there and what made you guys pull the trigger on starting this business? Yeah. So, token relations uh separate from crypto in America started about over a year ago now. And essentially what we were trying to do is build a place where blockchains, protocols, and projects can get to know their ecosystems all in one place. An example I give is like sure we are at the Avalanche Summit and like if you're not in the Avalanche ecosystem, where do you go to learn about what's going on in there? And if you are in it, where do you go? You probably go to Twitter, Discord, Telegram, maybe their website. But I just told you four different places to go and none of them might be guaranteed in like getting the

results that you actually want, right? So it becomes more of like a fragmented experience, right? And the way I thought about it when I was a reporter is like I'd get so many pitches to my inbox. Before starting token relations, I was at TechCrunch and before that I was at Blockworks. Um, and the problem is like I would get so much inbound and it wasn't like these things weren't important. I was just one person. I only have so much bandwidth and like there's other things that might stop me from covering a specific announcement. And so what if we could take all these things and put them within one place so you could get up to date on a bunch of different ecosystems. And that's essentially what we've done. You know, we work with some of the top blockchains in the ecosystem from like Salana to

Avalanche to say to Injective to Polygon, Aptos, you name it. And so what we do is really just put it all in one place, make it understandable, make it accessible, and really give the ecosystem a way to be educated and more long-term thinking. And then if you don't know about it, you can also learn. So sweet. Yeah. And and and how did you how did you uh meet Pomp to start this business? What's the uh what's the lore there? Yeah. So I was a reporter for a long time, as you know. Um, and I covered an exclusive for him years ago and then we touched base probably a year and a half ago now. I'm trying to think. Yeah, at the beginning of 2024. And uh, wish you the best with

token relations and with talking tokens as well and Crypto in America. Uh, you're the only person that I know that has like two podcasts. So, uh, good luck. Thank you. Great work. Yeah. And, uh, see you in the city soon. Yes. Thanks, guys. All right. Byebye. Thanks, Jackie. Yeah, they're doing great work. I mean, she has just the pulse on um she has the pulse on Crypto America. She has she has a pulse on some of the bigger L1 ecosystems. Um they think data products. So, uh yeah, that was fun. The Elizabeth Warren comment was was pretty funny.

Yeah, I I think you know it's a pretty pertinent observation that there are no anti-crypto voters. So, who is re Elizabeth Warren really acting on behalf of? It just doesn't doesn't really make a ton of sense. Um, like she's constituents, man. The constituents. She's acting on the constituents that don't exist. They they exist in her mind. They, you know, she she thinks there's this anti-crypto sentiment out there in the wild. Look, people don't want to get scammed. I understand consumer financial. I I do think that there are people now that look at crypto and they're like, "Oh, this is just a way for Trump to enrich himself and people are, you know, bribing him through his memecoin and they're, you know, they're they're basically buying

up the memecoin, proving it to him and then getting a backroom deal or or, you know, making investment via his his world liberty financial stable coin." I could see the outgrowth of a segment of the population that does have this disdain towards crypto as a result of a disdain for Trump. I am.

Yeah, look, normally I I let our good friend Arthur Hayes, our resident macro analyst, ask the macro questions, but yeah, I'm I'm since he's not here, I'll step in as the macro analyst. I'm excited to talk to Felix because I have kept up with some of his uh his takes. I think he's great on forward guidance and I think he's got a a finger on the pulse of macro these days and there's a ton going on. Look, I I for one uh did not follow macro for too long. And I think now, you know, it's just unavoidable because you look at the dog wagging the tail of crypto, how can you not look at overarching liquidity conditions as an indication of where crypto is headed? If

you want to look at is crypto going up, is it going down, is it going to go sideways, and when, you have to look at the bigger liquidity uh picture. And I think macro is is just that. So I'm extremely excited. We're gonna talk to Felix about um obviously the interest rate environment, the trade after the trade, which means you know the initial trade once there was uncertainty uh was gold. Gold gold flew uh and following uh gold doing quite well. Bitcoin came in and and did quite well bouncing from the bottom of about 76,500.

Yeah. Yeah, you know what's funny is I had Jordy on and and he talked about it as well. Uh Jordy Alexander from Seleni. We spoke about how um you know there's a couple times in the year to kind of pick money up off the floor and that 75 78 level was part of it. Um so I think we're about ready. Um we'll get him up when when it when uh he is up on the stage. Get him into the meet. Felix, good to see you, man. Uh thanks for joining us. big fans of your podcast. Also had Arthur Hayes on at a similar time that we did when he was gigab bullish and everybody was not. So, it's good good to see you, man.

Yeah. Thanks. Happy to be here. Big uh big fan. Make sure you're unmuted in in Google Meet so we can hear you. Oh, there there you guys hear me. Okay. Nice. Yeah. Happy to happy to be here. Big fan of you guys' work and uh yeah, excited to chat. Yeah, man. So, Robbie is our local macro analyst. Guy listens to the All-In podcast. He listens to Forward Guidance. He listens to all of Bessin's speech. So, I'm gonna sit back a little bit on on this one and uh see what Rob's got for you, Felix. Sounds good to me. I don't have anything too specific at this point. I I do tend to tend to think of macro as the dog wagging the tail of crypto because it's just even if if you're looking at the crypto asset class and maybe it's you know a few trillion

that's that's pocket change in the grand scheme of of things and so the bigger liquidity picture is is uh is is what leads the the charge and kind of dictates the show. So when when you think about this is that really the case? Can can crypto do well despite, you know, global liquidity coming out of the system? And then maybe we'll get into, you know, whether or not you think liquidity is going to be added or taken out of the system. Sure. Yeah. I'll start off by saying that I think there's there's too much of a focus on within the realm of global liquidity in terms of what the Fed and central bank policy makers are doing. I have completely shifted a lot of my macro focus towards the fiscal side of

things because that has actually been the driver and that is why you've seen Bitcoin do so well since 2022 even though we've seen the fastest hiking cycle in history. That is very counterintuitive and that's also at a time where we've seen the dollar absolutely surge as well. I think that caught off guard a lot of different people because they were too focused on oh the Federal Reserve balance sheet is coming down. they're doing QT, they're hiking rates. There's no way we can have a risk-on environment for for crypto and Bitcoin. And the last few years have completely proven that case that we can. And that's because we're living in this world of, you know, you've heard it called fiscal dominance. And I I don't know if I'd go as far as that, but I would say that we are, you know, heavily at the whim of the fiscal impulse now.

