Santiago Santos: My New Crypto Investing Playbook

Transcript

Gold doesn't have industrial demand. 90% of the demand for gold is jewelry and speculative. That's Bitcoin. Everything else in crypto is competing and trying to be a technology stock, but it's not a stock. It's it's the worst of both worlds because it's competing to be a stock. >> There's this kind of cohort of crypto protocols that are not nearly the same value as L1s or even L2s for that or some of these infra, but it's producing significant amount of cash flow and revenue to the tokens with a very transparent open public programmable kind of format.

>> That direct reinvestment into the protocol and into the into the the instrument itself that measures that network's value is closer. Is Is it still not sufficient? What How do you go to the What is the next milestone? >> Welcome back to the Rollup. I'm Robbie. >> I'm Andy. >> Robbie and I met at the University of Florida in 2017 where we first found out about digital assets. >> We learned a lot along the way and we're bringing you face to face with the leaders of our industry. Sit back, relax, and enjoy today's episode. >> What's up, Santiago? >> What's going on, man?

>> How's it going, guys? Thanks for having me on. >> Yeah, man. The great valuation disconnect man. >> It's been a hell of the last couple weeks in the market. >> I should I should have worn my my green Patagonia vest wrapping inversion. Uh you know, the meme of like you're a fundamental mid curve. I think that's where most people place me now that I've been mid curving uh the greatest generational trade that crypto is, but you know, I started being more vocal about the disconnect valuations and adoption in the space. Um As someone that has invested I love venture. I think there's asymmetric opportunities. It's it's but it is hard to justify these valuations and you know, since I started being more vocal about it and saying some of the quiet parts out loud, the

market is just done that. It's down 40-50% and I know I just uh uh which is different than saying I still believe in the technology, I still believe very much in the potential of it, but um there's just certain things that structurally have made it difficult for tokens to capture value. A lot of it is regulatory. Some of it is design from projects that started early on in 2017 and you know, you even saw Vitalik say something that a lot of people have been thinking about as it relates to the rollout centric architecture.

>> Yep. >> So anyways, that's I think you guys have covered a lot of that. I'm here to just hopefully make it a engaging, entertaining discussion. >> Yeah, absolutely. Um you know, I I I think in a lot of ways it's it it must be vindicating to to to see a lot of what you've been saying play out. Um you know, you you also said that a lot of these things are going to get adoption, but may not accrue that value, you know, from that adoption to their token. Um you know, just today we saw BlackRock, you know, this news of them buying Uniswap. Um you know, this isn't coming from the fee switch or anything, but you know, they have a real business, they have a balance sheet, and now there's institutional investors that are taking a look at them and you know,

seeing that as an investable asset class. Does this start to shift your perspective on the thesis or how do you anticipate this particular trend evolving? Well, crypto is an very investable asset class, will continue to be an investable asset class. The question is how do you express that? You want to go long stablecoins? Uh you're not going to buy USDC. >> Mhm. >> Right. Uh so, you have to you have to put numbers on the board. I mean, at some point you start showing revenue and traction and and you're get grounded to reality.

So, I've been positioned on what I think will continue to like my trade and where I'm positioned over the next 15 years, like industries that the crypto will continue to pro- proliferate. It is very valuable infrastructure that is going to replace traditional financial workflows. Uh a lot of that is stablecoins. A lot of that is tokenization. Like, money is moving just-in-time in real-time. That's like just-in-time manufacturing. Just-in-time money. Like, don't overthink it. Now, how The nuance is how do you position yourself? And I think about like crypto like AI is super impactful.

