Silvergate Liquidates, Coinbase Innovates [Again] | Roundup

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right now you can earn 5.1 percent on U.S treasuries that's right 5.1 percent on U.S treasuries not in defy it's on the public.com app we just partnered with public.com for Empire super easy to get 5.1 on your U.S treasuries you just go to public.com forward slash Empire open up a US Treasury account takes like a minute put your cash to work you also get access to a whole bunch of other things like stocks crypto treasuries all in one place super coolpublic.com forward slash Empire that's public.com forward slash Empire we will talk more about them later in the show all right everyone uh welcome back to another episode of Empire um today's Empire is uh sponsored by

Lufthansa is that right Santi is that uh is that what oh it may be soon but uh at daytime good fortune in meeting a pilot uh and he just came up to me and uh you know said hey are you the guy from Empire I'm like wait what so you're walking in the airport and Lufthansa pilot ends up and after the flight you know we're like driving in that little bus and so he was really loud everyone looked at me like who is this random person um so yeah it's good apparently people are listening to from all parts and disciplines so that's right sounds like you had a similar experience in Denver just when we thought your ego couldn't get any higher here we come around swamp you up to be fair I will say so I just have the last five days at the sort of wedding

and yeah I I don't know if people feel this but I kind of went through a mini identity crisis where people like what are you doing like crypto and then it's like rolled IRA and you know we're like oh like are you doing feel sorry for you or or you know they immediately bring up FTX and it's just uh I gotta say you know every time gets easier because you have conviction in the space and you go to East Denver we're going to talk about this episode of how you know it doesn't feel like a typical bear Market if you go to these conferences there's a lot of excitement there's a lot of teams still showing up um you know it's not like the scene from like Antonopoulos trying to explain Bitcoin in 2009 right and there was like two people in the room this is certainly

not it folks but still you know it uh it's difficult at times you know when you immediately get saddled with like the headline and the worst headline the cherry picking it's like oh you're one of those like okay you can sit on that table yeah I'm sorry to hear you had a tough wedding but I'm I'm sorry to hear I'm excited to go back home to be fair I will uh I will cheer you up well you should have been at East Denver eat Denver was uh was a crazy event I don't know I'm trying I want to think of like some takeaways from it but it was pretty remarkable and I think the most remarkable thing was just the sheer size of each Denver this year I mean I remember when Denver was like a couple people in the in the

little castle and it smelled like and you know the food was awful and like now there were I mean there were 30. it's tough to know the actual number I think the I think the real number of registrants was like 30 000 registrants and then the actual number of people who checked in was somewhere around like 11 12 13 000 people who checked in so and and eat Denver right they do free of free tickets so you know they got about a third of the people who registered actually showing up to the event but Denver was nuts I mean it was like surge charge uh surge pricing around like the Ubers the entire weekend like there was not a single Hotel available in in all of Denver

I mean just remarkable to see how many people came out in this uh in like the depths of the bear Market uh to this event so that was that was one big takeaway in terms of like the content and the people that I met um here are the takeaways on my end a lot of talk about privacy like a lot a lot a lot of talks about privacy which like if you remember 2018 really 2019 like there were a lot of talks about privacy back then so I do think privacy is making um progress but I will also just be I'm just cognizant of the fact that like deep in the depths of the bear Market privacy is a Nar is a narrative that comes back because like it's something that we can grab onto but yeah there was like privacy total ZK

Mania I mean like ZK roll up zkevm ZK compiler ZK Bridges like I met met your friends at scroll like the scroll Boon packed the whole time like the they they were they were crushing it um but like just it was interesting because they they announced uh I mean the round of clothes uh you know but they announced it I think that came out this week that they had raised so um a pretty big headline from some notable investors Bane yeah there are a lot of the great ZK projects there like caliber of Talon I talked to a lot of these teams Top Notch right these are like I mean the scroll team like bunch of PhD Giga brains but a lot of the other teams

too like and so just ZK Mania I'd say it I'd eat Denver there was also you know I mean like my did I ever tell you my thesis for scrolling like one sentence no no what is it I've always found that like I'm under indexed underexposed to China like statistically speaking their will and should be more High super high quality projects coming out of China um and historically you've had Chinese Founders that live overseas either in America or in Australia like the stopping guys are Chinese but they're in Australia um but scroll is like um they're based and a lot of them are Chinese and so uh really high quality talent and I've always like wanting to um invest behind a local team and uh

yeah really technical like like not not it sounds a lot like nervous or Neo but creatively these guys are just very very good you know the uh the the ethereum of China or something was that was that new yeah um okay so like zk's we're popping off Roll-Ups are everywhere like a lot of chatter around l2s particularly um around like bass like bass I'd say I had a really good and coinbase had a really good eat Denver had some really good panels they had like this like base Hub or whatever that you could go to it was the only place where Wi-Fi worked in the entire Conference Center uh also a lot of discussions around um like roll up as a service projects as well as a