And that's that's one of the biggest drivers that drove my my bull thesis for Bitcoin back in at the lows of April was looking at the fiscal dynamics of things. So, I totally think that we have a lot more upside from here based on those fiscal impulses. And we can get into that if you'd like, but overall I would say is that, you know, there's it doesn't quite matter as much what the Federal Reserve balance sheet is doing or or what the Fed is doing. That's you can quantify it. And it's it's it's been a bit of a sideshow compared to what's really driving things, which is just these huge fiscal deficits that have been running in the US since CO. They they've had the largest fiscal deficit.

Um, and now we're in the point now, and this is something I talked about in that original Bitcoin poll thesis, is that now we're having every other country in the world start to join the party as well, and they're going to increase their deficits. Yeah, we we had uh Arthur on the show and and um we also brought up with him this question where I we had seen Scott Besson say something that you know the countries that are in the deficit uh versus the countries in the surplus are actually in the stronger position when it comes to trade talks because the consumer buying power exists here and we can always you know uh bring the demand to another supplier and so you know when you're looking at the deficits who do you think is in the stronger position when it comes to some of these trade

negot negotiations. Do you think the it's really just a song and dance to try to, you know, continue the narrative or do you think there's a deal that's going to be done here? So, I think it's been an interesting sequence of events where, you know, we're talking, I was talking there about the uh the fiscal deficit, now we're talking about trade deficits, which are, you know, you know, you hear this talk about twin deficits. That's what we're referring to here. So speaking about the trade deficit side of things, we've seen this interesting sequence of events where when the Trump admin came in, there's a lot of focus on the current account deficit, which is goods coming into the US and then dollars going out and that mechanically leads to a capital account surplus on the other side of things because those dollars are going to the rest of the world and then you

know for the goods that are coming into the US. So that is the mechanics behind why you've seen such a huge current account deficit. And now we're in this situation where they want to find a way to rebalance the terms of trade or the balance of payments. And so the original approach, Liberation Day, was all about tackling the current account deficit side of things. let's put on a bunch of tariffs so that we can narrow down the current account trade deficit and therefore also narrow the capital account surplus and as well as the the current account surpluses of those other exporting countries like like China etc.

So it's been this interesting situation where we've started to see the limits of that approach. We've seen how you know you can't just go out and just tariff the entire world. Um you know there there's there's diminishing returns to that approach. So, we've seen them, you know, originally liberation day saw 30% effective tariff rate. We're we're now with this walking back at around, I think, 15ish%. Assuming that the uh the litigation in the courts remain and and these act those tariffs actually stay, we're around 50%. And I think that's a level that global trade can work around and digest and alter to, but I think there's limits to that approach now. So, I think what's really important, this is something actually Arthur Hayes wrote a

piece about recently. I don't know if he talked about it on the show, but he he's been on top of this, which is, well, what if we focus on the capital account side of things. What if instead of just trying to tariff goods and squeeze the consumer, we just lower the capital account surplus side of things? And that looks very different. And it and it squeezes very different people. It does not squeeze the consumer. It squeezes people with a lot of assets, especially foreign asset holders of US assets. So, we've started to see hints of this start to percolate in in in first off the fiscal bill that's going through right now. There's some hints in there where they're talking about taxing remittances from the US to the rest of the world.

There's a lot of these different crosscurrens and I think this is a much more tenable approach to what they actually want to achieve which is basically to they they want to narrow that that deficit one way or another. They can go about it with the tariff side of things. We're seeing the limits of that now and that's pretty much played out. So, I think we're going to see this this pivot towards the capital. You know, I'm talking about capital controls here. Really, I'm saying that let's put up, you know, headwinds to make it so that people don't want to own US assets. And this to me is is the big next driver of global capital flows. And I think that's where Bitcoin sits at a really inter interesting intersection of it all. Right. So the the thesis is that people foreigners particularly aren't are forced out or taxed heavily on US

equities, land, bonds and therefore they find an alternative asset class to store wealth. Yeah, exactly. And so that can look like a lot of different things. Obviously one of the huge benefactors has been gold which has been on an absolute tear uh for good reason today as well. Yeah, exactly. So, you know, that's an asset class that is getting the bid from central banks because central banks have foreign exchange reserves. They they they hold them strategically. They're not at the point yet where they want to own Bitcoin. I think that's a discussion for a few years from now. But we're seeing that in gold. We're seeing that in the euro, which is probably the the closest currency competitor to the US, even though it's still very far away in terms of its ability to be a reserve currency.