But you want to be positioned in the right side of the trade. What is the not the right side of the trade is infrastructure commoditizes. Like, think about you're using Claude and ChatGPT and subscribe to Manas. And like, you have a suite of productivity that you're paying a very fraction. Like, they're competing against each other and they're investing all this money in CapEx. It creates a ton of consumer preference, right? Cuz you Annie, you Rob, like you're just now way more productive. You don't need to hire three people. What I'm trying to say is that the the cost curve has gone down dramatically for the consumer. That's what technology does. So, you got to be careful to not get too excited in Yeah, AI is going to be totally transformational and crypto

and stablecoins are going to be totally transformational. But are you investing in that the Like, are you going to basically lose your a lot of your money because you bet on the wrong side of that. >> Mhm. >> Right? Like, if if said differently, to wrap like the round the conversation is what do you think outperforms? A bag of venture investments in AI startups or the S&P 500 that is able to fire 30% of its workforce and increase margins? Like, what is a better investment over the next 5 years? Like, what outperforms?

>> Uh >> Might depend how good of a venture investor you are. >> Well, yeah, venture is power law. So, there's only like five venture funds that actually outperform the S&P. >> Yeah, exactly. >> It's probably it's the S&P. >> It certainly is. And that's your And that's your thesis. I remember when you said when you were getting excited about Western Union, people thought you were um you were just the antithesis of somebody who should be a crypto bull. But I don't want to get down that, you know, this rabbit hole too too much. So I'll say I think there's the there's the valuation disconnect. There's the tokens dynamic, which I think people are really interested in. And then there's kind of like where we go. So kind of just around out the the valuation disconnect, we're kind of pushing this idea of, you know,

well, obviously I opened up this up saying revenue meta yada yada, that's obvious. Kind of this convergence point between legacy finance and DeFi being neo finance is really where there's actual value being captured by applications on chain at scale. I know you're an early investor in Pump. We're super big hyperliquid bulls. We are super bullish on Sky. Um even things like Etherfy, things like Ave, if they can sort their token, which we can talk about in a bit. There's this kind of cohort of crypto protocols that are not nearly the same value as L1s or even L2s for that or some of these infra, but it's producing significant amount of cash flow and revenue to the tokens with a very transparent, open,

public, programmable kind of format. So there's a valuation disconnect, Santi, in terms of the total valuations of of chains and of crypto. And then there's also a valuation disconnect, you know, in inside of the industry. How do you think about that kind of like that that evolving and allocators actually changing where they want to put capital in the coming, you know, months to years as it pertains not just like within crypto macro wise, but within crypto as an industry inside of it.

>> Yeah, a couple things that I'll I'll rattle them off in order of importance. I think a basket of companies that use crypto in the public markets outperforms any token. Any basket of tokens within crypto. That is, um, you know, figure that is Visa, that is Stripe when it IPOs. Um, Klarna, all these businesses that are using this infrastructure that we built over the last 10 years, uh, will be made radically efficient. They will cut their costs 20, 30, 40%. It's dramatic, as dramatic as AI. That those equities outperform the tokens that are not capturing value.

Cuz the token's not designed to capture and compound in the way that a a stock is. And that's a by virtue of the regulatory regime. Like we've never designed tokens to compound accrue and compound value in the same way that equities do. We can get into that. So, that's point number one. Like equities, companies that use crypto are going to be efficient. And they're going to outperform the token. Um, second, within tokens there is a very big disconnect between where value is being captured and the valuations. So, layer ones, the fee that layer ones are capturing has gone down dramatically.

Uh, look at Ethereum. Um, a large part of his technolo- like technolo- like the fees in the L1 have come down a ton. And the value capture has gone down, but, you know, they still are a 200, 300 billion-dollar asset. Um, so there's a great chart by 1K X that says the percentage of fees that are captured in the system are flowing upstream. They're flowing to DeFi protocols. They're flowing to DePIN protocols. Um, meanwhile, at layer ones, the fee capture has gone down, but they still represent 90% of the valuation. Like collectively, the market cap, excluding Bitcoin, 90% of it is layer ones.

But layer ones are capturing less and less share of the revenue. And so, to me that's like a jet that that that is the trade. It's go long applications, short the infrastructure. Um but it's tough because infrastructure historically has been where most investors more venture investors have made the most amount of money. Like you're early in Ethereum, you're early in you know, Ripple, you're early in Um and so that's at some point that breaks. You know, I don't short because markets are not rational uh and I don't want to be caught on the GameStop phenomenon of just getting blown out.