uh eigenlayer and Celestia we're in the we're in the narrative a lot so those two um I was surprised by I think those two you would expect to see but I was surprised by Gaming actually there was like there's a whole gaming section where you could you could play these games and there were these fully playable demos that were really really nice I I I completely forget the name of these games but like I will say I you you I know you're much deeper into games than I am the quality of these games was night and day from let's say 12 18 months ago so I I you know I know you're in touch with the gaming space But like I think this year we'll see some pretty interesting games launch just based on my experience at Ethan Burr

um what else is going on I mean the name is eat Denver so you gotta assume there's gonna be mostly eat folks there but like everyone's building on the evm like evm was uh I mean the the main place where people are building um I'd say the ecosystem that probably showed up and represented the second best outside of the uh ecosystem was Cosmos there were a lot of Cosmos people a lot of good like Cosmos dinners a lot of folks excited about Cosmos there um and like I don't know it was interesting when you go to these uh when you go to an event like this you ask you talk to different ecosystems I think if you ask people about another L1 outside of Ethan it's cool neither here nor there you ask people about Cosmos they

either love it or they hate it which uh which is I think a good sign for an ecosystem um no consumer use cases and no one talking consumer stuff no one seemed to care about consumer I I love about nfcs anything like no no nft stuff no I mean I posted on Twitter like didn't meet I literally didn't meet a single nft team and people were like I was there but I didn't there was nothing no nft stuff so um I don't know really good about it yeah it's it's if I were to like stack rank um the best East events like side events not like Devcon East Denver is

probably top three event out there uh yeah really high quality yeah really high quality yeah um man a lot we can talk about this week so we have silvergate uh winding down we have coinbase had a couple big announcements outside of just base they had uh they acquired One River and um uh they launched wallet as a service um there was like roll kit Babylon shared security like Cosmos and Bitcoin uh coming together so we could talk about that maker is reviewing this big proposal Amazon's entering crypto gbtc stuff where where do you want to start here um maybe we can it's just so fresh in my

mind we could go with uh Silver Gate um and then we can go from there without which for you cool works for me yeah so I I've been following this closely I because you know I was banking with silver date um and for a long time um you know people should remember that it's been very difficult historically to bank um you know to use a bank and get approved especially if you're like a corporation you know um some individuals including like Hayden and and whatnot it's up at different points of time their traditional bank accounts were shut down and you know there was a time where a lot of banks if you had sent money to coinbase it would just shut down your account and give you like a week notice

to move your money and so silvergate cropped up over the years as a crypto friendly Bank um you know melt them had a good observation uh yesterday um and she said listen every Bank technically can service crypto providers users whatever um the only hesitation I think from a bank is you're going to have more scrutiny from your regulator so instead of having 12 every 12 months an inspection which carries cost they're maybe just rank or you know ratchet that up to say every six months you know and just make your life a little bit more difficult uh in the sense that you know every time there's an inspection it's more costly um so a bank committee probably assesses

hey is there enough Revenue here um for us to actually go into crypto and historically you know on a breeding bull market you know silvergate was doing fantastically the stock at one point hit 200 now it's you know less than two bucks going to zero probably um so what what ended up happening is um it was the so so they announced that they were going to shut down the bank and then um you know they determined there was no longer kind of viable to continue operations and then assess how they kind of liquidate some of their assets which include some tax assets and some proprietary Tech this is following last week where they I think it was last week late last week or early this yeah that they they shut down the San Network

which is super easy way of transferring um you know Fiat to crypto and a lot of market makers use this a lot of funds use this you know it was like kind of instantaneous if you wanted to move from your silvergate cash account into coinbase like it was just like Fast settlement and it was very useful uh from liquidity flow of funds perspective and um I guess uh yeah it's uh it's unfortunate I think they were a combination of things happen here they were exposed to FDA accepting you remember in the FDX Fallout the criticism was uh if you're a customer of MTX you were sending money to technically the account

was under Alameda as my understanding um but then that was kind of the primary on-ramp that FDX was using through Almeda and so it's like okay well why didn't these guys like at some point check that right and so there's kind of like a responsibility to do property diligence and you know that was one of the allegations that yeah you know a lot of folks including these prominent two short uh short sellers uh we're calling fraud and whatnot and mismanagement and um you know so that was that was one big hit and and yeah then they announced uh recently like I think it was like two weeks ago or a week ago that they were delaying

the 10K um they had growing concerns around uh liquidity and solvency of the bank um and I guess I'll round up this discussion we can go into more detail to any of those pieces is there's a great thread um out there on Twitter by this guy um I forget his name but we'll post it that kind of dissects what happens and what happened to silvergate and what why it got to a position where it didn't have enough like solvency um and it's really this idea that like there was a massive run on the back when FDF happens everyone is freaking out um especially when you understand that

silvergate had some exposure and that came out and so a bunch of funds and users immediately go and withdraw everything from from silvergate because at that point you didn't want to take any counterpartners so what do you do most people I think they had like I I want to say like over 8 billion or so of capital just immediately yanked um and so they had a liquidity crunch they had to sell some assets um and you know they when when you when they had to force sell some of their assets these are like treasuries and like short you know duration kind of assets they took a big hit on that yep and so that laws was what led to the