But still, you're seeing that diversification. And my argument is that perhaps a level down from central banks, you know, talking about pension funds, insurance uh firms, and the like, I could see them start to diversify a little bit more into Bitcoin, too, because let's let's frame this around what Bitcoin has been for the last 5 years. It's it's basically just been a a risk- on high beta correlation to US equities, right? So, within that dynamic, it it's been hard to really sell it as a as a as a unique asset. I think it's just been, you know, just a high beta play. But now when you when you incorporate what I just talked about, which is that we're going to put capital controls on the NASDAQ, on the MAG 7, I think that's still coming. It's a multi-year trend, right? Like we can have short-term bounces like we're

seeing right now for sure. But in terms of of where the flows are headed for the next 5 years, I think the the case for Bitcoin starts to really emerge right now because you're seeing, you know, you don't really see capital controls on Bitcoin, right? it it it's more so going to be the the benefactor of those diversification tailwinds. So I think this is all coming together in a lot of different crossroads right now. Yeah. So Felix, in the very beginning when when you were talking more about the actual um you know fiscal uh deficit and dominance side of things and then now into the trade thing, one thing that you said that stuck out that I think is uh compelling to people is that the actual liquidity flows you think matter less per se than some of these more intricate kind of fiscal details. But one of the

charts that gets the people the most bullish on crypto Twitter is just mapping the M2 and putting the Bitcoin chart over it and being like, "Look guys, there's an 87day lag. It happens every time." So, so are you saying that this is like this is one of those correlation does not equal causation type of things or or saying that uh that the reason for Bitcoin's potential future success um you know is is more entrenched in these u you know let's just call them more complex reasonings than smooth brain can just go like look chart go up number go up type of thing.

Yeah totally. Um, so yeah, I would say it's a it's a spurious correlation. And when you talk about spurious correlations, what it means from like a statistically trained perspective is that there's a third variable driving it that is unknown in the statistical analysis. So my argument, and I wrote this in that that piece again as well, is that Bitcoin is a global liquidity asset. And so the reason it's been driven so heavily by the US side of things over the past few years is if you just look at fiscal deficits as a percentage of GDP, the US is at 7% of GDP. This is typically what the fis what the US government runs during a recession. So we're running a recessionary fiscal deficit during a positive growth regime. So no wonder

it's been the key driver. But now you look at the rest of every other country. You know, I'm I'm in Canada. our fiscal deficit of percentage of GDP is only 2%. And people are shocked to hear that because they think oh yeah up here in you know the socialist communist regime of Canada they must have a huge fiscal deficit but no it's been 2% versus US is seven and so my my bullish dynamic is that every other country because of the impact of what Trump is doing in terms of tariffs and you know talking about every other country trying to increase their percentage of spending uh for NATO and the military etc. every other country is going to come and meet the US at those higher levels. So, how this incorporates into the M2 dynamic, first off, my main criticism with the M2

analysis is that it yeah, it's it's it's quite noisy. I mean, there's plenty of times in 2022 where liquidity quote unquote was surging higher and Bitcoin wasn't. It just so happens that we're in this regime right now. And so my argument is that the key driver is these these powerful fiscal impulses and that does trickle into M2 because when you have a high fiscal deficit that's creating, you know, higher interest payments. Higher interest payments leads to income for people that own T bills that leads into higher M2 growth. So my main criticisms are just a lack of specificity in terms of what are the actual drivers. So yes, for the most part, I feel like it's it's somewhat useful as a heristic to just have a look

at what M2 is doing and know that you're probably on the right side of things. Um, but for practitioners like myself who are very passionate about macro. I'm more interested in diving deep into what are the actual causal drivers because to me again, that's just a a spurious correlation. So, you know, I don't have any big issues with it. I I do have big issues when people start to like look at every single tick and be like, "Oh, look, in a week from now, we're going to go down 4.458%." And it's like that's just ridiculous. Yeah, man. So, if we're looking forward then to, you know, the end of Q2 into Q3, um, you know, I I'm quite bullish. I think you are as well, but you put out a tweet recently that said, uh, you know, July could be sketchy. Why is July sketchier than other months ahead? Like,

what's particularly got your attention there? Yeah, so there's a few few different short-term things. So yeah, put it simply 8 to I don't know 16month time horizon. I'm obscenely bullish. Short-term here, there's a few different crossurrens that come together in July. So the first one is the positive economic data is in a bit of a weird I've been calling it a mirage right now where we've seen this today. We got the Atlanta Fed GDP now print and it's at like 4.6% growth which is just absolutely insane. And a lot of that is just due to the whipsaw effects of tariffs. So we saw the negative print last quarter that got everybody in a fuss and calling for a recession. And that was just because of a huge amount

of imports which decreases GDP mechanically. And now we're on the other side of things where we're seeing a huge slowdown in imports because everybody's already imported everything in the leadup to the tariffs and that increases GDP. So you have this sequence, you have the the pullback of the tariff announcements since liberation day, which is improving sentiment and business decisions. You can see this in the ISM survey data. So all of that together is creating this I wouldn't go as far to say like artificial strength, but some some whipsaw dynamics positively, which we're in the midst of right now. And and my belief is is that'll start to end in July and August.

So that's the first one. It's just that we've seen a whipsaw positively and then I think we're going to, you know, slow down a bit more again here. So, there's that. There's the tariff, you know, announcements in terms of the this 90-day pause that's coming to a head in in July. We've already seen I saw a headline right before jumping on that they're trying to get these deals done, you know, get get people to have their get other countries to have their their proposed deals on the table in the next week or so. So, a lot needs to happen very positively, very quickly. you know, trying to negotiate trade deals with a 100 countries in the next month is a pretty insane. Yeah. Who's doing that?

Who's gonna be on the phone? It's certainly not going to be Trump. That's for sure. Yeah. Exactly. So, there's there's a lot of just tail risk, I would say, in terms of just not meeting expectations. And then the last one is the debt ceiling situation, which is the X date. So the day where basically no matter what, Congress needs to figure out a solution and raise the debt ceiling because the extraordinary measures and running down to the TGA account and all that, you know, Treasury wonkiness wonkiness to keep them afloat ends in August. And when that happens, basically the Scott Essen and the Treasury are going to need to go into the open market and issue $700 billion of of Treasury bills. And somebody needs to be a buyer of that. And the last time that happened, the buyer of that was the

reverse repo facility. So back then, um I'm not sure how deep in the weeds your audience is on on on these like acronyms and facilities, but basically there is, you know, I think like $1.7 trillion sitting in the reverse repo, which is money market fund money. They're the ones that are buying T bills. So they were able to fund the rebuild of the TGA because of that RP. This time the RP is at like 120 billion. Um it's it's it's basically not going to foot the bill. So that needs to come from the open market. So you're going to have this this sketchy moment I think in July and August where they will need to get they'll need to issue $700 billion and basically pull that out from the open market. And it it'll all depend on who funds that and what they have to sell to

fund it. But that will create some some risky scenarios. But you know there everybody's aware of this. The Fed's aware of this. Scott Besson's aware of this. So I do think they'll have some sort of plan which we're not aware of yet. But it's still something to consider. So those three things just create a lot of dynamics for disappointment versus expectations that I think is important to be wary of. But I'm not too concerned because I I do think they'll all be pretty well resolved. Yeah, as I was saying prior to you hopping on, Jordi from uh also kind of said something similar with regards to a potential slower summer than most expect. So um seeing some seeing some confluence there. Yeah.