Uh they're illiquid markets. There's a number of reasons I wouldn't advise anyone to go short. But I do think that at some point um some applications are criminally undervalued. The question is is is a token the best way to express that trade thesis or you know, are you better off investing in the labs equity if you can get a hold of it? Cuz there's a lot of value leakage. You saw it in Ave last year. You saw it in Uniswap. Uh you like I'm hopeful that we can create we can I'm going to say it quite a bit a lot.

Tokens should be equity, should be designed like equity, and we should call it like that. And and then figure out and work backwards from there and say, "What do we need to do from a regulatory standpoint to make sure that there's no value leakage?" Coinbase bought the team behind Tensor. They didn't buy the token. They bought the the equity behind it. That tells you everything you need to know about the disconnect in in these tokens. Like tokens And someone might say like there's a couple of people that came at me cuz I said like tokens on compound, in my mind they're uninvestable. In its current form they're not investable. And someone says, "Wait a minute, Ethereum has a fee burn.

You're mid-curving it yet again." I said, "Okay, let's talk about the fee burn, right? You have all this activity. There's the world is going to come online. The the institutions are coming to Ethereum. You're an idiot because the token is going to be burned and that reduces the supply. You You don't understand basic economic principles. I said, well, yeah, okay, I get it. Not so fast, right? Why? Because the fee burn is is just that, right? It's like you need to It's not reinvested into the Ethereum ecosystem directly, right?

You could argue, okay, like if Ethereum produces a billion dollars of fees that year, that gets distributed to people that are staking and you know, validators. And so that that's just money out the door. And someone could say, well, that money's going to get reinvested in some way, shape or form back into the ecosystem. But that is a very hand-wavy argument. I as an investor don't like that because what I want to see is if a company produces profit like excess cash flow, it reinvests that. It either does a share buyback, it either does a dividend, um if it can't use product if they can't find productive uses of capital. But most of the time, if a company has $10 million of profit,

they're going to go, you know, reinvest that. They're going to use that to acquire more customers. They're going to use that to buy another business. They're going to grow top line. As an as an investor, you should just own that's going to compound. >> Yeah, I mean, I think that's what really resonated with me about that second post. The first one was the first post that you did about the valuation of disconnect resonated with me because we, you know, this is our third cycle and we had you on back in like 2024 and like one of the things that you said was like just insulate your lifestyle. And so, you know, we you know, that was achieved this time around and we feel good about it given that that this cycle was really strong. And so, I you know, it it felt good to be on

on the right side of that. And I think there's a certain euphoria associated with selling assets at, you know, close to highs. And that's great and all, but then this this this next one about that this idea of how tokens don't actually accrue the same value long-term that equities do really struck a chord because when I was first kind of starting any sort of entrepreneurial career, you know, there's this guy Taylor Welch, an internet marketer, and his thing was always wealthy people set up essentially systems which over time as time passes, they become more wealthy. And the problem with crypto is that I have to be so focused on speculating and trading, buying and selling as as you mentioned so aggressively all the time. Now, obviously, if you hold some of these

assets really, really long-term since the early days, you know, you you know, buy and hold still works and holds holds well for, you know, Bitcoin, for E, for some of the majors, but a lot of these things are much more they're they're it's a trader's market, not an investor's market. >> No. You have to That's exactly right. Crypto's rewarded traders, not investors. >> Correct. And I want to be an owner. I I want to be a long-term asset owner. That's my strategy, right? I've got all these different buckets, but crypto, it's hard to even do that outside of Bitcoin really. >> Cuz the token is not designed to capture value. That's as simple as that. Like, if you want You want to You want to be an early You want to believe that adoption's going to happen.