like lack of solvency you got to remember what always kills a bank and what killed silvergate and may kill other Banks is the mismatch between assets and liabilities you have all these liabilities when you deposit money into a bank that's a liability for the bank they use that Capital to then invest in other things and clip the spread between what they pay you on interest and what they can earn out there it's always like this and they had a liquidity Crunch and so it's important because when the siligate is going to be one of these things that's going to continuously be talked about this year next year is going to be that example um Regulators shouldn't you know congressmen are saying we should then

this is the problem with crypto we should limit the exposure to the financial system it's a risk it's like wait a minute it's it's really not like because you know exhibit one look at what is happening to Silicon Valley Bank which is also having a huge liquidity crunch it's the same thing and why is this happening well it's happening because the tech industry Venture business which they have a ton of exposure to is also going through a bat uh you know a hard time and so it's really that idea between the mismatch of assets liabilities that really hurts a bank and in this case a silvergate I would say that there was certainly an

element of crypto exposure here that they took in terms of the reputational hit the trust issues that you had as a bank that you know was servicing crypto providers and of course the FTX thing really hurt them you didn't really at any like from a consumer standpoint you didn't know how big the whole how big the exposure how big the liability is going to be Define so all of those things really just um deteriorated trust very quickly and the acid base just really went poof yeah and when that happens yeah where does this leave um I think the most so I think everyone gets what silvergate does on the banking front right they're just a bank that supports

crypto um one of the most important things about silvergate is they have this thing called the send network scn network um every law every single large Exchange Market maker investor C5 company use sen for 24 7 instant Fiat transfers um so my question to you becomes like you still have BCB group you still have Signature Bank but you know signature is facing pretty heavy scrutiny right now they're only selectively accepting clients you look at the signature Client List it's like yeah coinbase Kraken Circle paxo scripture.com CBOE bitstamp uh I mean everybody was using them where where do

you go uh like where does that leave Fiat on-ramps it's kind of just the stable coins now right and if you actually look at um the ratio of the of tether to Dollar volume it's it's at an all-time high right now and I think that's no coincidence so I I don't know I think it'll be interesting to see like without quick Fiat payment networks like like the send Network I think stablecoins just become increasingly dominant form of uh a you know way to transfer large large amounts of volume I think so too the the issue though is is the conversion of the stable coin and then how do you get the new funds in and uh yeah yeah of course euros and then

move in or something right like I'm I mean yeah here's what this does unfortunately what happens is it it everyone needs banking every even crypto companies need these crypto businesses need banking out of desperation we're going to see companies move offshore and we're going to see companies move into riskier banks that are going to end up causing a new suite of problems it's no different than what happened when uh Singapore band was it Singapore that banned binance and all this and everyone in Singapore had to move into FTX right when these regulations come down people end up people still want to use a

product so they end up pushing further out into the risk spectrum of service providers and I think that's going to happen here yeah so yeah definitely I I think uh there are other Banks uh that I know of that use and still support crypto First Republic um and a few others so uh but yeah I think this is a big again there are over the last month or so has been huge I think uh what is crypto Twitter team like this choke point operation to really make it very difficult um to enter crypto and by cutting the the on-ramps this is the choke one yep and so yeah I'll be really interesting I I continue to believe like this is going

to be a massive business yeah certainly it's got we're going through a bear market so again if you're back and and where are all these people gonna go they need a house somewhere to deposit a lot of that those assets and from a relation standpoint you know you could argue that um you know someone's gonna fill that Gap and and so again it's it's important uh to to really just make this distinction of you know there were certainly some errors I think at silvergate uh that you could you know that are specific to crypto uh but uh there was a I mean I don't want to put on my like really uh like speculative

speculation had here and and but there is like what there's a pretty notable short sellers here and there's a very coordinated attack across social media towards silicated some I mean it was the most heavily shorted stock uh out there and so when you're a short seller you naturally want uh you know there's there's always misinformation on both sides there's always never fully it um perfect information but um yeah it's just important to like I think this will be once the all of the facts come out I think it will be very important to sit down that point and say okay what really went wrong here uh because what I just said earlier is just making the distinction of you

know there was really a deterioration and Trust very quickly that it is no different than FTX right the CZ tweet and this in the article or the C you know the tweet in the article from coindesk and what that can do to very quickly spiral out of control uh the turkey you know the this happens the currencies this happens the bonds this happens to other stocks and so on it's just you know like um important to keep that in mind moving on yes coinbase coinbase is ripping not not it doesn't get enough credibility but coinbase is the I I uh I spend more time with probably the coinbase team in Denver than than any other team and had a had a very long conversation with