So despite despite this kind of near-term rockiness in in July and August, you you still remain over overall bullish. So is that mostly due to the capital controls that you expect the US to place on some of these other countries and and therefore liquidity phase in or is there other fiscal impulses maybe from you know Canada or other countries that you're expecting will will drive the market in a bullish direction over the next you know 8 to 16 months as you said. Yeah. Yeah. So correct to all of those basically. So there's a few different crossurrens that come together pretty nicely. So you have every other country in a reaction to the tariffs is unshackling themselves from fiscal. So the the big example of this

right now is Germany where they're pushing through like a $500 billion fiscal bill. Um a lot of it is like defense spending and military spending and that sort of thing. And alongside that they've they've taken off what they've been call what they have is this debt break uh regulation in in their laws where they can't run a certain percent of uh of a deficit. I think it's like 0.5 percent or something very very low. So they've taken that off. They've unshackled themselves. Um and so you have this dynamic of all these different countries start to incorporate higher fiscal deficits basically. Um yeah, same in Canada. You know, we just had an election and and Mark Carney is on the platform of we need to invest in our country and really just modernize our economy. So it feels like every country

is going through this right now. So you have again just think of this idea and at the same time when I wrote that piece originally this is where there was the narrative of the of the fiscal deficit in the US was going to come lower. There was the idea of Doge and all this stuff and we're starting to see that Yeah. That's not going to happen. We're actually that's completely couched. Yeah. Yeah. If the bill passes as it is. Yeah. If the bill passes how it is, it's going to actually go from 7% of GDP to 8%. So that's increasing. And then you have every other country that is going from the the 0 to 2% range to probably like five or something like that. So you have every other country coming to the party to run their economy hot. And then so you have that you have the capital

controls dynamic which is going to lead to a multi-year decline in relative overweight ownership of US assets into other things. So I'm mostly interested in owning other things. I'm I'm super bullish on gold, Bitcoin. I I want to own, you know, those rest of world equities. Um, you know, if you're interested in like, you know, foreign bonds, those are looking a lot more attractive to US bonds right now. So, I just want to be on the other side of things of where all the money is going because all the money is in the US right now. So you have yeah high fiscal deficits, you have this dynamic of capital controls which I think is a unique benefactor to Bitcoin all coming together that these are these are very durable changes that obviously you know

we can get these pullbacks in the summer like that. But I think it's it's it's the recipe that's setting up really nicely for for Bitcoin to show what it was made for which is just this you know immutable asset that's not at the whim of these individual countries. So it just yeah it feels like a really clean trade. I I like owning it alongside gold. I think there's, you know, there's nice there's nice complimentary ownership of both just because of their how their correlations sit. Like, you know, we've seen a little pullback in Bitcoin and gold is up like almost 3% today, for example. So, yeah, it just feels like they're all coming together and and they're they're very long-term changes. It's not just going to be like a quick blip. So, it's it's trying to just sit back and let it work its way

through and, you know, not get too chopped up in these summer months, which, you know, could be a little bleak. And, yeah, it's it's looking good on that long-term horizon. Yeah. Quick quick followup on on these fiscal deficits. You mentioned America's already at a 7%, but most of these other countries are somewhere between 0ero and 2% fiscal deficit. Why is it that this is a follow the leader sort of dynamic? If if America goes up, is it because they're trying to keep their currencies in balance? Why is it that the rest of these countries are going to start to run their economy hot as well? And is this a there's a follow-up to that question as well around, you know, the national debt and kind of a slippery

slope to hyperinflation. Maybe you can get there. We'll you know, we'll pause after this. You know, the the fiscal deficit follow the leader dynamic. Totally. Yeah. bringing up the point of the currencies is important because that is that is where a lot of these effects will actually net themselves out. So, you know, a lot of what we talked about at the beginning in terms of trade could easily lead to a regime for the next couple years. And this is actually another bullish factor, which is that I think the USD is in a pretty major cyclical downturn. I think it's it's you know obviously we'll see like small oversold bounces higher but I I think you know it's I've seen some takes some analysis of like a 20% decline in the US dollar on the table so I think that's totally reasonable um and a lot of the

reason for that so you have to FX is super confusing because there's always like a pair to it so if you think about and it's also an expression of rate differentials so we'll walk through this here which is that okay other countries are going to increase their fiscal deficits spend and more money. Um, that is going to lead to higher inflation, higher growth, higher bond yields, which is going to lead to basically that relative to the US, which is already at that level. So, they're going to catch up. Um, and so overall, you're going to see because of those higher bond yields, more capital going back home to these countries because on like an FX hedge basis, it's it's a lot more attractive for them.