Uh whether in pick your system of choice, hyper liquid, Ethereum, an L2, Solana, whatever. And you want to make your money work for you. And unfortunately, tokens are just not the instrument. They're They're like a I call them a fixed They're more like fixed income. Why? Because they're they're a variable coupon on a bond. Why? Cuz the coupon is how much gets burned that year, how many fees are produced by the system. So, that that might go up, but it's capped. You don't own the equity that is compounding. And I think um it's it's it's going to suck that in 20 years' time, someone's going to wake up and says, "Holy So, so you're telling me that like we grew number of users on chain

100x and stable coin in circulation went from 10 trillion to 100 trillion, and somehow Ethereum went down 60%. Make it make sense. >> What was the quote on the top of the article of stablecoin volumes has went 100x, but our fund only returned 1.3x or something? >> Yeah. Yeah. And and look, it's it's the unfortunate circumstance and anyone that's been on the investing side understands you want to get out the doors quickly as possible. And and that creates it's no different than Bitcoin miners. Right? Bitcoin miners the calculus that goes into a industrial-grade miner or even a retail miner. You see the deep end, you see it in in Bitcoin is I'm going to spend this money for hardware

and and invest and dedicate energy, provision energy resources into a system that is going to pay me a block reward. And I got to believe that that payback is there in a year's or 2 years' time cuz I I believe that what I'm getting putting in and putting out, that calculus is positive for me. But you have a constant amount of sell pressure. So Bitcoin's a bit different in the sense that you believe that it has this sort of store value property. And so you hold it like you hold oil and you store it because it or gold because it's valuable. Like gold doesn't have industrial gold doesn't have industrial demand. 90% of the demand for gold is jewelry and speculative.

That's Bitcoin. Everything else in crypto is competing a and trying to be a technology stock, but it's not a stock. It's it's the worst of both worlds because it's competing to be a stock. So from a momentum standpoint, from a attention standpoint, AI will for the time being capture a lot of those flows cuz it's just a more investable, sexier narrative than crypto is today. That might change. And second, your money's not working for you because you have these people that are constantly sucking money out of the system, right? It's all these traders.

Um and and unfortunately this is kind of where I think most of the projects that were designed in a regulatory environment that did not allow us to design tokens in the way that they should be, which is capturing compounded value, are going to be at a material disadvantage to the next wave of projects. >> 100% >> And and the question that I I just was talking to the the question that I find myself asking a lot of these long-time builders is like, "Hey, if you could design your project today, how would you design it differently?"

And most of the time it comes down to the structure of the token. >> Yeah. >> Looking for yield that stands out? Infinitify gives you just that. Deposit stable coins and earn far more than the current savings rate. Infinitify is a battle-tested, reliable DeFi platform that is ready to go. Head to infinitify.xyz. Havachi is fast and private purpose trading secured by ZK with Celestia underneath. Go to havachi.xyz to start trading today. >> Let's imagine Andre Cronje's 2020 valueless governance token medium article being written today as as a launch of a new asset, right, guys?

Like, I mean, imagine that. >> Yeah. >> It would look entirely different. >> And so, Santi, could you unpack what some of those structural differences are? How do the equities compound value into their into their equity today? And what would the changes have to be to a token structure to compound value into a token? >> Yeah. So so when you own a token, it's not a claim on the future cash flow. Equities, you you're you're owning um a claim on the future cash flow of the system.

Um tokens again distribute fees, but those fees are not direct There's not a mechanism to directly reinvest the fees that are generated in a system. While it is true like Ethereum moved a step closer by introducing this fee burn uh with the IP 1559 3 years ago. Um, the the the the point I'm trying to make is fee burns can be confused to have this property of equity, right? Uh, because you know, more activity, more fee burn, what have you. But, um, the issue is the reinvesting piece. I think you would want to have a system where um in the case of, uh, for instance, Uniswap, you have you dissolve labs, the