Jesse who uh Jesse Pollock and you know uh moderated a conversation with their VP of engineering will on the main stage and man I'm uh I'm just I'm optimistic about things coinbase is working on so they obviously had base the L2 announcement uh and then I mean since we've talked about it there have been two more announcements one is they acquired uh one River Asset Management Eric Peters is firm Eric's been on the show before uh we can we can link to that episode you all should definitely listen to it it's really good um but one so one River's this big asset manager it's gonna become coinbase asset management and we'll kind of form the foundation of coinbase's investment advisory service for institutional clients and with that huge Aqua hire I think Eric Peters is is actually going

to be leading that charge for them so that's a huge announcement in and of itself does this does this go after like bit why is this business um I don't know bit wise specifically because I think bitwise you know a lot of people use bitwise because they have this like this index product right um but I think it goes after anyone who manages capital for clients and crypto yeah and it kind of goes after any fund I think so got it I think I think it's a really smart move I also think there are other Acquisitions and even excuse me other product announcement was an even smarter move you're seeing uh them lean into these developer tools and on Wednesday coinbase announced their

wallet as a service offering so I just wanna I think this is a is a is a really smart move basically wallet as a service is a set of apis and sdks that developers can use to basically integrate MPC wallets natively into existing or new apps and the like I think this specific product is going to help onboard and launch so many new wallets and we've talked about the wallet Wars a little bit we had ciao come on did a big episode on the wallet Wars uniswap wallet just got announced argent's smart contract while it was social recovery I think a lot is getting a lot of

attention right now all these new wallets going on right now uh one of the things that was interesting in eat Denver I met with a bunch of big Brands like non-crypto non-web three brands traditional like e-commerce Brands uh really like Legacy Brands they want to launch wallets they all want their own wallet but they have no interest in building their own wallet and they want their um they want their their wallet to be tied to existing identity systems so users can just utilize their like normal username and password and that's something that coinbase wallet as a service is going to let them do so um I think it's pretty genius I think it's a smart move yeah yeah definitely they also announced this

like aggregation with this um like nft mod as well um so they're on a very uh yeah it seems to me like I was having this thought yesterday and I tweeted about it which is uh I don't think coinbase is getting enough credibility both from Wall Street and crypto native people around the contributions doing in the space um and people should go listen to the episode that we had with with these chrome-based folks around the base announcement but uh really impressive to see a firm that is first and foremost very focused on pushing the space forward and perhaps it at times having to cop you know cannibalize certain parts of their business

for the sole purpose of look at the end of the day when you think about how small the user base is and the penetration of crypto then if you can if you don't like a thousand X the user base then it's not gonna matter and it's very refreshing actually so really kudos to them uh really interesting and exciting to see what else comes out from from the um you know what they're working on under the hood Because by the way I mean they did give us some Alpha right there's a lot of things that were on the white we asked them what else is on the Whiteboard and why did you decide to do and they're like oh we have a running list of things it's just like this is the first part of the sequence so yeah I mean I I would probably speculate that there's going to be much

more announcements and you know tools coming out uh from them later this year vacuum six and 12 months I can I can assure you there are I think I think it's pretty exciting so um what's the bear case on coinbase right now naturally you know when you look at what has happened to silvergate then I think a lot of people my question um you know kind of that their business being hit a lot like if you know they get their fees from they make their money from custody and trading you know trading volumes down considerably and you know maybe the custody asset the custody piece will

have to be separated with new regulations right and so you lose that part of the business yeah yet you have like increasing like overhead and so the margin profile deteriorates and so I mean this is probably Wall Street thinks I don't think they've appreciated base and back and do um and so I mean this is barricades but if you're like equity research analyst I don't think you fully understand the pieces of coinbase unless you're using kind of like you know you're a quick donated person yeah uh I don't know what do you think this barricades I think the bear case is that um it's really really hard to do a lot of things at the same time well and um you're like starting to see Google get broken up a little bit by these

companies that just take on really specific products within Google so like you know Google Sheets getting uh is getting you know taken on by like something like airtable maybe um Google Docs is getting taken on by Coda um Google Slides is getting taken on by like Prezi or whatever whatever that other presentation yeah yeah when you think about the and 90 plus percent of the revenue it comes from one-on-one thing only because they dominate like no no no I'm just saying no no absolutely so many products at once then it can become tough to do so to be fair though I think crypto uh like coinbase has you know becomes synonymous with with

crypto um in in the US and other places yeah and that has a huge um uh value the issue I think is it's really hard to retain talent in the space yeah I mean like if you're a high quality engineer at some point you leave coinbase then the same way that you leave Google to build your own thing uh because the opportunity cost and the the possibility of really just you know building on Iran is is really high yep hey guys so while Jason's getting water I'm gonna I'm gonna emphasize one thing which is uh permissionless it's coming up later this year in September you do not want to miss it I'll be there uh and should be really nice set of speakers talking

about a whole host of things and great mixer crowd um so get your tickets now and hope to see them on there all right moving back moving past coinbase I I just want to be like cognizant of the fact that I think um I feel like I'm getting too bullish on coinbase so I wanna I'm gonna think a little more deeply about that like the bear case for coinbase maybe we can talk about that at uh on a future episode let's talk let's talk Amazon um I thought this was a pretty I mean big shout out to uh Michael bodley at blockworks he's been getting a lot of these scoops on Amazon breaking a lot of this news uh we covered it this week uh at blockworks Amazon is working on an nft offering that could be tied to real world assets