So yeah, there's there's that dynamic basically where the impact and results of the trade is going to lead to these recalibrations in FX currencies. So you have that plus you have the geopolitical dynamic of you know being like oh crap we can't rely on the US for everything anymore. Like it is a fact that the US has been footing the bill for NATO for too many years and you know countries like Canada where I'm at need to step it up as well. So we need to do that. We need to increase our our defense spending. we need to increase, you know, our our investment into just being more resilient as individual economies across the world. So, there's a lot of fundamental reasons, there's geopolitical reasons. Um, and then there could be yeah, like currency agreement reasons as well, which is that to to net

out in the most clean manner everything they want to do in terms of normalizing the trade situation is a major weakening of the US dollar. So, a lot it's it's not one answer. It's a lot of different moving parts, but they all go into that direction. Um and yeah, happy to talk about how that leads into this this fiscal path situation he talked about in in hyperinflation. Yeah, because Ray Dallio and you know some of these guys are talking about this inevitable debt death spiral that is caused by us printing money to finance our own debt and interest rates continue to go up as we continue to finance that debt and we have to print more money and the cycle continues. You know, it feels as you described the situation a runaway train.

We're at 7% now. That is increasing. We're not going to get to this 333 plan that Bessin and Dalia are trying to get to. So, where where does this end? Do we ever bring it back down to earth or do we just is this really a runaway train? Yeah. Yeah. It's it's such a difficult conversation to have because yes, the fiscal path is unsustainable, but it's probably also unsustainable for a lot longer than most people think. So, you know, if you just look at interest payments, right? If you if you look at it on like a unnormalized basis, like just the raw numbers, it's it's an upward, it's just a vertical line right now. But when you look at it as like a percentage of GDP, we're actually still

within a range like we're not at all-time highs yet. I think we're still roughly around where we were in like the 70s, which was the last time we saw really high bond yields. Um, so within that dynamic, we're I would say there's still a lot more runway. It's just that the path is unsustainable. And you know, I think Chair Powell is pretty correct in how he describes this, which is that the path is unsustainable, but the current level we're at is pretty sustainable. Um, so yeah, you know, you if you're running a 7% of GDP deficit like we are right now, and then you go into a recession, suddenly we could end up with just because of like the automatic stabilizers that occur in a recession, we could easily see the the deficit double to like 15% of GDP very easily. And in that situation, it it's

it's it's also a bit sketchy, but it's just about the the path of how long you can sustain that. Um, so I think overall, it's it's not sustainable, but it's more sustainable than most people think in the short term, is my opinion. Now, there's also different dynamics and policy choices that they can make to to keep this ball going for a long time with the end goal of running it hot, which is sort of what we've seen has been the policy pivot of the last month where we've seen Scott Besson come out and say we're we want to run high a high growth regime and outpace the debt because the debt is fixed, but the the GDP is a nominal term, a nominal metric.

So, you can run the economy hot and then suddenly the debt load becomes a lot more manageable because the levels stay the same. it's it's fixed at those levels. So the goal is to get to that point and basically just just run the economy so hot that the debt becomes manageable, but there's a lot of speed bumps that can hit in that process. So one of the big approaches we've seen is this focus on issuing T bills rather than long bonds. So this has been the the policy that originally is Yelen who implemented it under the Biden regime and we've seen a continuation from Bessant despite him being a critic of the policy which is pretty funny. But overall it looks like you know there's no plan to increase coupon issuance meaningfully on the long end for at least the next year or so. So this the

shift to T bills. There's almost unlimited demand for T bills um in the world. But the the trade-off for this is higher inflation. You know T bills are basically printing money versus if when you issue long bonds they're a lot more like a a risk asset in their in their characteristics. So you can do this for a long time. Um, but it will it will include higher inflation. And it's just I feel like it starts to become more of like a social dynamic in terms of like how much can society be okay with that before it becomes, you know, you start to vote people out and that sort of thing. Yeah. Yeah. Especially with the widening kind of wealth gap as well as in these in inflationary times, you know, it just kind of it it affects those in the higher classes in a

positive way. asset appreciation and then those who don't own assets are unfortunately subject to you know likely very little change in wages but higher prices for goods and so just becomes a problematic scenario I mean that's what we saw in 21 um people were were calling for a double in back we're calling soft lending and then a double bubble um not sure obviously we haven't had that quite yet um but subject to change if tariffs do stay on and um you know cause that kind inflationary spike. That seems like what the Fed is basically bracing for. Um, so that kind of brings me to my last thing for you, Felix, before we let you bounce off. Uh, if you were in control of the

U, the US tariff policy, what would your policy be and why? And perhaps it's what changes would you make? What indicators would you look for to inform your choice? What what would your tariff policy be now? Yeah, I' I'd go after the capital account surplus. I think it's it's so much more feasible for society to buy into that because what are you doing? You're taxing rich people. You're taxing rich people from other countries. Like that is just a win for almost everybody versus if you're going on the tariff side of things, what are you doing? You're you're taxing goods that people need and you know, you're taxing pharmaceuticals and and that sort of thing coming from China. Like these are people thing people, you know, these are things people need to live every day.

So, I would I would heavily focus on the capitalist account of side of things. And I think that's where it's headed. Um, yeah, I would I would I would put in more stringent capital controls to get people to not be so overweight US and and that would, you know, it's it's it's the laws it's a law of nature, balance of payments, which is that if you do that, it'll lower the current account trade deficit as as well without the need for tariffing your allies and that sort of thing. So I think that was a huge mistake is is the approach they took. I' I've I've kind of held this view that the issues that they're trying to solve I agree with. I think this this huge trade deficit that we're that the US is running is is not sustainable. You know

China has been taking advantage uh other US nation or sorry Asian nations have been taking advantage by having artificially weak currencies. Something did need to change. It's just the approach of it has been very not great and we've seen that in the walking walking back and so I do think that they're on a better path now if they focus on you know running it hot from a fiscal perspective paired with some of these capital controls on the capital account side of things. I think you can get to a more durable trajectory to normalize these these these balance of trade issues without getting, you know, the middle class to be the the bearer of it all. I I think that was a

very uh significant mistake. And I I it does feel like they're they're hitting in the the more correct approach to it now. And that approach is very bullish Bitcoin in my opinion. So, I'm not mad about it either. Do you think uh these other countries are kind of bracing for that and saw that saw that coming and you know that was that led to the creation of bricks? Do you see bricks as a real threat? Maybe a little bit. I mean yeah basically every country is trying to diversify out of the US dollar a little bit. Um whether that's gold, whether that's a bricks thing, whether it's just owning more of other currencies like the euro. Yeah, the trend is that in that direction. Absolutely. um this yeah this dynamic is not sustainable especially

when you start to weaponize the US dollar like they did with Russia. Yeah. You know suddenly that was the moment I mean that's when like if you look at a correlation of gold to real rates that was the breaking moment. Suddenly you know for decades gold has been correlated to real rates. So you know when you have negative real rates gold does really well and suddenly we got into this regime of really high real rates and gold was still doing really well. And you can basically look at a chart of the day that that happened where they weaponized the US dollar swift system as the moment where suddenly every reserve manager in in the central bank was like, "Oh crap, we need to diversify our holdings. We can't just own US treasuries."