token captures the fee of the front end and captures the fee of the system. And then and then there's the more interesting question is, well, who gets to decide how those fees are dis- like, are they reinvested or distributed to token holders? Uh, cuz in companies, if you're Amazon and you have excess profitability or Google, Google's a good example. It's like, it was so wildly profitable in search and then it said, "We're going to invest in robotics and AI and a number of different divisions." And so, if you're an owner of Google stock, you're you're investing behind a team that is going to be a steward of capital to reinvest that money. And if it at some point decides that it can't reinvest that money, it's going to pay

you a dividend. Uh, but it's the velocity of the decisions. Like, cuz in in Ethereum, I was thinking about this the other day. It's like, it took us like 6 years to do the merge. And the speed by which that those decisions happen is really slow. Um, and and I don't know what a good solution to for Ethereum would be, for instance, in these systems that are very distributed. I've always felt that you should distribute the token but not the decision-making behind the company. And so, that's why you see some projects that are a bit more centralized on the product, like Solana, or, you know, Canton or Hyperliquid.

Like, these are centralized teams that are, you know, Hyperliquid, the speed by which these proposals happen is quite fast. And you You sort of you're a large part of I don't know, if you ask like 100 people that own hype, I think a lot of the bet is like this is just a very cracked team of like less than 20 engineers and know what they're doing and they're going to make really good decisions for the protocol because they own a big part of it. Uh and hope that they're not going to sell, but like the way they ran the stablecoin RFP, well, that's pretty interesting. That captured a lot of value. Um so it's not a perfect solution, but I would say like um you probably get comfortable around having a very centralized organization that is running decisions and deciding

what where to allocate the excess fees and not just simplistically saying we're going to distribute um the fees that get generated in the system to people that are not long-term holders. You know what I mean? >> Mhm. >> And that's a problem that I see, you know, I I think there's a lot of MEV in these systems. There's a lot of parties that are not aligned for the long term. They're not stakeholders. They're just like extracting revenue and then not reinvesting it into the system. And so um the last thing I'll do is probably collapse the labs and equity. And look, there's a reason why deep end hasn't traded well cuz like something like helium the market understands that. Like that

that's sort of the other point I want to make is the market's not dumb. It sees that and says, "Wait a minute. I don't actually don't own the the goose that makes like the golden goose here. I'm owning a token that there's some fee burns, but I don't understand." And and that's the the the Degen Spartan had this like valueless governance tokens meme and I think it's very true. I think the market's not dumb. >> Yeet is built for big moments. The most fun you'll ever have with your crypto. Go to yeet.com to yeet into your next game. Not your keys, not your coins.

From the team that pioneered cold storage, Trezor has just released its new wallet. Guys, if you are still using hot wallets in 2025, 2026, you are missing the entire point. Secure your coins. Get a Trezor at trezor.io. >> I I take it that, you know, we we are making progress, just much, much too slow. Like, the Ethereum fee burn was a step in the right direction. It's not a big enough step. And then, hyper liquid and Solana and and particularly hyper liquid with buybacks are a much more direct impact on the underlying token.

And so, that direct reinvestment into the protocol and into the into the the the instrument itself that measures that network's value is closer. Is Is it still not sufficient? What What How do you go to the What is the next milestone? >> Yeah, I I think you're you're flying closer to the sun. Like, mega ETH is now enshrining kind of like the stablecoin with Athena that, um, you know, pays for some sequencer fees and, you know, that is interesting. It's not enough. Um, hyper liquid is also probably closer. This is again, if you look at what's actually performed well, >> Yeah.

>> is tokens that behave as close to equity. Um, and the tokens that don't have not traded well. And hyper liquid, to your point, Robbie, is as close as you are ever going to get to being like an equity. Because it has a team that moves fast, that is willing to reinvest, that is willing to do things like the stablecoin RFP that, you know, create more value. Um, they're still it's not perfect, right? But it's it's as close to it and I think that that combined with, of course, perps just being a killer category. Um, but uh to to round out this point, I mean, I think, again, I want to just validator rewards are not reinvesting.