uh rumored to to be officially announced in in late April um I think if you remember Amazon they partnered with was it Avalanche maybe I gotta look that up on the AWS side of things I believe so because we recorded the Avalanche episode and then the news came out like a week later yeah they were supporting like on the AWS yeah that's right so the hws team yeah exactly supporting is working with Avalanche um so I mean it's nuts Amazon Prime is the most prolific subscription platform out there right gotta be uh 160 million annual Subs just in the us alone uh it's rumored that Amazon plans to literally email every single one of them with their digital Collectibles initiative

once it goes live I didn't hear that they also will um we'll have it on the home page of Amazon like you'll literally be like browsing it'll be like you know Furniture Pharmaceuticals or whatever I don't I don't know it's on the homepage of Amazon uh shoes digital Collectibles so yeah pretty pretty crazy to see I mean this is uh going back to just the brief like anecdote like this is a a common thing that I was going back to when people are very skeptical of crypto I say just look at what's happening with like some a brand like like a group like lvmh Scott Alexander like what Tiffany's done like it's pretty impressive that they every considering everything's going on

like they see the opportunity right of when you go buy a physical good and you get a representation in a digital context through an nft like it's gonna happen right and it's really impressive because like historically some of these luxury brands really resisted the transition to e-commerce like Brands like Chanel like up to like two three years ago we're not selling online and now like everyone's doing it right very impressive that you know a group like lvmh is moving into nfts and exploring and tinkering into that and other companies like Adidas and a few others um and and I think at this point you gotta it would be really interesting to

go to these conferences where these people meet I gotta think that this is a common point of conversation around why because you could make more money from your users and you can keep them more engaged you could acquire a younger affluent demographic right and so yeah we got I mean I can't imagine what this does if all this is to be true you know having imagine everyone on Amazon and Amazon allowing you to set up a wallet super easily um and what you know from an onboarding perspective what that does you know I wonder what what they're like what they're thinking here like for like you buy something that you get on nft or there's different tiers of nfts that

Amazon is creating based on your you know how much you're spending on the platform what do you what you're doing like they're going to partner with other brands and collaborators like the Amazon X yoga Labs like NFC or whatever what Amazon's really good at is building new business lines right I mean kind of like remember things I was like AWS a 1.1 from zero to being like the number one profit driver for them I'm so I'm so torn on something like this I'm ah I yeah I don't know I think it's on a private is it on a private blockchain oh man I got I gotta

read more about this I believe that well the rumor was that that they were gonna build on immutable X and so you got immutable likes on some decent price action uh again just a rumor uh uh and maybe they want to just build a Marketplace I mean just becoming out of them Marketplace yeah you know uh who knows right but uh we'll we'll definitely have more something to keep an eye out yeah all right everyone today we're talking treasuries right now you can earn up to 5.1 percent on U.S treasuries that's right 5.1 percent on U.S treasuries I will be honest with you all I never really thought about investing in uh in treasuries and I think probably for two

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other Collectibles all in one place super interesting platform really excited to share them with you all the way to download this and the way to use it public.com forward slash Empire don't go somewhere else Santi and I gotta get credit for this one so go to public.com forward slash Empire I'm telling you the URL because we got to get credit download the app move your cash into their us treasure account hope you guys enjoy gbtc so uh grayscale just right so grayscale just wrapped up oral arguments and it's lawsuit against the the SEC for blocking the transition of gbtc into a spot ETF right so as a reminder grayscale wants to turn gbtc into a spot ETF uh that would collapse the entire

discount the discount sits at like what 30 to 40 today but really if you think about it the underlying should probably trade at the same price as gbtc however it doesn't um but if you turn it into an ETF it probably probably would um SEC keeps locking it but it appears that the sentiment is that grayscale won this round of the debate um the next step is a is a final decision from the court here so uh gbtc I'm looking at the price it's trading up like 15 to 20 over the last week uh discount has fallen from from 45 to 30 it looks like um I think I mean I think this would be a massive shift in the narrative right an

ETF I think there's a lot of steps I don't know the full approval process but like yeah an ETF approval would would be this massive narrative Tailwind in the middle of a bear Market um I man I mean with guns with Gensler in charge I think it's what give it a one percent chance this actually happens but um it does see it does seem like uh like they did win this this specific lawsuit so well this is the thing right you you have to make um and people should go listen to the episode we have Rebecca um right there's this idea that there's different parts of government that come out when you see these kind of headlines

right there's the SEC that they do kind of enforcement through action that that's not like the law degree right and then there's like the interpretation of said law which is then the judicial system so in this case I think it's fairly interesting that you know the the court was you know very much critical of the SEC decision over time to deny the approval and and so it sort of like puts into context it's one thing for like a crypto lawyer to say the SEC is over you know overstepping here and make the argument it's another to have a judge interpret that which is partial and it's just more objective to say wait a minute let's look at the law let's look at you know