Felix, one one last question for you. A lot of the things we talked about today point to a weaker dollar through running the the economy hot. the the one counterfactual here is this dollar milkshake theory that you know Santiago Capital talks about and and on the face of it it it seems really really compelling that the dollar will get stronger through through like three different counterparts. Do you think there's any merit to the dollar milkshake theory and it if if so why or why not? Yeah, I I was a big fan of the dollar milkshake theory still am. Um, I don't think Brent predict thought that the US would be the one to catalyze this regime shift. I think he thought that they

would be the ones that would be the last to this table. Um, because again like the approach of doing what I said in terms of capital controls is a major systemic risk to the reserve US reserve dollar reserve hedgeimonyy. So I just I think he thought that it we wouldn't get to a moment where society and policy makers were at a point of being willing to do this. So I think it I think it does question the thesis in in a lot of different ways because the the issue was or the the dynamic that was originally there for the military theory was that every other country is just in a so much worse situation than the US. But yeah, exactly. Suddenly we're in the opposite regime. We're running like the US is running the highest fiscal deficit. the

US is the one saying that we want to, you know, lower the capital account surplus. So, yeah, I think you have to revaluate it in a lot of different ways because yeah, the the fundamentals have shifted. Um, yeah, Felix, thank you for joining us, man. Appreciate your time. Love your work and uh we'll have to get you on in like three to six months and uh do a do a recap of what's going on because it feels like every week is just accelerated and there's just something going on. So, yeah. Thanks, guys. I really enjoyed that and uh would be happy to come on again. Speak to you soon, man. Thanks. See you. Cheers, man.

Yeah, man. There seems to be this recurring uh confluence of the summer being up. Yeah, you know, you're starting to sound like a bear. I mean, that was the most bullish macro conversation I've had in a while. Exactly. Exactly. And so, yeah, you may get a little bit of a slowdown July and August. Maybe that I mean, look, we we're in the summer right now. It's the first month of summer. And I I do think that uh Q3 is poised for just more of what we've seen. Now, it does feel like it's almost like that last rally before a mini downturn, like because we did get, you know, we got uh uh some some

moves upwards over the last few months. uh and that started to to dwindle and it hasn't had as much momentum as it had earlier in in kind of the spring. And so I I think there is some truth to that, but ultimately that is enveloped by bullishness in the spring, bullishness in the winter, and so on. And so, you know, when when you're considering this, like how short term are you thinking, right? Are you gonna try to trade the top and and take some off the table if you're if you're expecting a summer downturn or are you thinking just ride it through? Uh totally just ride it through. Yeah. Well, been holding for way too long to like start to get into macro predictions on the one month time

frame. But right, you know, like uh I I I think it's helpful context to understand as an investor as to like the more like I mean this being the third the third time being in like a cycle per se. Like my goal is just much more to like make like one trade like you know one like big trade, not like one asset but like one big like buy low sell high like vibe where it's not just like flip flip-flopping. Uh, and so like I think just getting caught up in in the, you know, summer slowness is just like a flip-flop. Like to me it's like, yeah, okay, the summers are always kind of slow. It doesn't mean it has to be like that. Things could change, but basically what these guys are saying is that based on the the current, as Felix said, kind

of whipssaw that, you know, the summer being slow, you know, tends to make some sense. So anyway, next we got Loris from Multiplier. Uh, let's get him up here. Excited to to hear from Loris. And uh I I know that these guys have have been shipping really really cool consumer products uh on on Abstract and more. So why don't we pull him up and let's get started. Hey everybody, just doing a little mic check. Yeah, man. I think you're good on my end. Um you're in the city, right? Yeah, I'm at the Alchemy HQ in New York.

Uh shout out to Glenn for actually giving me a conference room. I'll try and find a place to settle down. Yeah, I know Glenn is a good guy. I didn't realize that. He's a great guy. Yes, he is. They have out there, right? Oh, it's absolutely amazing. Yeah, they have an office here. It's It's a really great office. Yeah. Cool, man. Well, uh, welcome to the show. I know it's your first time on. Um, man, what is Multiplierfun? Who is Loris? Let's just start there. Then we got a ton of good questions for you. Yeah, let's let's just shoot into it. Started off my career in trad 2021.

helped uh a few D5 protocols when it comes to mechanism design. Started off a little dev shop that actually turned into a uh initially we started building an MT finance protocol. Raised the preede round from that from a lot of great angel investors and VCs but MT Finance kind of died. So I think I made a Twitter post about this like hey like the market's dying you know there's product there's market you get the product market fit. So we had to figure out what to do next. So, I was talking to a bunch of people on, you know, what we can do, what we can figure out. We decided to like build like this gamified experience where people can win cool stuff, uh, in a way where we don't hold inventory. And that's something we launched on Blast, Rev Blast came out.