Those are operating costs to run a decentralized system. And so, paying validators is is to secure the network is is like paying rent, right? >> Mhm. >> Keeps the lights on, but it doesn't compound value to to the token holder. Um In this you know, and so that's like just important that to internalize because most people will always say, "Oh, validator rewards are are you know, this is this is how you get rewarded. It's like equity." And it's really not. Um And and the other point which is is hard to reconcile it it it touches on a lot of things, not just like this disconnect between tokens and equity is like going back to the opening you're going to see more and more fees

get generated by these systems like like L1s. Um And value will be captured by those people like Aave's of the world that actually own the customer. If Aave actually can can become a neo bank they're going to capture a lot of that value for themselves and the tax that they pay to whoever is providing security on this exit settlement is going to capture a very small percentage of it. Uh of The next piece I'm going to write is probably security markets. Like EigenLayer tried to sort of create a better model to price security in these decentralized distributed systems, but it's really hard. I I I I asked like anytime an L2 builder comes

here, ask them, "Hey, the amount of money that you're paying back to Ethereum, is that fairly priced? Yes or no?" And they'll all dance around it, but I'll tell you if you look at their body language, it they'll probably say, "It is the biggest bargain in crypto because you're utilizing your the Ethereum alignment is real because God damn it, it feels great to pay to be paying for a service uh where the tax rate is like 1%. The real tax rate should be the amount of federal taxes that you pay in your tax bill Robin Hood, which is 30%. Ethereum provides a valuable service, which is security, and I think Vitalik at one point woke up and said, "Enough is enough."

Um But of course, anyone can pack up their and go, right? They can go build in Solana in another system. And that that's really the again, the the point that I make is I have zero interest in owning tokens because it's super competitive. It's open source, it's competitive. People are going to go If you If you don't like Ethereum and Ethereum jacks up their fee like Tron did, you can go to Solana. And then if if you don't like what Solana is doing, you can pack up your and go to Temple. >> Yep. >> And and so again, I think like as we think about what we're doing at Inversion, I I like that dynamic because I'm just going to go to the best provider. An infrastructure eventually becomes a commodity.

And it's a race to the bottom and so block space is infinite. It's cheap. It will only continue to be cheaper and the value that is going to be captured is by the people that build on top of it. And so BlockRock sees that cuz they can use Ethereum. It's fairly cheap to use Ethereum and then they can make way more money. So I would rather own BlockRock equity than ETH the token or BlockRock equity than Solana the token cuz it's just a better business model. They capture the fees and they compounds. And and and and so unfortunately, the crypto market is stuck in still trying to believe that like infrastructure is a good investment. I don't think infrastructure is a good investment.

>> Yeah. So the the the infrastructure commoditization, apps occurring value, token economics being the problem, things like Metcalfe's law or basically no we're kind of putting to the side for blockchains. You also made made it to mention that blockchains themselves aren't the issue. And so maybe you can elaborate on like some of the more let's just call it optimistic or positive results. Like so where do we go from here kind of overlay this in in the next several years. We, you know, pretty firmly believe that the Trump admin and hyper liquid, those two events or kind of factors have has led to basically this, you know, what's happening now in in terms of this

valuation disconnect amongst other factors and now we'll see teams trying to create more what you're calling crypto-enabled equity. So, what does that look like in the bull case? What's your base case? What's your bear case here for crypto, for tokens, and crypto as an industry moving towards more crypto-enabled equity? What does that look like on a 5-10 year time horizon? >> Oh gosh, I mean, don't overthink it. Every business is going to use stable coins. It starts with B2B cuz there's two motivated people to cut costs and then it starts to B2C people.