Commodities Securities laws here and make a proper assessment and less biased yeah as to the merits of having an ETF which is it's very interesting and I think might be as you say um a just a a more objective interpretation of of where crypto regulation might shape up and if and when policy does come out you know I I look at this and I'm I believe in the judicial system I believe in rule making and a process of keeping in mind what are the more important things of what is missing you know and

you know I do appreciate this idea of calling like the idea of like Securities laws are there because you want to have Market Integrity you want to have protect the consumer so consumer protection Market integrity and fairness are the the pillars of markets and if you don't have that then it's very difficult we have inside of trading you have this unfair marketplace right for people to transact the trace Trust and so if you keep that in mind then then I think it serves as a guiding principle to come up with sensible regulation for crypto and token issuers and so yeah like very interesting uh first round of discussion here and and I

think um yeah we'll see how this uh affects possibly the tone of of regulators towards crypto and it really just allow us to strip a lot of the noise away and just infer really okay yeah how can a chord interpret a lot of this and yeah I don't know what an ETF about just if we had an ETF and discount Market it would be good or bad Mark I don't even know if it's worth I I assumes medium to long term that but medium to long term it that's a legitimacy and then you know a lot of more people have exposure to this stuff take away from this section of the podcast is I think it's everyone like there's the SEC and they're like policy

makers there's also a legal system and I would say this week we've had a bunch of wins for the legal system right SEC lost their Voyager case right the sale to binance us was approved um SEC it seems like it's like losing the gbtc case or it's suffering a little bit of a setback the outcome's still pending there obviously but um seems like the the uh Democratic judges there were surprisingly critical actually of the SEC seems like grayscale looks kind of likely to win the case now so that's positive um we're recording this on Thursday today the uh the house Financial Services committee uh hearing happens where they where they question Biden's uh uh the Biden administration's kind of overreach I would call it and into

regulating crypto um interesting week yeah there's another thing that's happening uh what else happens oh um we heard from uh from folks who are kind of inside the the Ripple case that um insiders expect a result actually so there's this like long-running SEC case against xrp um and we heard that insiders expect a result any month now so that's uh that's I mean that could be a that could be a really big result for us so yeah yeah all right where to next my friend there's a quick one on maker that I just want to call out there's a big proposal going on in maker to extend its uh existing so uh us treasury bond

investments from 500 million to 1.25 billion uh proposal to increase it by 750 million uh the it's pretty interesting strategy we'll link to this proposal I'd recommend folks go read it um the strategy will deliver a net yield of we'll move the net yield we'll deliver a net yield of I think it's like 4.5 percent to maker after you know custody costs trading costs Etc um yeah it's I mean I think I think it's I think it's an awesome proposal I'll probably I'm probably gonna vote Yes on this so yeah what it's a whole well other than the how does this play into

like the not to get to a macro here but uh kind of the deficit situation if like is this isn't there a talk like if you have like depends on the maturity of these instruments but like if there's like a technical default well like there's a lot of chat around that and and if if you're like if you're you're like having short maybe not t those but if if your deposit and like you have a CD of the six months and at times with like the default isn't that like a weird kind of thing you want to avoid you do but so what we're doing here what we're doing here is there's um the 750 is deployed into the six-month U.S treasuries it's a laddering strategy

with bi-weekly maturities so I think that helps eliminate some of the risk there yeah yes I mean God forbid if we do have this involved and then there's I think there's broader issues but yeah uh to be fair it's not I continue I continue to think it's pretty wild that yields and treasury yields are higher than D5 yields so uh yeah there's kind of no reason to park your money in a D5 protocol as much as I love the final one you can click five percent four or five percent and um stratify yeah so I think it's a good proposal though um oh I want to do mention one thing one point because that's it as I was

thinking about this is like okay if you're gonna move your funds out well still we're gate to be fair just to make one important here they announced part of the outside said they will repay and honor all of customer deposits so no one's actually getting from a consumer standpoint here other than of course did you get your money out remember when I called you around the FTX thing I was like we were talking about silvergate I didn't take any risks yeah nice and crypto I've just learned whenever there's like you know I get you know so Rose had back pain and then that was it the intuition to sell I just felt that and here wait what is that Sarah story yeah back pain there's a great book about Source yeah like he was as much as like a technical Trader he was he said

listen all my cell signals where I just had lower back pain and I just listened to my listen to that uh synthetical work other than fit it but like all these big hedge fund folks trade off uh the the the lunar selection you know that yeah yeah yeah I mean you look at uh anyways on this particular instance uh yeah I didn't take any risks and uh yeah the asymmetry it's like The Talented turkey situation yeah you just don't want to uh considering that I did have some amounts in FTX numbers because I just dragged my feet for a day and it cost me dearly then I didn't want to take any risks yeah hey what what did you think of the Moon episode we did about ordinals

yeah very good actually uh it left me wanting to learn more about what was going on in Bitcoin community um and I then saw the cosmos kind of announcement I think there was this um waking up from the community both hardcore Bitcoin devs and just you know the Bitcoin community at large that is realizing hey we have this great security chain and this like idle Capital we can do a lot here there's just so much tap on top potential and I think it's very interesting I think um we'll we'll see but very refreshing you