Shout out to Zed for, uh, sorry, Jess for, uh, actually convincing us to go to Blast. And, yeah, ever since then, we've been on the consumer app trail. Uh, and that kind of led into what Multiplier is right now. and what multiplier will be a few months down the line. Yeah, man. You know what's funny is I was looking at some of your tweets and um on your uh on your fundrais tweet and then your giving capital back tweet, you wrote just quote unquote I up, which is kind of a banger way to start this tweet. Um what don't mean to just throw you on the spot here, but what were some of your takeaways looking back? What advice would you give to somebody raising capital in the space?

Uh well to anybody raising capital in the space my first piece of advice would be and bear in mind we've only raised the preede round because we've been a cash flow positive for the past 18 months with every single thing that we built but uh raise money what you need to and all I'm going to say about you know that entire tweet I really don't want to talk about that much but uh that tweet got 250k impressions you know Smokey was replying to it Jesse retweeted it right so L1 one marketing budgets and champions. That's all I'm going to say. You know, distribution is king.

Cool. Cool. Okay. Well, um, multiplayer has been pretty pretty popular on Abstract as of late. Um, and you have some news for us, man. So, um, let's just start first before we dive in. We'll dangle the carrot just a little bit longer. Um, what what made you guys choose Abstract to start? And uh why was abstract attractive as a builder and and why is it? Yeah, sure. So there's two ways to think about it. So ultimately multipliers is a DeFi protocol, right? There's two ways to think about it. Uh we use like two positioning statements. The first one is the people's market maker because people can curate coins. users can curate coins

and if people play the games that we build or third party devs build uh every single wager injected into the app injects lick into the LP of the token making go up right so we've had multiple case studies on abstract where we've you know curated a coin and made it go from 100k to 20 million in just like a few weeks right so a good way to think about like the entire platform is that we're an affiliate platform for onchain volume and when deciding to go to abstract Uh what we wanted it was you know a full like tabula like something that's completely fresh something that's completely new where we know that you know devs are going to be launching coins and where we can effectively test out the mechanism that we built out that

we learn to build out from the previous products that we build in a completely fresh environment. So it was a calculated risk on the team and I think the team has performed tremendously well. I can rant for 10 or 15 minutes. Why? How abstract kind of like took the blast model and extended it through, you know, gamification. We all we knew those things were coming up before we launched. And as a calculated risk, as a great launch point for the business that we're building, the protocol that we're building, I think Abstract was, you know, it it was the perfect environment to get started.

Beautiful. All right. Okay. Well, let's unveil the news then, Loris. Um, we have Multiplier.fun, the people's gaming, gambling, and fun platform. Yeah. Um, so more or less, uh, what we've always wanted to do was build our own games and every with every single game whenever a user wagers that link gets injected in a token. So I don't want to repeat myself too much here but ultimately we see ourselves as positioned between launchpads and dexes or more mature trading venues in the liquidity stack right so we see our see ourselves as a gamification layer for you know token launches pre-bonded tokens launch pools etc so we are

actually we have effectively closed a deal with uh a2 billion market cap protocol to become uh a gamification layer for them I can't say who at this point in time but ultimately What we want to do is like we we our products have generated $24 million in revenue over the past 18 months. We generated $6 million uh dollars in net profit over the past 18 months. I don't think a lot of consumer teams in crypto can actually you know testify to that kind of track record and that is that that's coming from the games that we built ourselves and it's all positive self fun right once again every single dollar spent is used to pump tokens in an ecosystem right so it creates this circle reflexivity so what we want to do is like partner up with a with a major

infrastructure partner in a major ecosystem so that we can take our results take our technology take all the incentive design the mech design that we've developed over the past 18 months and just trying to 30x this because we know that it works and we know I've made an outsized impact. Sure. So, sure. So, there's three dashboards that I we obsessively check every single day in the team. And first of all, when everybody joins the team, we're a pretty small team. We're just eight people, right? Uh there's a great book called the mom test. It's like, you know, an old SSF, you know, product development bible. Everybody has to I I reread it every single year. We do customer development research, user research on a on a bi-weekly cadence. But what we kind of like figured out over the past 16

months is how to like get really good conversion rates, right? So for our last product, the one that effectively was a pre-built, a multiplier where we took that mech design where we learned that hey this people's market making system works where like these, you know, how can we pump assets without holding those assets in our inventory and taking that on that inventory risk? Well, we wanted to build like a cool UI router, right? So, we're playing around with things and tinkering until we got to a 40% conversion rate. And even on multiplier right now on abstract, what we have is whenever a user lands, there's a 52% chance that they will convert into an activated user, which is honestly I would have to say uh the biggest accomplishment that we have in the team uh like the revenue etc. that is you

know irrelevant. revenue can change, you know, markets can die and narratives can die, but that's like a huge accomplishment on top of like week on week retention retention cohorts. And I I forgot the name of the guest on your on your podcast. I think it was like somebody five or six weeks ago is that really there has been a like a narrative shift or a meta shift where you know even investors are encouraging builders hey just you know don't talk about the token at the very start figure out how you can add value and actually make money and that puts you in you know position of power whenever you want to execute on broader plays and that's kind of like the the whole strategy strategy that we've had internally with the team make sure that we're cash flow positive make sure that we're de delivering

value. Uh have a hit rate of like 60 to 70% of our PMF hypothesis and only then figure out how you can move up the value chain. So start with an app and figure out how infrastructure perspective it's a it's a it's a decreasing linear curve, right? Um, I'm definitely not going to con. First of all, it's expensive. You know, we're we're we we we're pretty meticulous about cash flow management.