You have Gusto, you have um uh Deal, you have all these payment like employ- employees are going to get like employees are going to be paid in stable coins. Once they get paid in stable coins, they transact e-commerce in stable coins. Then you have a gen to commerce that uses stable coins. Then you have businesses to businesses that are sending money and saying, "Wait a minute, I don't have to send you a wire. I can just send you a stable coin." And that's uh BVNK, that's Stripe. So, that's the crypto enablement I mean, I I can't I mean, I am um in- incredibly bullish on that happening probably faster than most people think. I mean, gosh, you January alone you had 10 trillion of stable coins

moving around. That's more than Visa and MasterCard combined. Visa has a probably a better measure of like real economic activity, which is the adjusted stablecoin volume, which is stripping away MEV and and some like, you know, DEX activity, DeFi activity. And that's still very high. That's 1 and 1/2 trillion of stable coins that are moving in the real economy. That number grows by an order of magnitude this year alone. Grows by two orders of magnitude in the next 10 years.

Don't be on the like don't overthink it. The The nuance is how do you express that trade as an investor? >> It's always the question. >> And but but I I I think I created this uh sort of been playing around with AI just as it's like amazing what in a month these things have changed. And now I have like I'm opening a filing cabinet in my brain of ideas cuz I'm not technical. And now I'm putting them in production. Not prototyping. Just putting in production. Within 24 hours I built a new site. I didn't use a designer. I didn't pay them zero. I paid Cloud like $10 to do it.

Rem- like absolutely remarkable. Um what I'm trying to say is um like in many ways I think AI and crypto are very connected. Um and the if you're wondering like how can I actually make sense of this? I think there will be we're at a time where a lot of people are skeptical of different use cases of the crypto can power. The focus of course right now is stablecoins and and you know stuff like perps.

If we just stop there like this industry can grow 10X. But I think there's going to be a very violent shakeup of of where that 10X grows. Um I created where I was trying to go with the AI. I created this if you want to go online now it's at ftdv.gg. You want to pull it up? >> Where I'm going. I'm there. >> ftdv.gg It's like >> What would you rather own? Price is what you pay, value is what you get. I am not a cat. That is weird, but that's fine. I got a cat.

>> This is to make sure the bots but because it uses machine learning to like to give you the consensus view once you select and it's like very simple. Like if you we just walk through this exercise it's like would you rather own Solana at a $80 billion valuation or Stripe equity in the private markets at 90 billion? Would you rather own XAI equity before it merges SpaceX or Ethereum? Would you rather own >> Here's an interesting one, Santi. Would Would you rather own Open AI private equity at 500 bill or Apple at 4 trillion?

>> Uh Apple. I think Apple is like the dark horse in the AI race. >> That was contrarian 40% >> I had I had Bitcoin 1.3 trillion or Berkshire Hathaway 1.1 trillion. >> Uh Berkshire Hathaway. >> That was very contrarian. 20%. >> Wow, this is insane. This is a great exercise. >> and then and then it uses So I built that I had a project like this cuz I kept when when when someone asked me this question like how do you like do you want to invest in crypto or not? I think we all agree my framework in investing is everyone understands the demand side of crypto extremely well.

Everyone now. It's It's It's unequivocal that demand is going to grow for block space. Demand is going to grow for stable coins and other applications. No one No one argues that anymore. But whenever you're critical about valuations, everyone always goes back to demand. And you're like, well well but you see that's my point. If you really want to make money, you need to understand the supply dynamics. What are the supply dynamics? With a click of a button, anyone can deploy a chain. So the block space is incredibly elastic. It's not scarce by any stretch of the imagination. It's not like you built a road. There's no moats to these systems other than like some sort of memetic brand value that is hard to wrap your

head around that it's worth 200 billion. I'm sorry. I'm just going to call it at that. Um and and so I think if you really want to make money as an investor, you need to understand the supply. How that curve, the shape, the slope of the curve, and the shift in the curve as technology advances. And 5 years ago, I think you could have argued demand for block space was there. And it is very hard to build a consensus engine, a layer one. It took you, you know, you had to uh it wasn't easy to launch a chain. Now it's very easy to launch a chain.