know for me it's felt like in years of rigidity in the Bitcoin Community a lot of like rejection of what was going on in the ethereum camp and you know keeping bitcoin's scope to just pure money and kind of a sacrosanct after if you will the reality is like markets always win and if there's a huge opportunity you know um to to to make Bitcoin you know from a b perspective a much more lucrative chain then why wouldn't you do that yeah uh and I don't think it's mutually it doesn't subtract from Bitcoins like proposition I believe if anything it enhances it because when you did something that you and I have talked

about in this episode and been wanting to have an episode to talk about Bitcoin security model long term and when you think about the fees that the Bitcoin network is raking in there are de minimis most of it is block rewards which will diminish over time and so um yeah very exciting actually I want to learn more about this so there's people out there that are building on bitcoin um Network and have interesting ideas and proposals I think uh it's worth having them on here to talk about it uh there's of course maybe I've been have been seeing a lot of announcements and I think you mentioned this too of like everyone else wants to build on video yeah so yeah we see here's the here's the here's the one line of alpha right

any time in crypto you have something where it's a complete pain in the ass to buy it that eventually gets eroded away when it gets becomes easier to buy and there's usually this massive inefficiency or massive asymmetry of opportunity when you have to go through all these hoops to buy something and I think uh I I actually haven't bought anything yet or gone through it but I'm really thinking about it because just by you know buying ordinals right now is like total pain in the ass and eventually it'll become pretty easy just that alone is a big asymmetry that gets eroded down I mean arguably you could extend that argument and say

this is why crypto continues to be so early when people ask me I'll miss the boat I'm like what are you talking about it's still very difficult to operate in the space increasingly so now that we've gone back without silvergate in the equation so uh for a long time you know it's been a bit of an Arbitrage situation where if you're willing to jump the hoops and barbed wire and cross all kinds of you know tumultuous oceans and Traverse all of that and then get into the space and set up and learn about security and interact on chain then yeah which is interesting on this point like account abstraction got announced and I didn't get I thought it was going to get way more attention I guess the lesson there is folks like

just don't announce stuff while there's like a conference and people go to parties and like you know like distracted don't ship anything during conference week or I love you a bit don't announce it yeah I love some like hardcore Dems like just don't care about any of this though okay like it's just like it happened last week in Denver nobody was talking about it no you go on Twitter everyone's panicking about silvergate in person nobody's talking about it so yeah you know uh just on a more personal note I feel like during in during bear markets the thing that is very comforting is I've spent most of my time now is spent talking to Founders and teams like not new teams like new projects I haven't like my pace of deployment has

gone down just because I haven't seen that many uh although I did write one of my largest picks uh last week um but nonetheless what kind of company um it's like a well I'll immediately leak out a lot later but it's um I don't wanna like it doesn't get announced but it's uh it's related to this entertainment space so like uh whoa I know that I know oh I'm I met with them in Denver yeah like out of nowhere out of nowhere I'm like how does this like massive like they exist I'm like what yeah I mean I'm like I'm I was very surprised and then the other thing was to be super nice is the

founder had actually reached out and back in 2021 and we had worked in in a yearn group uh this has been rating D5 summer and we're in a lot of same groups and so he reached out and said hey I have this idea I have this kind of quirky asset that I want to build and and just run with it and then yeah we went back and forth a bit and then kind of died off partially because I you know I didn't kind of take much of it at the time and then like two years later it's grown into like a whole Beast of its own and then I got like this other person that I really like in the space and respect you brought me this kind of deal and he said you ought to look at this I said wait a minute is

this the same project and it was so nice it's always so nice to see like a team that like stuck with it and it was growing it in a what is now I think it's just impressive and out of nowhere I'm like you got to wonder how many of these kind of exist out there so anyways really excited about this project I will um I don't want to say it now because I you know I talked to the team that hasn't been announced but uh we'll probably have them on here to talk about a combination of like really leveraging like short form content with nfps and you know like no lost Lottery ish type of thing so to really have again the common you'll see this time and time again but I think this example will be a case

study for how do you really Drive customer engagement this is probably what Amazon is seeing with Tiffany seeing what every single brand in this space will realize is there are certain instruments and strategies the digital ownership uniquely enables to really enhance the value proposition of your product and consumer engagement like I'm not asking to believe in any of this stuff but just that concept is very much here to stay and it will and when brands are struggling to retain users with churn description fail payments this is the argument for

microtransactions stable coins and some like nfts that represent a subscription or represent loyalty um and I think I think this year will be one where that that theme narrative really percolates uh among more traditional kind of companies yeah love that yeah what for the next yeah I was gonna say we haven't done this historically but things to look for next week or just don't like well it's actually something I'm thinking about and looking for and just like going to spend some time

looking into I had dinner with uh Jason Choi um and his partner uh Wing wingarian Hungarian I used to be a defiant yeah exactly yeah he was a defined with Arthur or Jason was at Spartan group um hello Jason yeah he's awesome um and he's they're both running tangent right now which is a great great fund um they were including men they were clueing men on just like Hong Kong is opening back up so Hong Kong used to be this like OG crypto Hub right like bitmex started there Amber started there um pre-bahamas FDX was you know started there um and I think like Hong Kong sat at this really interesting intersection