Uh, what would make me go to a conference? Like a very superficial answer is all my friends are going there and kind of like makes sense for me to go there from a business perspective. But secondly, it needs to be very well orchestrated, organized. Honestly, the the only three conferences that I like are uh token 2049 in Singapore. I always go to eat Denver and shout out to uh to the Salana Foundation for Salon Accelerate because it was one of the best conferences we ever been to. I mean, I uh I I was just curious about kind of some of your conference thoughts because uh I saw that tweet and I haven't been to a conference out of uh New York City either. You know, there was Dubai that I was like and then there's um you know, there's been a

couple in the last but I'll be at permission list. So, I think that'll be a good builder conference. That's going to be a good builder conference for sure. Yeah. All right. Well, kind of just wrapping up, man. Um, just a random question about some of the direction about the art around multiplier kind of gives like this 8bit aesthetic vibe. Um, how'd you guys settle on that? I think we just like, you know, the entire team is like CT native. It's like we booked our truffle suite, Mangro, uh, Open, a lot of great companies. Like we have a very like CT native culture. We're also we're al also not targeting a user audience outside of CT. Like I'm I'm going to be very explicit opinion about

that. We know exactly the user personas we're targeting. There's several and they're all pretty like cryptonative. So, kind of like the uh I would have to say not necessarily like a cyber funk or punk aesthetic is what we're going for, but we wanted to like create a sense of nostalgia, right? Yeah. And like nostalgia is a common uh mimemetic qualia throughout the entire space. You know, Jez posted this tweet yesterday about, you know, this is where I learned to trade. I think it was, you know, Runscape or something like that. Other people were posting a Yeah. Yeah.

Exactly. So that's kind of like the like the the meta mimemetic quality or like the um cultural alignment that we wanted to go for for the app, right? As we're as we're moving up the value chain and as we're capturing more of the liquidity stack that's going to obviously change a little bit for the app, it's I think it's worked perfectly. Rob, you got anything? Are you out of there? Yeah. Yeah, I'm here. I uh it's been patiently listening. I had some tech things on my side, but I I look I I I think from my point of view, you guys have done it the right way. Like you've you've operated this like a real business. You you've targeted a market.

You've you've capitalized on that market and and you you let the token come later, right? And so you're operating this like a true business uh and you're letting the product suite develop. and I I hope other projects take note and and look at the success that you guys have driven uh and and find success in their own right. Thank you. It's definitely uh it isn't easy. Um but ultimately I think it's also good for like team morale if anybody if any other like early stage builders listening because nothing beats like like nothing is going to you know turbocharge your engineering team by seeing like massively improved metrics, right?

Everybody just wants to ship harder. Every just everybody just wants to execute harder. You're actually talking with real users. Yeah. Right. You're seeing how you're delivering value. Even that value is frankly in our case like uh fi multiplayer finance with like ponzanomics on top. Right. You see those metrics. You see how you know people are enjoying it, the things they're seeing and it's a massive like it it truly creates a spirit of core and I couldn't imagine building any other way. But that's just me, right? Everybody has a different playbook. That's just like the playbook that I've settled on. And I think the market has uh has uh reciprocated that. I actually saw a study just the other day that said uh Nvidia was one of the top five places to work. Um and it they looked at office

culture and longevity and all these things. I was like, "Yeah, no surprise that the stock that's up, you know, how everybody acts, right, is one of the best places to work because all their engineers have stock options." Yeah, exactly. everyone just coming in and you're on you're on mute there in the in the Google meet. I hear you chirping in but but I mean look absolutely right and it's the same same goes for crypto and token prices and engineers are going to be motivated not only by token price stock price but also by user metrics ultimately you guys are trying to you know provide something and build something of value that real people find useful and valuable.

Um yeah def uh what when it comes to like first principles in hiring and I think you know I've made a lot of mistakes and only now I'm getting it right is like you want to find extremely greedy neurode divergent people extremely greedy extremely neurode divergent people but the greed is just as important as as as a neurode divergence right you want people who want to lock in you want people who uh are going to talk about your equilibriumbased risk model with you know a constant product function at 11:00 p.m. on a Saturday, right? If if if you don't have that culture with the team, you're just not going to make it.

Could you explain why neurodeivergence is such an important characteristic to have in in success? Um, well, I think it depends. You know, look, let's be real. We uh we wear like uh anime PFPs on a social media platform and uh we have like a lexicon of vocabulary like a a mimemetic kaleidoscope of concepts that I don't think any like normal person would understand. I think to be successful in this industry you just have to be a little bit weird. But that's the thing that attracted me in the first place, right? I came in with the idea that I'm going to bring the securization stack on chain. At the end of the day, I'm

building, you know, a gamification layer so we can build better Ponzi. Sunchan, you know, we love you, the future of France. Definitely. Thank you for joining us, man. Congrats on the success. Excited for your multi-chain expansion and looking forward to hearing more uh and seeing more of what you guys do. Uh my friends are juiced up about the airdrop, juiced up about the platform. So, uh people have been having a lot of fun. It's just getting started really. This is this is just the first sitting. They're stealing this from stealing this from pump fun. All right, take care. Thanks, man. Thanks for having me. Cheers, buddy. Man, you're not going to find commentary like this anywhere else. All these other podcast

TV streams talking about the success of neurode divergence in early stage crypto tech startups. You're not going to hear those takes anywhere else, man. Pretty good stream for Monday. quite a bit of uh quite a bit of all over the place though, but uh we survived. We pushed through. We made it happen. Um and yeah, I mean, Felix's segment was amazing. Jackie was too. Defi Dojo had just so many fire yield takes. Um yeah, and then Loris just kind of dropped the bomb that they're leaving, not leaving Abstract, but they're they're expanding outside of Abstract. Uh meanwhile, Laio took absolutely under six mil. Uh is down. I lost again.

Really down. We got to put in something on this. Hype is breaking out. I don't know what's going on there, but maybe it's the buybacks. Maybe it's the real revenue in the buybacks. I don't know, man. I think it's this James Win guy pumping a damn out of it. But Rob, fun stream, man. Um, thanks for uh thanks for joining there. It was fun. Hey man. I'm You're not going to get rid of me this easily. I'm not going anywhere. I'll be here tomorrow. I'll be here Thursday. I'll be here next week. And uh we're gonna we're going to keep our production guy real real busy. 247 coming soon. You guys just wait.

All righty, boys and girls. Thanks for tuning in. We'll speak to you soon.