And so I think uh when you go through this game of what you'd rather own, it's always useful to put it in perspective because it it frames the conversation not of as an investor, you don't necessarily have to own anything. You don't have to own the token. You can go and buy uh Western Union for 9 billion or you can go buy uh 4 billion, sorry. You could go buy uh you know equity in or in things that are going to use the infrastructure. And and I think that's how I disarm a lot of the arguments in crypto, which is you have a really fanatical base that is very very it's like a religious kind of experience, right? You're Ethereum aligned or you're not.

Don't ever bring up the point that Ethereum is worth 300 billion because you're you're a mid curve and um this is going to the moon. And you're like fair enough, like, you know, to each his own. >> Sohns, I don't think the robo-advisors have a ideological preference to their asset classes as much as we do, humans. >> Yeah, the market doesn't care. The market's not fair. The interesting thing I will say is like the pendulum will swing back to new applications beyond stablecoins and perps. I'm actually kind of now excited to start thinking more and more about that. Um I think that more value is going to be captured from this point forward by newcomers and early and adopters than the OGs that have been investing in the space that are now leaving.

>> Mhm. >> And a lot of a lot of them are leaving because they said, "Gosh, so like we envision a world where you're going to have an decentralized Uber and a decentralized, you know, Airbnb experience." And you know, this whole idea of like Wall Street on on on blockchain is this just does It's not cool for me. >> Yeah, it's not the same. >> Candidly, not that I don't just want to criticize Ethereum because you know, I was an early investor in Ethereum. I think there's a lot of really good things about the Ethereum community and developer and it's remarkable what it did in the coordination standpoint. But one thing that's always bugged me is the fact that somehow I feel like the ethereal Ethereum

insider group, even Vitalik, is not they've sort of been dismissive of DeFi. It's like let's explore other more aggressive things. And and you've seen a lot of the OG DeFi builders say, "Wait a minute, man. Like I'm trying to build something cool here. I'm I'm trying to build something that is powerful. Financial inclusion gets lost in the conversation. Uh flash loans and new primitives get lost in the conversation. Um and I think it's like don't Why are you neglecting your core customer?

>> Yep. >> And that's all I've never really understood that, right? And it goes back to this idea of like why tokens are not equity. You don't have a strong management team that is very aligned in saying, "How do we drive the most amount of value for Ethereum?" Like you have these factions within the Ethereum community and 2 years ago or a year and a half ago that you try to kind of the Ethereum community said, "Galvanize and say, 'Let's get our together cuz Solana's eating our lunch and other blockchains are eating our lunch.'" And so you have now these two different organizations and so that's the drawback of decentralization that unfortunately we try to decentralize as quickly as possible.

Everything from validation and block production to product to the hierarchy. And I And I think that's something that I think if if someone would in a private conversation would tell you, we probably shouldn't have done that. We probably should have stayed a bit more. But you couldn't have done it, right? Because it was a very hostile regulatory environment. Um to So, it's not surprising that a lot of the L2s, Hyperliquid, a lot of the new chains are very much centralized from a product decision-making standpoint. >> Yeah. Some go even as far as like um being very opinionated in the applications they could build, right?

Mega E's selected Athena. That's That's a pretty specific choice, right? By a management team. That That By the way, may or may not be the right choice because it introduces counterparty risk. And if Athena, you know, it it's um it is a But But But I think that that's the it Moving fast is important and making decisions is very important to drive to adapt to new demand for block space. Um and unfortunately, a lot of these kind of gen one, gen two chains were just not are not designed to move fast and to compound in the way that, you know, a management team in a

company that represents an equity will. And And the power of compounding is the velocity by which you make those decisions and reinvest that cash flow. Fee burns are not that. >> Validator rewards, not that. >> Are not that. >> you think about it, it actually works in reverse because the time that you spend holding assets which don't have that property of making owners wealthy is time less spent owning assets that could do that for you. And Santiago Santos, always a pleasure, man. Hope you're spending as as as much time building out Inversion as you all writing these bangers, brother. So, uh >> Best believe we're in the new office.

That's our little background inversion green. So, we're here. We're building. Um yeah, thanks for having me on, guys. >> Cheers, man.