between the west and and China and when China implemented their their crypto ban that the general perception was that Hong Kong's days as a crypto Hub were were numbered um and that was relatively true actually because what happened is you had this crypto ban and then you had covet where everything really shut down and Singapore opened up code restrictions sooner than Hong Kong did and you had this Mass Exodus of talent from from Hong Kong to places like Singapore during during the covered lockdowns um now though Jason was telling me things are completely opening back up both on the coveted side of things but also on the regulatory side of things and that the that folks in Hong Kong are very

aware of how strict the SEC as being in in the US and they're seeing Hong Kong is like this big opportunity to bring crypto teams and exchanges specifically back back into Hong Kong so that is a trend that I was not aware of until recently and that I thought is something that's interesting and and something we should probably pay attention to yeah I do want to go out there later this year um to Hong Kong um and and just kind of Shanghai or China's reopening back again too and so um been talking to like the scroll guy and a few other teams that are based there to yeah um like Jason from folius

Ventures you know he's focused very much in in that market and yeah I if I were to think in from my personal standpoint I've always felt that I'm like super underexposed because I do think that like just statistically speaking like population wise you have to think for me Asia's always like been ahead of a curve in terms of adoption of like you know thinking about like uh WeChat and 10 cent and like their their adoption of you know digital first has been a clue and insights into how the world is kind of really just kind of progress and so I think that's still true and they get it out there Japan is the other Market that kind of no one really knows about it's so insular like they love Bitcoin like the penetration rates are super high the Bitcoin and uh

I generated my first investment in a japanese-based company recently so I was really happy to see it to like be able to like crack that market if you will to be sure I don't think you've ever cracked Japan as a foreigner was it the L1 that we uh was it astronetwork no no no not at all it's like an exchange oh nice it's Gonna Change yeah so uh anyways anything else sir um no I have a prediction to make which is that uh with so Alex Thorne a Galaxy's research team put out a really good report on ordinals and um we should invite Alex on the podcast and talk about ordinals actually I think he's the right person to do this I think someone will propose a stable coin on

bitcoin uh like a Bitcoin stable coin uh in in the coming with with all the Crackdown around silvergate stable coins ordinals popping off I think there's gonna be a Bitcoin stable coin that ends up taking off like fully like collateralized by Bitcoin don't know what it looks like don't know if it's like a usdc type product on bitcoin don't make it collateralized by Bitcoin don't don't notice oh it's interesting uh on this thread like people forget but like this is what really made ethereum kind of in many ways like really take off after the Ico kind of craziness died down maker you needed to have a central bank and the idea of parking your collateral like eth and then minting the eye was pretty I mean to this days it's a working

experiment and it was the backbone for defy and it was just like it it was dormant for a long time and then that'll it without maker you couldn't have had anything I don't think we would have been nearly as far where we are today yeah um and yeah like why couldn't you just deploy a maker type like sucker back on bitcoin right although good idea you park your Bitcoin bitcoin's been fairly stable ish and you meant something like a die yeah I will end it with a with a tweet or a LinkedIn post or something that I saw somewhere which was uh that I just liked it's clickbaity but I liked it it was just uh no I was talking about how every 10 years the there's a new um

the new platform that people use so it's like desktop in 1995 cell phone in 2005. like Mobile in 2005 applications in 2015 and then 10 years later 2025 wallets is the new uh it's the new uh platform well certainly uh relevant was coinbase uh announcing that and I will extend that prediction say probably coinbase is the number one um wallet provider in the next two years I'm trying to extend this podcast because I'm I'm trying there's one more thing I wanted to talk about but I'm all right but I'm forgetting it um so it's gonna come to me right oh oh we're I was supposed to uh we are hiring we have new open roles of blockworks

that's what I'm supposed to all right hold on I Gotta Give a plug hold on hold on all right we have open roles a bunch of people eat Denver we're asking if we're hiring we are hiring we have uh uh reporters uh open worlds for like reporters and journalists we're hiring senior full stack Engineers come work on our uh protocol governance data and research platform uh we're hiring an accounting lead very exciting role uh we are hiring on VP of sales and we are hiring account execs brand Partners so co-worker block Works come work with Santi yeah I was gonna say like do you consider me part of block works or like I'm in this like freelancer podcaster maybe I should just tell people I work for Block watching these events like you

know like what do you do I work in a media company that must be maybe I'll just adopt this tagline app there's two titles that you could go with podcast extraordinaire or institutional or institutional Angel and uh I think one sounds a little better than the other so I think I think definitely the first one definitely the first one has extraordinary yeah Five Guys extraordinaire uh shout out to balance of pilot that uh continues to play and listen to Empire hopefully not while in flight but uh maybe you'll see Empire in one of these like uh you know you know like you can watch them oh no Garrett and will we have two podcast producers Shout Out Gary will they're working on getting uh Empire inside of uh airplanes

so it's a Ty always I always tell folks listen you either love this or it's free melatonin either way you're winning on the salon oh wow so there you go anyways folks sorry that you uh have to put up with listening to Santi and I twice a week every week but we appreciate you and uh we will see you all next week and we'll keep doing it so you know uh anyways let us know we can get better and to your permissionless [Music]